Corporation Tax Act 2010 section 269CK

Profits arising from tax arrangements to be disregarded

Section 269CK is a targeted anti-avoidance rule that requires banking companies to disregard certain profits generated through tax arrangements when calculating their relevant profits for the purpose of the restriction on carried-forward loss relief.

• Where a banking company enters into arrangements that generate additional profits, and those profits would enable the company to use carried-forward losses that would otherwise be restricted, the arrangements may be caught by this anti-avoidance rule.
• The rule applies where a main purpose of the arrangements is to secure a corporation tax advantage for the banking company, or for the banking company and its connected companies taken together.
• The rule is triggered only where the tax value of the arrangements (the corporation tax advantage plus any related economic benefits) exceeds the non-tax value (any genuine commercial economic benefits unrelated to the tax advantage).
• If all three conditions are met, the additional profits generated by the arrangements are stripped out and ignored when calculating the banking company's relevant profits, effectively preventing the use of pre-2015 restricted carried-forward losses against those arrangement-generated profits.