Corporation Tax Act 2010 section 356JKB

Effect of transfer of allowance for transferee

Section 356JKB sets out how to calculate the amount of cluster area allowance that each transferee is treated as generating when they acquire an equity share in a licensed area following a disposal.

• When a cluster area allowance is transferred on a disposal of an equity share, each transferee is treated as generating new cluster area allowance at the start of the accounting period beginning on the disposal date.
• The allowance allocated to each transferee is calculated using the formula: T × E3 ÷ (E1 − E2), where T is the total transferred allowance, E3 is the equity share acquired by that transferee, E1 is the transferor's equity share before the disposal, and E2 is the transferor's equity share after the disposal.
• Where there are multiple transferees, each one receives a proportion of the total transferred allowance corresponding to the size of the equity share they individually acquired from the transferor.
• The terms "transferor" and "transferee" carry the same meaning as in the provision governing the original disposal and transfer of the allowance.