Corporation Tax Act 2010 section 937F

Ring-fenced scheme losses and relevant scheme profits

Section 937F sets out how to calculate "ring-fenced scheme losses" and "relevant scheme profits" arising from risk transfer schemes, by identifying the proportion of scheme losses or profits that are attributable to the scheme rather than to genuine economic outcomes.

• Where a company makes scheme losses and the relevant group suffers a pre-tax economic loss from fluctuations in the scheme rate, index or value, a calculated proportion of each scheme loss is ring-fenced
• The ring-fenced proportion of scheme losses is calculated as (Total group scheme losses − Total group scheme profits − Pre-tax economic loss) ÷ Total group scheme losses
• Where a company makes scheme profits and the relevant group enjoys a pre-tax economic profit from fluctuations in the scheme rate, index or value, a calculated proportion of each scheme profit is treated as a "relevant scheme profit"
• The relevant proportion of scheme profits is calculated as (Total group scheme profits − Total group scheme losses − Pre-tax economic profit) ÷ Total group scheme profits