HM Revenue and Customs Brief 07/09
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Issued 01 April 2009
The Corporation Tax Act 2009
The Corporation Tax Act 2009 (CTA 2009), produced by the tax
law rewrite project, has come into force for Corporation Tax purposes
for accounting periods ending on or after 1 April 2009 and for Income
Tax and Capital Gains Tax purposes for the tax year 2009-10 and
subsequent tax years. The project has already produced the following
- the Capital Allowances Act 2001 (CAA)
- the Income Tax (Earnings and Pensions) Act 2003 (ITEPA),
which rewrote Schedule E
- the Income Tax (Trading and Other Income) Act 2005
(ITTOIA), which rewrote Schedules A, D and F for Income Tax
- the Income Tax Act 2007
This Act is expected to be followed by a second Bill dealing
with Corporation Tax. This was published in draft for consultation on 3
March 2009. (A third Bill covering international and miscellaneous
provisions which applies in part for corporation purposes was published
in draft at the same time.)
CTA 2009 consists largely of provisions covering much the
same ground as those rewritten in ITTOIA for Income Tax, but includes
provisions that are confined to Corporation Tax such as those dealing
with loan relationships, derivative contracts, research and development
and expenses of investment businesses. The second Corporation Tax Bill
includes rates of tax, reliefs, losses, rules for special vehicles such
as REITs and AUTs, special regimes such as repos, leasing, oil and tax
The law is rewritten to make it clearer and easier to use.
The structure is logical, with each of the main areas in a part of its
In the main, CTA 2009 does not change the effect of the law
but it does correct some minor anomalies. It also incorporates two
extra-statutory concessions and one statement of practice.
Detailed Explanatory Notes, including an Annex listing the
minor changes made to the law, accompany the Act. There are also Tables
of Origins and Destinations which will assist users to identify the
source material for any given provision and trace what has happened to
Particular features of CTA 2009
Removal of references to schedules and cases
A key feature of CTA 2009 is the removal of references to
schedules and cases. This does for Corporation Tax what ITTOIA did for
Income Tax. The law is not changed but income now falls within
different parts of the Act rather than under schedules and cases.
Foreign income and UK source income are amalgamated
Profits arising from UK or non-UK sources are now amalgamated,
although separation is still required where losses arising on overseas
sources are treated in a distinct way or reliefs are only available
against non-UK source income.
The structure of CTA 2009
CTA 2009 is divided into 17 Parts and 4 Schedules.
Part 1: Introduction
This part provides an overview to the Act as a whole.
Part 2: Charge to Corporation Tax: Basic Provisions
This part rewrites the charge to Corporation Tax on resident
and non-resident companies, the rules of company residence and of
Part 3: Trading Income
This part calculates the profits of a trade, applies the rules
for particular trades and identifies components of trading income
including post-cessation receipts.
Part 4: Property Income
This part rewrites the Corporation Tax rules on property
income including lease premiums, furnished holiday accommodation and
Part 5: Loan Relationships
This part rewrites the loan relationship provisions, mainly
Chapter 2 of Part 4 of FA 1996.
Part 6: Relationships treated as Loan Relationships
This part rewrites provisions on relationships treated as loan
relationships, many of which are based on provisions outside Chapter 2
of Part 4 of FA 1996 such as alternative finance arrangements in FA
2005 and repos in FA 2007.
Part 7: Derivative Contracts
This part rewrites the provisions for derivative contracts in
Schedule 26 to FA 2002.
Part 8: Intangible Fixed Assets
This part rewrites the rules on intangible fixed assets in
Schedule 29 to FA 2002.
Part 9: Intellectual Property: Know-How and Patents
This part rewrites the rules on disposal of know-how, sales of
patent rights and relief on patent income in sections 524 to 533 of
Part 10: Miscellaneous Income
This part brings together income not included elsewhere;
foreign dividends, estates in administration, annual payments and
income not otherwise charged (old Case VI of Schedule D).
Part 11: Relief for Particular Employee Share Acquisition
This part rewrites the relief for share incentive plans in
Schedule 4AA to ICTA and option schemes in sections 84A and 85A of ICTA.
Part 12: Other Relief for Employee Share Acquisition
This part rewrites the relief for share acquisition schemes in
Schedule 23 to FA 2003.
Part 13: Additional Relief for Expenditure on Research and
This part rewrites the special relief for research and
development expenditure including relief for SMEs, sub-contracted work
and vaccine research in Schedules 10 and 20 to FA 2000 and Schedules 12
and 13 to FA 2002.
Part 14: Remediation of Contaminated Land
This part rewrites the relief for expenditure on remedying
contaminated land in Schedule 22 to FA 2001.
Part 15: Film Production
This part rewrites the rules on the taxation of film
production in Chapter 3 of Part 3 of FA 2006.
Part 16: Companies with Investment Business
This part rewrites the rules for investment companies.
Part 17: Partnerships
This part rewrites the tax rules that apply for partnerships.
Part 18: Unremittable Income
This part rewrites the rules on unremittable income in section
584 of ICTA.
Part 19: General Exemptions
This part rewrites various exemptions from tax including
FOTRA securities and housing grants.
Part 20: General Calculation Rules
This part contains various general rules that apply to all
income charged to Corporation Tax. These include restriction on
deductions for unpaid remuneration, employee benefit contributions,
business entertaining and other general rules.
Part 21: Other General Provisions
This part includes provisions of a general nature including
orders and regulations, definitions and Treasury powers in relation to
The four schedules are:
- Minor and consequential amendments.
- Transitionals and savings.
- Repeals and revocations.
- Index of defined expressions.
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© Crown Copyright 2009.
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Article Published/Sorted/Amended on Scopulus 2009-04-04 12:50:44 in Tax Articles