Chapter 60 – Corporation Tax Computation (1): General Rules

60.5 Rates. The main rate of corporation tax for the financial years 2023 and 2024 is
25%. A small profits rate of 19% applies for companies on profits up to £50,000 with
effect from 1 April 2023.

Chapter 61 – Distributions

61.2.6 Other Interest Payments. In Shinelock Ltd v HMRC [2023] UKUT 107
(TCC), the Upper Tribunal held that a payment to a shareholder that was calculated by
reference to the capital gain arising on a property disposal constituted a distribution in
respect of a ‘special security’ in CTA 2010 s 1000 para F because it was results
dependent. The taxpayer thus was precluded from claiming a loan relationship debit
in respect of the payment.

61.3 Taxation of Shareholders—ITTOIA 2005, Part 5, Chapter 3. The tax-free
dividend allowance is reduced from £2,000 to £1,000 for the tax year 2023-24, and to
£500 for 2024-25 and subsequent tax years. Some recent cases on the taxation of
dividends are also noteworthy. An interim dividend is taxable when actually paid
rather than declared: see Gould v HMRC [2022] UKFTT 431 (TC). A part of a
dividend declared but not actually paid is not taxable: see Jays and another v HMRC
[2022] UKFTT 420 (TC).

Chapter 62 – Computation (1): General Rule

62.5.1.3 Set-off Against General Profits of the Same Accounting Period and
the Preceding Year (Three Years for Terminal Losses). In Civic Environmental
Systems Ltd v HMRC [2023] EWCA Civ 722, the taxpayer company had made a
claim to carry back corporation tax losses to a previous accounting period.
The losses claimed in the carry back claim exceeded the profits available, with the
excess to be carried forward. The profits for that previous year were subsequently
adjusted upwards, and the taxpayer sought to reclaim a higher amount of loss
carryback. However, the CA concluded that there was no provision for a freestanding
claim for carried-back losses to be reopened.

Chapter 63 – Computation (2): Accounting-based Rules for Specific Transactions

63.2.7 Anti-avoidance. In BlackRock Holdco 5 LLC v Revenue and Customs Comrs
[2022] UKUT 199 (TCC), the company’s non-trading loan relationship debits were
disallowed under the transfer pricing rules, and had those rules not applied the debits
would have been disallowed under the loan relationships unallowable purpose rule.
See also Kwik-Fit Group Ltd v Revenue and Customs Comrs [2022] UKUT 314
(TCC), upholding the First-tier Tribunal decision, that debits on certain intra group
loans forming part of a reorganisation which was intended to accelerate the use of tax
assets had unallowable purpose. In JTI Acquisition Company (2011) Ltd v Revenue
and Customs Comrs [2021] UKFTT 446 (TC), debits in respect of interest on loan
notes issued by a company under a series of transactions in connection with the
acquisition of a US company by a multinational group were disallowed for
unallowable purpose.