INTM167260 - UK residents with foreign income or gains: corporation tax: Loan relationships: relief for foreign tax: identification of UK tax: Example 2
The loan relationship profit exceeds the amount of the credits relating to interest which has suffered foreign tax:
The figures are as in example 1 (see INTM167250) except that in addition the company claims under CTA09/S459 to carry back and set against the loan relationship profits of this accounting period a non-trading deficit of £1,000 which arises in a later accounting period.
For the purpose of allowing credit relief in respect of the foreign interest of £500 the computation is restated to show UK tax chargeable on the credits of £500 + £600 + £800 and to show separately debits of £900 which are then treated as available to be set against profits of any description for that accounting period under TIOPA10/S52. Taking account of other profits for the accounting period and of the non-trading deficit carried back the result would be as follows
| - | Trade | Loan relationship | - | Property Income | Foreign dividend | Total |
|---|---|---|---|---|---|---|
| Profits | 2,000 | 1,000 | - | 500 | 1,000 | 4,500 |
| less non-trading deficit carried back | - | (1,000) | - | - | - | (1,000) |
| - | 2,000 | - | - | 500 | 1,000 | 3,500 |
| Restated as | Trade | Loan Relationship (i) | Other Loan Relationship | Property Income | Foreign dividend | Total |
| Profits | 2,000 | 500 | 400 (iii) | 500 | 1,000 | 4,400 |
| less Loan Relationship debits (ii) | - | - | (400) | (500) | - | (900) |
| - | 2,000 | 500 | - | - | 1,000 | 3,500 |
Notes:
i) see note (i) to example 1.
ii) see note (ii) to example 1.
iii) that is £600 + £800 - £1,000: the non-trading deficit carried back from a later accounting period, which is set against Loan Relationship profits of this period, may be regarded for this purpose as set against credits which have not suffered foreign tax in priority to those which have.