Paragraph 9

United Kingdom

(1)

In accordance with the separate enterprise principle, loans and other financial assets, and profits arising from them, are attributed to a permanent establishment to the extent that they can reasonably be regarded as having been generated by the activities of the permanent establishment.

(2)

The following provisions have effect as regards the factors to be taken into account.

(3)

Particular account shall be taken of the extent to which the permanent establishment is responsible for—

(a)

obtaining the offer of new business;

(b)

establishing the potential borrower’s credit rating and the risk involved in providing credit;

(c)

negotiating the terms of the loan with the borrower;

(d)

deciding whether, and if so on what conditions, to make or extend the loan.

(4)

Account may also be taken of the extent to which the permanent establishment is responsible for—

(a)

concluding the loan agreement and disbursing the proceeds of the loan;

(b)

administering the loan (including handling and monitoring the service of it) and holding and controlling any securities pledged.

(5)

References in this paragraph to a financial asset include any financial risk in relation to a loan, or potential loan, that is capable of giving rise to fees or other receipts and for which the holding of capital is required (or would be required if the transaction were between parties at arm’s length).

Notes on Schedule A1

Textual amendments

F1: Sch. A1 repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 278, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)
F2: Sch. A1 inserted (with effect in accordance with s. 149(6) of the amending Act) by Finance Act 2003 (c. 14), s. 149(3), Sch. 25