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Background

This calculates the profits/losses subject to exemption, any TIOPA 2010 s35 deduction due and unilateral relief for foreign tax suffered on up to twelve overseas branches.

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Developing the schedule

This schedule is developed from the Adjustment of profit/Calculation of tax liability schedule. Multiple copies of this schedule can be developed if there are more than twelve branches.

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Completing the schedule

Overseas branch exemption

These details are entered on the information for the return schedule, and are displayed on this schedule for reference.

When the Overseas branch exemption applies, the Percentage exempt this period is used to calculate the profits or losses that are exempt. This figure is automatically taken to the relevant Adjustment of profit and loss schedule, where the UK taxable profits are adjusted accordingly.

When Negative amount matching applies this period, the exempt profits or losses figures are adjusted to take account of the Brought forward/Opening amount values entered. Where negative amount streaming is to be applied to a specific branch, then set the Apply streaming to this branch flag and enter the relevant Brought forward/Opening amount. Any residual negative amount should then be entered in the Residual losses column, where it will be apportioned across all branches.

Branch profit/(loss) /Adjustments

Profits are entered for each overseas branch, together with any necessary tax adjustments under UK legislation.

It should be noted that all the branch profits shown on this schedule must already have been included in the profits shown on the Adjustment of profit/Calculation of tax liability schedule.

Foreign tax suffered

The amount of Allowable foreign tax suffered by the branches should be entered. Where Overseas branch exemption applies, foreign tax paid on exempt profits must be excluded from the amount entered.

Creditable tax

The software will automatically grant relief for the lower of the Allowable foreign tax suffered or the UK tax arising on the income on a credit basis.

The user should check whether it is appropriate to claim unilateral relief or whether the relevant double tax treaties provide a more favourable relief.

TIOPA 2010, s35 deduction

This is calculated automatically. The amounts of credit disallowed and loss attributable on which this is based are printed to provide disclosure.

Unrelieved foreign tax carried back/carried forward

Unrelieved foreign tax on the profits of foreign branches may be carried back for up to three years or carried forward indefinitely.

Note: Double tax relief must be first offset in the current period under TIOPA 2010 s73 and then must be used in the most recent period first in the event of a carry back.

When the Overseas branch exemption applies to overseas profits, tax relief cannot be claimed on any foreign tax paid on those exempt profits. In this instance, the software shows the unrelieved foreign tax as being lost, rather than available for carry forward.

When a TIOPA 2010, s35 deduction has been made, the Unrelieved foreign tax lost or Unrelieved foreign tax c/fwd is automatically adjusted accordingly.

Deduct foreign tax

Select the Deduct foreign tax flag at the bottom of the sheet if you want to claim foreign tax as an expense rather than credit relief.

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Standard sub-schedules

An optional Local taxes paid schedule is available to analyse foreign tax paid on the branch profits.

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Carry forward

On carry forward, this schedule is automatically developed in the subsequent computation if it is present in the prior year computation. In the subsequent computation, any Unrelieved foreign tax b/fwd is completed automatically.

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Related errors

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