Taxes Consolidation Act 1997 section 835AZ

Relevant profit and loss

Section 835AZ defines "relevant profit" and "relevant loss" for the purposes of the interest limitation rule, providing the starting point for the EBITDA calculation on which any interest restriction is based.

• Relevant profit is the amount of profits on which corporation tax falls finally to be borne, adjusted for development land gains or losses and certain value-basis reliefs, with items taxed or relieved at rates above 12.5% grossed up to a common 12.5% base.
• Losses carried forward from earlier periods and losses carried back from later periods are excluded from the calculation, as are most group relief amounts — except interest treated as a charge on income and management expenses that would be surrendered under group relief but for Part 35D.
• Income and expenses directly connected with a qualifying long-term infrastructure project are excluded from relevant profit, with apportionment on a just and reasonable basis where a company carries on both qualifying and non-qualifying activities.
• A relevant loss is calculated in the same manner as a relevant profit, reading references to profits on which corporation tax is borne as references to losses after all reliefs and deductions.