When income arises in a foreign jurisdiction to a UK resident company, and that income is taxed in that foreign jurisdiction, the UK may give relief for the foreign tax suffered by crediting the foreign tax against the UK tax charged on that income. Where a credit is given under TIOPA10/S18, an adjustment should be made to the amount included in tax-interest to take account of the foreign tax suffered.

This adjustment is calculated by dividing the TIOPA10/S18 credit amount by the appropriate rate of corporation tax. This gives the notional untaxed income amount which is then excluded from tax-interest.

Further guidance on Double Taxation Relief can be found at INTM160000+.

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