Finance Act 1972

Section 99.

SCHEDULE 19 Transitional Relief for Companies with Overseas Trading Income

Amendments of section 84 of Finance Act 1965

1 (1) In subsection (3) of section 84 of the [1965 c. 25.] Finance Act 1965 for the words "the amount after deducting income tax borne by the company on franked investment income of the income tax deducted or deductible from the company's dividends " there shall be substituted the words " the amount of the advance corporation tax paid or payable in respect of the company's dividends ".

(2) In subsection (5) of that section for the words " the company by virtue of an election under section 48 of this Act pays any dividends without deduction of income tax " there shall be substituted the words " any of the dividends paid by the company are dividends to which section 84 of the Finance Act 1972 does not apply by virtue of an election under section 256 of the Income and Corporation Taxes Act 1970 " and for the words " if all the dividends so paid are paid without deduction of income tax " there shall be substituted the words " if all the dividends so paid are dividends to which the said section 84 does not so apply ".

(3) The expressions " unused credit for foreign tax " and " the current charge to corporation tax " (defined in subsection (8)(b) and (c) of the said section 84) shall be construed as if the rate of corporation tax for any relevant financial year were 40 per cent. and as if the law relating to corporation tax were the same as it was on 1st April 1972.

(4) For paragraph (d) of subsection (8) of that section there shall be substituted—

“(d) ' dividend' does not include a capital dividend or a dividend which is not a qualifying distribution, and in relation to any dividends ' advance corporation tax paid or payable ' includes advance corporation tax which would have been payable but for the dividends being group income, and for the purposes of this section there shall be disregarded any advance corporation tax which a company is treated as having paid by virtue of section 92 of the Finance Act 1972”.

Amendments of Schedule 20 to Finance Act 1965

2 (1) In paragraph 3(2)(a)(ii) of Schedule 20 to the Finance Act 1965 for the words " abatement in respect of dividends paid without deduction of income tax" there shall be substituted the words " abatement in respect of dividends to which section 84 of the Finance Act 1972 does not apply ".

(2) In paragraph 3(2)(b) of that Schedule for the words " dividends without deduction of income tax" there shall be substituted the words " dividends to which the said section 84 did not apply by virtue of an election under section 256 of the Income and Corporation Taxes Act 1970 ".

(3) In paragraph 3(4) of that Schedule, in the words preceding paragraph (a), for the words " income tax deducted or deductible from dividends" there shall be substituted the words " advance corporation tax paid or payable in respect of dividends ".

(4) For paragraph 3(4)(a) of that Schedule there shall be substituted—

“(a) there shall be treated as an amount of advance corporation tax so paid or payable any amount by which the advance corporation tax paid in respect of dividends paid to it by the other member of the group (after deducting a sum equal to any amount of tax credit paid to the company under section 254 or 255 of the Income and Corporation Taxes Act 1970 in respect of the dividends) exceeds the appropriate fraction of the relief falling to be given to the other member in that year, before abatement in respect of dividends to which section 84 of the Finance Act 1972 does not apply”.

(5) In paragraph 3(5) of that Schedule for the words " income tax deducted or deductible from dividends " there shall be substituted the words " advance corporation tax paid or payable in respect of dividends ".

(6) In paragraph 3(6) of that Schedule for the words " abatement in respect of dividends paid without deduction of income tax " and " in respect of dividends so paid" there shall be substituted respectively the words " abatement in respect of dividends to which section 84 of the Finance Act 1972 does not apply " and " under subsection (5) of the principal section ".

(7) In paragraph 4(1) of that Schedule for the words " the amount (before deduction of income tax) of those dividends " there shall be substituted the words " the amount of those dividends (together with such proportion thereof as corresponds to the rate of advance corporation tax applicable to them) ".