44Limited right to carry back surrendered ACT
(1)In any case where,—
(a)on a date not earlier than 17th March 1987, a company which is the surrendering company for the purposes of section 92 of the [1972 c. 41.] Finance Act 1972 (setting of company's advance corporation tax against subsidiary's liability) paid a dividend, and
(b)at no time in the accounting period of the surrendering company in which that dividend was paid was the surrendering company under the control of a company resident in the United Kingdom (construing "control" in accordance with section 302 of the Taxes Act), and
(c)under subsection (1) of the said section 92 the benefit of the advance corporation tax (in this section referred to as "ACT") paid in respect of that dividend was surrendered to a subsidiary of the surrendering company, and
(d)that ACT is not such that the restriction in paragraph (a) or paragraph (b) of subsection (2) of section 16 of the [1972 c. 22.] Oil Taxation Act 1975 (ACT on distributions to associated companies etc.) applies with respect to it, and
(e)in one or more of the accounting periods of the subsidiary beginning in the six years preceding the accounting period in which falls the date referred to in paragraph (a) above, the subsidiary has a liability to corporation tax in respect of income which consists of or includes income arising from oil extraction activities or oil rights, within the meaning of Part II of the Oil Taxation Act 1975 (in this section referred to as "ring fence income"),
sections 85 and 92 of the Finance Act 1972 shall have effect-subject to subsections (3) to (7) below.
(2)Where the conditions in subsection (1) above are fulfilled, the subsidiary to which the benefit of the ACT is surrendered is in the following provisions of this section referred to as a "qualifying subsidiary"; and in those provisions—
(a)"section 85" means section 85 of the Finance Act 1972 (payments of ACT to be set against company's liability to corporation tax on its profits) and "section 92" means section 92 of that Act;
(b)"the surrendering company" has the same meaning as in section 92;
(c)"surrendered ACT" means ACT which, by virtue of subsection (2) of section 92, a qualifying subsidiary is treated as having paid in respect of a distribution made on a particular date; and
(d)"the principal accounting period" means the accounting period of the qualifying subsidiary in which that date falls.
(3)So much of subsection (3A) of section 92 as would prevent surrendered ACT being set against a qualifying subsidiary's liability to corporation tax under subsection (3) of section 85 (carry back to earlier periods) shall not apply; but the said subsection (3) shall have effect subject to the following provisions of this section.
(4)Surrendered ACT may not under subsection (3) of section 85 be set against a qualifying subsidiary's liability to corporation tax for an accounting period earlier than the principal accounting period unless throughout—
(a)that period,
(b)the principal accounting period, and
(c)any intervening accounting period,
the qualifying subsidiary was carrying on activities which, under and for the purposes specified in section 13 of the [1975 c. 22.] Oil Taxation Act 1975, constitute a separate trade (oil extraction activities etc.).
(5)Subject to subsection (6) below, for each accounting period of the surrendering company in which is paid a dividend, the ACT on which gives rise, under section 92, to surrendered ACT, the total amount of that surrendered ACT in respect of which claims may be made under subsection (3) of section 85 (whether by one qualifying subsidiary of the surrendering company or by two or more taken together) shall not exceed whichever of the following limits is appropriate to the accounting period of the surrendering company—
(a)for periods ending on or after 17th March 1987 and before 1st April 1989, £10 million;
(b)for periods ending on or after 1st April 1989 and before 1st April 1991, £15 million;
(c)for later periods, £20 million.
(6)In any case where an accounting period of the surrendering company is less than twelve months, the amount which is appropriate to it under paragraphs (a) to (c) of subsection (5) above shall be proportionately reduced.
(7)The amount of surrendered ACT of the principal accounting period which, on a claim under subsection (3) of section 85, may be treated as if it were ACT paid in respect of distributions made by the qualifying subsidiary concerned in any earlier accounting period shall not exceed the amount of ACT that would have been payable in respect of a distribution made at the end of that earlier period of an amount which, together with the ACT so payable in respect of it, would equal the qualifying subsidiary's ring fence income of that period.
(8)In determining the amount (if any) of ACT which may be repayable—
(a)under section 17(3) of the Oil Taxation Act 1975, or
(b)under section 127(5) of the [1981 c. 35.] Finance Act 1981,
any ACT in respect of a distribution actually made on or after 17th March 1987 shall be left out of account.