Income and Corporation Taxes Act 1988

246 Charge of ACT at previous rate until new rate fixed, and changes of rate. U.K.

(1) M1 If, at the beginning of any financial year, the [F1 lower rate] percentage for the appropriate year of assessment has not been determined (whether under the Provisional Collection of Taxes Act 1968 or otherwise), then, subject to subsection (2) below, advance corporation tax in respect of distributions made in that financial year shall be payable under Schedule 13 and may be assessed under that Schedule according to the rate of advance corporation tax fixed for the previous financial year.

(2) Subsection (1) above does not apply with respect to any distribution made in a financial year after—

(a) the date on which is determined the [F1 lower rate] percentage for the appropriate year of assessment; or

(b) 5th [F2 May] in that year,

whichever is the earlier.

(3) If a rate of advance corporation tax for any financial year is not fixed, under section 14(3) or any other enactment, or if advance corporation tax for any financial year is charged otherwise than as it has been paid or assessed, the necessary adjustment shall be made by discharge or repayment of tax or by a further assessment.

(4) M2 In subsections (1) and (2) above “the [F1 lower rate] percentage for the appropriate year of assessment”, in relation to a financial year, means the percentage at which income tax at the [F1 lower rate] is charged for the year of assessment which begins on 6th April in that financial year.

(5) M3 Where different rates of advance corporation tax are in force in different parts of an accounting period, the maximum set-off permitted for that accounting period under section 239(2) shall be determined by apportioning the profits of the company charged to corporation tax for that period (as defined in section 239(6)) between the different parts of the period, calculating the maximum for each part as if it were a separate accounting period and aggregating the result.

(6) Where the rate of advance corporation tax for any financial year differs from the rate last fixed—

(a) any advance corporation tax payable in respect of a distribution made in that financial year on or before 5th April shall be calculated according to the rate last fixed and—

(i) the definition of “franked payment” in section 238(1), and

(ii) section 231(1) and Schedule 13,

shall have effect in relation to the distribution as if the rate for that year were the same as the rate last fixed;

(b) if a distribution is made on or before 5th April in an accounting period which extends beyond 5th April in that year and another distribution is made, or franked investment income is received, in that period after that date, then—

(i) the company’s liability for advance corporation tax,

(ii) the amount of any such tax, and

(iii) the amount of any surplus of franked investment income,

for that accounting period, shall be determined under section 241 and Schedule 13 as if the part of the accounting period ending with, and the part of it beginning after, that date were separate accounting periods.

Textual Amendments

F1 Words in s. 246(1)(2)(4) substituted (27.7.1993 with effect in relation to the financial year 1994 and subsequent financial years) by 1993 c. 34, s. 78(12)(13)

F2 Word in s. 246(2)(b) substituted (27.7.1993) by 1993 c. 34, s. 206(3)

Modifications etc. (not altering text)

C1 S. 246(5) applied (with modifications) (1.7.1997) by The Manufactured Dividends (Tax) Regulations 1997 (S.I. 1997/993), reg. 9(1)

Marginal Citations

M1 Source—1986 s.17(2)-(4)

M2 Source—1986 s.17(1)

M3 Source—1972 s.103(4), (5); 1973 Sch.14 5; 1987 (No.2) s.74(5)