Finance Act 1996

Section 137.

SCHEDULE 23 U.K. Self-assessment: Schedules 13 and 16 to the Taxes Act 1988

Part I U.K. Schedule 13 to the Taxes Act 1988

1 Schedule 13 to the Taxes Act 1988 (collection of advance corporation tax) shall be amended in accordance with the following provisions of this Part of this Schedule.

2 In paragraph 2 (contents of returns) in sub-paragraph (2) (specification of particular matters to be included in a return) after “The return shall specify” there shall be inserted “ (a) ” and at the end of that sub-paragraph there shall be inserted—

“(b) whether any estimated amount of franked payments is included under that paragraph by virtue of paragraph 7(2) below and, if so, the amount so included;

(c) whether any estimated amount of advance corporation tax is included under paragraph (c) of sub-paragraph (1) above by virtue of paragraph 7(2) below and, if so, the amount so included.”

3 In paragraph 3(3) (power of the inspector to make an assessment in certain cases)—

(a) for “the inspector”, where first occurring, there shall be substituted “ an officer of the Board ”; and

(b) for “or if the inspector is dissatisfied with any return, he may” there shall be substituted “ or if an officer of the Board is of the opinion that a return is incorrect, any such officer may ”.

4 (1) In sub-paragraph (1) of paragraph 3B (power of the inspector to make an assessment where he is not satisfied that there is a reasonable basis for the company treating itself as an international headquarters company)—

(a) for “the inspector is not satisfied that there was a reasonable basis” there shall be substituted “ an officer of the Board is of the opinion that there was not a reasonable basis ”; and

(b) for “he may” there shall be substituted “ any such officer may ”.

(2) In sub-paragraph (3) of that paragraph for “the inspector” there shall be substituted “ an officer of the Board ”.

5 In paragraph 5 (certain deemed claims for set-off in respect of franked investment income to be supported by such evidence as the inspector may reasonably require) for “the inspector” there shall be substituted “ an officer of the Board ”.

6 In paragraph 6A(1) (certain deemed claims for set-off in respect of foreign income dividends to be supported by such evidence as the inspector may reasonably require) for “the inspector” there shall be substituted “ an officer of the Board ”.

7 (1) Paragraph 7 (special provision for qualifying distributions which are not payments and payments whose nature is not clear) shall be amended as follows.

(2) For sub-paragraph (2) (no amount to be shown under paragraph 2(1)(a) or (c) in respect of those qualifying distributions or payments) there shall be substituted—

“(2) No amount is required to be shown under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment and, unless estimated amounts are shown by virtue of paragraph (a) below, paragraph 3(1) above shall not apply in relation to advance corporation tax in respect thereof; but—

(a) the company making the return may include under paragraph 2(1)(a) and (c) above estimated amounts in respect of the qualifying distribution or payment; and

(b) if it does so, paragraph 3(1) above shall apply in relation to advance corporation tax in respect thereof as it applies in relation to advance corporation tax in respect of franked payments which are required to be included in the return.”

(3) In sub-paragraph (3) (particulars of the qualifying distribution or payment to be given separately in the return) at the beginning there shall be inserted “Whether or not estimated amounts are also included under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment,”.

(4) For sub-paragraph (4) (assessment of advance corporation tax) there shall be substituted—

“(3A) Sub-paragraph (4) below applies—

(a) if an estimated amount is not included under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment; or

(b) if an officer of the Board is of the opinion that an estimated amount which is included under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment is incorrect.

(4) Where this sub-paragraph applies, any advance corporation tax payable in respect of the qualifying distribution or payment shall be assessed on the company and shall be so assessed without regard to any franked investment income received by the company, but—

(a) relief shall be given in accordance with sub-paragraph (4A) or (4B) below;

(b) for the purposes of the application of paragraph 2(3) above to any subsequent return period, the amount of the franked payment comprising the qualifying distribution or payment shall be taken to be the amount calculated as mentioned in sub-paragraph (4A) or (4B) below, as the case may be; and

(c) any advance corporation tax due under an assessment made by virtue of this sub-paragraph shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if correct amounts had been included under paragraph 2(1)(a) and (c) above in respect of the qualifying distribution or payment.

(4A) Where sub-paragraph (4) above applies by virtue of sub-paragraph (3A)(a) above, relief shall be given from the tax assessed (by discharge thereof) to the extent, if any, to which that tax exceeds the tax that would have been payable if the amount of the franked payment comprising the qualifying distribution or payment, calculated on the amount or value thereof shown in the assessment, had been included in the return under sub-paragraph (1)(a) of paragraph 2 above and the tax had been calculated in accordance with sub-paragraph (4) of that paragraph.

(4B) Where sub-paragraph (4) above applies by virtue of sub-paragraph (3A)(b) above, relief shall be given from the tax assessed (by discharge thereof) to the extent, if any, to which that tax exceeds the tax that would have been payable if the excess (if any) of—

(a) the amount of the franked payment comprising the qualifying distribution or payment, calculated on the amount or value thereof shown in the assessment, over

(b) the estimated amount specified under paragraph 2(2)(b) above in respect of that franked payment,

had been included in the return under sub-paragraph (1)(a) of paragraph 2 above and the tax had been calculated in accordance with sub-paragraph (4) of that paragraph.”

8 After paragraph 7 there shall be inserted—

“7A Amended return where company becomes aware of an error

“7A (1) If a company becomes aware—

(a) that anything which ought to have been included in a return made by it under this Schedule for any return period has not been so included,

(b) that anything which ought not to have been included in a return made by it under this Schedule for any return period has been so included,

(c) that an estimated amount included by virtue of paragraph 7(2)(a) above in a return under this Schedule for any period is incorrect, or

(d) that any other error has occurred in a return made by it under this Schedule for any return period,

it shall forthwith supply to the collector an amended return for that return period.

(2) The duty imposed by sub-paragraph (1) above is without prejudice to any duty that may also arise under paragraph 7A of Schedule 16.

(3) Where an amended return is supplied under this paragraph, all such assessments, adjustments, set-offs or payments or repayments of tax shall be made as may be required for securing that the resulting liabilities to tax (including interest on unpaid or overpaid tax) whether of the company or any other person are the same as they would have been if a correct return had been made.”

9 In paragraph 8 (power of inspector to make assessments etc where items are included in returns under the Schedule in error) for “the inspector” there shall be substituted “ an officer of the Board ”.

Part II U.K. Schedule 16 to the Taxes Act 1988

10 U.K. Schedule 16 to the Taxes Act 1988 (collection of income tax on company payments which are not distributions) shall be amended in accordance with the following provisions of this Part of this Schedule.

11 U.K. In paragraph 4(2) (cases where the inspector may make an assessment)—

(a) for “the inspector”, where first occurring, there shall be substituted “ an officer of the Board ”; and

(b) for “or if the inspector is dissatisfied with any return, he may” there shall be substituted “ or if an officer of the Board is of the opinion that a return is incorrect, any such officer may ”.

12 U.K. After paragraph 7 there shall be inserted—

“ Amended return where company becomes aware of an error U.K.

7A (1) If a company becomes aware—

(a) that anything which ought to have been included in a return made by it under this Schedule for any period has not been so included,

(b) that anything which ought not to have been included in a return made by it under this Schedule for any period has been so included, or

(c) that any other error has occurred in a return made by it under this Schedule for any period,

it shall forthwith supply to the collector an amended return for that period.

(2) The duty imposed by sub-paragraph (1) above is without prejudice to any duty that may also arise under paragraph 7A of Schedule 13.

(3) Where an amended return is supplied under this paragraph, all such assessments, adjustments, set-offs or payments or repayments of tax shall be made as may be required for securing that the resulting liabilities to tax (including interest on unpaid or overpaid tax) whether of the company or any other person are the same as they would have been if a correct return had been made.”

13 U.K. In paragraph 8 (power of inspector to make assessments etc where items are included in returns under the Schedule in error) for “the inspector” there shall be substituted “ an officer of the Board ”.