Finance Act 1950

40 Modification of last preceding section in the case of recoveries by assignees and in certain cases of subsidiary companies

(1) The provisions of the last preceding section shall, in the cases specified in the subsequent provisions of this section, have effect subject to the modifications therein specified.

(2) Where the recovery is made otherwise than by, or by the executors or administrators of, the person carrying on the trade or business or trade in the accounting period, or year or period, mentioned in paragraph (a) of subsection (1) of the last preceding section, the payments and repayments of tax mentioned in the said subsection (1) shall not be made, but the Commissioners of Inland Revenue may serve on, or on the executors or administrators of, the person making the recovery a notice giving particulars, to the best of the judgment of those Commissioners, of the payments and repayments which would have fallen to be made but for the provisions of this subsection, and requiring the person on whom the notice is served to pay such sum as may be specified in the notice, being the sum by which, to the best of the judgment of the Commissioners, the total amount of the said payments exceeds the total amount of the said repayments:

Provided that where the person making the recovery is not resident in the United Kingdom or is dead and was not resident in the United Kingdom at the time of his death, the Commissioners may, if they think fit, instead of serving a notice on him or his executors or administrators, serve a notice on, or on the executors or administrators of, any predecessor in title of his in respect of the debt, claim or property in question, being a person who is resident in the United Kingdom or was so resident when he was last entitled to the rights in respect of the debt, claim or property in question to which the person making the recovery has succeeded.

(3) Where a notice is served under subsection (2) of this section on, or on the executors or administrators of, a person, the same consequences as respects—

(a) the imposition of liability to pay, and the recovery of, the sum to which the notice relates, with or without interest; and

(b) priority for the claim of the Crown for that sum in bankruptcy, or in the winding up of a company or in the administration of the estate of a deceased person ; and

(c) appeals to the Special Commissioners and the stating of cases for the opinion of the High Court,

shall follow on the service of the notice as would have followed on the making of an assessment to income tax in that amount on, or, as the case may be, on the executors or administrators of, that person by the Special Commissioners under Case VI of Schedule D in respect of income chargeable under that Case for the year of assessment current when the notice was served, and the provisions of the Income Tax Acts relating to those matters shall, with the necessary adaptations, have effect accordingly.

(4) Where excess profits tax is concerned and—

(a) a body corporate was carrying on the trade or business in the accounting period mentioned in paragraph (a) of subsection (1) of the last preceding section ; and

(b) that body corporate was in that accounting period a subsidiary member of a group of companies; and

(c) at some time before the recovery is made, that group ceased to exist or that body corporate ceased to be a member thereof,

subsections (2) and (3) of this section shall apply as they apply where the recovery is made otherwise than by, or by the executors or administrators of, the person who was carrying on the business in the said accounting period.

A group of companies shall be deemed for the purposes of this subsection to continue to exist notwithstanding any changes in the members thereof, so long as, and only so long as, the same body corporate remains the principal company of the group.

In this subsection, the expressions " group of companies", " the principal company " and " subsidiary member " have the meanings assigned to them by subsection (1) of section twenty-eight of the Finance Act, 1940 (which contains provisions as to the treatment of inter-connected companies for excess profits tax purposes).

(5) Subsections (2) and (3) of this section shall also apply as aforesaid where the profits tax is concerned and—

(a) a body corporate was carrying on the trade or business in the accounting period mentioned in paragraph (a) of subsection (1) of the last preceding section ; and

(b) a notice given by another body corporate under section twenty-two of the Finance Act, 1937 (which provides for the amalgamation for the purposes of the profits tax of the profits or losses of bodies corporate with those of their subsidiaries) had effect as respects that body corporate in relation to a chargeable accounting period coinciding with, or falling wholly or partly within, that accounting period; and

(c) that notice had ceased to be in force before the recovery is made:

Provided that this subsection shall not apply by reason of the notice ceasing to be in force if—

(i) it ceased to be in force by reason of the giving of a sub sequent notice under the said section twenty-two, being a notice given as respects both those bodies corporate ; and

(ii) thereafter, until the recovery is made, there is no period during which either that notice or some other notice under the said section twenty-two, being a notice given as respects both bodies corporate, is not in force.