Finance (No. 2) Act 1975

48 Repayment supplement in respect of delayed repayments of certain taxes to companies

(1) This section applies to the following payments made to a company in connection with any accounting period for which the company was resident in the United Kingdom (in this section called " the relevant accounting period "), that is to say—

(a) a repayment of corporation tax paid by the company for that accounting period (including advance corporation tax paid in respect of distributions made by the company in that accounting period and any sum paid in respect of that period on an assessment under paragraph 7(6)(a) of Schedule 16 to the Finance Act 1972); or

(b) a repayment of income tax in respect of a payment received by the company in that accounting period on which the company bore income tax by deduction; or

(c) a payment of the whole or part of the tax credit comprised in any franked investment income received by the company in that accounting period.

(2) Subject to the following provisions of this section, where a payment of not less than £100 to which this section applies is (after the passing of this Act) made by the Board or an inspector after the end of the twelve months beginning with the material date, the payment shall be increased under this section by an amount (in this section referred to as a " repayment supplement") equal to interest on the amount paid at the rate of 9 per cent, per annum for each complete tax month contained in the period (if any) beginning with the relevant date and ending at the end of the tax month in which the order for the payment is issued.

(3) In relation to any complete tax month beginning before 6th April 1974 which is contained in the last-mentioned period, subsection (2) above shall have effect as if the rate of interest there specified were 6 per cent, per annum (instead of the rate there specified or any other rate in force by virtue of subsection (6) below).

(4) For the purposes of subsection (2) above—

(a) if the payment is a repayment of corporation tax that was paid on or after the first anniversary of the material date, the relevant date is the anniversary of the material date that occurs next after the date on which that tax was paid;

(b) in any other case, the relevant date is the first anniversary of the material date ;

and where a payment to which this section applies is a repayment of corporation tax paid by a company on different dates, the payment shall as far as possible be treated for the purposes of this subsection as a repayment of tax paid on a later rather than an earlier date among those dates.

(5) For the purposes of this section—

(a) a repayment of corporation tax made in consequence of a claim by a company under section 85(3) of the [1972 c. 41.] Finance Act 1972 to have the whole or any part of an amount of surplus advance corporation tax arising in the case of any accounting period treated as if it were advance corporation tax paid in respect of distributions made by the company in any earlier accounting period shall be treated as a repayment of corporation tax paid for the accounting period in the case of which that amount of surplus advance corporation tax arose; and

(b) a repayment of income tax or corporation tax made on a claim under subsection (5) of section 286 of the Taxes Act (loans to participators etc.) shall be treated as if it were a repayment of corporation tax paid for the accounting period in which the repayment of, or of the part in question of, the loan or advance mentioned in that subsection was made.

(6) Without prejudice to subsection (3) above, the Treasury may, by order in a statutory instrument subject to annulment in pursuance of a resolution of the House of Commons, from time to time increase or decrease the rate of interest by reference to which repayment supplements are calculated under subsection (2) above.

(7) A repayment supplement shall not be payable under this section in respect of a payment made in consequence of an order or judgment of a court having power to allow interest on the payment.

(8) A repayment supplement paid under this section shall be disregarded for all the purposes of corporation tax and income tax.

(9) In this section—

• " tax month " has the meaning given by section 47(12) of this Act;

• " the material date " in relation to a payment to which this section applies, means the last date on which corporation tax on any of the profits of the company in question arising in the relevant accounting period could have been paid—

  (a)

  in a case where section 243(4) of the Taxes Act applies, within the nine months there mentioned ;

  (b)

  in a case where section 244(1) of that Act (companies trading before financial year 1965) applies, within the interval there mentioned from the end of the relevant accounting period ; or

  (c)

  in a case where section 344 of that Act (special provision for building societies) applies, within the time limit imposed by subsection (2)(a) of that section.