Finance (No.2) Act 1987

74 General rules.

(1) This section has effect with respect to the liability of a company to corporation tax where a chargeable gain accrues to the company on or after 17th March 1987; and in the following provisions of this section—

(a) “the 1987 date” means 17th March 1987; and

(b) a “new accounting period” means an accounting period beginning on or after the 1987 date.

(2) With respect to any new accounting period, section 85 of the [1972 c. 41.] Finance Act 1972 (set off of advance corporation tax against liability to corporation tax on income) shall have effect as follows—

(a) in subsections (1) to (3), for the word “income”, in each place where it occurs, there shall be substituted “profits”; and

(b) in subsection (6) for the word “income”, in the first place where it occurs, there shall be substituted “profits” and the words from “exclusive” onwards shall be omitted.

(3) Section 93 of the Finance Act 1972 (reduction of corporation tax liability in respect of chargeable gains) shall not apply with respect to any new accounting period.

(4) With respect to any new accounting period, section 95 of the Finance Act 1972 (mitigation of corporation tax liability of small companies) shall have effect as follows—

(a) in subsections (1) and (2) for the word “income”, in each place where it occurs, there shall be substituted “basic profits”;

(b) in subsection (7), after the word “profits”, in the first place where it occurs, there shall be inserted “(but not the basic profits)”; and

(c) in subsection (8), for the word “income”, in the first place where it occurs, there shall be substituted “basic profits” and for the words from “is its income”, onwards there shall be substituted “shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne”.

(5) With respect to any new accounting period, in sections 101(2) and 103(4) of the [1972 c. 41.] Finance Act 1972 (each of which refer to income as defined in section 85(6) of that Act) for the word “income” there shall be substituted “profits”.

(6) In Schedule 5 to this Act—

(a) Part I has effect with respect to the operation of the provisions of the Finance Act 1972 referred to in subsections (2) to (5) above in relation to any accounting period of a company which begins before and ends on or after the 1987 date; and

(b) Part II has effect with respect to the operation of the enactments referred to in sections 75 and 76 below in relation to any such period.