C2C3C4PART VI COMPANY DISTRIBUTIONS, TAX CREDITS ETC
Pt. 6 modified by Gas Act 1986 (c. 44), s. 60(3) (as substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 4 (with Sch. 15))
Pt. 6 modified by British Steel Act 1988 (c. 35), s. 11(7) (as substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 55 (with Sch. 15))
C1CHAPTER I TAXATION OF COMPANY DISTRIBUTIONS
Pt. 6 Chs. 1-3: power to amend conferred (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 533(2)(3)(d)
207AF1 Application of lower rate to company distributions.
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
208 U.K. company distributions not generally chargeable to corporation tax.
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F9CHAPTER II MATTERS WHICH ARE DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
Pt. 6 Ch. 2 (ss. 209-211) repealed (1.4.2010 with effect in accordance with s. 1184(1) of the repealing Act) by Corporation Tax Act 2010 (c. 4), Sch. 1 para. 14, Sch. 3 Pt. 1 (with Sch. 2)
209 Meaning of “distribution”.
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
209AF10 Section 209(3AA): link to shares of company or associated company
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
209B Section 209(3AA): hedging arrangements
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
210 Bonus issue following repayment of share capital.
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
211 Matters to be treated or not to be treated as repayments of share capital.
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F33CHAPTER III MATTERS WHICH ARE NOT DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
Pt. 6 Ch. 3 (ss. 212-230A) repealed (1.4.2010 with effect in accordance with s. 1184(1) of the repealing Act) by Corporation Tax Act 2010 (c. 4), Sch. 1 para. 15, Sch. 3 Pt. 1 (with Sch. 2)
Payments of interest
212 Interest etc. paid in respect of certain securities.
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demergers
213 Exempt distributions.
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
213AF19Exempt distributions: division of business
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
214 Chargeable payments connected with exempt distributions.
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
215 Advance clearance by Board of distributions and payments.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
216 Returns.
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
217 Information.
F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
218 Interpretation of sections 213 to 217.
F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock dividends
230 Stock dividends: distributions.
F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F34Industrial and provident society dividends etc
S. 230A and preceding cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 100 (with Sch. 2 Pts. 1, 2)
230ADividend or bonus granted by industrial and provident society
F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER IV TAX CREDITS
231 Tax credits for certain recipients of qualifying distributions.
F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
231AF47 Restrictions on the use of tax credits by pension funds.
F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
231AAF48 No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
231ABF49 No tax credit for original owner under repurchase agreement in respect of certain manufactured dividends.
F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F50231B Consequences of certain arrangements to pass on the value of a tax credit.
1
This section applies in any case where—
a
a person (“A”) is entitled to a tax credit in respect of a qualifying distribution;
b
arrangements subsist such that another person (“B”) obtains, whether directly or indirectly, a payment representing any of the value of the tax credit;
c
the arrangements (whether or not made directly between A and B) were entered into for an unallowable purpose; and
d
the condition in subsection (2) below is satisfied.
2
The condition is that if B had been the person entitled to the tax credit and the qualifying distribution to which it relates, and had received the distribution when it was made, then—
a
B would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
b
if B is a company, B could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
3
This section does not apply if and to the extent that any other provision of the Tax Acts has the effect of cancelling or reducing the tax advantage which would otherwise be obtained by virtue of the arrangements.
4
Where this section applies—
a
no claim shall be made under section 231(2) for payment of the amount of the tax credit;
b
c
the income consisting of the distribution in respect of which A is entitled to the tax credit shall not be regarded for the purposes of section 241 as franked investment income; and
d
no claim shall be made under section 35 of the Finance (No. 2) Act 1997 (transitional relief) for payment of an amount determined by reference to that distribution.
5
For the purposes of this section, the question whether any arrangements were entered into for an “unallowable purpose” shall be determined in accordance with subsections (6) and (7) below.
6
Arrangements are entered into for an unallowable purpose if the purposes for which at least one person is a party to the arrangements include a purpose which is not amongst the business or other commercial purposes of that person.
7
Where one of the purposes for which a person enters into any arrangements is the purpose of securing that that person or another obtains a tax advantage, that purpose shall be regarded as a business or other commercial purpose of the person only if it is neither the main purpose, nor one of the main purposes, for which the person enters into the arrangements.
8
Any reference in this section to a person obtaining a tax advantage includes a reference to a person obtaining a payment representing any of the value of a tax credit in circumstances where, had the person obtaining the payment been entitled to the tax credit and the qualifying distribution to which it relates, that person—
a
would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
b
if that person is a company, could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
9
If an amount representing any of the value of a tax credit to which a person is entitled is applied at the direction of, or otherwise in favour of, some other person (whether by way of set off or otherwise), the case shall be treated for the purposes of this section as one where that other person obtains a payment representing any of the value of the tax credit.
10
In determining for the purposes of subsections (2)(b) and (8)(b) b above whether a company could have used the income consisting of the distribution in question to frank a distribution of the company, the company shall be taken to use its actual franked investment income to frank distributions before using the income consisting of the distribution in question.
11
References in this section to using franked investment income to frank a distribution of a company have the same meaning as in Chapter V of Part VI.
12
In this section—
“arrangements” means arrangements of any kind, whether in writing or not (and includes a series of arrangements, whether or not between the same parties);
“business or other commercial purposes” includes the efficient management of investments;
“franked investment income” has the same meaning as in Chapter V of Part VI and references to income consisting of a distribution shall be construed accordingly;
F106“tax advantage” has the meaning given by F107section 1139 of CTA 2010
232 Tax credits for non-U.K. residents.
F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
233 Taxation of certain recipients of distributions and in respect of non-qualifying distributions.
F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
234 Information relating to distributions.
F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F42234A Information relating to distributions: further provisions.
F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F44235 Distributions of exempt funds etc.
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F45236 Provisions supplementary to section 235.
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F46237 Disallowance of reliefs in respect of bonus issues.
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CHAPTER V ADVANCE CORPORATION TAX AND FRANKED INVESTMENT INCOME
238 Interpretation of terms and collection of ACT.
F51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239 Set-off of ACT against liability to corporation tax.
F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
240 Set-off of company’s surplus ACT against subsidiary’s liability to corporation tax.
F53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
241 Calculation of ACT where company receives franked investment income.
F54. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
242 Set-off of losses etc. against surplus of franked investment income.
F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
243 Set-off of loss brought forward, or terminal loss.
F56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
244 Further provisions relating to claims under section 242 or 243.
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245 Calculation etc. of ACT on change of ownership of company.
F58. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
245AF59 Restriction on application of section 240 in certain circumstances.
F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
245B Restriction on set-off where asset transferred after change in ownership of company.
F61. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246 Charge of ACT at previous rate until new rate fixed, and changes of rate.
F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F103F87Chapter VA Foreign Income Dividends
Pt. 6 Ch. 5A (ss. 246A-246Y) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 1
Ss. 246A-246Y (Pt. 6 Ch. 5A) repealed (with effect in accordance with Sch. 6 para. 3(2)-(4) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 6 para. 3(1), Sch. 8 Pt. 2(11), Note
Election by company paying dividend
246A Election by company paying dividend.
F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246B Procedure for making election.
F64. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recipient of foreign income dividend
246C No tax credit for recipient.
F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246D Individuals etc.
F66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Companies: payments and receipts
246E Foreign income dividend not franked payment.
F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246F Calculation of ACT where company receives foreign income dividend.
F68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246G Information relating to foreign income dividends.
F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246H Power of inspector to require information.
F70. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign source profit and distributable foreign profit
246I Foreign source profit and distributable foreign profit.
F71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matching of dividend with distributable foreign profit
246J Matching of dividend with distributable foreign profit.
F72. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246K Matching: subsidiaries.
F73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246L Requirement as to subsidiaries.
F74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246M Matching: further provisions.
F75. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment or set-off of advance corporation tax
246N ACT to be repaid or set off against corporation tax liability.
F76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246P Notional foreign source advance corporation tax.
F77. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246Q Repayment or set-off: supplementary.
F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246R Supplementary claims.
F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International headquarters companies
246S International headquarters companies.
F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246T Liability to pay ACT displaced.
F81. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246U Settlement of liability by IHC as to ACT.
F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246V Settlement of liability by non-IHC as to ACT.
F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246W Payments and repayments where further matching takes place.
F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments
246X Adjustments where profits or foreign tax altered.
F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Application of this Chapter
246Y Application of this Chapter.
F86. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F101CHAPTER VI MISCELLANEOUS AND SUPPLEMENTAL
Pt. 6 Ch. 6 (ss. 249-254) repealed (1.4.2010 with effect in accordance with s. 1184(1) of the repealing Act) by Corporation Tax Act 2010 (c. 4), Sch. 1 para. 22, Sch. 3 Pt. 1 (with Sch. 2)
Group income
247 Dividends etc. paid by one member of a group to another.
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
248 Provisions supplementary to section 247.
F89. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock dividends
249 Stock dividends treated as income.
F90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250 Returns.
F91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
251 Interpretation of sections 249 and 250.
F92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental
252 Rectification of excessive set-off etc. of ACT or tax credit.
F97. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
253 Power to modify or replace section 234(5) to (9) and Schedule 13.
F98. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
254 Interpretation of Part VI.
F99. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
255“Gross rate” and “gross amount” of distributions to include ACT.
F100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pt. 6 modified by Airports Act 1986 (c. 31), s. 77(3) (as substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 3 (with Sch. 15))