Income and Corporation Taxes Act 1988

Supplemental U.K.

M1 252.— Rectification of excessive set-off etc. of ACT or tax credit. U.K.

(1) If an inspector discovers that—

(a) F1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) any set-off or payment of tax credit,

ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax (including interest on unpaid tax) of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.

(2) In any case where—

(a) interest has been paid under section 826 on a payment of tax credit; and

(b) interest ought not to have been paid on that payment, either at all or to any extent,

an assessment under this section may be made for recovering any interest that ought not to have been paid.

(3) Where—

(a) an assessment is made under this section to recover tax credit paid to a company in respect of franked investment income received by the company in an accounting period; and

(b) more than one payment of tax credit has been made in respect of that period,

any sum recovered shall as far as possible be treated as relating to a payment of tax credit made later rather than to a payment made earlier.

(4) Subsections (2) and (3) above shall have effect in relation to payments of tax credit claimed in respect of accounting periods ending after such day as may be appointed for the purpose of those subsections by order made by the Treasury, not being earlier than 31st March 1992.

(5) The Management Act shall apply to any assessment under this section for recovering a payment of tax credit or interest on such a payment as if it were an assessment to income tax for the year of assessment, or in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed, and as if that payment represented a loss of tax to the Crown; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within 14 days after the issue of the notice of assessment.

Subordinate Legislation Made

P1 S. 252(4) power exercised: 30.9.1993 appointed for the purposes of s. 252(2)(3) by S.I. 1992/3066, art. 2(2)(b).

Textual Amendments

F1 S. 252(1)(a) repealed (with effect in accordance with Sch. 3 para. 21(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 21(2), Sch. 27 Pt. 3(2), Note

Modifications etc. (not altering text)

C1 S. 252 modified (27.7.1993) by 1993 c. 34, s. 80(8)

C2 S. 252 modified (16.8.1995) by The Venture Capital Trust Regulations 1995 (S.I. 1995/1979), reg. 15(4)(5)

C3 S. 252 applied (16.8.1995) by The Venture Capital Trust Regulations 1995 (S.I. 1995/1979), reg. 20

C4 S. 252 modified (31.7.1997) by Finance (No. 2) Act 1997 (c. 58), s. 35(10)

C5 See 1989 s.157(1)for reckonable date for interest charge under 1970(M) s.86where assessment made to recover corporation tax payable as the result of a claim under s.240made on or after 14March 1989. (Ceases to have effect for accounting periods ending after the day appointed for the purposes of s.86).

Marginal Citations

M1 Source—1972 s.102; (No.2) s.88(5)-(7)

253 Power to modify or replace section 234(5) to (9) and Schedule 13. U.K.

M2 (1) The Board may by regulations—

(a) modify, supplement or replace any of the provisions of subsections (5) to (9) of section 234 for the purpose of requiring companies resident in the United Kingdom to make returns and give information to the inspector in respect of distributions made by them, whether before or after the passing of this Act, which are not qualifying distributions;

(b) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and references in this Act and in any other enactment to section 234(5) to (9) F3 . . . shall be construed as including references to any such regulations.

(2) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Regulations under this section may—

(a) make different provision for different descriptions of companies and for different circumstances and may authorise the Board, where in their opinion there are special circumstances justifying it, to make special arrangements as respects F5 . . . the repayment of income tax borne by a company or the payment to a company of amounts in respect of any tax credit to which it is entitled;

(b) include such transitional and other supplemental provisions as appear to the Board to be expedient or necessary.

(4) The Board shall not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.

Textual Amendments

F2 S. 253(1)(b) repealed (with effect in accordance with Sch. 3 para. 22(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 22(2)(a), Sch. 27 Pt. 3(2), Note

F3 Words in s. 253(1) repealed (with effect in accordance with Sch. 3 para. 22(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 22(2)(b), Sch. 27 Pt. 3(2), Note

F4 S. 253(2) repealed (with effect in accordance with Sch. 3 para. 22(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 22(3), Sch. 27 Pt. 3(2), Note

F5 Words in s. 253(3)(a) repealed (with effect in accordance with Sch. 3 para. 22(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 22(4), Sch. 27 Pt. 3(2), Note

Marginal Citations

M2 Source—1972 s.108

254 Interpretation of Part VI. U.K.

(1) M3 In this Part, except where the context otherwise requires—

• “new consideration” means, subject to subsections (5) and (6) below, consideration not provided directly or indirectly out of the assets of the company, and in particular does not include amounts retained by the company by way of capitalising a distribution;

• “security” includes securities not creating or evidencing a charge on assets, and interest paid by a company on money advanced without the issue of a security for the advance, or other consideration given by a company for the use of money so advanced, shall be treated as if paid or given in respect of a security issued for the advance by the company;

• “share” includes stock, and any other interest of a member in a company;

and in this section “a 90 per cent. group” means a company and all of its 90 per cent. subsidiaries.

(2) M4 In this Part, the expressions “in respect of shares in the company” and “in respect of securities of the company”, in relation to a company which is a member of a 90 per cent. group, mean respectively in respect of shares in that company or any other company in the group and in respect of securities of that company or any other company in the group.

(3) Without prejudice to section 209(2)(b) as extended by subsection (2) above, in relation to a company which is a member of a 90 per cent. group, “distribution” includes anything distributed out of assets of the company (whether in cash or otherwise) in respect of shares in or securities of another company in the group.

(4) Nothing in subsections (2) and (3) above shall require a company to be treated as making a distribution to any other company which is in the same group and is resident in the United Kingdom.

(5) M5 Where share capital has been issued at a premium representing new consideration, any part of that premium afterwards applied in paying up share capital shall be treated as new consideration also for that share capital, except in so far as the premium has been taken into account under section 211(5) so as to enable a distribution to be treated as a repayment of share capital.

(6) M6 Subject to subsection (7) below, no consideration derived from the value of any share capital or security of a company, or from voting or other rights in a company, shall be regarded for the purposes of this Part as new consideration received by the company unless the consideration consists of—

(a) money or value received from the company as a qualifying distribution;

(b) money received from the company as a payment which for those purposes constitutes a repayment of that share capital or of the principal secured by the security; or

(c) the giving up of the right to the share capital or security on its cancellation, extinguishment or acquisition by the company.

(7) No amount shall be regarded as new consideration by virtue of subsection (6)(b) or (c) above in so far as it exceeds any new consideration received by the company for the issue of the share capital or security in question or, in the case of share capital which constituted a qualifying distribution on issue, the nominal value of that share capital.

(8) M7 Where two or more companies enter into arrangements to make distributions to each other’s members, all parties concerned (however many) may for the purposes of this Part be treated as if anything done by any one of those companies had been done by any of the others.

(9) M8 A distribution shall be treated under this Part as made, or consideration as provided, out of assets of a company if the cost falls on the company.

(10) M9 References in this Part to issuing share capital as paid up apply also to the paying up of any issued share capital.

(11) M10 Where securities are issued at a price less than the amount repayable on them, and are not [F6 listed] on a recognised stock exchange, the principal secured shall not be taken for the purposes of this Part to exceed the issue price, unless the securities are issued on terms reasonably comparable with the terms of issue of securities so [F6 listed].

(12) M11 For the purposes of this Part a thing is to be regarded as done in respect of a share if it is done to a person as being the holder of the share, or as having at a particular time been the holder, or is done in pursuance of a right granted or offer made in respect of a share; and anything done in respect of shares by reference to share holdings at a particular time is to be regarded as done to the then holders of the shares or the personal representatives of any share holder then dead.

This subsection shall apply in relation to securities as it applies in relation to shares.

Textual Amendments

F6 Words in s. 254(11) substituted (with effect in accordance with Sch. 38 para. 6(6) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 6(1)(2)(d)

Marginal Citations

M3 Source—1970 s.237(1), (3), (5); 1972 Sch.22 10(4)

M4 Source—1972 Sch.22 10(1)-(3)

M5 Source—1970 s.237(1)

M6 Source—1972 Sch.22 8

M7 Source—1972 Sch.22 9

M8 Source—1970 s.237 (2)

M9 Source—1970 s.237(4)

M10 Source—1970 s.237(6)

M11 Source—1970 s.237(7)

255 “Gross rate” and “gross amount” of distributions to include ACT. U.K.

F7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7 S. 255 repealed (with effect in accordance with Sch. 3 para. 23(2) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 23(1), Sch. 27 Pt. 3(2), Note