PART XIX SUPPLEMENTAL
Miscellaneous
817 Deductions not to be allowed in computing profits or gains.
M191
In arriving at the amount of profits or gains for F153corporation tax purposes—
a
no other deductions shall be made than such as are expressly enumerated in F154the Corporation Tax Acts; and
2
818 Arrangements for payments of interest less tax or of fixed net amount.
F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
819 Old references to standard rate tax.
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C1820 Application of Income Tax Acts from year to year.
M1 In order to ensure the collection in due time of income tax which may be granted for any year commencing on 6th April, all such provisions contained in the Income Tax Acts as were in force on the preceding day shall have full force and effect with respect to tax which may be so granted, in the same manner as if that tax had been actually granted by Act of Parliament and those provisions had been applied thereto by the Act.
821 Under-deductions from payments made before passing of annual Act.
M21
Where, in any year of assessment F3or accounting period, any half-yearly or quarterly payments F4(or half-periodic or quarterly payments) have been made on account of any interest, dividends or other annual profits or gains, previously to the passing of the Act imposing income F5or corporation tax for that year F6or period, and tax has not been charged thereon or deducted therefrom or has not been charged thereon or deducted therefrom at the rate ultimately imposed for that year F6or period—
a
b
the agents entrusted with the payment of the interest, dividends or other annual profits or gains shall furnish to the Board a list containing the names and addresses of the persons to whom payments have been made and the amount of those payments, upon a requisition made by the Board in that behalf.
2
Any person liable to pay any rent, interest or annuity, or to make any other annual payment—
a
shall be authorised—
i
to make any deduction on account of income tax for any year of assessment which he has failed to make previously to the passing of the Act imposing the tax for that year, or
ii
to make up any deficiency in any such deduction which has been so made,
on the occasion of the next payment of the rent, interest or annuity or making of the other annual payment after the passing of the Act so imposing the tax, in addition to any other deduction which he may be by law authorised to make; and
b
shall also be entitled, if there is no future payment from which the deduction may be made, to recover the sum which might have been deducted as if it were a debt due from the person as against whom the deduction could originally have been made if the Act imposing the tax for the year had been in force.
3
Subsection (2) above shall apply with respect to—
F10a
any payment to which section 906 of ITA 2007 applies (certain royalties etc where usual place of abode of owner is abroad), and
b
any royalty or other sum paid in respect of the user of a patent; F13. . .
F13c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
as it applies with respect to any rent, interest, annuity or other annual payment.
4
In this section “interest” and “dividends” do not include any interest or dividend which is a distribution.
822 Over-deductions from interest on loan capital etc. made before passing of annual Act.
M31
If in any year of assessment (“the year”) a resolution having statutory effect under the Provisional Collection of Taxes Act 1968 provides for the charging of income tax at a F14lower rate less than that charged for the previous year, the following provisions of this section shall have effect with respect to deductions in respect of income tax by any body corporate, from payments of interest (not being a distribution) on any of its securities.
2
Any deduction which was made before the expiration of one month from the passing of the resolution and which would, if the tax had been renewed at the rate imposed for the previous year, have been a legal deduction, shall be deemed to be a deduction rendered legal by section 2 of the Provisional Collection of Taxes Act 1968 and that section shall, subject to this section, apply accordingly.
3
Any over-deduction to be made good under that section may be made good by a reduction of the amount of tax deducted from the next payment of like nature made on the security in question after the passing of the Act imposing the tax for the year.
4
Any amount made good under section 2 of the Provisional Collection of Taxes Act 1968 shall—
a
in the case of an over-deduction which is made good under subsection (3) above, enure to the benefit of the person entitled to the payment on the occasion of which the over-deduction is made good; and
b
in any other case, enure to the benefit of the person entitled to the security in question at the date when the amount is made good,
irrespective, in either case, of whether or not he is the person who was entitled to the payment, or to the security at the date when the original deduction was made.
5
Subsection (3) above shall not authorise the retention of any part of the amount over-deducted for more than one year from the passing of the Act imposing the tax for the year.
823 Adjustments of reliefs where given at different times.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C2C3C4824 Repayment supplements: individuals and others.
F161
Subject to the following provisions of this section, a repayment made by the Board or an officer of the Board of any of the following, namely—
a
an amount paid on account of income tax under section 59A of the Management Act;
b
any income tax paid by or on behalf of an individual for a year of assessment;
c
a surcharge imposed under section 59C of that Act; and
d
a penalty incurred by an individual under any of the provisions of that Act,
shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount repaid at the rate applicable under section 178 of the Finance Act 1989 for the period (if any) between the relevant time and the date on which the order for the repayment is issued.
F17F181A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F21F192A
Subsection (1) above shall apply to a repayment made in consequence of a claim under section 228 of the Income Tax Act 1952 (relief in respect of income accumulated under trusts) as if the repayment were of income tax paid by the claimant for the year of assessment in which the contingency mentioned in that section happened.
F202B
Subsection (1) above shall apply to a payment made by the Board under section 375(8) (payment of amount which borrower would have been able to deduct from interest payment under section 369(1)) as if the payment were a repayment falling within that subsection.
F212C
Subsection (1) above shall apply to a repayment made by the Board as a result of a claim for relief under—
a
paragraph 2 of Schedule 1B to the Management Act (carry back of loss relief),
b
paragraph 3 of that Schedule (relief for fluctuating profits of farming etc.), or
c
Schedule 4A to this Act (relief for fluctuating profits of creative artists etc.),
as if it were a repayment falling within that subsection.
F22C53
For the purposes of subsection (1) above—
F23aa
if the repayment is a payment made by the Board under section 375(8), the relevant time is—
i
if the interest payment was made in the year 1996-97 or a subsequent year of assessment, the 31st January next following that year;
ii
if the interest payment was made in an earlier year of assessment, the 5th April next following that year;
F24ab
if the repayment is a repayment as a result of a claim for relief under any of the provisions mentioned in subsection (2C) above, the relevant time is the 31st January next following the year that is the later year in relation to the claim;
F25a
if the repayment is—
i
the repayment of an amount paid in accordance with the requirements of section 59A of the Management Act on account of income tax for a year of assessment, or
ii
the repayment of income tax for such a year which is not income tax deducted at source,
the relevant time is the date of the payment that is being repaid;
b
if the repayment is of income tax deducted at source for a year of assessment, the relevant time is the 31st January next following that year; and
c
if the repayment is of a penalty or surcharge, F26the relevant time is the date on which the penalty or surcharge was paid.
F274
For the purposes of subsection (3) above, where a repayment in respect of income tax for a year of assessment is made to any person, that repayment—
a
shall be attributed first to so much of any payment made by him under section 59B of the Management Act as is a payment in respect of income tax for that year;
b
in so far as it exceeds the amount (if any) to which it is attributable under paragraph (a) above, shall be attributed in two equal parts to each of the payments made by him under section 59A of the Management Act on account of income tax for that year;
c
in so far as it exceeds the amounts (if any) to which it is attributable under paragraphs (a) and (b) above, shall be attributed to income tax deducted at source for that year; and
d
in so far as it is attributable to a payment made in instalments shall be attributed to a later instalment before being attributed to an earlier one.
4A
In this section any reference to income tax deducted at source for a year of assessment is a reference to—
a
income tax deducted or treated as deducted from any income, or treated as paid on any income, in respect of that year, and
b
but does not include a reference to amounts which, in that year, are deducted at source under F28PAYE regulations in respect of previous years.
5
F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
F30F31. . . The Treasury may by order from time to time increase or decrease the rate of interestby reference to which—
a
repayment supplements are calculated under subsection (1) above; and
b
repayment supplements are calculated under section 47 of the Finance (No. 2) Act 1975.
7
A repayment supplement shall not be payable under this section in respect of a repayment or payment made in consequence of an order or judgment of a court having power to allow interest on the repayment or payment, or in respect of a repayment of a post-war credit within the meaning of the Income Tax (Repayment of Post-War Credits) Act 1959.
8
F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
M4Subsections (1) F33to (7) above shall apply in relation to F34. . . F35the trustees of a settlementF36, scheme administrators of registered pension schemes sub-scheme administrators of sub-schemes which form part of a split scheme pursuant to the Registered Pensions (Splitting of Schemes) Regulations 2006F37or personal representatives F34. . . as they apply in relation to an individual.
10
F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
825 Repayment supplements: companies.
1
M5This 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 (“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 periodand any sum paid in respect of that period on an assessment under section 430(7)(a)) F39; 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 F40. . . to which this section applies is made by the Board or an inspector after the end of the 12 months beginning with the material date, the payment shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount paid at the F41rate applicable under section 178 of the Finance Act 1989 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.
F422A
In relation to any complete tax month beginning before 6thApril 1974which is contained in the last-mentioned period, subsection (2)above shall have effect as if the rate of interest specified in it were 6per cent. per annum (instead of the rate so specified or any other rate in force by virtue of subsection (5)below or section 48(6)of the Finance (No.2) Act 1975). F164
3
M6For 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.
4
For the purposes of this section—
C6a
a repayment of corporation tax made in consequence of a claim by a company under section 239(3) 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 (4) of section 419 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. F43and
c
a repayment of corporation tax or income tax falling to be made as a result of a claim under section 393A(1) to have the whole or any part of a loss incurred in an accounting period set off against profits of an earlier accounting period (“the earlier period”)—
i
shall, in a case where the earlier period falls wholly within the period of twelve months immediately preceding the accounting period in which the loss was incurred, be treated as a repayment of tax paid for the earlier period; and
ii
in any other case, shall be treated as a repayment of tax paid for the accounting period in which the loss is incurred; and
F44d
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C155
F45Without prejudice to subsection (2A)above the Treasury may by order from time to time increase or decrease the rate of interest by reference to which repayment supplements are calculated under subsection (2) above.
6
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.
7
A repayment supplement paid under this section shall be disregarded for all purposes of income tax and corporation tax.
8
In this section—
“tax month” means the period beginning with the 6th day of any calendar month and ending with the 5th day of the following calendar month;
“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
C16in a case where section 10(1) applies, within the nine months there mentioned;
- b
in a case where section 478 applies, within the time limit imposed by subsection (2)(a) of that section, but subject to subsection (6) of that section.
- a
9
This section has effect subject to section 826(8).
C7C8C9826 Interest on tax overpaid.
M7P11
In any case where—
a
a repayment falls to be made of corporation tax paid by a company for an accounting period which ends after the appointed day; or
F46aa
a repayment falls to be made under sections 246N and 246Q of advance corporation tax paid by a company in respect of distributions made by it in such an accounting period; or
b
a repayment of income tax falls to be made in respect of a payment received by a company in such an accounting period; or
c
a payment falls to be made to a company of the whole or part of the tax credit comprised in any franked investment income received by the company in such an accounting period F47; or
d
a payment of R&D tax credit falls to be made to a company under Schedule 20 to the Finance Act 2000 in respect of an accounting periodF48; or
F49da
a payment of a tax credit falls to be made to a company under Schedule 13 to the Finance Act 2002 in respect of an accounting period, or
e
a payment of land remediation tax credit or life assurance company tax credit falls to be made to a company under Schedule 22 to the Finance Act 2001 in respect of an accounting periodF50; or
f
a payment of film tax credit falls to be made to a companyF51, or
g
a payment of first-year tax credit falls to be made to a company under Schedule A1 to the Capital Allowances Act,
then, from the material date until F52the order for repayment or payment is issued, the repayment or payment shall carry interest at the rate which, under section 89 of the Management Act, is for the time being the prescribed rate for the purposes of this section.
2
F53Subject to section 826A(2), in relation to corporation tax paid by a company for an accounting period, the material date for the purposes of this section is the date on which corporation tax was paid or, if it is later, the date on which corporation tax for that accounting period became (or, as the case may be, would have become) due and payable in accordance with F54section 59D of the Management Act (payment of corporation tax).
F552A
F56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
In relation to a repayment of income tax falling within subsection (1)(b) above or a payment of the whole or part of a tax credit falling within subsection (1)(c) above, F57the material date is the day after the end of the accounting period in which the payment referred to in subsection (1)(b) above or, as the case may be, the franked investment income referred to in subsection (1)(c) above was received by the company.
F583A
In relation to a payment of R&D tax credit falling within subsection (1)(d) above the material date is whichever is the later of—
a
the filing date for the company’s company tax return for the accounting period for which the R&D tax credit is claimed, and
b
the date on which the company tax return or amended company tax return containing the claim for payment of the R&D tax credit is delivered to the Inland Revenue.
For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the M8Finance Act 1998.
F593AA
In relation to a payment of tax credit falling within subsection (1)(da) above, the material date is whichever is the later of—
a
the filing date for the company’s company tax return for the accounting period for which the tax credit is claimed, and
b
the date on which the company tax return or amended company tax return containing the claim for payment of the tax credit is delivered to the Inland Revenue.
For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the Finance Act 1998.
F603B
In relation to a payment of land remediation tax credit or life assurance company tax credit falling within subsection (1)(e) above the material date is whichever is the later of—
a
the filing date for the company’s company tax return for the accounting period for which the land remediation tax credit or the life assurance company tax credit is claimed, and
b
the date on which the company tax return or amended company tax return containing the claim for payment of the land remediation tax credit or the life assurance company tax credit is delivered to the Inland Revenue.
For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the Finance Act 1998.
F613C
In relation to a payment of film tax credit the material date is whichever is the later of—
a
the filing date for the company's company tax return for the accounting period for which the tax credit is payable, and
b
the date on which the company tax return or amended company tax return containing the claim for payment is delivered to an officer of Revenue and Customs.
For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the Finance Act 1998.
F623D
In relation to a payment of first-year tax credit falling within subsection (1)(g) above the material date is whichever is the later of—
a
the filing date for the company's company tax return for the accounting period for which the tax credit is claimed, and
b
the date on which the company tax return or amended company tax return containing the claim for payment of the tax credit is delivered to the Commissioners for Her Majesty's Revenue and Customs.
For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the Finance Act 1998.
4
For the purposes of this section a repayment of tax made on a claim under section 419(4) shall be treated as if it were a repayment of corporation tax for the accounting period in which F63the event giving rise to entitlement to relief under section 419(4) occurred but, in relation to such a repayment of tax, the material date for the purposes of this section is—
F64a
the date when the entitlement to relief in respect of the repayment accrued, that is to say—
i
where the repayment F65, or the release or writing off, of the loan or advance (or part thereof) occurred on or after the day mentioned in section 419(4A), the date nine months after the end of that accounting period; and
ii
in any other case, the date nine months after the end of the accounting period in which the loan or advance was made;
or
b
if it is later, the date on which the tax which is to be repaid was in fact paid.
5
Interest paid under this section—
F166a
shall be paid without any deduction of income tax and
F665A
Paragraph (b) of subsection (5) above does not apply in relation to interest payable to a company within the charge to corporation tax.
6
Where a repayment of corporation tax is a repayment of tax paid by a company on different dates, the repayment shall so far as possible be treated for the purposes of this section as a repayment of tax paid on a later rather than an earlier date among those dates.
7
F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F72F687A
In any case where—
a
a company carrying on a trade incurs a loss in the trade in an accounting period (“the later period”),
b
as a result of a claim under section 393A(1), the whole or any part of that loss is set off F69(whether under section 393A(1) or 393B(3)) for the purposes of corporation tax against profits (of whatever description) of an earlier accounting period (“the earlier period”) which does not fall wholly within the period of twelve months immediately preceding the later period, and
c
a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that accounting period,
then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of F70so much of the amount of that repayment as falls to be made as a result of the claim under section 393A(1), except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable, F71as mentioned in subsection (7D) below.
F727AA
F73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F747B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F757BB
Subject to subsection (7BC) below, in any case where—
a
within the meaning of section 806D, any relievable underlying tax or relievable withholding tax arises in an accounting period of a company (“the later period”),
b
pursuant to a claim under section 806G, the whole or any part of that tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an earlier accounting period (“the earlier period”), and
c
a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period,
then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under section 806G, except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (7D) below).
7BC
Where, in a case falling within subsection (7A)(a) and (b) above—
a
as a result of the claim under section 393A(1), an amount or increased amount of eligible unrelieved foreign tax arises for the purposes of section 806A(1), and
b
pursuant to a claim under section 806G, the whole or any part of an amount of relievable underlying tax or relievable withholding tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an accounting period before the earlier period,
then subsection (7BB) above shall have effect in relation to the claim under section 806G as if the reference in the words after paragraph (c) to the later period within the meaning of that subsection were a reference to the period which, in relation to the claim under section 393A(1), would be the later period for the purposes of subsection (7A) above.
F767C
In a case where—
a
there is for an accounting period of a company (“the later period”) F77a non-trading deficit on the company’s loan relationships,
b
as a result of a claim under F78section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act the whole or part of the deficit for the later period is set off against profits of an earlier accounting period (“the earlier period”), and
c
a repayment falls to be made of corporation tax for the earlier period F79or of income tax in respect of a payment received by the company in that accounting period,
then, in determining the amount of interest (if any) payable under this section on the F80repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under F165section 83(2)(c) of that Act or, as the case may be, paragraph 4(3) of Schedule 11 to that Act except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable, F71as mentioned in subsection (7D) below.
F81F827CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F837D
In subsections (7), (7A), (7B) F84, (7BB) and (7C) above, any reference to the date on which corporation tax for an accounting period became, or would have become, due and payable shall be construed on the basis that corporation tax for an accounting period becomes due and payable on the day following the expiry of nine months from the end of the accounting period.
F857E
The power conferred by section 59E of the Management Act (alteration of date on which corporation tax becomes due and payable) does not include power to make provision in relation to subsection (7), (7A), (7B), F86(7BB), (7C) or (7D) above the effect of which would be to change the meaning of references in subsection (7), (7A), (7B) F86, (7BB) or (7C) above to the date on which corporation tax for an accounting period became, or would have become, due and payable (as mentioned in subsection (7D) above).
P18
In consequence of the preceding provisions of this section, no repayment supplement (within the meaning of section 825) shall be paid in respect of any repayment of tax or payment of tax credit where the relevant accounting period (within the meaning of that section) ends after the appointed day.
F878A
Where—
a
F91b
there is—
i
a change in the company’s assessed liability to corporation tax, or
ii
a change in the amount of the R&D tax credit F92, tax credit under Schedule 13 to the Finance Act 2002F93, land remediation tax credit or life assurance company tax creditF94or film tax creditF95or first-year tax credit under Schedule A1 to the Capital Allowances Act payable to the company (which does not result in a change falling within sub-paragraph (i)),
other than a change which in whole or in part corrects an error made by the Board or an officer of the Board, and
c
as a result only of that change (and, in particular, not as a result of any error in the calculation of the interest), it appears to an officer of the Board that the interest ought not to have been paid, either at all or to any extent,
the interest that ought not to have been paid may be recovered from the company as if it were interest charged under Part IX of the Management Act (interest on overdue tax).
8B
For the purposes of subsection (8A) above, the cases where there is a change in a company’s assessed liability to corporation tax are those cases where—
a
an assessment, or an amendment of an assessment, of the amount of corporation tax payable by the company for the accounting period in question is made, or
b
a determination of that amount is made under paragraph 36 or 37 of Schedule 18 to the Finance Act 1998 (which until superseded by a self-assessment under that Schedule has effect as if it were one),
whether or not any previous assessment or determination has been made.
F968BA
For the purposes of subsection (8A)(b) above, the cases where there is a change in the amount of the R&D tax credit F97, tax credit under Schedule 13 to the Finance Act 2002F98, the land remediation tax credit or the life assurance company tax creditF99or film tax creditF100or first-year tax credit under Schedule A1 to the Capital Allowances Act payable to the company are those cases where an assessment, or an amendment to an assessment, is made to recover an amount of R&D tax credit F97, tax credit under Schedule 13 to the Finance Act 2002F101, land remediation tax credit or life assurance company tax creditF99or film tax creditF100or first-year tax credit under Schedule A1 to the Capital Allowances Act paid to the company for the accounting period in question.
8C
In subsection (8A)(b) above “error” includes—
a
any computational error; and
b
the allowance of a claim or election which ought not to have been allowed.
P19
In this section “the appointed day” means such day or days, not being earlier than 31st March 1992, as the Treasury may by order appoint for the purposes of this section.
826AF118 Interest on payments in respect of corporation tax and meaning of “the material date".
1
The Treasury may by regulations make provision applying section 826, with such modifications as may be prescribed, for the purpose of conferring on companies of such descriptions as may be prescribed a right to interest—
a
on such payments made by them in respect of corporation tax as may be prescribed,
b
at the rate applicable under section 178 of the M9Finance Act 1989, and
c
for such period as may be prescribed,
and for treating any such interest for the purposes, or prescribed purposes, of the Tax Acts as interest under section 826(1)(a) on a repayment of corporation tax.
2
The Treasury may by regulations make provision modifying section 826(2) in relation to companies of such description as may be prescribed.
3
Subsections (1) and (2) above do not apply in relation to companies in relation to which section 826(2) is modified or otherwise affected by regulations under section 59E of the Management Act (alteration of date on which corporation tax becomes due and payable) in relation to the accounting period to which the corporation tax in question relates.
4
Where the Treasury make regulations under subsection (2) above in relation to companies of any description, they may also make regulations modifying section 59DA(2) of the Management Act in relation to those companies, or any description of such companies, by varying the date before which the claim there mentioned may not be made.
5
Regulations under this section—
a
may make different provision in relation to different cases or circumstances or in relation to companies or accounting periods of different descriptions;
b
may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.
6
Regulations under this section may not make provision in relation to accounting periods ending before the day appointed under section 199 of the M10Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).
7
In this section “prescribed” means prescribed by regulations made under this section.
827 VAT penalties etc.
M211
Where, under F171Part IV of the Value Added Tax Act 1994, a person is liable to make a payment by way of—
a
penalty under any of sections F17260 to 70; or
b
interest under section F17374; or
c
surcharge under section F17359;
the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1751A
Where a person is liable to make a payment by way of a penalty under any of sections 8 to 11 of the Finance Act 1994 (penalties relating to excise), that payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1701B
Where a person is liable to make a payment by way of—
a
penalty under any of paragraphs 12 to 19 of Schedule 7 to the Finance Act 1994 (insurance premium tax), or
b
interest under paragraph 21 of that Schedule,
the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1761C
Where a person is liable to make a payment by way of—
a
penalty under Part V of Schedule 5 to the Finance Act 1996 (landfill tax), or
b
interest under paragraph 26 or 27 of that Schedule,
the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1771D
Where a person is liable to make a payment by way of—
a
any penalty under any provision of Schedule 6 to the Finance Act 2000 (climate change levy),
b
interest under paragraph 70 of that Schedule (interest on recoverable overpayments etc.),
c
interest under any of paragraphs 81 to 85 of that Schedule (interest on climate change levy due and on interest), or
d
interest under paragraph 109 of that Schedule (interest on penalties),
the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1781E
Where a person is liable to make a payment by way of—
a
any penalty under any provision of Part 2 of the Finance Act 2001 (aggregates levy),
b
interest under any of paragraphs 5 to 9 of Schedule 5 to that Act (interest on aggregates levy due and on interest),
c
interest under paragraph 6 of Schedule 8 to that Act (interest on recoverable overpayments etc.), or
d
interest under paragraph 5 of Schedule 10 to that Act (interest on penalties),
the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1801F
Where a person is liable to make a payment by way of a penalty under section 25 or 26 of the Finance Act 2003 (evasion of, or contravention of relevant rule relating to, certain taxes and duties under the management of the Commissioners of Customs and Excise etc) the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
F1791G
Where a person is liable to make a payment by way of—
a
any penalty under Part 4 of the Finance Act 2003 (stamp duty land tax), or
b
interest under any provision of that Part,
the payment shall not be allowed as a deduction in computing any income, profits or losses F181for any corporation tax purposes (but see also subsection (3)(a) below).
2
F1833
For income tax purposes—
a
provision corresponding to that made by this section (other than subsection (2) above) is made by sections 54 and 869 of ITTOIA 2005, and
b
provision corresponding to that made by subsection (2) above is made by section 777 of ITTOIA 2005 (as read with Chapter 10 of Part 6 of that Act).
827AF119Territorial scope of charges under certain provisions to which section 836B applies
F102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
828 Orders and regulations made by the Treasury or the Board.
1
M11Subject to F186subsections (2) and (5) below, any power of the Treasury or the Board to make any order or regulations under this Act or under any F191provision of the Corporation Tax Acts not contained in this Act (including enactments passed after this Act) shall be exercisable by statutory instrument.
2
C103
M12Subject to F187subsections (4) and (5) below and to any other provision to the contrary, any statutory instrument containing any order or regulations made by the Treasury or the Board under this Act or under any F193provision of the Corporation Tax Acts not contained in this Act (including enactments passed after this Act) shall be subject to annulment in pursuance of a resolution of the House of Commons.
C114
Subsection (3) above shall not apply in relation to an order or regulations made under section F103. . . F10479B(5),F105. . . F106. . . F107. . . F108. . . F109F105. . . F110590C(6). . . F111791 or 840A(1)(d) or paragraph 7 of Schedule 14 F112F113. . . or—
a
if any other Parliamentary procedure is expressly provided;
b
if the order in question is an order appointing a day for the purposes of any provision of the Tax Acts, being a day as from which the provision will have effect, with or without amendments, or will cease to have effect.
F1145
Nothing in this section applies in relation to any of the following (in relation to which F194section 570B of the Capital Allowances Act or section 717 of ITEPA 2003 F188F195. . . applies)—
a
b
any statutory instrument containing any order or regulations made by the Treasury or the Board under F190either of those Acts.
F1156
Nothing in this section applies in relation to any of the following (in relation to which section 282 of the Finance Act 2004 applies)—
a
any power of the Treasury or the Board to make any order or regulations under Part 4 of that Act;
b
any statutory instrument containing any order or regulations made by the Treasury or the Board under that Part of that Act.
829 Application of Income Tax Acts to public departments and avoidance of exempting provisions.
F116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
830 Territorial sea and designated areas.
M221
The territorial sea of the United Kingdom shall for all purposes of F202. . . corporation tax (including the following provisions of this section) be deemed to be part of the United Kingdom.
2
In this section—
a
“exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of so much of the seabed and subsoil and their natural resources as is situated in the United Kingdom or a designated area;
b
“exploration or exploitation rights” means rights to assets to be produced by exploration or exploitation activities or to interests in or to the benefit of such assets; and
c
“designated area” means an area designated by Order in Council under section 1(7) of the M23Continental Shelf Act 1964.
3
Any profits or gains from exploration or exploitation activities carried on in a designated area or from exploration or exploitation rights shall be treated for the purposes of F201. . . corporation tax as profits or gains from activities or property in the United Kingdom.
C174
Any profits or gains arising to any person not resident in the United Kingdom from exploration or exploitation activities or rights shall for the purposes of corporation tax be treated as F200profits of a trade carried on by that person in the United Kingdom through a branch or agency.
5
F117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interpretation
831 Interpretation of this Act.
1
M13In this Act, except so far as the context otherwise requires—
a
“the Corporation Tax Acts” means the enactments relating to the taxation of the income and chargeable gains of companies and of company distributions (including provisions relating also to income tax); and
b
“the Income Tax Acts” means the enactments relating to income tax, including any provisions of the Corporation Tax Acts which relate to income tax.
2
In this Act “the Tax Acts”, except so far as the context otherwise requires, means this Act and all other provisions of the Income Tax Acts and the Corporation Tax Acts.
3
In this Act—
F120“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;
F121“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;
F122“ITA 2007” means the Income Tax Act 2007;
“the Management Act” means the Taxes Management Act 1970;
“the 1968 Act” means the Capital Allowances Act 1968;
“the 1970 Act” means the Income and Corporation Taxes Act 1970; and
“the 1979 Act” means the Capital Gains Tax Act 1979.
F123“the 1990 Act” means the Capital Allowances Act 1990.
F124“the 1992 Act” means the Taxation of Chargeable Gains Act 1992.
C124
Section 1 of the M14Family Law Reform Act 1987, the paragraph inserted in Schedule 1 to the M15Interpretation Act 1978 by paragraph 73 of Schedule 2 to that Act and section 1(3) of the M16Law Reform (Parent and Child) (Scotland) Act 1986 (legal equality of illegitimate children) shall be disregarded in construing references in this Act to a child or to children (however expressed).
5
6
Any reference in this Act to a section, Part or Schedule is a reference to that section, Part or Schedule of or to this Act, unless the context otherwise requires.
832 Interpretation of the F126Corporation Tax Acts etc.
1
F241M24In the Corporation Tax Acts, except in so far as the context otherwise requires—
“Act” includes an Act of the Parliament of Northern Ireland and a Measure of the Northern Ireland Assembly;
F209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“authorised unit trust” has the meaning given by section 468(6);
F242. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“the Board” means the Commissioners of Inland Revenue;
“body of persons” means any body politic, corporate or collegiate, and any company, fraternity, fellowship and society of persons whether corporate or not corporate;
“building society” means a building society within the meaning of the M25Building Societies Act 1986;
“capital allowance” means any allowance under F220the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act);
F221“the Capital Allowances Act” means the Capital Allowances Act 2001;
“chargeable gain” has the same meaning as in the F2031992 Act;
“chargeable period” means an accounting period of a company or a year of assessment;
“close company” has the meaning given by sections 414 and 415;
“collector” means any collector of taxes;
“company” means, subject to subsection (2) below, any body corporate or unincorporated association but does not include a partnership, a local authority or a local authority association;
“distribution” has the meaning given by Part VI with section 418;
F231“estate in land”, in relation to any land in Scotland, includes the land;
“farm land” means land in the United Kingdom wholly or mainly occupied for the purposes of husbandry, but excluding any dwelling or domestic offices, and excluding market garden land, and “farming” shall be construed accordingly;
F223“for accounting purposes” means for the purposes of accounts drawn up in accordance with generally accepted accounting practice;
F212“franked investment income” means income of a company resident in the United Kingdom which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit);
F213. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F224“generally accepted accounting practice” F227has the meaning given by section 50(1) of the Finance Act 2004;
F214. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F243. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F244. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“inspector” means any inspector of taxes;
F245. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F228“international accounting standards” has the meaning given by section 50(2) of the Finance Act 2004;
F222F246. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F204“local authority association” has the meaning given by section 519;
F205F247. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“market garden land” means land in the United Kingdom occupied as a nursery or garden for the sale of the produce (other than land used for the growth of hops) and “market gardening” shall be construed accordingly;
F229“offshore installation” has the meaning given by section 837C;
F210“open-ended investment company", and “authorised corporate director", “owner of shares" and “scheme property" in relation to an open-ended investment company, have the meanings given by subsection (10) of section 468, read with subsections (11) to (18) of that section, as those subsections are added by regulation 10(4) of the Open-ended Investment Companies (Tax) Regulations 1997;
“ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company;
F232“overseas property business”—
F225“period of account”—
- a
in relation to a person, means any period for which the person draws up accounts, and
- b
in relation to a trade, profession, vocation or other business means any period for which accounts of the business are drawn up;
- a
F226“permanent establishment”, in relation to a company, has the meaning given by section 148 of the Finance Act 2003;
F251. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F252“property investment LLP” has the meaning given by section 842B;
“qualifying distribution” has the meaning given by section 14(2);
“qualifying policy” means a policy of insurance which is a qualifying policy for the purposes of Chapter I of Part VII;
F206F253. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F216. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F207. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F239“registered pension scheme” has the meaning given by section 150(2) of the Finance Act 2004;
F233F254. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F208“Schedule A business” means any business the profits or gains of which are chargeable to F234corporation tax under Schedule A, including the business in the course of which any transaction is by virtue of paragraph 1(2) of that Schedule to be treated as entered into;
F240“scheme administrator”, in relation to a pension scheme, has the meaning given by section 270 of the Finance Act 2004 (but see also sections 271 to 274 of that Act);
F219F255. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F211F256. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F211F256. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F211F256. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F238F257. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F217. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F235“tax credit” means—
“trade” includes every trade, manufacture, adventure or concern in the nature of trade;
F230“UK generally accepted accounting practice” has the meaning given by section 50(4) of the Finance Act 2004;
F236F260. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F237. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“unit holder” has the meaning given by section 468(6);
F261“unit trust scheme” has the same meaning as in the Income Tax Acts (see section 1007 of ITA 2007);
“year of assessment” means, with reference to any income tax, the year for which such tax was granted by any Act granting income tax;
“the year 1988-89” means the year of assessment beginning on 6th April 1988, and any corresponding expression in which two years are similarly mentioned means the year of assessment beginning on 6th April in the first-mentioned of those two years;
and a source of income is within the charge to corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax, shall be similarly construed.
2
M26 The definition of “company” is subject to section 468, and does not apply in the following provisions of this Act, that is to say—
Chapter I of Part XVII;
sections 774 to 777;
section 839;
paragraph 15 of Schedule 3;
(and also does not apply where the context otherwise requires because some other definition of “company” applies).
F2622A
Chapter 2 of Part 9 of ITA 2007 (which relates to settlements and trustees) applies for the purposes of the Corporation Tax Acts as it applies for the purposes of the Income Tax Acts.
3
M27Except so far as the context otherwise requires, in the Tax Acts, and in any enactment passed after 12th March 1970 which by any express provision is to be construed as one with the Tax Acts, the Corporation Tax Acts or the Income Tax Acts, “tax”, where neither income tax nor corporation tax is specified, means either of those taxes.
4
Subsection (3) above is without prejudice to the provisions of section 9 which apply income tax law for certain purposes of corporation tax, and accordingly the employment of “income tax” rather than “tax” in any provision of the Tax Acts is not a conclusive indication that that provision is not applied to corporation tax by that section.
F2184A
Any reference in the F263Corporation Tax Acts to franked investment income received by a company apply to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.
5
F264. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
833 Interpretation of Income Tax Acts.
F127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
834 Interpretation of the Corporation Tax Acts.
M281
For the purposes of the Corporation Tax Acts, except in so far as the context otherwise requires—
“accounting date” means the date to which a company makes up its accounts F268. . . ;
“accounting period” shall be construed in accordance with section 12;
C18“allowable loss” does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it F273F275does not include a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it.;
“branch or agency” means any factorship, agency, receivership, branch or management;
F271“chargeable profits”, in relation to a company that is not resident in the United Kingdom—
- a
for corporation tax purposes generally, has the meaning given by section 11(2), and
- b
for the purposes of Chapter 4 of Part 17 (controlled foreign companies), has the meaning given by section 747(6);
- a
“charges on income” has the meaning given by section F269338A;
F270“derivative contract” has the same meaning as it has for the purposes of Schedule 26 to the Finance Act 2002;
“the financial year 1988” means the financial year beginning with April 1988, and similarly with references embodying other dates;
“group relief” has the meaning given by section 402;
F266“loan relationship” has the same meaning as it has for the purposes of Chapter II of Part IV of the Finance Act 1996;
“non-trading deficit”, in relation to a company’s loan relationships, shall be construed in accordance with section 82 of the Finance Act 1996;
F272“statutory insolvency arrangement” means—
- a
a voluntary arrangement that has taken effect under or as a result of the Insolvency Act 1986, Schedule 4 or 5 to the Bankruptcy (Scotland) Act 1985 or the Insolvency (Northern Ireland) Order 1989,
- b
F276a compromise or arrangement that has taken effect under Part 26 of the Companies Act 2006, or
- c
any arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) above that has taken effect under or by virtue of the law of a country or territory outside the United Kingdom;
- a
F274“venture capital trust” has the same meaning as in Part 6 of ITA 2007.
2
Section 6(4) shall also apply for the purposes of the following provisions of this Act, that is to say—
Chapter II of Part X, except section 395;
sections 75 and 76;
section 490;
sections 768 and 769;
F267. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
3
For all the purposes of the Corporation Tax Acts dividends shall be treated as paid on the date when they become due and payable, F265except in so far as Chapter III of Part XII makes other provision for dividends treated as paid by virtue of that Chapter.
4
Except as otherwise provided by the Corporation Tax Acts, any apportionment to different periods which falls to be made under those Acts shall be made on a time basis according to the respective lengths of those periods.
F137834AMiscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
1
In the Corporation Tax Acts references to any provision to which this section applies are references to any provision listed in the following table, so far as the provision relates to corporation tax (but subject to any applicable limitation in subsection (3)).
2
This is the table—
Provisions of this Act | Description |
|---|---|
Section 56(2) | Transactions in deposits |
Section 214(1)(ab) | Chargeable payments connected with exempt distributions |
Section 436A(1) | Gross roll-up business: separate charge on profits |
Section 442A(1) | Taxation of investment return where risk reinsured |
Section 571(1) | Cancellation of tax certificates |
Section 730(6) | Transfers of income arising from securities |
Section 761(1)(b)(ii) | Offshore income gains |
Section 774(1) | Transactions between dealing company and associated company |
Section 776(3A) | Transactions in land |
Section 780(3A)(b) | Sale and leaseback: taxation of consideration received |
Section 781(1) | Assets leased to traders and others |
Section 786(5)(b) | Transactions associated with loans or credit |
Provisions of CTA 2009 | Description |
|---|---|
Chapter 15 of Part 3 | Post-cessation receipts: trades |
Chapter 7 of Part 4 | Rent receivable in connection with a UK section 39(4) concern |
Chapter 8 of Part 4 | Rent receivable for UK electric-line wayleaves |
Chapter 9 of Part 4 | Post-cessation receipts: UK property businesses |
Section 752 | Non-trading gains on intangible fixed assets |
Section 908 | Profits from disposals of know-how |
Section 912 | Profits from sales of patent rights |
Section 965(4) | Adjustments after the administration period |
Chapter 8 of Part 10 | Income not otherwise charged |
Section 986(4), so far as it relates to an amount treated as received under section 998(3) | Withdrawal of deductions if approval for share incentive plan withdrawn: non-trading cases |
Section 1083(5) | Refunds of expenditure on research and development |
Section 1229 | Management expenses: claw back of relief |
Section 1252 | Industrial development grants: companies with investment business |
Section 1253 | Contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits |
Section 1254 | Repayments under the Financial Services and Markets Act 2000 |
Section 1277(4) | Withdrawal of relief for unremittable foreign income after source ceases |
Other provisions | Description |
|---|---|
Section 85(1) of the Finance Act 1989 | Certain receipts of basic life assurance and general annuity business |
Section 85A(1) of the Finance Act 1989 | Excess adjusted life assurance trade profits |
Paragraph 3(1) of Schedule 12 to the Finance (No 2) Act 1992 | Banks etc in compulsory liquidation |
Section 256(2) of the Capital Allowances Act | Life assurance business: capital allowances |
Section 131(4) of the Finance Act 2004 | Companies in partnership |
Section 27(2) of the Finance (No 2) Act 2005 | Avoidance involving tax arbitrage: qualifying payments |
Section 112(1) of the Finance Act 2006 | Real estate investment trusts: entry charge |
3
The reference in Part 2 of the above table to Chapter 8 of Part 10 of CTA 2009 does not include that Chapter so far as relating to income which arises from a source outside the United Kingdom.
F138834BMeaning of “UK property business” and “overseas property business”
In the enactments relating to corporation tax “UK property business” and “overseas property business” have the meaning given by Chapter 2 of Part 4 of CTA 2009.
F139834CTotal profits
1
In the Corporation Tax Acts references to total profits, in relation to an accounting period of a company, are to the amount arrived at by adding together—
a
the amounts chargeable for the period under the charge to corporation tax on income, and
b
any amount to be included for the period in respect of chargeable gains (see section 8 of the 1992 Act).
2
Subsection (1) is subject to the provisions of the Corporation Tax Acts.
835“Total income” in the Income Tax Acts.
F128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
836 Returns of total income.
F129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
836AF140 Generally accepted accounting practice
F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
836BF141Table of provisions to which this section applies
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
837“Annual value” of land.
F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F142837A Meaning of “research and development”.
1
The following provisions have effect for the purposes of, and subject to, the provisions of the F328Corporation Tax Acts which apply this section.
2
F3302A
Activities that, as a result of regulations made under section 1006 of ITA 2007, are “research and development” for the purposes of that section are also “research and development” for the purposes of this section.
2B
And activities that, as a result of any such regulations, are not “research and development” for the purposes of that section are also not “research and development” for the purposes of this section.
5
F327. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Unless otherwise expressly provided, “research and development" does not include oil and gas exploration and appraisal.
F143837B Meaning of “oil and gas exploration and appraisal”.
1
References in the F331Corporation Tax Acts to “oil and gas exploration and appraisal” are to activities carried out for the purpose of—
a
searching for petroleum anywhere in an area, or
b
ascertaining—
i
the extent or characteristics of any petroleum-bearing area, or
ii
what the reserves of petroleum of any such area are,
so that it may be determined whether the petroleum is suitable for commercial exploitation.
2
For this purpose “petroleum” has the meaning given in section 1 of the M42Petroleum Act 1998.
F144837CMeaning of “offshore installation”
1
For the purposes of the F336Corporation Tax Acts, unless the context otherwise requires, “offshore installation” means a structure which is, is to be, or has been, put to a use specified in subsection (2) while—
a
standing in any waters,
b
stationed (by whatever means) in any waters, or
c
standing on the foreshore or other land intermittently covered with water.
2
The uses are—
a
use for the purposes of exploiting mineral resources by means of a well;
b
use for the purposes of exploration with a view to exploiting mineral resources by means of a well;
c
use for the storage of gas in or under the shore or the bed of any waters;
d
use for the recovery of gas so stored;
e
use for the conveyance of things by means of a pipe;
f
use mainly for the provision of accommodation for persons who work on or from a structure which is, is to be, or has been, put to a use specified in any of paragraphs (a) to (e) while—
i
standing in any waters,
ii
stationed (by whatever means) in any waters, or
iii
standing on the foreshore or other land intermittently covered with water.
3
But a structure is not an offshore installation if—
a
it has ceased permanently to be put to a use specified in subsection (2),
b
it is not, and is not to be, put to any other use specified in subsection (2), and
c
since ceasing permanently to be put to a use specified in subsection (2) it has been put to a use which is not so specified.
4
In this section “structure” includes a ship or other vessel.
5
The Treasury may make provision by regulations as to the meaning of “offshore installation” for the purposes of the F336Corporation Tax Acts.
6
The regulations may—
a
add to, amend or repeal subsections (1) to (4) or any provision of those subsections;
b
make different provision for different purposes;
c
include incidental, consequential, supplemental, saving or transitional provisions.
C19C20C24C25838 Subsidiaries.
M291
For the purposes of the F277Corporation Tax Acts a body corporate shall be deemed to be—
a
a “51 per cent. subsidiary” of another body corporate if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by that other body corporate;
C21b
a “75 per cent. subsidiary” of another body corporate if and so long as not less than 75 per cent. of its ordinary share capital is owned directly or indirectly by that other body corporate;
c
a “90 per cent. subsidiary” of another body corporate if and so long as not less than 90 per cent. of its ordinary share capital is owned directly by that other body corporate.
C22C262
In subsection (1)(a) and (b) above “owned directly or indirectly” by a body corporate means owned, whether directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate.
C22C263
In this section references to ownership shall be construed as references to beneficial ownership.
C23C22C264
For the purposes of this section the amount of ordinary share capital of one body corporate owned by a second body corporate through another body corporate or other bodies corporate, or partly directly and partly through another body corporate or other bodies corporate, shall be determined in accordance with the following provisions of this section.
C23C22C265
Where, in the case of a number of bodies corporate, the first directly owns ordinary share capital of the second and the second directly owns ordinary share capital of the third, then for the purposes of this section, the first shall be deemed to own ordinary share capital of the third through the second, and, if the third directly owns ordinary share capital of a fourth, the first shall be deemed to own ordinary share capital of the fourth through the second and third, and the second shall be deemed to own ordinary share capital of the fourth through the third and so on.
C23C22C266
In this section—
a
any number of bodies corporate of which the first directly owns ordinary share capital of the next and the next directly owns ordinary share capital of the next but one, and so on, and, if they are more than three, any three or more of them, are referred to as “a series”;
b
in any series—
i
that body corporate which owns ordinary share capital of another through the remainder is referred to as the “first owner”;
ii
that other body corporate the ordinary share capital of which is so owned is referred to as “the last owned body corporate”;
iii
the remainder, if one only, is referred to as “an intermediary” and, if more than one, are referred to as “a chain of intermediaries”;
c
a body corporate in a series which directly owns ordinary share capital of another body corporate in the series is referred to as “an owner”; and
d
any two bodies corporate in a series of which one owns ordinary share capital of the other directly, and not through one or more of the other bodies corporate in the series, are referred to as being directly related to one another.
C23C22C267
Where every owner in a series owns the whole of the ordinary share capital of the body corporate to which it is directly related, the first owner shall be deemed to own through the intermediary or chain of intermediaries the whole of the ordinary share capital of the last owned body corporate.
C23C22C268
Where one of the owners in a series owns a fraction of the ordinary share capital of the body corporate to which it is directly related, and every other owner in the series owns the whole of the ordinary share capital of the body corporate to which it is directly related, the first owner shall be deemed to own that fraction of the ordinary share capital of the last owned body corporate through the intermediary or chain of intermediaries.
C23C22C269
Where—
a
each of two or more of the owners in a series owns a fraction, and every other owner in the series owns the whole, of the ordinary share capital of the body corporate to which it is directly related; or
b
every owner in a series owns a fraction of the ordinary share capital of the body corporate to which it is directly related;
the first owner shall be deemed to own through the intermediary or chain of intermediaries such fraction of the ordinary share capital of the last owned body corporate as results from the multiplication of those fractions.
C23C22C2610
Where the first owner in any series owns a fraction of the ordinary share capital of the last owned body corporate in that series through the intermediary or chain of intermediaries in that series, and also owns another fraction or other fractions of the ordinary share capital of the last owned body corporate, either—
a
directly, or
b
through an intermediary or intermediaries which is not a member or are not members of that series, or
c
through a chain or chains of intermediaries of which one or some or all are not members of that series, or
d
in a case where the series consists of more than three bodies corporate, through an intermediary or intermediaries which is a member or are members of the series, or through a chain or chains of intermediaries consisting of some but not all of the bodies corporate of which the chain of intermediaries in the series consists;
then, for the purpose of ascertaining the amount of the ordinary share capital of the last owned body corporate owned by the first owner, all those fractions shall be aggregated and the first owner shall be deemed to own the sum of those fractions.
C27C29C30C31C32C33C34C35C36C37C38C39C40C41C42C43C44C45C46C47C48C49C50C51C52C53C54C55C56C57C58C59C60C61C62C63C64C65C66C67C68C69C70C71C72C73C75C76C77C78C79C80C81C82C83C84C85C86C87C88C89839 Connected persons.
M301
For the purposes of, and subject to, the provisions of the F284Corporation Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).
C28C742
F2783
A person, in his capacity as trustee of a settlement, is connected with—
a
any individual who in relation to the settlement is a settlor,
b
any person who is connected with such an individual, F281. . .
c
any body corporate which is connected with that settlement,
F282d
if the settlement is the principal settlement in relation to one or more sub-fund settlements, the trustees of the sub-fund settlements, and
e
if the settlement is a sub-fund settlement in relation to a principal settlement, the trustees of any other sub-fund settlements in relation to the principal settlement.
3A
For the purpose of subsection (3) above a body corporate is connected with a settlement if—
a
it is a close company (or only not a close company because it is not resident in the United Kingdom) and the participators include the trustees of the settlement; or
b
it is controlled (within the meaning of section 840) by a company falling within paragraph (a) above.
F2833B
For the purpose of subsection (3) above—
a
“settlement” has the same meaning as in section 620 of ITTOIA 2005,
b
“trustee”, in relation to a settlement in relation to which there would be no trustees apart from this paragraph, means any person—
F285i
in whom the property comprised in the settlement is for the time being vested, or
ii
in whom the management of that property is for the time being vested,
and
c
“principal settlement” and “sub-fund settlement” have the meaning given by paragraph 1 of Schedule 4ZA to the 1992 Act.
C284
Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the F280spouse or civil partner or relative of any individual with whom he is in partnership.
C285
A company is connected with another company—
a
if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other; or
b
if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.
C286
A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.
C287
Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.
C288
In this section—
“company” includes any body corporate F279(including an open-ended investment company) or unincorporated association, but does not include a partnership, and this section shall apply in relation to any unit trust scheme as if the scheme were a company and as if the rights of the unit holders were shares in the company;
“control” shall be construed in accordance with section 416; and
“relative” means brother, sister, ancestor or lineal descendant.
In relation to any period during which section 470(2) has effect the reference above to a unit trust scheme shall be construed as a reference to a unit trust scheme within the meaning of the M31Prevention of Fraud (Investments) Act 1958 or the M32Prevention of Fraud (Investments) Act (Northern Ireland) 1940.
C90C91C92C93C94C95C96840 Meaning of “control” in certain contexts.
M33For the purposes of, and subject to, the provisions of the F286Corporation Tax Acts which apply this section, “control”, in relation to a body corporate, means the power of a person to secure—
a
by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or
b
by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate,
that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person, and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.
F145840ZAMeaning of “tax advantage”
1
In any provision of the Corporation Tax Acts in relation to which it is provided that “tax advantage” has the meaning given by this section, “tax advantage” means—
a
a relief from tax or increased relief from tax,
b
a repayment of tax or increased repayment of tax,
c
the avoidance or reduction of a charge to tax or an assessment to tax, or
d
the avoidance of a possible assessment to tax.
2
For the purposes of subsection (1)(c) and (d) it does not matter whether the avoidance or reduction is effected—
a
by receipts accruing in such a way that the recipient does not pay or bear tax on them, or
b
by a deduction in calculating profits or gains.
3
In this section “relief from tax” includes—
a
a tax credit under section 231 for the purposes of corporation tax, and
b
a tax credit under section 397(1) of ITTOIA 2005 for the purposes of income tax.
F146840A Banks.
1
In any provision F324of the Corporation Tax Acts in relation to which it is provided that “bank” has the meaning given by this section “bank” means—
a
the Bank of England;
F320b
a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits other than—
i
a building society within the meaning of the Building Societies Act 1986,
F322ii
iii
iv
an insurance company within the meaning of section F323 275 of the Finance Act 2004;
c
an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to accept deposits; or
F325ca
the European Investment Bank; or
d
a relevant international organisation which is designated as a bank for the purposes of that provision by an order made by the Treasury.
2
F321. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
For the purposes of subsection (1) above, a relevant international organisation is an international organisation of which the United Kingdom is a member.
F287841Meaning of “recognised stock exchange” etc
1
In the Corporation Tax Acts “recognised stock exchange” has the same meaning as in the Income Tax Acts (see subsections (1) and (2) of section 1005 of ITA 2007).
2
References in the Corporation Tax Acts to securities which are listed on a recognised stock exchange are to be read in accordance with subsections (3) and (4) of that section.
3
References in the Corporation Tax Acts to securities which are included in the official UK list are to be read in accordance with subsection (5) of that section.
4
In this section “securities” includes shares and stock.
841AF147 Recognised clearing systems.
F133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
842 Investment trusts.
M341
In the F306Corporation Tax Acts“investment trust” means, as respects any accounting period, a company which is not a close company and which is approved for the purposes of this section for that accounting period by the Board, and the Board shall not approve any company unless it is shown to their satisfaction—
F288aa
that the company is resident in the United Kingdom; and
a
b
subject to subsection (2) below, that no holding in a company, other than an investment trust or a company which would qualify as an investment trust but for paragraph (c) below, represents more than 15 per cent. by value of the investing company’s investments; and
F289c
that the shares making up the company’s ordinary share capital (or, if there are such shares of more than one class, those of each class) are F307included in the official UK list; and
d
that the distribution as dividend of surpluses arising from the realisation of investments is prohibited by the company’s memorandum or articles of association; and
F2941AA
F305. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2991AB
In determining for the purposes of paragraph (a) or (e) of subsection (1) above (and accordingly of subsection (2A)(b) below)—
a
the amount of a company’s income, or
b
the amount of income which a company derives from shares or securities,
the amounts to be brought into account under Chapter 2 of Part 4 of the Finance Act 1996 in respect of the company’s loan relationships shall be determined without reference to any debtor relationships of the company.
F3021AC
In determining the amount of a company’s income for the purposes of subsection (1)(a) above, no account shall be taken of any amount that falls under section 75B(7)(b) to be regarded as income of the company chargeable under Case VI of Schedule D.
F2901A
For the purposes of paragraph (b) of subsection (1) above and the other provisions of this section having effect in relation to that paragraph—
C97a
holdings in companies which are members of a group (whether or not including the investing company) and are not excluded from that paragraph shall be treated as holdings in a single company; and
b
where the investing company is a member of a group, money owed to it by another member of the group shall be treated as a security of the latter held by the investing company and accordingly as, or as part of, the holding of the investing company in the company owing the money;
and for the purposes of this subsection “group” means a company and all companies which are its 51 per cent. subsidiaries
2
Subsection (1)(b) above shall not apply—
a
to a holding in a company acquired before 6th April 1965 which on that date represented not more than 25 per cent. by value of the investing company’s investments; or
b
to a holding in a company which, when it was acquired, represented not more than 15 per cent. by value of the investing company’s investments;
so long as no addition is made to the holding.
F2912A
Subsection (1)(e) above shall not apply as regards an accounting period if—
a
the company is required to retain income in respect of the period by virtue of a restriction imposed by law, and
b
the amount of income the company is so required to retain in respect of the period exceeds an amount equal to 15 per cent. of the income the company derives from shares and securities.
2B
Subsection (2A) above shall not apply where—
a
the amount of income the company retains in respect of the accounting period exceeds the amount of income it is required by virtue of a restriction imposed by law to retain in respect of the period, and
b
the amount of the excess or, where the company distributes income in respect of the period, that amount together with the amount of income which the company so distributes is at least £10,000 or, where the period is less than 12 months, a proportionately reduced amount.
2C
Paragraph (e) of subsection (1) above shall not apply as regards an accounting period if the amount which the company would be required to distribute in order to fall within that paragraph is less than £10,000 or, where the period is less than 12 months, a proportionately reduced amount.
3
For the purposes of subsection (2) above—
a
“holding” means the shares or securities (whether of one class or more than one class) held in any one company; and
b
an addition is made to a holding whenever the investing company acquires shares or securities of that one company, otherwise than by being allotted shares or securities without becoming liable to give any consideration, and if an addition is made to a holding that holding is acquired when the addition or latest addition is made to the holding; and
c
where in connection with a scheme of reconstruction F300. . . , a company issues shares or securities to persons holding shares or securities in a second company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings in the second company, without those persons becoming liable to give any consideration, a holding of the shares or securities in the second company and a corresponding holding of the shares or securities so issued shall be regarded as the same holding.
F3083A
References in this section to income do not include income treated as arising under section 761(1)(a).
4
842AAF148 Venture capital trusts.
F134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
842AF135 Local authorities.
1
Except so far as the context otherwise requires, in the F319Corporation Tax Acts“local authority” means—
a
b
2
The following are the descriptions of authority specified for the purposes of paragraph (a) of subsection (1) above—
F309a
a billing authority as defined in section 69 of the Local Government Finance Act 1992;
b
a precepting authority as defined in that section;
c
a body having power by virtue of regulations under section 74 of the M35Local Government Finance Act 1988 to issue a levy;
d
a body having power by virtue of regulations under section 75 of that Act to issue a special levy;
F311e
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F318f
a fire and rescue authority in Wales constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies;
g
an authority having power to make or determine a rate;
3
The following are the descriptions of authority specified for the purposes of paragraph (b) of subsection (1) above—
F312a
a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994;
d
a joint board or committee within the meaning of the M36Local Government (Scotland) Act 1973;
e
an authority having power to requisition any sum from an authority F313such as is mentioned in paragraph (a) above.
4
The following are the descriptions of authority specified for the purposes of paragraph (c) of subsection (1) above—
a
an authority having power to make or determine a rate;
b
an authority having power to issue a precept, requisition or other demand for the payment of money to be raised out of a rate.
5
In this section “rate” means a rate the proceeds of which are applicable for public local purposes and which is leviable by reference to the value of land or other property.
F149842B Meaning of F136. . . “property investment LLP”
1
In F333the Corporation Tax Acts—
a
F334. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
a “property investment LLP” means a limited liability partnership whose business consists wholly or mainly in the making of investments in land and the principal part of whose income is derived therefrom.
2
Commencement, savings, repeals etc.
843 Commencement.
1
Except as otherwise provided by the following provisions of this section, this Act shall come into force in relation to tax for the year 1988-89 and subsequent years of assessment, and for companies’ accounting periods ending after 5th April 1988.
2
Except as otherwise provided by the following provisions of this section, such of the provisions of this Act as relate to capital gains tax (including the provisions of Part XVIII as applied to capital gains tax by section F150277 of F151the 1992 Act) shall come into force in relation to that tax for the year 1988-89 and subsequent years of assessment.
3
The following provisions of this Act, that is to say—
a
so much of any provision as authorises the making of any Order in Council or regulations or other instrument;
b
so much of any provision as relates to the making of a return, the furnishing of a certificate or the giving of any other information, including any such provision which imposes a duty on the Board or an officer of the Board as well as any such provision which imposes a duty on any other person;
c
so much of any provision as imposes any penalty;
d
except where the tax concerned is all tax for years of assessment before the year 1988-89 or accounting periods ending before 6th April 1988, so much of any other provision as confers any power or imposes any duty the exercise or performance of which operates or may operate in relation to tax for more than one chargeable period,
shall come into force for all purposes on 6th April 1988 to the exclusion of the corresponding enactments repealed by this Act.
4
This section has effect except as otherwise provided by any other provision of this Act, and in particular except as provided by sections 96, 380 to 384, 393, F152 . . ., 400, 703 and 812.
844 Savings, transitional provisions, consequential amendments and repeals.
1
Schedule 29, which makes amendments to other enactments consequential on the passing of this Act, shall have effect.
2
Schedule 29, section 843 and this section are without prejudice to the provisions of the M18Interpretation Act 1978 as respects the effect of repeals.
3
Schedule 30 which contains savings and transitional provisions shall have effect.
4
The enactments mentioned in Schedule 31 are hereby repealed to the extent specified in the third column of that Schedule.
5
Subject to subsection (6) below, section 843(3), Schedule 30 and to any other provision of this Act by which any provision is brought into force to the exclusion of the corresponding enactments repealed by this Act, those repeals shall come into force in accordance with subsections (1) and (2) of section 843.
6
No provision mentioned in subsection (5) above shall be taken as bringing a repeal into force except to the extent that the repealed enactment is being superseded.
845 Short title.
This Act may be cited as the Income and Corporation Taxes Act 1988.