Income and Corporation Taxes Act 1988

7 (1) This paragraph applies to—

(a) any qualifying distribution which is not a payment; and

(b) any payment in respect of which the company making it would be liable to pay advance corporation tax if, but only if, it amounted to or involved a qualifying distribution and it is not in the circumstances clear whether or how far it does so.

[F1 (2) No amount is required to be shown under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment and, unless estimated amounts are shown by virtue of paragraph (a) below, paragraph 3(1) above shall not apply in relation to advance corporation tax in respect thereof; but—

(a) the company making the return may include under paragraph 2(1)(a) and (c) above estimated amounts in respect of the qualifying distribution or payment; and

(b) if it does so, paragraph 3(1) above shall apply in relation to advance corporation tax in respect thereof as it applies in relation to advance corporation tax in respect of franked payments which are required to be included in the return.]

(3) [F2 Whether or not estimated amounts are also included under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment,] particulars of the qualifying distribution or payment shall be given separately in the return for the return period in which it is made [F3 and if in that period no franked payment (apart from that distribution or payment) is made and no foreign income dividend is paid], a return containing those particulars shall be made for that period under paragraph 1 above.

[F4 (3A) Sub-paragraph (4) below applies—

(a) if an estimated amount is not included under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment; or

(b) if an officer of the Board is of the opinion that an estimated amount which is included under paragraph 2(1)(a) or (c) above in respect of the qualifying distribution or payment is incorrect.

(4) Where this sub-paragraph applies, any advance corporation tax payable in respect of the qualifying distribution or payment shall be assessed on the company and shall be so assessed without regard to any franked investment income received by the company, but—

(a) relief shall be given in accordance with sub-paragraph (4A) or (4B) below;

(b) for the purposes of the application of paragraph 2(3) above to any subsequent return period, the amount of the franked payment comprising the qualifying distribution or payment shall be taken to be the amount calculated as mentioned in sub-paragraph (4A) or (4B) below, as the case may be; and

(c) any advance corporation tax due under an assessment made by virtue of this sub-paragraph shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if correct amounts had been included under paragraph 2(1)(a) and (c) above in respect of the qualifying distribution or payment.

(4A) Where sub-paragraph (4) above applies by virtue of sub-paragraph (3A)(a) above, relief shall be given from the tax assessed (by discharge thereof) to the extent, if any, to which that tax exceeds the tax that would have been payable if the amount of the franked payment comprising the qualifying distribution or payment, calculated on the amount or value thereof shown in the assessment, had been included in the return under sub-paragraph (1)(a) of paragraph 2 above and the tax had been calculated in accordance with sub-paragraph (4) of that paragraph.

(4B) Where sub-paragraph (4) above applies by virtue of sub-paragraph (3A)(b) above, relief shall be given from the tax assessed (by discharge thereof) to the extent, if any, to which that tax exceeds the tax that would have been payable if the excess (if any) of—

(a) the amount of the franked payment comprising the qualifying distribution or payment, calculated on the amount or value thereof shown in the assessment, over

(b) the estimated amount specified under paragraph 2(2)(b) above in respect of that franked payment,

had been included in the return under sub-paragraph (1)(a) of paragraph 2 above and the tax had been calculated in accordance with sub-paragraph (4) of that paragraph.]

Textual Amendments

F1 Sch. 13 para. 7(2) substituted (with effect in accordance with s. 137(2)(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 23 para. 7(2)

F2 Words in Sch. 13 para. 7(3) inserted (with effect in accordance with s. 137(2)(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 23 para. 7(3)

F3 Words in Sch. 13 para. 7(3) substituted (with effect in accordance with Sch. 16 para. 3(13) of the amending Act) by Finance Act 1994 (c. 9), Sch. 16 para. 3(11)

F4 Sch. 13 para. 7(3A)(4)(4A)(4B) substituted for para. 7(4) (with effect in accordance with s. 137(2)(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 23 para. 7(4)