PART XVI ESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION

696 Absolute interests in residue.

M11

The following provisions of this section shall have effect in relation to a F4company which, during the administration period or during a part of that period, has an absolute interest in the residue of the estate of a deceased person or in a part thereof.

2

There shall be ascertained in accordance with section 697 the amount of the residuary income of the estate for each whole year of assessment, and for each broken part of a year of assessment, during which—

a

the administration period was current, and

b

that F5company had that interest;

and the amount so ascertained in respect of any year or part of a year or, in the case of a F5company having an absolute interest in a part of a residue, a proportionate part of that amount, is in this Part referred to as the “residuary income” of that F5company for that year of assessment F6; and references to the residuary income of a company for an accounting period are to be construed in accordance with subsection (8).

F13

When any sum has been paid during the administration period in respect of that absolute interest, that sum, except so far as it is excluded from the operation of this subsection, shall be deemed for F7corporation tax purposes to have been paid to that F8company as income for the F9accounting period in which it was actually paid.

3A

A payment shall be excluded from the operation of subsection (3) above to the extent (if any) that the aggregate of that sum and all the sums which—

a

have been paid previously during the administration period in respect of that absolute interest, and

b

fall under this section to be treated as paid to that F10company as income F11(whether or not the company was a company liable to corporation tax at the time of payment),

exceeds the aggregated income entitlement of that F10company for the F12accounting period in which the sum is paid.

3B

For the purposes of this section the aggregated income entitlement of that F13company for any F14accounting period is the amount which would be the aggregate of the amounts received for that F14accounting period and all previous F15accounting periods in respect of the interest if that F13company had a right in F16each accounting period to receive, and had received—

a

in the case of a United Kingdom estate, F17its residuary income for F18that accounting period less income tax at the applicable rate for F18that accounting period; and

b

in the case of a foreign estate, F17its residuary income for F18that accounting period.

4

In the case of a United Kingdom estate, any amount which is deemed to have been paid to that F19company as income for F19any accounting period by virtue of subsection (3) above shall be deemed to be income of such an amount as would, after deduction of income tax for F19that accounting period, be equal to the amount deemed to have been so paid, and to be income that has borne income tax at the F2applicable rate.

F35

Where, on the completion of the administration of the estate, the aggregate of all the sums which, apart from this subsection—

a

have been paid during the administration period in respect of that absolute interest, and

b

fall under this section to be treated as paid to that F20company as income,

is exceeded by the aggregated income entitlement of that F20company for the F21accounting period in which the administration of the estate is completed, then an amount equal to the amount of the excess shall be treated for the purposes of subsections (3) to (4) above as having been actually paid, immediately before the end of the administration period, in respect of that interest.

6

In the case of a foreign estate, any amount which is deemed to have been paid to that F22company as income for any F23accounting period by virtue of this section shall be deemed to be income of that amount F24. . . .

7

Where—

a

a F25company has been charged to F26corporation tax for any accounting period by virtue of this section in respect of an amount deemed to have been paid to F27it as income in respect of an interest in a foreign estate (“the deemed income”), and

b

any part of the aggregate income of that estate for F28the relevant year of assessment has borne United Kingdom income tax by deduction or otherwise (“the aggregate income”),

the tax so charged on F27it shall, on proof of the facts on a claim, be reduced by an amount bearing the same proportion thereto as the amount of the deemed income which has borne United Kingdom income tax bears to the amount of the aggregate income.

8

F29. . . The residuary income of a company shall be computed in the first instance by reference to years of assessment, and the residuary income for any such year shall be apportioned between the accounting periods (if more than one) comprising that year.

F309

In subsection (7) “the relevant year of assessment”, in relation to an amount deemed to have been paid to a company as income for an accounting period by virtue of this section, means the year of assessment for which the amount would have been deemed to have been paid as income if references in subsections (3) to (6) to accounting periods were references to years of assessment.