(1)Subsection (2) below applies where—
(a)there falls to be made to a company (“the surrendering company”)which is a member of a group throughout the appropriate period a tax refundrelating to an accounting period of the company (“the relevant accountingperiod”), and
(b)another company (“the recipient company”) which is a member of thesame group throughout the appropriate period also has the relevant accountingperiod as an accounting period.
(2)Where this subsection applies the two companies may, at any time beforethe refund is made to the surrendering company, jointly give notice to theinspector in such form as the Board may require that subsection (4) below isto have effect in relation to the refund or to any part of the refundspecified in the notice.
(3)In subsection (1) above—
“appropriate period” means the period beginning with therelevant accounting period and ending on the day on which the notice undersubsection (2) above is given, and
“tax refund relating to an accounting period” means, inrelation to a company—
(a)a repayment of corporation tax paid by the company for the period,
(b)a repayment of income tax in respect of a payment received by the companyin the period, or
(c)a payment of the whole or part of the tax credit comprised in any frankedinvestment income received by the company in the period.
(4)Subject to subsection (6) below, where this subsection has effect inrelation to any refund or part of a refund—
(a)the recipient company shall be treated for all purposes of the Tax Actsas having paid on the relevant date an amount of corporation tax for therelevant accounting period equal to the amount of the refund or part, and
(b)there shall be treated for all those purposes as having been made to thesurrendering company on the relevant date a repayment of corporation tax orincome tax or a payment of tax credit (as the case may be) equal to the amountof the refund or part;
and where the refund is a repayment of corporation tax, any interestrelating to it which has been paid by the surrendering company shall betreated as having been paid by the recipient company.
[F1(4A)Where subsection (4) above has effect in relation to any amount and there is, by virtue of any of subsections (7) to [F2(7CA)] of section 826 of the Taxes Act 1988, a period for which the whole or any part of that amount would not, had the refund been made to the surrendering company, have carried interest under that section, that period shall be treated as excluded—
(a)from any period for which any refund made by virtue of subsection (4) above to the recipient company in respect of some or all of that amount or, as the case may be, that part of it is to carry interest under that section; and
(b)from any period for which a sum representing some or all of that amount or part would (apart from this subsection) be treated by virtue of subsection (4) above as not carrying interest under section 87A of the M1Taxes Management Act 1970;
and in determining for the purposes of this subsection which part of any amount is applied in discharging a liability of the recipient company to pay any corporation tax and which part is represented by a refund to the recipient company, it shall be assumed that the part in relation to which there is a period which would not have carried interest under section 826 of the Taxes Act 1988 is applied in preference to any other part of that amount in or towards discharging the liability.]
(5)In subsection (4) above “relevant date”, in relation toa refund, means—
(a)in so far as it consists of a repayment of corporation tax paid by thesurrendering company after the date on which it became due and payable undersection 10 of the Taxes Act 1988, the day on which it was paid by thatcompany, and
(b)otherwise, the date on which corporation tax for the relevant accountingperiod became due and payable.
(6)For the purpose of ascertaining the amount of any penalty to which therecipient company is liable under section 94(6) of the M2Taxes Management Act 1970, the corporation tax which the company istreated as having paid by subsection (4)(a) above shall be treated as paid onthe day on which the notice under subsection (2) above is given (and not onthe relevant date).
(7)A payment for a transferred tax refund—
(a)shall not be taken into account in computing profits or losses of eithercompany for corporation tax purposes, and
(b)shall not for any of the purposes of the Corporation Tax Acts be regardedas a distribution or a charge on income;
and in this subsection “a payment for a transferred taxrefund” means a payment made by the receiving company to thesurrendering company in pursuance of an agreement between them as respects thegiving of a notice under this section, being a payment not exceeding theamount of the refund in question.
(8)For the purposes of this section two companies are members of the samegroup if and only if they would be for the purposes of Chapter IV of Part Xof the Taxes Act 1988.
(9)This section shall not apply unless the relevant accounting period endsafter such day, not being earlier than 31st March 1992, as the Treasury mayby order made by statutory instrument appoint.
Textual Amendments
F1S. 102(4A) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 11
F2Words in s. 102(4A) substituted (1.5.1995) by 1995 c. 4, s. 130, Sch. 24 Pt. II para. 12(3)
Modifications etc. (not altering text)
C1S. 102 applied (with modifications) (7.1.1999) by S.I. 1998/3175, reg. 9(1)
Marginal Citations