Section 243B Relief for certain charges on income on a value basis
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Amendments
Section 243B inserted by Finance Act 2002 section 54(1)(a) as respects an accounting period ending on or after 6 March 2001. An accounting period which straddles 6 March 2001 is split into two accounting periods: one beginning when the accounting period begins and ending on 5 March 2001, and the other beginning on 6 March 2001 and ending when the accounting period ends: Finance Act 2002 section 54(2).
(1) In this section-
["charges on income paid for the purpose of the sale of goods", in relation to the course of a trade in an accounting period, means such amount as would be the amount of the income from the sale of goods in that period if, notwithstanding section 448(4), the words "the company's income for the relevant accounting period from the sale in the course of the trade mentioned in that subsection of goods and merchandise" used for the purposes of section 448(3) were a reference to the amount of so much of the charges on income paid wholly and exclusively for the purposes of the trade in that period as appears to the inspector or on appeal to the Appeal Commissioners to be referable to charges on income paid for the purpose of the sale of goods and merchandise;]1;
"relevant corporation tax", in relation to an accounting period of a company, means the corporation tax which, apart from this section and sections 239, 241, 396B, 420B, 440 and 441, would be chargeable on the company for the accounting period;
"relevant trading charges on income" has the same meaning as in section 243A.
Amendments
1 Definition of "charges on income paid for the purpose of the sale of goods" substituted by Finance Act 2006 section 127 and Schedule 2 para 1(b)(i) for accounting periods ending on or after 2 February 2006.
How do the rules regarding "value basis" affect charges on income?
(1) Finance Act 2001 section 90 introduced three new sections: section 243A which deals with restriction of relief for charges, section 396A which deals with restriction of loss relief, and section 420A which deals with group relief....
(2) Where a company pays relevant trading charges on income in an accounting period and the amount so paid exceeds an amount equal to the aggregate of the amounts allowed as deductions against the income of the company for the accounting period in accordance with section 243A, then the company may claim relief under this section for the accounting period in respect of the excess.
Amendments
Subs (2) substituted by Finance Act 2006 section 127 and Schedule 2 para 1(b)(ii) for accounting periods ending on or after 2 February 2006.
(3) Where for any accounting period a company claims relief under this section in respect of the excess, the relevant corporation tax of the company for the accounting period shall be reduced-
(a) in so far as the excess consists of charges on income paid for the purpose of the sale of goods ...1, by an amount equal to 10 per cent of those charges on income paid for the purpose of the sale of goods, and
(b) in so far as the excess consists of charges on income (in this section referred to as "other relevant trading charges on income") which are not [charges on income paid for the purpose of the sale of goods]2, by an amount determined by the formula-
C x _R_
100
where-
C is the amount of the other relevant trading charges on income, and
R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.
Amendments
1 Deleted by Finance Act 2006 section 127 and Schedule 2 para 1(b)(iii)(I) for accounting periods ending on or after 2 February 2006.
2 Substituted by Finance Act 2006 section 127 and Schedule 2 para 1(b)(iii)(II) for accounting periods ending on or after 2 February 2006.
(4)(a) Where a company makes a claim for relief under this section in respect of any relevant trading charges on income paid in an accounting period, an amount (which shall not exceed the amount of the excess in respect of which a claim under this section may be made), determined in accordance with paragraph (b), shall be treated for the purposes of the Tax Acts as relieved under this section.
(b) [The]1 amount determined in accordance with this paragraph in relation to an accounting period is an amount equal to the aggregate of the following amounts:
(i) where relief is given under paragraph (a) of subsection (3) for the accounting period, an amount equal to 10 times the amount by which the relevant corporation tax for the accounting period is reduced by virtue of that paragraph, and
(ii) where relief is given under paragraph (b) of subsection (3) for the accounting period, an amount determined by the formula-
T x 100
R
where-
T is the amount by which the relevant corporation tax for the accounting period is reduced by virtue of that paragraph, and
R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.
Amendments
1 Substituted by Finance Act 2003 section 59(1)(a) as respects accounting periods ending on or after 6 February 2003.
