Section 845B Set-off of surplus advance corporation tax

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Amendments

Section 845B inserted by Finance Act 2003 section 41(1)(n) as respects accounting periods ending on or after 6 February 2003.

(1) In this section―

"surplus advance corporation tax", in relation to an accounting period of a company, means an amount of advance corporation tax―

(a) to which the company was liable under section 159 in respect of a distribution made before 6 April 1999,

(b) which was paid by the company and not repaid to it, and

When does "surplus advance corporation tax" (surplus ACT) arise?

(1) Under the advance corporation tax system, a company was obliged to make a payment of "advance corporation tax" equivalent to the tax credits attaching to the distributions made by it in respect of an accounting period. Surplus advance corporation...

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(2) Where in the case of an accounting period of a company there is an amount of surplus advance corporation tax, that amount shall be set against the company's liability to corporation tax on any income charged to corporation tax for that accounting period and shall accordingly discharge a corresponding amount of that liability.

What rules apply to the use of surplus ACT for an accounting period?

(2) Your company must set any unused surplus ACT for an accounting period against the corporation tax liability on the company's income (as opposed to the corporation tax in respect of its chargeable gains) for that period.

(3) For the purposes of this section―

(a) the income of a company charged to corporation tax for any accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to chargeable gains, and

(b) the part of the profits so attributable shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.

What is included in the CT liability in this section?

(3) In (2), the corporation tax liability on the company income means the corporation tax attributable to your profits after excluding the chargeable gains from those profits. In this regard, part of the profits attributable to income means that part...

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(4) For the purposes of this section, a notice under section 884 may require the inclusion in the return to be delivered by a company under that section of particulars of any surplus advance corporation tax carried forward in relation to that company under subsection (2).

What information may be requested by Revenue?

(4) An inspector or Revenue officer may request your company to file a corporation tax return within a specified time (section 884). Such a request may also notify you to provide details of your surplus ACT.

(5) Where an inspector discovers that any set-off of surplus advance corporation tax under this section ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his or her judgment be required for recovering any tax that ought to have been paid and generally for securing that the resulting liabilities to tax (including interest on unpaid tax) of the person concerned are what they would have been if only such setoffs had been made as ought to have been made.

Can Revenue make an assessment to recover ACT that should not have been offset?

(5) Yes. An inspector may make an assessment to recover ACT that should not have been set-off, i.e., that should not have been used to reduce the company's corporation tax liability.