Taxes Consolidation Act 1997 Schedule 32 paragraph 5

Distributions Out of Certain Income of Manufacturing Companies — Provisions Relating to Relief for Certain Losses and Capital Allowances : Carried Forward from 1975–76

Paragraph 5 of Schedule 32 provided rules for calculating the tax credit attaching to distributions made by manufacturing companies where those companies also had unrelieved income tax trading losses and capital allowances carried forward from the year 1975–76.

• The paragraph applied where a company had manufacturing income taxed at the effective 10 per cent corporation tax rate under Part 14 and also claimed relief under paragraph 16 for pre-1976 losses and capital allowances.
• Relief under paragraph 16 operated as a deduction from corporation tax payable rather than as a deduction from income, which created a mismatch when calculating tax credits on distributions.
• The paragraph set out translation rules to convert the paragraph 16 relief (given as a deduction from tax) into an equivalent deduction from income, so that the correct tax credit could be attached to distributions made from profits taxed at the 10 per cent rate.
• The paragraph was repealed with effect from 6 April 1999, as tax credits no longer attached to distributions made on or after that date.