Set-off of surplus advance corporation tax

Summary

The Advance Corporation Tax (ACT) regime was ended in 1999, this section allows for the continuing set-off of surplus ACT. Surplus ACT paid by a company in respect of distributions made by it in an accounting period before 6 April 1999 may be set off against the company’s liability (if any) to corporation tax on its income (but not chargeable gains) in subsequent accounting periods.

Details

Definition

(1) Surplus advance corporation tax is defined as ACT paid by a company (and not repaid) in respect of distributions made by it in an accounting period before 6 April 1999 and which has not been set off against the company’s liability (if any) to corporation tax on its income (but not chargeable gains) of that period.

Set-off of surplus ACT

(2) A company with surplus ACT (that is, where a company’s ACT for an accounting period exceeds its corporation tax liability for that period) may claim to have that surplus set off against the company’s liability to corporation tax for that period.

(3) Income of a company charged to corporation tax shall not include profits attributable to chargeable gains. Where there are charges, management expenses or other amounts which may be set off against profits of more than one description, they must be set against income and not chargeable gains.

Returns under section 884

(4) For the purpose of this section notices required under section 884 may require the inclusion of details of surplus advance corporation tax carried forward.

Inspector raised assessments

(5) Where an excessive or erroneous set-off of ACT has been made, an inspector may raise such assessments as are necessary to ensure the collection of the correct tax due (including interest on such tax).

Relevant Date: Finance Act 2021