Finance Act, 1980

Provisions relating to relief for certain corporation profits tax losses.

48.—(1) Subsection (3) of section 184 of the Corporation Tax Act, 1976 , is hereby amended—

(a) in paragraph (b), by the substitution for the definitions of A and B of the following definitions:

“A is the excess of the amount of corporation tax which, apart from sections 58 (basis of relief from corporation tax for export profits), 182, this section and section 41 of the Finance Act, 1980, is chargeable for the accounting period over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period, and

B is the excess of the amount of corporation tax which, apart from sections 58, 182, this section and section 41 of the Finance Act, 1980, would be chargeable for the accounting period if the amount of the company's income for the accounting period were reduced by the appropriate amount over an amount calculated by applying a rate equal to the standard rate for the year of assessment in which the accounting period ends to the amount of the company's income for the accounting period as reduced by the appropriate amount:”,

and

(b) in the proviso to paragraph (b), by the deletion of “and” in paragraph (ii) and by the substitution for paragraph (iii) and the paragraph immediately following it of the following:

“(iiA) where the corporation tax payable by a company for an accounting period is reduced by virtue of a claim under section 41 (2) of the Finance Act, 1980, the amount of relief to be allowed under the foregoing provisions of this section shall be reduced in the same proportion which the amount by which the corporation tax referable to the income from the sale of goods (within the meaning of the said section 41) for that accounting period is so reduced bears to the relevant corporation tax; and

(iii) the amount of a reduction made for an accounting period under paragraph (i) or (ii) of this proviso shall, for the purposes of section 64, be deemed to be a reduction of the amount of relief allowed under section 58, and for the purposes of this proviso—

(I) ‘corporation tax referable to the income attributable to the excess’ and ‘corporation tax referable to the income from the sale of goods exported’ have the meanings assigned to them in section 58, and

(II) ‘relevant corporation tax’ has the meaning assigned to it in section 182.”.

(2) Where, for any accounting period of a company which coincides with or includes a relevant accounting period—

(a) the corporation tax which is referable to the income of the company from the sale in the course of the trade of goods for the relevant accounting period falls to be reduced under section 41, and

(b) a reduced relief under section 184 of the Corporation Tax Act, 1976 , is allowed as respects the accounting period in accordance with the provisions of paragraph (iiA) of the proviso to subsection (3) (b) of the said section 184,

then—

(i) the amount of the company's income which, apart from this paragraph, falls to be taken into account in the definition of A or C in section 45 (1) in respect of the relevant accounting period shall be reduced by an amount determined by the formula

K ×

L

__

M

×

N

__

P

where—

K is the amount of the relief for the accounting period under the said section 184 before any reduction in that relief under the provisions of the proviso to subsection (3) (b) of that section,

L is the income of the accounting period within the meaning of section 28 (8) of the Corporation Tax Act, 1976 ,

M is the relevant corporation tax within the meaning of section 182 of the Corporation Tax Act, 1976 , in relation to the accounting period,

N is the income from the sale of goods, within the meaning of section 41, for the relevant accounting period, and

P is the total income brought into charge to corporation tax for the accounting period,

and

(ii) the amount of the corporation tax (as reduced under section 41) which, apart from this paragraph, falls to be taken into account in the definition of B or D in section 45 (1) in respect of the relevant accounting period shall be reduced by an amount determined by the formula

Q ×

2

__

7

where Q is the amount of the reduction in the relief for the accounting period under the provisions of the said paragraph (iiA) of the said proviso.