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Preliminary tax.
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38.— (1) Section 958 of the Principal Act is amended—
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(a) in subsection (1)—
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(i) in paragraph (a)—
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(I) by inserting the following definition after “ corres ponding corporation tax for the preceding chargeable period ”:
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“ ‘ corresponding income tax for the preceding chargeable period ’, in relation to a chargeable period which is an accounting period of a company, means an amount determined by the formula—
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I x C
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P
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where—
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I is the income tax payable under section 239 or 241 by the chargeable person for the preceding chargeable period,
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C is the number of days in the chargeable period, and
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P is the number of days in the preceding chargeable period;”,
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(II) by substituting the following for the definition of “ tax payable for the initial period ”:
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“ ‘ tax payable for the initial period ’, in relation to a chargeable period which is—
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(I) a year of assessment for capital gains tax (being the years of assessment 2003 to 2008 inclusive), means the tax which would be payable by the chargeable person if the year of assessment ended on 30 September in that year instead of 31 December in that year, or
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(II) a year of assessment for capital gains tax (being the year of assessment 2009 or any subsequent year of assessment), means the tax which would be payable by the chargeable person if the year of assessment ended on 30 November in that year instead of 31 December in that year;”,
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and
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(III) by inserting the following definition after “ pre- preceding chargeable period ”:
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“ ‘ relevant accounting period ’ shall be construed in accordance with paragraph (c);”, and
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(ii) by inserting the following after paragraph (b):
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“(c) (i) Subject to subparagraph (ii), a relevant accounting period shall mean an accounting period of a company, other than a small company, which commences on or after 14 October 2008.
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(ii) An accounting period shall not be a relevant accounting period where, but for this subparagraph, the final instalment of preliminary tax would, by reason of the dates on which the accounting period commences and ends, be due and payable in accordance with subsection (2BA)(c) on or before the date on which the initial instalment would be due and payable in accordance with subsection (2BA)(b).”,
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(b) in subsection (2B)—
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(i) in paragraph (a), by substituting “Subject to subsection (2BA), preliminary tax” for “Preliminary tax”, and
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(ii) in paragraph (c), by substituting “subsections (4C) and (4CA)” for “subsections (4C) and (4E)”,
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(c) by inserting the following after subsection (2B):
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“(2BA) (a) Preliminary tax appropriate to a chargeable period which is a relevant accounting period shall be due and payable in 2 instalments.
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(b) The first of the 2 instalments referred to in paragraph (a) (in this section referred to as the ‘initial instalment’) shall be due and payable within a period of 6 months from the commencement of the accounting period, but in any event the initial instalment shall be due and payable not later than day 21 of the month in which that period of 6 months ends.
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(c) The second of the 2 instalments referred to in paragraph (a) (in this section referred to as the ‘final instalment’) shall be due and payable not later than the day which is 31 days before the day on which the accounting period ends, but where that day is later than day 21 of the month in which the first-mentioned day occurs, the final instalment shall be due and payable not later than day 21 of that month.”,
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(d) in subsection (2C)—
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(i) in paragraph (b), by inserting “Subject to paragraph (c), references” for “References”, and
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(ii) by inserting the following after paragraph (b):
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“(c) References in this Part to the due date for the payment of the initial instalment, or the final instalment, of preliminary tax shall, in the case where that tax is due for a chargeable period which is a relevant accounting period, be construed in accordance with subsection (2BA).”,
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(e) in subsection (3)(a)—
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(i) by substituting “Subject to subsections (3A), (4), (4B), (4C), (4CA), (4D), (4E), (4F) and (4G)” for “Subject to subsections (3A), (4), (4B), (4C), (4D) and (4E)”, and
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(ii) in subparagraph (v) by substituting the following for clause (I):
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“(I) as respects tax payable for the initial period—
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(A) where the initial period falls in the years of assessment 2003 to 2008 inclusive, on or before 31 October in the year of assessment, and
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(B) where the initial period falls in the year of assessment 2009 or any subsequent year of assessment, on or before 15 December in that year of assessment, and”,
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(f) in subsection (4C)—
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(i) by substituting “Subject to subsections (2B)(c), (4CA), (4E), (4F), (4G) and (11)” for “Subject to subsections (2B)(c), (4E) and (11)”, and
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(ii) in paragraph (b)(i), by substituting the following for clause (II):
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“(II) the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period,”,
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(g) by inserting the following after subsection (4C):
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“(4CA) (a) Subject to subsections (2B)(c), (4E), (4F), (4G) and (11), where but for this subsection tax payable by a chargeable person for a chargeable period which is a relevant accounting period would be due and payable in accordance with subsection (3), and—
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(i) the chargeable person has defaulted in the payment of the initial instalment or final instalment of preliminary tax for the chargeable period,
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(ii) the initial instalment of preliminary tax paid by the chargeable person for the chargeable period is less than, or less than the lower of—
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(I) 45 per cent of the tax payable by the chargeable person for the chargeable period, or
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(II) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period,
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(iii) where the chargeable period commenced on the company coming within the charge to corporation tax, the initial instalment of preliminary tax paid by the chargeable person for the chargeable period is less than 45 per cent of the tax payable by the chargeable person for the chargeable period,
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(iv) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the chargeable period is less than 90 per cent of the tax payable by the chargeable person for the chargeable period, or
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(v) the initial instalment or the final instalment of preliminary tax payable by the chargeable person for the chargeable period was not paid by the date on which it was due and payable,
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then the tax payable by the chargeable person for the chargeable period shall be deemed to have been due and payable in accordance with paragraph (b).
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(b) (i) Tax due and payable in accordance with this paragraph by a chargeable person for a chargeable period which is a relevant accounting period shall be due and payable in 2 instalments.
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(ii) The first of the 2 instalments referred to in subparagraph (i) (in this paragraph and in paragraphs (c) and (d) referred to as the ‘initial relevant instalment’) shall be due and payable not later than the day on which the initial instalment of preliminary tax is due and payable in accordance with subsection (2BA).
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(iii) The second of the 2 instalments referred to in subparagraph (i) (in this paragraph and in paragraph (d) referred to as the ‘final relevant instalment’) shall be due and payable not later than the day on which the final instalment of preliminary tax is due and payable in accordance with subsection (2BA).
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(c) The amount of the initial relevant instalment shall be 45 per cent of the tax payable by the chargeable person for the chargeable period.
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(d) The amount of the final relevant instalment shall be an amount equal to the excess of the tax payable by the chargeable person for the chargeable period over the amount of the initial relevant instalment.”,
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(h) in subsection (4E), by substituting “Subject to subsections (4F) and (4G), where” for “Where”,
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(i) by inserting the following after subsection (4E):
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“(4F) Where as respects a chargeable period which is a relevant accounting period—
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(a) the initial instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is less than 45 per cent of the tax payable by the chargeable person for the chargeable period,
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(b) the initial instalment of preliminary tax so paid by the chargeable person for the chargeable period is not less than 45 per cent of the amount which would be payable by the chargeable person for the chargeable period if no amount were included in the chargeable person’s profits for the chargeable period—
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(i) in respect of chargeable gains on the disposal by the person of assets in the part of the chargeable period which is after the date by which the initial instalment of preliminary tax for the chargeable period is payable in accordance with subsection (2BA), or
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(ii) in the case of a relevant company, in respect of profits or gains or losses accruing, and not realised, in the chargeable period on financial assets or financial liabilities as are attributable to changes in value of those assets or liabilities in the part of the chargeable period which is after the end of the month immediately preceding the month in which the initial instalment of preliminary tax for the chargeable period is payable in accordance with subsection (2BA),
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and
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(c) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is not less than 90 per cent of that amount of tax which would be payable by the chargeable person for the chargeable period if computed in accordance with subsection (4G)(b),
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then the initial instalment of preliminary tax paid by the chargeable person for the chargeable period shall be treated for the purposes of subsection (4CA) as having been paid by the date on which it is due and payable.
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(4G) Where as respects a chargeable period which is a relevant accounting period—
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(a) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is less than 90 per cent of the tax payable by the chargeable person for the chargeable period,
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(b) the aggregate of the initial instalment and the final instalment of preliminary tax so paid by the chargeable person for the chargeable period is not less than 90 per cent of the amount which would be payable by the chargeable person for the chargeable period if no amount were included in the chargeable person’s profits for the chargeable period—
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(i) in respect of chargeable gains on the disposal by the person of assets in the part of the chargeable period which is after the date by which, or
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(ii) in the case of a relevant company, in respect of profits or gains or losses accruing, and not realised, in the chargeable period on financial assets or financial liabilities as are attributable to changes in value of those assets or liabilities in the part of the chargeable period which is after the end of the month immediately preceding the month in which,
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the final instalment of preliminary tax for the chargeable period is payable in accordance with subsection (2BA), and
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(c) the chargeable person makes a further payment of preliminary tax for the chargeable period within one month after the end of the chargeable period and the aggregate of that payment and the initial instalment and final instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is not less than 90 per cent of the tax payable by the chargeable person for the chargeable period,
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then the final instalment of preliminary tax paid by the chargeable person for the chargeable period shall be treated for the purposes of subsection (4CA) as having been paid by the date on which it is due and payable.”,
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and
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(j) by substituting the following for subsection (11):
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“(11) (a) In this subsection—
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‘ initial balance ’ means the amount represented by the formula—
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A — B
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where—
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A is the amount of the initial instalment of preliminary tax paid by the surrendering company for the relevant period in accordance with subsection (2BA), and
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B is—
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(i) where the relevant period commenced on the surrendering company coming within the charge to corporation tax—
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(I) 45 per cent of the tax payable by the surrendering company for the relevant period, or
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(II) where subsection (2B)(c) applies in relation to that period, a nil amount,
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or,
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(ii) in any other case, the lower of—
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(I) 45 per cent of the tax payable by the surrendering company for the relevant period, or
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(II) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period, which is payable by the surrendering company;
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‘ final balance ’ means the amount represented by the formula—
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C — D
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where—
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C is the amount of preliminary tax paid by the surrendering company for the relevant period in accordance with subsection (2B) or subsection (2BA), as the case may be, and
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D is 90 per cent of the tax payable by the surrendering company for the relevant period, or, where subsection (2B)(c) applies in relation to that period, a nil amount;
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‘ relevant initial balance ’ means that part of an initial balance that is specified in a notice given in accordance with paragraph (c);
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‘ relevant final balance ’ means that part of a final balance that is specified in a notice given in accordance with paragraph (c).
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(b) This subsection applies where—
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(i) a chargeable person being a company (in this subsection referred to as the ‘ surren dering company ’) which is a member of a group pays—
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(I) an initial instalment of preliminary tax for a chargeable period (in this subsection referred to as the ‘ relevant period ’) in accordance with subsection (2BA), being an amount which exceeds, or exceeds the lower of—
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(A) 45 per cent of the tax payable by the surrendering company for the relevant period, or
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(B) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period, which is payable by the surrendering company,
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(II) an initial instalment of preliminary tax for a relevant period which commenced on the surrendering company coming within the charge to corporation tax, being an amount which exceeds 45 per cent of the tax payable by that company for the relevant period,
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(III) an amount of preliminary tax for a relevant period in accordance with subsection (2B) or subsection (2BA) as the case may be, being an amount which exceeds 90 per cent of the tax payable by the surrendering company for the relevant period, or
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(IV) any amount of preliminary tax for a relevant period in respect of which subsection (2B)(c) applies,
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(ii) another chargeable person being a company (in this subsection referred to as the ‘ claimant company ’) which is a member of the group pays—
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(I) an initial instalment of preliminary tax for a chargeable period in accordance with subsection (2BA), being an amount which is less than, or less than the lower of—
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(A) 45 per cent of the tax payable by the claimant company for the chargeable period, or
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(B) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period, which is payable by the claimant company,
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(II) an initial instalment of preliminary tax for a chargeable period which commenced on the claimant company coming within the charge to corporation tax, being an amount which is less than 45 per cent of the tax payable by that company for the relevant period, or
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(III) an amount of preliminary tax for a chargeable period in accordance with subsection (2BA), being an amount which is less than 90 per cent of the tax payable by the claimant company for the chargeable period,
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(iii) the chargeable period in subparagraph (ii) coincides with the relevant period, and
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(iv) the claimant company is not a small company in relation to the relevant period.
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(c) Where this subsection applies the 2 companies may, at any time on or before the specified return date for the chargeable period of the surrendering company, jointly give notice to the Collector-General, in such form as the Revenue Commissioners may require, that—
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(i) paragraph (d)(i) is to have effect in relation to the relevant initial balance, or,
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(ii) paragraph (d)(ii) is to have effect in relation to the relevant final balance,
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which is specified in the notice.
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(d) (i) Where this paragraph has effect in relation to any relevant initial balance—
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(I) an additional amount of preliminary tax equal to the relevant initial balance shall be deemed for the purposes of subsection (4CA)(a)(ii) to have been paid by the claimant company on the due date for the payment of the initial instalment of preliminary tax of that company for the relevant period if 100 per cent of the tax payable by the claimant company for the relevant period, disregarding this clause, is paid on or before the specified return date for the relevant period, and
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(II) the surrendering company shall for the purposes of this subsection be treated as having surrendered the relevant initial balance to the claimant company and that relevant initial balance shall not be available for use by any other company under this subsection.
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(ii) Where this paragraph has effect in relation to any relevant final balance—
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(I) an additional amount of preliminary tax equal to the relevant final balance shall be deemed for the purposes of subsection (4CA)(a)(iv) to have been paid by the claimant company on the due date for the payment of the final instalment of preliminary tax of that company for the relevant period if 100 per cent of the tax payable by the claimant company for the relevant period, disregarding this clause, is paid on or before the specified return date for the relevant period, and
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(II) the surrendering company shall for the purposes of this subsection be treated as having surrendered the relevant final balance to the claimant company and that relevant final balance shall not be available for use by any other company under this subsection.
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(e) A payment for a relevant initial balance or for a relevant final balance—
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(i) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and
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(ii) shall not be regarded as a distribution or a charge on income for any of the purposes of the Corporation Tax Acts,
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and, in this paragraph, ‘ payment for a relevant initial balance or for a relevant final balance ’ means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered in accordance with this subsection, being a payment not exceeding that amount.
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(f) (i) This subsection shall not affect the liability to pay corporation tax of any company to which the subsection relates.
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(ii) Where this subsection applies, the amount on which, but for this subsection, the claimant company is liable to pay interest in accordance with section 1080 shall be reduced by—
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(I) any relevant initial balance deemed to have been paid by that company in accordance with paragraph (d)(i)(I), or
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(II) any relevant final balance deemed to have been paid by that company in accordance with paragraph (d)(ii)(I).
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(g) For the purposes of this subsection, 2 companies are members of the same group if and only if they would be such members for the purposes of section 411.”.
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(2) (a) Subsection (1), apart from paragraphs (a)(i)(II) and (e)(ii), has effect for accounting periods commencing on or after 14 October 2008.
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(b) Paragraphs (a)(i)(II) and (e)(ii) of subsection (1) apply to disposals made in the year of assessment 2009 and subsequent years of assessment.
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