Finance Act, 1941

Provisions in respect of a company which succeeded to an unincorporated business.

42.—Where a company has succeeded to a trade or business which, immediately before such succession was carried on by an individual or by two or more individuals in partnership, and such company carries on a trade or business substantially the same as the trade or business so carried on by such individual or such individuals, and such company is a company the directors whereof have a controlling interest therein, and such company has not had three consecutive trade years the last of which ended in the year ended on the 31st day of August, 1939, then and in such case, if the said individual or all of the said individuals is or are a director or directors of such company, the following provisions shall have effect, that is to say:—

(a) the following profits may, on the application of the company, be treated as profits of the company for the purpose of computing the standard profits of the company, that is to say, the profits of any trade year or trade years which, if the said succession had not occurred and excess corporation profits tax had been chargeable on the profits of such individual or individuals from the said trade or business carried on by him or them, might have been brought into account for the purpose of ascertaining the standard profits of such individual or individuals;

(b) the amount of any profits of such individual or individuals which, under the foregoing paragraph of this section, are treated as profits of the company shall be determined on the same principles as those on which the profits of a company are required by law to be determined for the purpose of a charge to corporation profits tax and the enactments for the time being regulating the determination of the profits for the said purpose shall apply and have effect accordingly;

(c) in the ascertainment of the profits of the company for any accounting period or part of an accounting period for the purpose of a charge to excess corporation profits tax, no deduction shall be allowed in respect of sums paid by the company by way of remuneration to such individual or individuals.