Finance Act, 1944

Subsidiary companies.

14.—(1) Where a post-appointed day company is an auxiliary of a pre-appointed day company, the post-appointed day company shall be deemed, for the purposes of this section, to be a subsidiary of the pre-appointed day company.

(2) Where—

(a) a post-appointed day company (in this sub-section referred to as the second company) is an auxiliary of another post-appointed day company (in this sub-section referred to as the first company), and

(b) the first company is deemed by sub-section (1) of this section to be a subsidiary of a pre-appointed day company,

the second company shall also be deemed, for the purposes of this section, to be a subsidiary of the pre-appointed day company.

(3) Where—

(a) of three or more post-appointed day companies, one is deemed by sub-section (1) of this section to be a subsidiary of a pre-appointed day company, and

(b) each of the other post-appointed day companies is an auxiliary of any one of the post-appointed day companies,

each of the other post-appointed day companies shall also be deemed, for the purposes of this section, to be a subsidiary of the pre-appointed day company.

(4) Where by virtue of the preceding provisions of this section a post-appointed day company would, but for this sub-section, be deemed to be a subsidiary of two or more pre-appointed day companies, it shall be treated as being a subsidiary of such one only of those pre-appointed day companies as the Revenue Commissioners may direct.

(5) Where a post-appointed day company is deemed by this section to be a subsidiary of a pre-appointed day company, then, unless the Revenue Commissioners otherwise direct, the following provisions shall, for the purpose of a charge to corporation profits tax, apply, that is to say—

(a) the post-appointed day company shall be deemed not to be a company;

(b) the trade or business or undertaking of a similar character, including the holding of investments, carried on by the post-appointed day company shall be deemed to be carried on by the pre-appointed day company;

(c) the assets of the post-appointed day company shall be deemed to be the assets of the pre-appointed day company.

(6) (a) Where the Revenue Commissioners are satisfied that part of the issued capital of a post-appointed day company, which is deemed by this section to be a subsidiary of a pre-appointed day company, would, if the said capital had been issued by the pre-appointed day company as its own capital, have entitled the pre-appointed day company either to a deduction from profits under section 41 of the Act of 1941 or to any increase in its substituted standard under section 39 of the Act of 1941, they may, for the purposes of the said sections, deem the said part of the issued capital of the post-appointed day company to be capital issued by the pre-appointed day company.

(b) In this sub-section the word “capital” has the same meaning as in sub-paragraph (i) of paragraph (c) of sub-section (2) of section 16 of the Finance Act, 1942 (No. 14 of 1942).

(7) Where, as the result of the application to a pre-appointed day company and one and only one post-appointed day company of the provisions set out in sub-section (5) of this section, the pre-appointed day company is liable to pay corporation profits tax of an amount in excess of the amount for which it would other wise be liable, the following provisions shall have effect, that is to say—

(a) the said companies shall be liable jointly and severally to pay the excess;

(b) if the said excess is paid by the pre-appointed day company, the pre-appointed day company may recover from the post-appointed day company an amount equal to the said excess.

(8) Where, as the result of the application to a pre-appointed day Company and two or more post-appointed day companies of the provisions set out in sub-section (5) of this section, the pre-appointed day company is liable to pay corporation profits tax of an amount in excess of the amount for which it would other wise be liable, the following provisions shall have effect, that is to say—

(a) the pre-appointed day company and each of the post-appointed day companies shall be liable jointly and severally to pay the excess;

(b) if the said excess is paid by the pre-appointed day company, the Special Commissioners may, on the application of the pre-appointed day company, apportion (which apportionment shall be final) the said excess between the post-appointed day companies in such proportions as the Special Commissioners think proper, and in that case the amount so apportioned to any post-appointed day company shall be recoverable from that post-appointed day company by the pre-appointed day company.

(9) (a) A company (in this paragraph referred to as the second company) shall, for the purposes of this section, be deemed to be an auxiliary of another company (in this paragraph referred to as the first company) if—

(i) the second company is incorporated after the first company, and

(ii) the first company holds more than fifty per cent. of the paid up ordinary issued capital of the second company.

(b) For the purposes of this sub-section—

(i) any shares of a company held by the nominees or the shareholders of another company shall be deemed to be held by that other company,

(ii) preference stock (other than preference stock carrying voting rights only when dividends are in arrear) which carry voting rights or preference shares (other than preference shares carrying voting rights only when dividends are in arrear) which carry voting rights shall be deemed to be ordinary stock or ordinary shares.

(10) In this section—

the expression “pre-appointed day company” means a company incorporated before the 7th day of May, 1941;

the expression “post-appointed day company” means a company incorporated on or after the 7th day of May, 1941;

references to corporation profits tax shall be construed as including references to excess corporation profits tax.

(11) (a) Subject to paragraph (b) of this sub-section, the provisions of this section shall apply and have effect in relation to any accounting period ending after the 31st day of December, 1943.

(b) Where the provisions set out in sub-section (5) of this section apply to a pre-appointed day company and a post-appointed day company, and the said companies inform the Revenue Commissioners that they desire the provisions of this section to apply and have effect in relation to all accounting periods ending after the date of the incorporation of the post-appointed day company, then the provisions of this section shall apply and have effect accordingly.