Finance Act, 1963

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PART IV.

Corporation Profits Tax.

Increase of rate of corporation profits tax.

37.—(1) Section 35 of the Finance Act, 1941 , shall not apply or have effect in respect of any accounting period ending on or after the 1st day of January, 1962, and in lieu thereof, the following provisions shall, subject to the next subsection, apply and have effect in respect of every such accounting period:

(i) subsection (1) of section 52 of the Finance Act, 1920 , shall be construed and have effect as if “fifteen per cent.” were substituted for “five per cent.”;

(ii) paragraph (a) of the proviso to that subsection shall be construed and have effect as if “tax shall be charged at a rate of five per cent. on so much of the profits as does not exceed two thousand five hundred pounds, and where the profits are profits arising in some shorter accounting period, tax shall be charged at a rate of five per cent. on such amount of the profits as bears to two thousand five hundred pounds” were substituted for “no tax shall be charged on the first five hundred pounds thereof, and where the profits are profits arising in some shorter accounting period, no tax shall be charged on such amount of the profits as bears to five hundred pounds”;

(iii) paragraph (b) of that proviso shall be construed and have effect as if “twenty per cent.” were substituted for “ten per cent.”

(2) In the case of any such accounting period which began before the 1st day of January, 1962, the profits shall be apportioned between the part of the period before that day and the part thereof after the 31st day of December, 1961, in proportion to the respective lengths of those parts and—

(a) as respects so much of the profits as is apportioned to the first-mentioned part, corporation profits tax shall be charged thereon at the rate of ten per cent., provided that no tax shall be charged on so much thereof as bears to two thousand five hundred pounds the same proportion as that part bears to twelve months,

(b) as respects so much of the profits as is apportioned to the second-mentioned part, corporation profits tax shall be charged thereon at the rate of fifteen per cent., provided that tax shall be charged at the rate of five per cent. on so much thereof as bears to two thousand five hundred pounds the same proportion as that part bears to twelve months,

(c) the amount of tax payable by a company incorporated by or under the laws of the State shall in no case exceed the sum of the following amounts:

(i) the amount represented by fifteen per cent. of the balance of the profits apportioned to the first-mentioned part remaining after allowing such proportion of the deductions specified in paragraph (b) of the proviso to subsection (1) of section 52 of the Finance Act, 1920 , as would be appropriate to that part if those deductions were apportioned in the same manner as the profits are required by this subsection to be apportioned, and

(ii) the amount represented by twenty per cent, of the balance of the profits apportioned to the second-mentioned part remaining after allowing such proportion of those deductions as would be appropriate to that part if those deductions were apportioned as aforesaid.

(3) (a) This subsection applies where the profits of the accounting period in question do not exceed—

(i) in case that accounting period is a period of twelve months—two thousand five hundred pounds, and

(ii) in case that accounting period is a period of less than twelve months—a sum which bears the same proportion to two thousand five hundred pounds as the length of the accounting period bears to twelve months.

(b) One-half of so much of the corporation profits tax chargeable for an accounting period beginning before and ending on or after the 1st day of January, 1962, as is referable to the profits apportioned pursuant to subsection (2) of this section to the part of that accounting period after the 31st day of December, 1961, shall not be payable.

(c) One-half of the corporation profits tax chargeable for an accounting period beginning on or after the 1st day of January, 1962, and ending on or before the 31st day of December, 1963, shall not be payable.

(d) One-half of so much of the corporation profits tax chargeable for an accounting period beginning before and ending on or after the 1st day of January, 1964, as is referable to the profits apportioned to the part of that accounting period before that day shall not be payable.

(e) For the purpose of paragraph (d) of this subsection, the profits apportioned to a part of an accounting period shall be the part of the profits of the accounting period apportioned to that part on an apportionment of the profits of the accounting period between that part and the remainder of the accounting period in proportion to the respective lengths of that part and such remainder.

(4) (a) Where the profits of an accounting period mentioned in paragraph (c) of the immediately preceding subsection exceed the sum which bears to two thousand five hundred pounds the same proportion as the length of the accounting period bears to twelve months, the tax payable for the accounting period shall not exceed the aggregate of—

(i) the amount of tax which would have been payable if the profits of the accounting period had not exceeded the said sum, and

(ii) one-quarter of the amount by which the profits exceed the said sum.

(b) Where, in the case of an accounting period mentioned in paragraph (b) or (d) of the immediately preceding subsection, the profits apportioned to the part of the accounting period after the 31st day of December, 1961, or, as the case may be, before the 1st day of January, 1964, exceed the sum which bears to two thousand five hundred pounds the same proportion as the length of that part bears to twelve months, the tax payable on those profits shall not exceed the aggregate of—

(i) the amount of tax which under the said paragraph (b) or paragraph (d) would have been payable on those profits if they had not exceeded the said sum, and

(ii) one-quarter of the amount by which those profits exceed the said sum.

(5) Any additional corporation profits tax payable by virtue of the alterations in the law made by this section in respect of any accounting period ending on or after the 1st day of January, 1962, may be assessed and recovered notwithstanding that corporation profits tax has already been assessed in respect of that period.