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INCOME AND CORPORATION TAXES ACT 1988

UK Public General Acts

Version as enacted

1988 CHAPTER 1


  • PART I. THE CHARGE TO TAX
    • Income tax
    • Corporation tax
    • Small companies' rate
    • Advance corporation tax
    • The six Schedules
  • PART II. PROVISIONS RELATING TO THE SCHEDULE A CHARGE AND THE ASSOCIATED SCHEDULE D CHARGES
    • General
    • Deductions and other allowances
    • Premiums, leases at undervalue etc
    • Supplemental: Schedules A and D
  • PART III. PROVISIONS RELATING TO THE SCHEDULE C CHARGE AND GENERAL PROVISIONS ABOUT GOVERNMENT SECURITIES
    • General
    • Government securities: exemptions from tax
    • Government securities: interest payable without deduction of tax
  • PART IV. PROVISIONS RELATING TO THE SCHEDULE D CHARGE
    • CHAPTER I. SUPPLEMENTARY CHARGING PROVISIONS
    • CHAPTER II. INCOME TAX: BASIS OF ASSESSMENT ETC.
      • Cases I and II
      • Cases III, IV and V
      • Case VI
    • CHAPTER III. CORPORATION TAX: BASIS OF ASSESSMENT ETC
    • CHAPTER IV. PROVISIONS SUPPLEMENTARY TO CHAPTERS II AND III
    • CHAPTER V. COMPUTATIONAL PROVISIONS
      • Deductions
      • Treatment of regional development and other grants and debts released etc.
      • Special provisions
    • CHAPTER VI. DISCONTINUANCE, AND CHANGE OF BASIS OF COMPUTATION
      • Valuation of trading stock etc.
      • Case VI charges on receipts
      • Reliefs
      • Supplemental
    • CHAPTER VII. PARTNERSHIPS AND SUCCESSIONS
      • General
      • Partnerships involving companies
      • Limited partners
    • CHAPTER VIII. MISCELLANEOUS AND SUPPLEMENTAL
  • PART V. PROVISIONS RELATING TO THE SCHEDULE E CHARGE
    • CHAPTER I. SUPPLEMENTARY CHARGING PROVISIONS OF GENERAL APPLICATION
      • Miscellaneous provisions
      • Shareholdings, loans etc.
      • Vouchers etc.
      • Living accommodation
      • Payments on retirement, sick pay etc.
    • CHAPTER II. SUPPLEMENTARY CHARGING PROVISIONS APPLICABLE TO DIRECTORS AND HIGHER-PAID EMPLOYEES AND OFFICE HOLDERS
      • Expenses
      • Benefits in kind
      • General supplementary provisions
    • CHAPTER III. PROFIT-RELATED PAY
      • Preliminary
      • The relief
      • Registration
      • Administration
      • Supplementary
    • CHAPTER IV. OTHER EXEMPTIONS AND RELIEFS
      • Share option and profit sharing schemes
      • Retirement benefits etc.
      • Foreign emoluments and earnings, pensions and certain travel facilities
      • Other expenses, subscriptions etc.
    • CHAPTER V. ASSESSMENT, COLLECTION, RECOVERY AND APPEALS
  • PART VI. COMPANY DISTRIBUTIONS, TAX CREDITS ETC
    • CHAPTER I. TAXATION OF COMPANY DISTRIBUTIONS
    • CHAPTER II. MATTERS WHICH ARE DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
    • CHAPTER III. MATTERS WHICH ARE NOT DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
      • Payments of interest
      • Demergers
      • Purchase of own shares
      • Stock dividends
    • CHAPTER IV. TAX CREDITS
    • CHAPTER V. ADVANCE CORPORATION TAX AND FRANKED INVESTMENT INCOME
    • CHAPTER VI. MISCELLANEOUS AND SUPPLEMENTAL
      • Group income
      • Stock dividends
      • Supplemental
  • PART VII. GENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS
    • CHAPTER I. PERSONAL RELIEFS
      • The reliefs
      • Supplemental
    • CHAPTER II. TAXATION OF INCOME OF SPOUSES
      • General rules
      • Separate assessments
      • Separate taxation
    • CHAPTER III. RELIEF FOR INVESTMENT IN CORPORATE TRADES: THE BUSINESS EXPANSION SCHEME
    • CHAPTER IV. SPECIAL PROVISIONS
    • CHAPTER V. RESIDENCE OF INDIVIDUALS
  • PART VIII. TAXATION OF INCOME AND CHARGEABLE GAINS OF COMPANIES
    • Taxation of income
    • Chargeable gains
  • PART IX. ANNUAL PAYMENTS AND INTEREST
    • Annual payments
    • Relief for payments of interest (excluding MIRAS)
    • Mortgage interest relief at source
  • PART X. LOSS RELIEF AND GROUP RELIEF
    • CHAPTER I. LOSS RELIEF: INCOME TAX
      • Trade etc. losses
      • Case VI losses
    • CHAPTER II. LOSS RELIEF: CORPORATION TAX
      • Trade etc. losses
      • Case VI losses
    • CHAPTER III. LOSS RELIEF: MISCELLANEOUS PROVISIONS
    • CHAPTER IV. GROUP RELIEF
  • PART XI. CLOSE COMPANIES
    • CHAPTER I. INTERPRETATIVE PROVISIONS
      • Additional matters to be treated as distributions
    • CHAPTER II. CHARGES TO TAX IN CONNECTION WITH LOANS
    • CHAPTER III. APPORTIONMENT OF UNDISTRIBUTED INCOME ETC.
  • PART XII. SPECIAL CLASSES OF COMPANIES AND BUSINESSES
    • CHAPTER I. INSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS
      • Insurance companies: general
      • Provisions applying only to overseas life insurance companies
      • Underwriters
      • Capital redemption business
    • CHAPTER II. FRIENDLY SOCIETIES, TRADE UNIONS AND EMPLOYERS' ASSOCIATIONS
      • Unregistered friendly societies
      • Registered friendly societies
      • Trade unions and employers' associations
    • CHAPTER III. UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.
      • Unit trust schemes
      • Dealers in securities, banks and insurance businesses
    • CHAPTER IV. BUILDING SOCIETIES, BANKS, SAVINGS BANKS, INDUSTRIAL AND PROVIDENT SOCIETIES AND OTHERS
    • CHAPTER V. PETROLEUM EXTRACTION ACTIVITIES
    • CHAPTER VI. MISCELLANEOUS BUSINESSES AND BODIES
  • PART XIII. MISCELLANEOUS SPECIAL PROVISIONS
    • CHAPTER I. INTELLECTUAL PROPERTY
      • Patents and know-how
      • Copyright and public lending right
      • Artists' receipts
    • CHAPTER II. LIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES
    • CHAPTER III. ENTERTAINERS AND SPORTSMEN
    • CHAPTER IV. SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY
    • CHAPTER V. SCHEMES FOR RATIONALIZING INDUSTRY
    • CHAPTER VI. OTHER PROVISIONS
      • Relief for losses on unquoted shares in trading companies
      • Miscellaneous
  • PART XIV. PENSION SCHEMES, SOCIAL SECURITY BENEFITS, LIFE ANNUITIES ETC.
    • CHAPTER I. RETIREMENT BENEFIT SCHEMES
      • Approval of schemes
      • Tax reliefs
      • Charge to tax in certain cases
      • Supplementary provisions
    • CHAPTER II. OTHER PENSION FUNDS AND SOCIAL SECURITY BENEFITS AND CONTRIBUTIONS
    • CHAPTER III. RETIREMENT ANNUITIES
    • CHAPTER IV. PERSONAL PENSION SCHEMES
      • Preliminary
      • Restrictions on approval
      • Tax reliefs
      • Charge to tax
      • Miscellaneous
    • CHAPTER V. PURCHASED LIFE ANNUITIES
    • CHAPTER VI. MISCELLANEOUS
  • PART XV. SETTLEMENTS
    • CHAPTER I. DISPOSITIONS FOR SHORT PERIODS
    • CHAPTER II. SETTLEMENTS ON CHILDREN
    • CHAPTER III. REVOCABLE SETTLEMENTS ETC.
    • CHAPTER IV. LIABILITY TO HIGHER RATE AND ADDITIONAL RATE TAX
      • Liability of settlors
      • Liability of trustees
    • CHAPTER V. MAINTENANCE FUNDS FOR HISTORIC BUILDINGS
  • PART XVI. ESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION
  • PART XVII. TAX AVOIDANCE
    • CHAPTER I. CANCELLATION OF TAX ADVANTAGES FROM CERTAIN TRANSACTIONS IN SECURITIES
    • CHAPTER II. TRANSFERS OF SECURITIES
      • Transfers with or without accrued interest: introductory
      • Transfers with or without accrued interest: charge to tax and reliefs
      • Transfers with or without accrued interest: supplemental
      • Other transfers of securities
      • Purchase and sale of securities
      • Miscellaneous provisions relating to securities
      • Supplemental
    • CHAPTER III. TRANSFER OF ASSETS ABROAD
    • CHAPTER IV. CONTROLLED FOREIGN COMPANIES
    • CHAPTER V. OFFSHORE FUNDS
      • Material interests in non-qualifying offshore funds
      • Charge to tax of offshore income gains
    • CHAPTER VI. MISCELLANEOUS
      • Migration etc. of company
      • Change in ownership of company
      • Transactions between associated persons
      • Other provisions
  • PART XVIII. DOUBLE TAXATION RELIEF
    • CHAPTER I. THE PRINCIPAL RELIEFS
    • CHAPTER II. RULES GOVERNING RELIEF BY WAY OF CREDIT
      • General
      • Tax underlying dividends
      • Miscellaneous rules
    • CHAPTER III. MISCELLANEOUS PROVISIONS
  • PART XIX. SUPPLEMENTAL
    • Miscellaneous
    • Interpretation
    • Commencement, savings, repeals etc.
  • Version as enacted

Introductory Text

Income and Corporation Taxes Act 1988

1988 CHAPTER 1

An Act to consolidate certain of the enactments relating to income tax and corporation tax, including certain enactments relating also to capital gains tax; and to repeal as obsolete section 339(1) of the Income and Corporation Taxes Act 1970 and paragraphs 3 and 4 of Schedule 11 to the Finance Act 1980.

[9th February 1988]

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

PART I
THE CHARGE TO TAX



Income tax


1 The charge to income tax

(1) Income tax shall be charged in accordance with the provisions of the Income Tax Acts in respect of all property, profits or gains respectively described or comprised in the Schedules, A, B, C, D, E and F, set out in sections 15 to 20 or which in accordance with the Income Tax Acts are to be brought into charge to tax under any of those Schedules or otherwise.

(2) Where any Act enacts that income tax shall be charged for any year, income tax shall be charged for that year—

(a) in respect of any income which does not fall within paragraph (b) below, at such rate as Parliament may determine to be the basic rate for that year;
(b) in respect of so much of an individual’s total income as exceeds £17,900, at such higher rates respectively as Parliament may determine in relation to the first £2,500, the next £5,000, the next £7,900, the next £7,900 and the remainder;
but this subsection has effect subject to any provision of the Income Tax Acts providing for income tax to be charged at a different rate in certain cases.
(3) The amount up to which an individual’s income is by virtue of subsection (2) above chargeable for any year at the basic rate shall be known as the basic rate limit; and the parts of income in excess of the basic rate limit which are specified in paragraph (b) of that subsection shall be known respectively as the first, second, third, fourth and fifth higher rate bands.

(4) If the retail prices index for the month of December preceding a year of assessment is higher than it was for the previous December, then, unless Parliament otherwise determines, subsection (2) above shall apply for that year as if for each of the amounts specified in that subsection as it applied for the previous year (whether by virtue of this subsection or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple.

(5) Subsection (4) above shall not require any change to be made in the amounts deductible or repayable under section 203 between the beginning of a year of assessment and 5th May in that year.

(6) The Treasury shall before each year of assessment make an order specifying the amounts which by virtue of subsection (4) above will be treated as specified for that year in subsection (2) above.

(7) Part VII contains general provisions relating to the taxation of income of individuals.

2 Fractions of a pound, and yearly assessments

(1) The due proportion of income tax shall be charged for every fractional part of one pound.

(2) Every assessment and charge to income tax shall be made for a year commencing on the 6th April and ending on the following 5th April.

3 Certain income charged at basic rate

Where a person is required to be assessed and charged with income tax in respect of any property, profits or gains out of which he makes any payment in respect of—

(a) any annuity or other annual payment (not being interest) ; or
(b) any royalty or other sum in respect of the user of a patent; or
(c) any rent, royalty or other payment which is declared by section 119 or 120 to be subject to deduction of tax under section 348 or 349 as if it were a royalty or other sum paid in respect of a patent;
he shall, in respect of so much of the property, profits or gains as is equal to the payment and may be deducted in computing his total income, be charged at the basic rate.

4 Construction of references in Income Tax Acts to deduction of tax

(1) Any provision of the Income Tax Acts requiring, permitting or assuming the deduction of income tax from any amount (otherwise than in pursuance of section 203) or treating income tax as having been deducted from or paid on any amount, shall, subject to any provision to the contrary, be construed as referring to deduction or payment of income tax at the basic rate in force for the relevant year of assessment.

(2) For the purposes of subsection (1) above, the relevant year of assessment shall be taken to be (except where otherwise provided) —

(a) if the amount is an amount payable wholly out of profits or gains brought into charge to tax, the year in which the amount becomes due;
(b) in any other case, the year in which the amount is paid.

5 Date for payment

(1) Subject to the provisions of the Income Tax Acts and in particular to subsection (2) below and section 203, income tax contained in an assessment for any year shall be payable on or before the 1st January in that year, or at the expiration of a period of 30 days beginning with the date of the issue of the notice of assessment, whichever is the later.

(2) Subject to subsection (3) below, income tax under Schedule D charged for any year on any individual or firm in respect of the profits or gains of any trade, profession or vocation and contained in an assessment for that year shall, instead of being payable in accordance with subsection (1) above, be payable in two equal instalments, the first on or before the 1st January in that year or at the expiration of the period referred to in subsection (1) above, and the second on or before the following 1st July; and the provisions of the Income Tax Acts as to the recovery of income tax shall apply to each instalment of the tax in the same manner as they apply to the whole amount of the tax.

(3) Where the date of the issue of the notice of assessment is later than the 1st June following the end of the year of assessment, subsection (2) above shall not have effect, and the tax shall be due and payable as provided in subsection (1) above.

(4) Except as otherwise provided by the Income Tax Acts, any income tax charged at a rate other than the basic rate on—

(a) income from which income tax has been deducted (otherwise than under section 203) ; or
(b) income from or on which income tax is treated as having been deducted or paid; or
(c) income chargeable under Schedule F;
shall be due and payable on or before 1st December following the end of the year for which it is assessed, or at the expiration of a period of 30 days beginning with the date of the issue of the notice of assessment, whichever is the later.

Corporation tax


6 The charge to corporation tax and exclusion of income tax and capital gains tax

(1) Corporation tax shall be charged on profits of companies, and the Corporation Tax Acts shall apply, for any financial year for which Parliament so determines, and where an Act charges corporation tax for any financial year the Corporation Tax Acts apply, without any express provision, for that year accordingly.

(2) The provisions of the Income Tax Acts relating to the charge of income tax shall not apply to income of a company (not arising to it in a fiduciary or representative capacity) if—

(a) the company is resident in the United Kingdom, or
(b) the income is, in the case of a company not so resident, within the chargeable profits of the company as defined for the purposes of corporation tax by section 11(2).
(3) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax or would be so chargeable but for an exemption from corporation tax.

(4) In this section, sections 7 to 12, 114, 115 (but subject to subsection (7) ) , 242, 243, 247 and 248, Part VIII, Chapter IV of Part X and Part XI, except in so far as the context otherwise requires—

(a) “profits” means income and chargeable gains; and
(b) “trade” includes “vocation”, and also includes an office or employment or the occupation of woodlands in any context in which the expression is applied to that in the Income Tax Acts.
(5) Part VIII contains general provisions relating to the taxation of profits of companies.

7 Treatment of certain payments and repayment of income tax

(1) No payment made by a company resident in the United Kingdom shall be treated for any purpose of the Income Tax Acts as paid out of profits or gains brought into charge to income tax; nor shall any right or obligation under the Income Tax Acts to deduct income tax from any payment be affected by the fact that the recipient is a company not chargeable to income tax in respect of the payment.

(2) Subject to the provisions of the Corporation Tax Acts, where a company resident in the United Kingdom receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company by an assessment made for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax) ; and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(3) Subsection (2) above does not apply to a payment of relevant loan interest to which section 369 applies.

(4) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.

(5) Effect shall be given to section 6(2) , to that section as modified by subsection (2) above and by section 11(3) and, so far as exemptions from income tax conferred by the Corporation Tax Acts call for repayment of tax, to those exemptions by means of a claim.

8 General scheme of corporation tax

(1) Subject to any exceptions provided for by the Corporation Tax Acts, a company shall be chargeable to corporation tax on all its profits wherever arising.

(2) A company shall be chargeable to corporation tax on profits accruing for its benefit under any trust, or arising under any partnership, in any case in which it would be so chargeable if the profits accrued to it directly; and a company shall be chargeable to corporation tax on profits arising in the winding up of the company, but shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in those profits.

(3) Corporation tax for any financial year shall be charged on profits arising in that year; but assessments to corporation tax shall be made on a company by reference to accounting periods, and the amount chargeable (after making all proper deductions) of the profits arising in an accounting period shall, where necessary, be apportioned between the financial years in which the accounting period falls.

In relation to accounting periods ending after such day, not being earlier than 31st March 1992, as the Treasury may by order appoint for the purposes of this subsection, this subsection shall have effect with the substitution for “assessments to corporation tax shall be made on a company” of “corporation tax shall be computed and chargeable (and any assessments shall accordingly be made) ”.
(4) In any financial year assessments for accounting periods falling wholly or partly in that year or (subject to subsection (5) below) in the preceding year may, notwithstanding that corporation tax has not at the time been charged for the year in question, charge tax for so much of the period as falls within that year according to the rate of tax and the other rates and the fractions last fixed, but any such charge shall be subject to later adjustment, if need be, by discharge or repayment of tax or by a further assessment if for that year corporation tax is not charged by an Act of Parliament passed not later than 5th August next after the end of the year or is charged otherwise than as it has been assessed.

(5) Where the House of Commons passes a resolution for fixing the rate of corporation tax for any financial year or for altering the tax for any financial year, then any assessment to tax afterwards made by virtue of subsection (4) above may be made in accordance with the resolution; but no assessment made by virtue of that subsection later than 5th May next after the end of any financial year shall charge tax for that year, unless a resolution for charging corporation tax for that year has been so passed, nor shall any assessment be made by virtue of any such resolution later than the prescribed period from the date on which the resolution is passed.

(6) In subsection (5) above “the prescribed period” means—

(a) as respects a resolution passed in March or April in any year, a period beginning with the passing of the resolution and ending with 5th August in the same calendar year,
(b) as respects any other resolution, four months after the date on which the resolution is passed.

9 Computation of income: application of income tax principles

(1) Except as otherwise provided by the Tax Acts, the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person’s income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment.

(2) For the purposes of this section “income tax law” means, in relation to any accounting period, the law applying, for the year of assessment in which the period ends, to the charge on individuals of income tax, except that it does not include such of the enactments of the Income Tax Acts as make special provision for individuals in relation to matters referred to in subsection (1) above.

(3) Accordingly, for purposes of corporation tax, income shall be computed, and the assessment shall be made, under the like Schedules and Cases as apply for purposes of income tax, and in accordance with the provisions applicable to those Schedules and Cases, but (subject to the provisions of the Corporation Tax Acts) the amounts so computed for the several sources of income, if more than one, together with any amount to be included in respect of chargeable gains, shall be aggregated to arrive at the total profits.

(4) Without prejudice to the generality of subsection (1) above, any provision of the Income Tax Acts which confers an exemption from income tax, or which provides for a person to be charged to income tax on any amount (whether expressed to be income or not, and whether an actual amount or not) , shall, except as otherwise provided, have the like effect for purposes of corporation tax.

(5) Where, by virtue of this section or otherwise, any enactment applies both to income tax and to corporation tax—

(a) it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and
(b) for that purpose references in any such enactment to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.
(6) The provisions of the Income Tax Acts applied by this section do not include sections 1 to 5, 60 to 69, Part VII or sections 348 to 350 of this Act; and nothing in this section shall be taken to mean that income arising in any period is to be computed by reference to any other period (except in so far as this results from apportioning to different parts of a period income of the whole period).

10 Time for payment of tax

(1) Except as provided by section 478—

(a) corporation tax for an accounting period ending after such day or days (not being earlier than 31st March 1992) as the Treasury may by order appoint for the purposes of this section shall be due and payable on the day following the expiry of nine months from the end of that period; and
(b) corporation tax assessed for any other accounting period shall be paid within nine months from the end of that period or, if it is later, within 30 days from the date of the issue of the notice of assessment.
(2) Notwithstanding that, by virtue of subsection (1) (a) above or section 419(1) , any corporation tax (or any amount payable as if it were corporation tax) is due without the making of an assessment, no proceedings for collecting that tax (or other amount) shall be instituted—

(a) unless it has been assessed; and
(b) until the expiry of the period of 30 days beginning on the date on which the notice of assessment is issued;
and the reference in this subsection to proceedings for collecting tax or any other amount includes a reference to proceedings by way of distraint or poinding for that tax or other amount.
(3) If, with respect to any accounting period—

(a) a company has paid an amount of corporation tax without the making of an assessment; and
(b) at any time before an assessment to corporation tax for the period becomes final, the company has grounds for believing that, by reason of a change in the circumstances of the case since the tax was paid, the amount paid exceeds the company’s probable liability for corporation tax,
the company may, by notice given to the inspector on or after the date which, under section 826, is the material date in relation to that tax, make a claim for the repayment to the company of the amount of that excess; and a notice under this subsection shall state the amount which the company considers should be repaid and the grounds referred to in paragraph (b) above.
(4) If, apart from this subsection, a claim would fall to be made under subsection (3) above at a time when the company concerned has appealed against such an assessment as is referred to in paragraph (b) of that subsection but that appeal has not been finally determined, that subsection shall have effect as if, for the words from “make a claim” to “excess”, there were substituted “apply to the Commissioners to whom the appeal stands referred for a determination of the amount which should be repaid to the company pending a determination of the company’s liability for the accounting period in question”; and such an application shall be determined in the same way as the appeal.

(5) Where on an appeal against an assessment to corporation tax a company makes an application under section 55(3) or (4) of the Management Act (postponement of tax charged but not paid etc.) , that application may be combined with an application under subsections (3) and (4) above (relating to tax which was paid prior to the assessment).

11 Companies not resident in United Kingdom

(1) A company not resident in the United Kingdom shall not be within the charge to corporation tax unless it carries on a trade in the United Kingdom through a branch or agency but, if it does so, it shall, subject to any exceptions provided for by the Corporation Tax Acts, be chargeable to corporation tax on all its chargeable profits wherever arising.

(2) For purposes of corporation tax the chargeable profits of a company not resident in the United Kingdom but carrying on a trade there through a branch or agency shall be—

(a) any trading income arising directly or indirectly through or from the branch or agency, and any income from property or rights used by, or held by or for, the branch or agency (but so that this paragraph shall not include distributions received from companies resident in the United Kingdom) ; and
(b) such chargeable gains accruing on the disposal of assets situated in the United Kingdom as are by section 12 of the 1979 Act made chargeable to capital gains tax in the case of an individual not resident or ordinarily resident in the United Kingdom.
(3) Subject to section 447, where a company not resident in the United Kingdom receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company’s income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income by an assessment made for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(4) Subsection (3) above does not apply to a payment of relevant loan interest to which section 369 applies.