First Previous (SCHEDULE 5 Abolition of Tax Credits) Next (SCHEDULE 7 Rates of Excise Duty on Tobacco Products)

3 1998

FINANCE ACT, 1998

SCHEDULE 6

Change in Rate of Corporation Tax: Further Provisions

Section 55 .

The Taxes Consolidation Act, 1997 , is hereby amended in accordance with the following provisions of this Schedule.

1. In section 26(4)(b) there shall be substituted for “31st day of December, 1998”, “31st day of December, 1997”.

2. In section 78(3)(c)(ii) there shall be substituted for “31st day of December, 1998”, “31st day of December, 1997”.

3. In subsection (2) of section 448—

(a) in paragraph (a) there shall be substituted for “twenty-six thirty-sixths”, “twenty-two thirty-seconds” as respects any accounting period beginning on or after the 1st day of January, 1998, and

(b) for paragraph (b) there shall be substituted the following paragraph:

“(b) Where a company which carries on a trade which consists of or includes the manufacture of goods claims and proves as respects a relevant accounting period (being an accounting period which falls wholly or partly into the period beginning on the 1st day of April, 1996, and ending on the 31st day of December, 1998) that during that accounting period any amount was receivable in respect of the sale in the course of the trade of goods, corporation tax payable by the company for that accounting period, in so far as it is referable to the income from the sale of those goods, shall be reduced—

(i) by twenty-eight thirty-eighths, in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the period beginning on the 1st day of January, 1996, and ending on the 31st day of March, 1997,

(ii) by twenty-six thirty-sixths, in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the period beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1997, and

(iii) by twenty-two thirty-seconds, in so far as it is corporation tax charged on profits which under section 26(3) are apportioned to the financial year 1998,

and the corporation tax referable to the income from the sale of those goods—

(I) shall, for the purposes of subparagraph (i), be such an amount as bears to the part of the relevant corporation tax charged on profits which under section 26(3) are apportioned to the period beginning on the 1st day of January, 1996, and ending on the 31st day of March, 1997, the same proportion as the income from the sale of those goods bears to the total income brought into charge to corporation tax for the relevant accounting period, and

(II) shall, for the purposes of subparagraph (ii), be such an amount as bears to the part of the relevant corporation tax charged on profits which under section 26(3) are apportioned to the period beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1997, the same proportion as the income from the sale of those goods bears to the total income brought into charge to corporation tax for the relevant accounting period, and

(III) shall, for the purposes of subparagraph (iii), be such an amount as bears to the part of the relevant corporation tax charged on profits which under section 26(3) are apportioned to the financial year 1998, the same proportion as the income from the sale of those goods bears to the total income brought into charge to corporation tax for the relevant accounting period.”.

4. In Schedule 32—

(a) in paragraph 5—

(i) in subparagraph (2)—

(I) for the definition of “S” in clause (i) there shall be substituted the following:

“S is—

(A) as respects accounting periods beginning before the 1st day of April, 1997, 38/28,

(B) as respects accounting periods beginning on or after the 1st day of April,1997, and before the 1st day of January, 1998, 36/26, and

(C) as respects accounting periods beginning on or after the 1st day of January,1998, 32/22,”,

(II) for the definition of “S” in clause (ii) there shall be substituted the following:

“S is—

(I) as respects accounting periods beginning before the 1st day of April, 1997, 10/28,

(II) as respects accounting periods beginning on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 10/26, and

(III) as respects accounting periods beginning on or after the 1st day of January, 1998, 10/22.”,

and

(ii) in subparagraph (3) for clause (a) there shall be substituted the following clause:

“(a) For the purposes of subparagraph (2)—

(i) where an accounting period begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and another part beginning on the 1st day of April, 1997, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods, and

(ii) where an accounting period, including a period treated under subclause (i) as an accounting period, begins before the 1st day of January, 1998, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 1997, and another part beginning on the 1st day of January, 1998, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.”,

(b) in paragraph 6—

(i) in subparagraph (2) for the definition of “S” in clause (ii) there shall be substituted the following—

“S is—

(a) as respects accounting periods beginning before the 1st day of April, 1997, 10/28,

(b) as respects accounting periods beginning on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 10/26, and

(c) as respects accounting periods beginning on or after the 1st day of January, 1998, 10/22.”,

and

(ii) in subparagraph (3) for clause (a) there shall be substituted the following clause:

“(a) For the purposes of subparagraph (2)—

(i) where an accounting period begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and another part beginning on the 1st day of April, 1997, and ending on the day on which the accounting period ends and both parts shall be treated as if they were separate accounting periods, and

(ii) where an accounting period, including a period treated under subclause (i) as an accounting period, begins before the 1st day of January, 1998, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 1997, and another part beginning on the 1st day of January, 1998, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.”,

(c) in paragraph 16—

(i) for clauses (a) and (b) of subparagraph (3) there shall be substituted the following clauses:

“(a) as respects accounting periods beginning before the 1st day of April, 1997, 23 per cent,

(b) as respects accounting periods beginning on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 21 per cent, and

(c) as respects accounting periods beginning on or after the 1st day of January, 1998, 17 per cent;”

and

(ii) for subparagraph (5) there shall be substituted the following subparagraph:

“(5) For the purposes of this paragraph—

(a) where an accounting period begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and another part beginning on the 1st day of April, 1997, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods, and

(b) where an accounting period, including a period treated under clause (a) as an accounting period, begins before the 1st day of January, 1998, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 1997, and another part beginning on the 1st day of January, 1998, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.”,

and

(d) in paragraph 18—

(i) for clause (b) of subparagraph (4) there shall be substituted the following clause:

“(b) Subject to clause (c), relief for an accounting period shall be an amount determined by the formula—

(A − B) − (C − D)

where—

A is the amount of corporation tax which, apart from paragraph 16, this paragraph and section 448, is chargeable for the accounting period,

B is an amount determined by applying a rate equal to—

(a) as respects accounting periods beginning before the 1st day of April, 1997, 23 per cent,

(b) as respects accounting periods beginning on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 21 per cent, and

(c) as respects accounting periods beginning on or after the 1st day of January, 1998, 17 per cent,

to the amount of the company's income for the accounting period,

C is the amount of corporation tax which, apart from paragraph 16, this paragraph and section 448, would be chargeable for the accounting period if the amount of the company's income for the accounting period were reduced by the appropriate amount, and

D is an amount determined by applying a rate equal to—

(a) as respects accounting periods beginning before the 1st day of April, 1997, 23 per cent,

(b) as respects accounting periods beginning on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 21 per cent, and

(c) as respects accounting periods beginning on or after the 1st day of January, 1998, 17 per cent,

to the amount of the company's income for the accounting period as reduced by the appropriate amount.”,

and

(ii) in subparagraph (6) for clause (a) there shall be substituted the following clause:

“(a) For the purposes of this paragraph—

(i) where an accounting period begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and another part beginning on the 1st day of April, 1997, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods, and

(ii) where an accounting period, including a period treated under subclause (i) as an accounting period, begins before the 1st day of January, 1998, and ends on or after that day, it shall be divided into one part beginning on the day on which the accounting period begins and ending on the 31st day of December, 1997, and another part beginning on the 1st day of January, 1998, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods.”.