LegalizeFinance Act , 1977
(II) where the accounting period of the company ends on or after the 6th day of April, 1976, the amount of the company's trading income for that period after all reductions of income for that period by virtue of sections 16 and 18 of the Corporation Tax Act, 1976, and after all deductions and additions for that period by virtue of section 14 of that Act,
(ii) the company's trading income to be taken into account in computing a deduction shall be that income before any deduction is made under this section or the Fifth Schedule, and
(iii) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1977.”,
(iii) the following paragraph shall be substituted for paragraph (b) of subsection (4):
“(b) There shall be made such assessments, additional assessments, reductions of assessments or repayments of tax as may in any case be required in order to give effect to this section.”,
(iv) in relation to accounting periods which end on or after the 6th day of April, 1975, the following subsections shall be substituted for subsection (7):
“(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's ‘decrease in stock value’) shall, if the accounting period ends on a date before the 6th day of April, 1977, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:
Provided that the amount which is treated as a trading receipt of the company's trade for any accounting period shall not exceed an amount determined by the formula
| AB C | ||
|---|---|---|
where—
A is the aggregate amount of the deductions which, under the provisions of this section, the company was entitled to make in computing its trading income for the preceding accounting periods,
B is the aggregate amount of the deductions which, by virtue of the provisions of section 26 (1) (a) (i) of the Finance Act, 1976, the company was entitled to make in computing its trading income for the purposes of income tax, and
C is the aggregate of the amounts which, under this subsection, were treated as trading receipts of the company's trade for the preceding accounting periods.
(8) (a) This subsection applies to—
(i) any amount which under section 31 (8) would fall to be deducted from a company's increase in stock value but which has not been so deducted, and
(ii) any amount which by reason of the proviso to subsection (7) is not treated as a trading receipt of the company's trade.
(b) An amount to which this subsection applies shall be deducted—
(i) if it is an amount referred to in paragraph (a) (i), from the company's increase in stock value in the earliest accounting period in which such an increase occurs, and
(ii) if it is an amount referred to in paragraph (a) (ii), from the company's increase in stock value in the next succeeding accounting period in which such an increase occurs, and the amount which remains after such deduction shall, for the purposes of subsection (4) (a), be the company's increase in stock value in that accounting period:
Provided that—
(I) where any amount to which this subsection applies exceeds the amount of the increase in stock value from which it is to be deducted, the excess shall be deemed to be a decrease in stock value in the accounting period in which such increase occurs and shall be deducted from the amount of the company's increase in stock value in the next succeeding accounting period in which there is an increase in stock value and so on;
(II) where a deduction (in this paragraph referred to subsequently as ‘the lesser deduction’) to which a company is entitled under this section in the computation of its trading income for an accounting period which ends before the 6th day of April, 1976, is less than the amount of the deduction (in this paragraph referred to subsequently as ‘the greater deduction’) to which the company would have been entitled under this section in the computation of its trading profits for that accounting period but for the foregoing provisions of this subsection, the company may claim, not later than the 31st day of December, 1977, that the greater deduction shall be made in the computation of its trading income for that accounting period, but in that case the value of its trading stock at the beginning of the period of account immediately following the period of account the end of which coincides with the end of that accounting period or which is current at the end of that accounting period shall, for the purposes of the Tax Acts, other than this section, be treated as reduced by an amount equal to the excess of the greater deduction over the lesser deduction, and that amount shall, for the purposes of paragraph (b) of this subsection, be regarded as an amount which has been deducted from the company's increase in stock value in that accounting period.
(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1977, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C where—
A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1977,
B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1977, and
C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:
Provided that the amount which, by virtue of this subsection, is treated as a trading receipt of the company's trade for any accounting period shall not exceed an amount determined by the formula
| DE F | ||
|---|---|---|
where—
D is the aggregate amOunt of the deductions which, under the provisions of this section, the company was entitled to make in computing its trading income,
E is the aggregate amount of the deductions which, under the provisions of section 26 (1) (a) (i) of the Finance Act, 1976, the company was entitled to make in computing its trading income for the purposes of income tax, and
F is the aggregate of the amounts which, under the provisions of this section, were treated as trading receipts of the trade for preceding accounting periods.
(10) Where in an accounting period a company ceases to carry on a trade or ceases to be resident in the State or ceases to be within the charge to tax under Case I of Schedule D in respect of a trade, the company's closing stock value shall, for the purposes of subsections (7) and (9), be deemed to be nil.
(11) Where in any accounting period which ends on or after the 6th day of April, 1975, a company carries on a trade which consists partly of trading operations of any of the classes mentioned in the definition of ‘trade’ in subsection (1) (hereinafter referred to as ‘qualifying trading operations’) and partly of other trading operations the company shall be regarded as carrying on a trade which consists wholly or mainly of qualifying trading operations if, but only if, the total amount receivable by the company from sales made in the course of the qualifying trading operations in the accounting period is not less than 75 per cent. of the total amount receivable by the company from all sales made in the course of its trade in the accounting period.”,
(c) in the Third Schedule—
(i) in paragraph 1 (1)—
(I) “or, as the case may be, the company's decrease in stock value” shall be inserted after “increase in stock value”, and
(II) “or, as the case may be, subsection (8)” shall be inserted after “subsection (2)”,
(ii) in paragraph 2—
(I) the following subparagraph shall be inserted after subparagraph (1):
“(1A) In any case where paragraph 1 (1) applies, a company's decrease in stock value in the accounting period shall be determined for the purposes of section 31 by the formula
| A (O C) ____ N | ||
|---|---|---|
where—
A, O, C and N have the same meanings as in subparagraph (1):
Provided that in any case where the accounting period mentioned in section 12 (8) of the Finance Act, 1976, is comprised in the company's reference period, the decrease in stock value in any accounting period which is comprised in that reference period shall be determined as if N (instead of being the number of months in the reference period) were the number of months in the period from the beginning of the reference period to the end of the accounting period so mentioned.”, and
(II) “or, as the case may be, where a company's decrease in stock value in an accounting period falls to be determined in accordance with subparagraph (1A),” shall be inserted in subparagraph (2) after “in accordance with subparagraph (1),”,
(d) in the Fifth Schedule to the Finance Act, 1975 (inserted by section 26 of the Finance Act, 1976)—
(i) in paragraph 1 (1)—
(I) “or, as the case may be, the company's decrease in stock value” shall be inserted after “increase in stock value”, and
(II) “or, as the case may be, subsection (7)” shall be inserted after “subsection (2)”,
(ii) in paragraph 2—
(I) the following subparagraph shall be inserted after subparagraph (1):
“(1A) In any case where paragraph 1 (1) applies, a company's decrease in stock value in the accounting period shall be determined for the purposes of section 31A by the formula
| A (O C) ____ N | ||
|---|---|---|
where—
A, O, C and N have the same meanings as in subparagraph (1):
Provided that in any case where the accounting period mentioned in section 31A (10) is comprised in the company's reference period, the decrease in stock value in any accounting period which is comprised in that reference period shall be determined as if N (instead of being the number of months in the reference period) were the number of months in the period from the beginning of the reference period to the end of the accounting period so mentioned.”, and
(II) “or, as the case may be, where a company's decrease in stock value in an accounting period falls to be determined in accordance with subparagraph (1A),” shall be inserted in subparagraph (2) after “in accordance with subparagraph (1),”.
Section 12 of the Finance Act, 1976, shall be amended in accordance with the following provisions of this paragraph:
(a) in subsection (3) “1977-78” shall be substituted for “1976-77”,
(b) with effect as on and from the 6th day of April, 1976, the following subsections shall be substituted for subsection (5)—
“(5) In the computation of a person's trading income for an accounting period in which there is a decrease in stock value and which ends on a date in the year 1976-77, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:
Provided that the amount which is so treated shall not exceed the aggregate amount of the deductions which the person was entitled to make under this section in computing his trading income for accounting periods which ended on a date in the year 1975-76.
(6) In the computation of a person's trading income for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1977, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C
where—
A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1977,
B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1977, and
C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1977:
Provided that the amount which, by virtue of this subsection, is treated as a trading receipt of the person's trade for any accounting period shall not exceed an amount determined by the formula
| DE | ||
|---|---|---|
where—
D is the aggregate amount of the deductions which, under the provisions of this section, the person was entitled to make in computing his trading income for accounting periods which ended on or after the 6th day of April, 1975, and
E is the aggregate of the amounts which under the provisions of this section, were treated as trading receipts of the trade for preceding accounting periods.
(7) Where a deduction allowed by virtue of this section in computing a person's trading profits of a trade for an accounting period has effect for the year 1977-78—
(a) the person shall not be entitled to relief under section 309 of the Income Tax Act, 1967, for the year 1978-79 or any later year in respect of a loss sustained in the trade before the 6th day of April, 1977,
(b) the person shall not be entitled to relief under section 311 of the Income Tax Act, 1967, for the year 1976-77 or any earlier year in respect of a loss sustained in the trade, and
(c) the provisions of section 241 (3) of the Income Tax Act, 1967, or of that section as applied by any other provision of the Income Tax Acts, shall not apply as respects a capital allowance or part of a capital allowance which is, or is deemed to be, all or part of a capital allowance for the year 1977-78 and to which full effect has not been given in that year owing to there being no profits or gains chargeable for that year or an insufficiency of profits or gains chargeable for that year.
(8) Where in an accounting period a person ceases to carry on a trade or ceases to be resident in the State or ceases to be within the charge to tax under Case I of Schedule D in respect of a trade, the person's closing stock value shall, for the purposes of subsections (5) and (6), be deemed to be nil.
(9) The foregoing provisions of this section shall apply to a trade carried on by a partnership as they apply to a trade carried on by a person.”.
SECOND SCHEDULE ENACTMENTS REPEALED
PART I
| Number and Year | Short Title | Extent of Repeal |
|---|---|---|
| (1) | (2) | (3) |
| No. 13 of 1949 | Finance Act, 1949. | Section 21 and the Fifth Schedule so far as it is unrepealed. |
| No. 17 of 1966 | Finance Act, 1966. | Section 22. |
| No. 6 of 1967 | Income Tax Act, 1967. | Sections 355, 357 and 369 (2), Parts I and II and paragraphs 2, 3, 4, and 5 of Part III of Schedule 6 and Schedule 7. |
| No. 33 of 1968 | Finance Act, 1968. | In section 35(2), the words “(a) Northern Ireland and Great Britain”. |
| No. 19 of 1973 | Finance Act, 1973. | Sections 32 and 38 and the Second and Fourth Schedules. |
| No. 20 of 1975 | Capital Gains Tax Act, 1975. | The proviso to section 4(2). |
| No. 7 of 1976 | Corporation Tax Act, 1976. | Subsections (6) and (7) of section 42. |
| S.I. No. 143 of 1975 | Double Taxation Relief (Taxes on Income) (United Kingdom) Order, 1975. | The whole Order. |
PART II
| Number and Year | Short Title | Extent of Repeal |
|---|---|---|
| (1) | (2) | (3) |
| No. 6 of 1967 | Income Tax Act, 1967. | Section 356. |
PART III
| Number and Year | Short Title | Extent of Repeal |
|---|---|---|
| (1) | (2) | (3) |
| No. 25 of 1938 | Finance Act, 1938. | Section 17. |
PART IV
| Number and Year | Short Title | Extent of Repeal |
|---|---|---|
| (1) | (2) | (3) |
| No. 8 of 1976 | Capital Acquisitions Tax Act, 1976. | Section 67(4). |
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