TAXES CONSOLIDATION ACT, 1997

• (2)
• (a) Where a relevant distribution is made or is deemed for the purposes of this section to have been made by a company for an accounting period, the tax credit to which the recipient of the relevant distribution is entitled in respect of it shall be an amount arrived at by applying a fraction determined by the formula—

A + B ______ C

to the amount of the relevant distribution,

where—

A is an amount arrived at by applying to the amount of the company's distributable income for the accounting period, excluding distributions received by the company in that period, the fraction—

D ______ 100 − D

where D is the standard credit rate per cent for the year of assessment in which the relevant distribution is made reduced in the same proportion as the company's liability to corporation tax on its income (other than its income from the sale of goods within the meaning of section 448) for the accounting period is reduced under section 58 of the Corporation Tax Act, 1976, subject to paragraph (c) of the proviso to section 182(3), and paragraph (iii) of the proviso to section 184(3), of that Act,

B is the aggregate of the tax credits in respect of the amount referred to in subsection (4)(a)(ii), and

C is the amount of the company's distributable income for the accounting period.

• (b) The reference to certain tax credits in the definition of “B” in paragraph (a) shall, in relation to distributions received by a company which makes a distribution to which this section applies, be construed—

• (i) as a reference to such tax credits multiplied by .4937 in so far as they are tax credits in respect of distributions made before the 6th day of April, 1978, or made after the 5th day of April, 1983, and before the 6th day of April, 1988,

• (ii) as a reference to such tax credits multiplied by .6203 in so far as they are tax credits in respect of distributions made after the 5th day of April, 1978, and before the 6th day of April, 1983,

• (iii) as a reference to such tax credits multiplied by .5649 in so far as they are tax credits in respect of distributions made after the 5th day of April, 1988, and before the 6th day of April, 1989,

• (iv) as a reference to such tax credits multiplied by .6835 in so far as they are tax credits in respect of distributions made after the 5th day of April, 1989, and before the 6th day of April, 1991,

• (v) as a reference to such tax credits multiplied by .7975 in so far as they are tax credits in respect of distributions made after the 5th day of April, 1991, and before the 6th day of April, 1995, and

• (vi) as a reference to such tax credits multiplied by .8899 in so far as they are tax credits in respect of distributions made after the 5th day of April, 1995, and before the 6th day of April, 1997.

• (3) For the purposes of this section—

• (a) where the total amount of the distributions made by a company for an accounting period exceeds the distributable income of the company for that accounting period, the excess shall be deemed for the purposes of this section to be a distribution for the immediately preceding accounting period;

• (b) where the total amount of the distributions made or deemed under paragraph (a) to have been made by a company for the immediately preceding accounting period referred to in paragraph (a) exceeds the distributable income of the company for that accounting period, the excess shall be deemed to be a distribution for the next immediately preceding accounting period and so on;

• (c) where the total amount of the distributions made or deemed under this subsection to have been made for the first accounting period for which the company came within the charge to corporation tax exceeds the distributable income of the company for that accounting period—

• (i) the excess shall be deemed to be a distribution for the company's period of account which ended on the accounting date last before the 6th day of April, 1975, or, if there was no such period of account, to be a distribution for the year which ended on the 5th day of April, 1976, and

• (ii) the tax credit in respect of the excess which is so deemed shall be an amount equal to the amount of income tax which under section 410 of the Income Tax Act, 1967, the company would have been entitled to deduct from a dividend of such an amount as after deduction of that tax would equal the amount of the excess, and for this purpose it shall be assumed that the dividend was paid on the 5th day of April, 1976, and was in respect of such period of account or year which ended on the 5th day of April, 1976, as the case may be,

but the tax credit in respect of a distribution to which subparagraph (i) applies shall not exceed the amount which would be the amount of the tax credit in respect of the distribution if that tax credit were determined in accordance with section 136(2).

• (4)
• (a) For the purposes of this section, the distributable income of a company for an accounting period shall be the aggregate of the following amounts—

• (i) the income of the company charged to corporation tax for the accounting period less the amount of corporation tax payable by the company for the accounting period which is attributable to that income, and

• (ii) an amount equal to the distributions received by the company in the accounting period which is comprised in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 83(5), 157 or 158, and which relief was not subsequently withdrawn under those sections.

• (b) For the purposes of paragraph (a), the income of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to chargeable gains, and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.

• (5) Where the distributable income of a company for an accounting period is to be determined for the purposes of this section in relation to a distribution made by the company for that accounting period (in this subsection referred to as “the first-mentioned distribution”), there shall be deducted from the aggregate mentioned in subsection (4)(a) the aggregate of the following amounts—

• (a) the amount of the company's income which, in relation to the first-mentioned distribution, is to be taken into account in the definition of “A” in section 147(1) (before any reduction under paragraph 5(2)(i) or 6(2)(i) of Schedule 32) as income of the company for the relevant accounting period (within the meaning of Part 14) which coincides with or is included in that accounting period, less the amount of corporation tax to be taken into account in the definition of “B” in section 147(1) in respect of that amount of the company's income, and

• (b) an amount equal to the distributions received by the company in the accounting period which are relevant distributions within the meaning of section 147, and which are to be included within the definition of “E” in subsection (1) of that section in relation to the first-mentioned distribution.

• (6) Where a period of account for or in respect of which a company makes a distribution is not an accounting period and part of the period of account falls within an accounting period, the proportion of the distribution to be treated for the purposes of this section as being for or in respect of the accounting period shall be the same proportion as that part of the period of account bears to the whole of that period.

• (7) Where a company makes a distribution which is not expressed to be for or in respect of a specified period, the distribution shall be treated for the purposes of this section as having been made for the accounting period in which it is made.

• (8) Where the income of a company for an accounting period includes a dividend from which income tax was deducted under section 456 of the Income Tax Act, 1967, then, for the purposes of this section, the amount of tax so deducted shall be deemed to be a tax credit in respect of a distribution of an amount equal to the amount of the dividend reduced by the amount of tax so deducted.

• (9) In relation to a relevant distribution (other than a supplementary distribution under section 146), section 152 shall apply so that the statements provided for by that section shall show, in addition to the particulars to be given apart from this section, the amount of the tax credit which would apply in respect of the distribution if it were not a relevant distribution.

• (10) The inspector may by notice in writing require a company to furnish him or her with such information or particulars as may be necessary for the purposes of subsections (1) to (9), and, if the company does not comply with the requirements of the notice, it shall be liable to a penalty of £800.

• (11)
• (a) In this subsection, “the relieved amount” means so much of a relevant distribution as is determined by the formula—

E −	F × (100 − G) _____ G

where—

E is the amount of the distribution,

F is the amount of the tax credit in respect of the distribution, and

G is the standard credit rate per cent for the purposes of section 136(2) in respect of the year of assessment in which the distribution is made.

• (b) Notwithstanding any other provision of the Tax Acts, for the purposes of determining a person's liability, if any, to income tax in respect of distributions received by such person, so much of a relevant distribution as is the relieved amount shall be treated as a separate distribution received by the person in respect of which such person shall not be entitled to a tax credit, and the remainder, if any, of the relevant distribution shall be treated as a separate distribution received by such person in respect of which the tax credit shall be the tax credit in respect of the relevant distribution.

146 Provisions supplementary to section 145. [CTA76 s65]

146.—(1) Where a company makes a distribution in respect of any right or obligation to which section 139 relates and the tax credit in respect of that distribution is calculated in accordance with section 145, the company shall make a supplementary distribution of an amount equal to the excess of the amount of the tax credit which would have applied to the distribution if section 145 had not been enacted over the amount of the tax credit which in accordance with section 145 applies to the distribution, and the person to whom the distribution and the supplementary distribution are made shall be regarded as having received one distribution consisting of the aggregate of the distribution and the supplementary distribution.

• (2) Notwithstanding section 136, the recipient of a supplementary distribution under subsection (1) shall not be entitled to a tax credit in respect of it.

• (3) In relation to any supplementary distribution within the meaning of subsection (1), section 152(1) shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

CHAPTER 5 Distributions out of certain income of manufacturing companies

147 Distributions. [FA80 s45(1) to (3) (apart from paragraph (a) of proviso to subsection (1A)) and (5) to (8); FA88 s32(1) and (3) and Sch2 PtII par1(a); FA89 s24; FA92 s248; F(No.2)A92 s2; FA93 s46(5); FA97 s146(1) and Sch9 PtI par11(2)]

147.—(1) (a) There shall be treated as a specified distribution for the purposes of subsection (4) so much of a distribution (in this paragraph referred to as “the first-mentioned distribution”) treated under subsection (2) or section 154 as made by a company for an accounting period as does not exceed the amount, which may be nil, determined by the formula—

Y ×	(A − B) + E − U _______ (R − S) + T − W

where, subject to sections 148 and 149 and paragraphs 5 and 6 of Schedule 32—

A is the amount of the company's income, the corporation tax referable to which is reduced under section 448, for the relevant accounting period which coincides with or is included in the accounting period,

B is the amount of the corporation tax, as reduced under section 448, referable to the amount mentioned in the definition of “A”,

E is the amount of the relevant distributions, whether made before the 6th day of April, 1989, or on or after that day, received by the company in the accounting period, which is included in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 83(5), 157 or 158, and which relief was not subsequently with drawn under those sections,

R is the amount of the income of the company charged to corporation tax for the accounting period within the meaning of section 145 (4)(b), with the addition of any amount of income of the company which would be charged to corporation tax for the accounting period but for section 231, 232, 233 or 234, or section 71 of the Corporation Tax Act, 1976,

S is the amount of the corporation tax which, before any set-off of or credit for tax, including foreign tax, and after any relief under section 448 or paragraph 16 or 18 of Schedule 32, or section 58 of the Corporation Tax Act, 1976, is chargeable for the accounting period, exclusive of the corporation tax, before any credit for foreign tax, chargeable on the part of the company's profits attributable to chargeable gains for that period; and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description,

T is the amount of the distributions received by the company in the accounting period which is included in its franked investment income of the accounting period, other than franked investment income against which relief is given under section 83(5), 157 or 158, and which relief was not subsequently withdrawn under those sections, with the addition of any amount received by the company in the accounting period to which section 140(3), 141(3), 142(4) or 144(3)(a) applies,

U is the amount of relevant distributions made by the company before the 6th day of April, 1989, which—

• (i) were made for the accounting period, or

• (ii) would be deemed to have been made for the accounting period by virtue of subsections (3) and (7) of section 145 if—

• (I) subsections (3) and (7) of that section were treated as applying for the purposes of this definition as they apply for the purposes of that section, and

• (II) “relevant distribution” and “distributable manufacturing income” were substituted for “distribution” and “distributable income” respectively wherever those terms occur in subsections (3) and (7) of that section,

W is the amount of the distributions made by the company before the 6th day of April, 1989, which—

• (i) were made for the accounting period, or

• (ii) would be deemed to have been made for the accounting period by virtue of subsections (3) and (7) of section 145 if—

• (I) subsections (3) and (7) of that section were treated as applying for the purposes of this definition as they apply for the purposes of that section, and

• (II) every reference to “distributable income of the company” in subsection (3) of that section were a reference to the amount determined by the formula—

(R − S) + T

where R, S and T have the same meanings as otherwise in this paragraph,

and

Y is the amount of the first-mentioned distribution,

• (b) Any reference in this section to a relevant distribution—

• (i) made by a company before the 6th day of April, 1989, shall be construed as a reference to a relevant distribution within the meaning of paragraph 4 of Schedule 32, and

• (ii) made by a company on or after the 6th day of April, 1989, shall be construed as a reference to a relevant distribution within the meaning of subsection (4).

• (c) For the purposes of this Chapter, “relevant accounting period” has the same meaning as it has for the purposes of Part 14.

• (2)
• (a) For the purposes of this subsection and subsections (1) and (4) and irrespective of the period of account for which a distribution is made by a company, a distribution or distributions, as the case may be, made by the company on a day (in this subsection referred to as “the first-mentioned day”) falling on or after the 6th day of April, 1989, shall be treated as having been made for the most recent accounting period of the company ending before the first-mentioned day; but, where a distribution made by a company is—

• (i) a distribution by virtue only of subparagraph (ii), (iii)(I) or (v) of Section 130(2)(d), or

• (ii) a distribution made in respect of shares of a type referred to in paragraph (c) of the definition of “preference shares” in section 138(1),

the distribution shall be treated, subject to paragraphs (b) to (d), as having been made for the accounting period in which the first-mentioned day falls.

• (b) (i) Where the first-mentioned day falls in an accounting period of the company which begins on the day on which the company commenced to be within the charge to corporation tax, the distribution or distributions, as the case may be, shall be treated as made for that accounting period and, where the total amount of distributions made by the company on or after the 6th day of April, 1989, which are treated as having been made for that accounting period would otherwise exceed the amount of the distributable income of the company for that accounting period, the excess shall be treated as a distribution or distributions, as the case may be, which has not or have not been made for any accounting period.

• (ii) Where the first-mentioned day falls on or after the first day of an accounting period of the company which ends on a day on which the company ceases to be within the charge to corporation tax, the distribution or distributions, as the case may be, shall be treated as made for that accounting period.

• (c) (i) Where the total amount of distributions made by the company on or after the 6th day of April, 1989, which are treated as having been made for an accounting period, would otherwise exceed the amount of the distributable income of the company for that accounting period, the excess shall be treated as a distribution or distributions, as the case may be, made for the immediately preceding accounting period of the company.

• (ii) Where the total amount of distributions made by the company on or after the 6th day of April, 1989, which are treated as having been made for the immediately preceding accounting period referred to in subparagraph (i), would otherwise exceed the amount of the distributable income of the company for that accounting period, the excess shall be treated as a distribution or distributions, as the case may be, made for the immediately preceding accounting period of the company, and so on.

• (d) Where by virtue of the application of this subsection to the distribution or distributions, as the case may be, made by the company on the first-mentioned day there is an excess mentioned in paragraphs (b) and (c), that excess—

• (i) where there is only one distribution made by the company on the first-mentioned day, shall be wholly attributed to that distribution, or

• (ii) where there is more than one distribution so made on the first-mentioned day, shall be partly attributed to each of those distributions in the same respective proportion as the amount of each such distribution bears to the total amount of the distributions made by the company on that day,

so that any distribution made by the company on the first-mentioned day shall be treated as consisting of 2 or, if there is more than one such excess, more distributions each of which is made by the company for a different accounting period (if any).

• (3) For the purposes of this section—

• (a) the amount of the distributable income of a company for an accounting period shall be the amount determined by the formula—

(R − S) + T − W

where R, S, T and W have the same meanings respectively as in subsection (1), and

• (b) the amount of the distributable manufacturing income of a company for an accounting period shall be the amount determined by the formula—

(A − B) + E

where A, B and E have the same meanings respectively as in subsection (1).

• (4) Where a distribution made by a company on or after the 6th day of April, 1989 (in this subsection referred to as “the first-mentioned distribution”), is treated for the purposes of this subsection as—

• (a) consisting of or including a specified distribution, or

• (b) consisting of 2 or more distributions, one or more of which is treated as consisting of or including a specified distribution,

the first-mentioned distribution shall, notwithstanding any other provision of the Corporation Tax Acts, be treated for the purposes of those Acts as if it consists of 2 distributions, either but not both of which may be nil, being respectively—

• (i) a distribution, which shall be a relevant distribution for the purposes of this section, of an amount equal to the amount of the specified distribution mentioned in paragraph (a) or equal to the total amount of the specified distributions mentioned in paragraph (b), as the case may be, and

• (ii) a distribution which is not a relevant distribution and which consists of the balance of the first-mentioned distribution.

• (5)
• (a) The tax credit to which a recipient of a relevant distribution is entitled in respect of it shall, notwithstanding any provision of the Corporation Tax Acts other than this section, be an amount equal to one-eighteenth of the amount of the relevant distribution.

• (b) Where as respects an accounting period corporation tax payable by a company is by virtue of subsection (7) of section 448 reduced by the revised relief (within the meaning of that subsection), the tax credit in respect of a distribution treated for the purposes of this section as made for the accounting period shall be an amount determined by the formula—

[image omitted]

where—

F is the amount or value of the distribution, and

G is an amount determined by the formula—

H __ J	× 100

where—

H is the corporation tax payable by the company for the accounting period, in so far as it is referable to income from the sale of those goods (within the meaning of section 448), after deducting from that tax such amount as is to be deducted under section 448, and

J is the income from the sale of those goods.

• (6) The tax credit (if any) to which the recipient of a distribution to which subsection (4)(ii) applies is entitled in respect of the distribution shall be calculated in accordance with the Corporation Tax Acts other than subsection (5).

• (7) In relation to a relevant distribution, including part of a distribution treated under subsection (4) as a relevant distribution, made by a company, section 152 shall apply to the company so that the statements provided for by that section shall show as respects each such distribution, in addition to the particulars required to be given apart from this subsection, that the distribution is a relevant distribution for the purposes of this section.

• (8)
• (a) Where it appears to the inspector that the amount of tax credit to which the recipient of a relevant distribution, including part of a distribution treated under subsection (4) as a relevant distribution, was shown to be entitled on the statement annexed to or accompanying any warrant or cheque or other order mentioned in section 152(1), or in any statement mentioned in section 152(3), exceeds the amount of the tax credit to which the recipient of the statement should have been shown to be entitled on that statement by reference to this section and section 150, the inspector may make an assessment to income tax on the company under Case IV of Schedule D for the year of assessment in which the statement is made on an amount the income tax on which, at the standard rate for that year of assessment, is equal to the amount by which the tax credit shown in the statement exceeds the tax credit to which the recipient of that statement should have been shown to be entitled on that statement.

• (b) Any amount on which by virtue of this subsection income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

• (c) This subsection shall not apply if the inspector is, or on appeal the Appeal Commissioners are, satisfied that, either by reason of a correction by the company of the statement annexed to or accompanying the relevant warrant or cheque or other order mentioned in section 152(1), or of the statement mentioned in section 152(3), or for any other good and sufficient reason, it would be just and reasonable that this subsection should not apply.

• (9) The inspector may by notice in writing require a company to furnish him or her with such information or particulars as may be necessary for the purposes of this section and, if the company does not comply with the requirements of the notice, it shall be liable to a penalty of £1,200.

148 Treatment of certain deductions in relation to relevant distributions. [FA80 s46; FA88 s32(3) and Sch2 PtII par1(b)]

148.—(1) In this section, “relevant deduction”, in relation to a relevant accounting period of a company, means any amount allowed as a deduction against the total profits of the company in that period in respect of—

• (a) charges on income,

• (b) group relief,

• (c) any allowance in respect of capital expenditure to which effect is given for that period under section 308(4),

• (d) any loss in respect of which the profits of that period are treated as reduced under section 396(2), or

• (e) other amounts which under the Corporation Tax Acts may be deducted from or set against or treated as reducing profits of more than one description.

• (2) Where for any relevant accounting period of a company—

• (a) the corporation tax referable to the income of the company from the sale of goods is to be reduced under section 448, and

• (b) a relevant deduction has been allowed against the total profits in computing the corporation tax chargeable,

then, the amount of the company's income to be taken into account in the definition of “A” in section 147(1) in respect of that relevant accounting period shall be reduced by an amount equal to such part of the relevant deduction as bears to the whole the same proportion as the amount of the income of the company from the sale of goods bears to the total income brought into charge to corporation tax for the relevant accounting period.

149 Dividends and other distributions at gross rate or of gross amount. [FA80 s49; FA88 s32(3) and Sch2 PtII par1(g)]

149.—(1) Where a company makes a distribution which is a relevant distribution for the purposes of section 147, including part of a distribution treated under section 147(4) as a relevant distribution, and which is in respect of any right or obligation to which section 139 applies, the company shall make a supplementary distribution of an amount equal to the excess of the amount of the tax credit which would have applied in respect of the relevant distribution, if section 147(5) had not been enacted, over the amount of the tax credit which in accordance with section 147(5) applies to the relevant distribution.

• (2) Where the whole or part of a supplementary distribution under subsection (1) which is a relevant distribution for the purposes of section 147 is received by a company in an accounting period, then, for the purposes of that section—

• (a) the whole or part, as the case may be, of the supplementary distribution shall be an amount taken into account under the definition of “E”, and

• (b) the whole of the supplementary distribution shall be an amount taken into account under the definition of “T”,

in the formulae in subsections (1) and (3) of section 147.

• (3) Notwithstanding section 136, the recipient of a supplementary distribution under subsection (1) shall not be entitled to a tax credit in respect of it.

• (4) In relation to any supplementary distribution within the meaning of subsection (1), section 152(1) shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

150 Tax credit for recipients of certain distributions. [FA 93 s46(1) and (2)]

150.—(1) This section shall apply to a distribution made by a company which carries on a specified trade (being a specified trade within the meaning of section 133(1)) and which is a distribution by virtue only of subparagraph (ii), (iii)(I) or (v) of section 130(2)(d).

• (2) Where a distribution to which this section applies or part of such a distribution is not otherwise a relevant distribution for the purposes of section 147(5), then, notwithstanding any provision to the contrary in section 147, the distribution or part of it, as the case may be, shall be deemed for the purposes of section 147(5) to be a relevant distribution.

151 Appeals. [FA80 s51]

151.—An appeal to the Appeal Commissioners shall lie on any question arising under this Chapter in the like manner as an appeal would lie against an assessment to corporation tax, and the provisions of the Tax Acts relating to appeals shall apply accordingly.

CHAPTER 6 Distributions — supplemental

152 Explanation of tax credit to be annexed to interest and dividend warrants. [CTA76 s5 and s83(5)]

152.—(1) Every warrant, cheque or other order drawn or made, or purporting to be drawn or made, in payment by any company of any dividend, or of any interest which is a distribution, shall have annexed to it or be accompanied by a statement in writing showing—

• (a) the amount of the dividend (distinguishing a dividend or any part of it which is paid out of capital profits of the company) or interest paid,

• (b) (whether or not the recipient is a person entitled to a tax credit in respect of the dividend or interest) the amount of the tax credit to which a recipient who is such a person is entitled in respect of that dividend or interest, and

• (c) the period for which that dividend or interest is paid.

• (2) Where a company fails to comply with any of the provisions of subsection (1), the company shall incur a penalty of £10 in respect of each offence, but the aggregate amount of the penalties imposed under this section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed £100.

• (3)
• (a) A company which makes a distribution (not being a distribution to which subsection (1) refers) shall, if the recipient so requests in writing, furnish to the recipient a statement in writing showing the amount or value of the distribution and (whether or not the recipient is a person entitled to a tax credit in respect of the distribution) the amount of the tax credit to which a recipient who is such a person is entitled in respect of the distribution.

• (b) The duty imposed by this subsection shall be enforceable at the suit or instance of the person requesting the statement.

153 Distributions to non-residents. [CTA76 s83(4); FA92 s38(2); FA94 s27(a); FA95 s39]

153.—(1) Where for any year of assessment the income of a person who for that year is neither resident nor ordinarily resident in the State includes an amount in respect of a distribution made by a company resident in the State—

• (a) the liability of the person to income tax in respect of the distribution shall be reduced by the amount by which that liability, before it is reduced by the tax credit (if any) in respect of the distribution, exceeds the amount (which may be nil) of that tax credit, and

• (b) the amount or value of the distribution shall be treated for the purposes of sections 237 and 238 as not brought into charge to income tax.

• (2) The Revenue Commissioners may by notice in writing require a company which has made a distribution to furnish them, within such time as they may direct, with such particulars as they consider necessary to identify persons benefiting from subsection (1).

154 Attribution of distributions to accounting periods. [FA89 s25; FA92 s37; FA97 s38]

154.—(1) (a) Notwithstanding sections 140, 141, 144, 145 and 147(2) but subject to subsections (2) and (3), where a company which makes a distribution specifies, by notice in writing given to the inspector within 6 months of the end of the accounting period in which the distribution is made, the extent to which the distribution is to be treated for the purposes of sections 140, 141, 144, 145 and 147 as made for any accounting period or periods, the distribution shall be so treated for those purposes irrespective of the period of account for which it was made.

• (b) A part of a distribution treated under paragraph (a) as made for an accounting period shall be treated for the purposes of sections 140, 141, 144 and 145, and subsections (1), (2) and (4) of section 147, as a separate distribution.

• (2) A company may specify in accordance with subsection (1) that only so much of a distribution, or more than one distribution, made on any day is made—

• (a) for any accounting period, as does not exceed the undistributed income of the company for that accounting period on that day, and

• (b) for an accounting period or accounting periods ending more than 9 years before that day, as does not exceed the amount by which the amount of the distribution or the aggregate amount of the distributions, as the case may be, exceeds the aggregate of the undistributed income of the company on that day for accounting periods ending before, but not more than 9 years before, that day.

• (3) Except where a distribution made by a company is—

• (a) an interim dividend paid before the 6th day of April, 2002, by the directors of the company, pursuant to powers conferred on them by the articles of association of the company, in respect of the profits of the accounting period in which it is paid,

• (b) a distribution by virtue only of subparagraph (ii), (iii)(I) or (v) of section 130(2)(d),

• (c) a distribution made in respect of shares of a type referred to in paragraph (c) of the definition of “preference shares” in section 138(1), or

• (d) made in an accounting period in which the company ceases or commences to be within the charge to corporation tax,

the company shall not be entitled to specify in accordance with subsection (1) that the distribution is to be treated as made for the accounting period in which it is made.

• (4) Notwithstanding subsection (3) but subject to subsection (5), a company shall not be entitled to specify in accordance with subsection (1) that a distribution, being an interim dividend or part of it, is to be treated as made for the accounting period in which it is made where—

• (a) the circumstances of the company are such that, if the distribution or the part of it, as the case may be, were treated as made for the accounting period in which it is made, the company would be unable at the time when the interim dividend is paid to determine without recourse to estimation how much of the distribution or the part of it, as the case may be, would in accordance with section 147(1) be treated as a specified distribution for the purposes of section 147(4), or

• (b) that treatment of the distribution or the part of it, as the case may be, as made for the accounting period in which it is made, would facilitate any arrangement whereby the tax credit in respect of a dividend received by a shareholder could exceed the tax credit, if any, in respect of a dividend received by another shareholder, notwithstanding that the shareholdings of those shareholders carry the same or substantially similar rights in respect of dividends and capital.

• (5) Subsection (4) shall apply to a company—

• (a) the profits brought into charge to corporation tax of which are wholly or mainly referable to relevant trading operations within the meaning of section 445(1) or 446(1), and

• (b) which—

• (i) (I) is a trading or holding company owned by a consortium for the purposes of section 165(1)(b) or a 51 per cent subsidiary of a company resident in the State, and

• (II) has not made an election under section 165(2)(b),

or

• (ii) is referred to in section 168(1)(a)(ii) as “the first-mentioned company”,

as if subsection (4)(b) were deleted.

• (6) For the purposes of this section, the amount of the undistributed income of a company for an accounting period on any day shall be the amount of the distributable income of the company for the accounting period as determined by section 147(3), reduced by the amount of each distribution, or part of each distribution, made before that day and on or after the 6th day of April, 1989, which is to be treated, whether under section 147 or this section, as made for that accounting period.

155 Restriction of certain reliefs in respect of distributions out of certain exempt or relieved profits. [FA90 s34(1)(a) and (b)(ii), (2), (3), (5) and (6)]

155.—(1) In this section, “distribution” has the same meaning as in the Corporation Tax Acts.

• (2)
• (a) This section shall apply to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to eliminate the risk that the person beneficially owning those shares—

• (i) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realise directly or indirectly in money or money's worth an amount so specified or implied, other than a distribution, in respect of those shares, or

• (ii) might not receive an amount so specified or implied of distributions in respect of those shares.

• (b) The reference in this subsection to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.

• (c) For the purposes of this subsection, an amount specified or implied shall include an amount specified or implied in a foreign currency.

• (3) Where any person receives a distribution in respect of shares to which this section applies and, apart from the application of this subsection to the distribution, section 140(3)(a), 141(3)(a), 144(3)(a) or 145 would apply to the distribution, then, notwithstanding any provision of the Tax Acts other than subsection (4) and for the purposes of those Acts—

• (a) none of those sections shall apply to the distribution,

• (b) that person shall not be entitled to a tax credit in respect of the distribution, and

• (c) the distribution shall be treated as income chargeable to income tax or corporation tax, as the case may be, under Case IV of Schedule D.

• (4) Subsection (3) shall not apply to a distribution received—

• (a) by a company—

• (i) none of the shares of which is beneficially owned by a person resident in the State, and

• (ii) which, if this subsection had not been enacted, would not be chargeable to corporation tax in respect of any profits other than distributions which would be so chargeable by virtue of this section, or

• (b) by a person not resident in the State.

• (5) Notwithstanding subsection (4), the liability to income tax or corporation tax of any person resident in the State, other than a company to which paragraph (a) of that subsection relates, shall be determined as if that subsection had not been enacted.

CHAPTER 7 Franked investment income

156 Franked investment income and franked payments. [CTA76 s24]

156.—(1) Income of a company resident in the State which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit) shall be referred to in the Corporation Tax Acts as “franked investment income” of the company.

• (2) The sum of the amount or value of a distribution made by a company resident in the State and the amount of the tax credit in respect of the distribution shall be referred to in the Corporation Tax Acts as “a franked payment”, and references to any accounting or other period in which a franked payment is made are references to the period in which the distribution in question is made.

157 Set-off of losses, etc. against franked investment income. [CTA76 s25(1) to (7); FA86 s55(1)(a); FA92 s49(1)]

157.—(1) Where in any accounting period a company receives franked investment income, the company may on making a claim for the purpose require that the franked investment income or part of the franked investment income shall for all or any of the purposes mentioned in subsection (2) be treated as if it were a like amount of profits chargeable to corporation tax and, subject to subsections (4) and (5), the company shall be entitled to have paid to it the value of the tax credit comprised in the income or in the part of the income so treated.

• (2) The purposes for which a claim may be made under subsection (1) shall be—

• (a) the deduction of charges on income under section 243;

• (b) the setting of certain capital allowances against total profits under section 308(4);

• (c) the setting of trading losses against total profits under section 396(2).

• (3) Where a company makes a claim under this section for any accounting period, the reduction to be made in profits of that accounting period shall be made as far as may be in profits chargeable to corporation tax rather than in the amount treated as profits so chargeable under this section.

• (4) Where a claim under this section relates to section 308(4) or 396(2) and an accounting period of the company falls partly before and partly within the time mentioned in section 308(4) or 396(2), as the case may be, then—

• (a) the restriction imposed by section 308(4) or 396(3) on the amount of the relief shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as profits of the accounting period under this section; but

• (b) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the time mentioned in section 308(4) or 396(2), as the case may be.

• (5)
• (a) Subject to paragraph (b), where a company has obtained payment of a tax credit on a claim under this section or under section 83(5) and apart from such a claim any amount could be set off against or deducted from profits of a subsequent accounting period, the company may claim that the amount shall be so set off or deducted; but in that case, to the extent to which the amount was used to obtain payment of a tax credit, such tax credit shall be recoverable from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for that year of assessment is equal to the amount of such tax credit.

• (b) Relief under this subsection shall not be given against the profits of an accounting period if such relief could be given against the profits of an earlier accounting period.

• (6) Where a company makes a claim under subsection (5) in respect of an accounting period, any income tax payable by virtue of that subsection shall, for the purposes of the charge, assessment, collection and recovery from the company of that tax and of any interest or penalties on that tax, be treated and described as corporation tax payable by that company for that accounting period, notwithstanding that for the other purposes of the Tax Acts it is income tax.

• (7) The time limits for claims under this section shall be—

• (a) if and in so far as the purpose for which the claim is made is the deduction of charges on income under section 243 or the setting of capital allowances against total profits under section 308(4), 2 years from the end of the accounting period in which the charges were paid or the capital allowances were to be made;

• (b) if and in so far as the purpose for which the claim is made is the setting of trading losses against total profits under section 396(2), 2 years from the end of the accounting period in which the trading loss is incurred;

• (c) if the claim is a claim under subsection (5), 2 years from the end of the accounting period in respect of which the claim is made.

• (8) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

158 Set-off of loss brought forward or terminal loss against franked investment income in the case of financial concerns. [CTA76 s26; FA83 s51; FA86 s55(1)(a) and (b); FA92 s49(2)]

158.—(1) Where in any accounting period a company receives franked investment income, the company, instead of or in addition to making a claim under section 157, may on making a claim for that purpose require that the franked investment income shall be taken into account for relief under section 396(1) or 397 up to the amount of such income received in the accounting period which, if chargeable to corporation tax, would have been so taken into account by virtue of section 396(6), and (subject to the restriction to the amount of franked investment income) subsections (2) to (7) shall apply where the company makes a claim under this section for any accounting period.

• (2) For the purposes of the claim, the amount to which the claim relates shall be treated as trading income of the accounting period.

• (3)
• (a) The reduction to be made in trading income of an accounting period shall be made as far as may be in trading income chargeable to corporation tax rather than in the amount treated as trading income so chargeable under this section.

• (b) Where the claim is made under section 397, the loss in the trade shall be set primarily against income chargeable to corporation tax (exclusive of income so treated as chargeable by this section) for the accounting periods referred to in section 397(1), and the set-off of the loss against franked investment income provided for by this section shall apply to the balance only of such loss which has not been set off under section 397(1) and the set-off against franked investment income of such balance of the loss as is referred to above shall be effected in a later rather than an earlier accounting period falling within the 3 years mentioned in section 397(1).

• (4) Where a company has obtained payment to it of a tax credit by virtue of this section on a claim under section 396(1) and apart from such a claim a loss could be set off against or deducted from profits of a subsequent accounting period, the company may claim that the loss shall be so set off or deducted; but in that case, to the extent to which the loss was used to obtain payment of a tax credit, such tax credit shall be recovered from the company by an assessment on it to income tax under Case IV of Schedule D for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for that year of assessment is equal to the amount of such tax credit, and the time limit for a claim under this subsection shall be 2 years from the end of the subsequent accounting period.

• (5) Where a company makes a claim under subsection (4) in respect of an accounting period, any income tax payable by virtue of that subsection shall, for the purposes of the charge, assessment, collection and recovery from the company of that tax and of any interest or penalties on that tax, be treated and described as corporation tax payable by that company for that accounting period, notwithstanding that for the other purposes of the Tax Acts it is income tax.

• (6) Where the claim relates to section 397 and an accounting period of the company falls partly outside the 3 years mentioned in subsection (1) of that section—

• (a) the restriction imposed by subsection (2) of that section on the amount of the reduction that may be made in the trading income of that period shall be applied only to any relief to be given apart from this section, and shall be applied without regard to any amount treated as trading income of the period by virtue of this section; but

• (b) relief under this section shall be given only against a part of the amount so treated proportionate to the part of the accounting period falling within the 3 years in question.

• (7) Any amount on which by virtue of this section income tax is charged on a company by an assessment under Case IV of Schedule D shall not be regarded as income of the company for any purpose of the Tax Acts.

CHAPTER 8 Advance corporation tax

159 Liability for advance corporation tax. [FA83 s38]

159.—Except where otherwise provided for in this Chapter, where a company resident in the State makes a distribution, the company shall be liable to make a payment of corporation tax (to be known as “advance corporation tax”) in accordance with this Chapter and, subject to section 162, the amount of advance corporation tax shall, whether or not the recipient of the distribution is a person entitled to a tax credit in respect of the distribution, be equal to the amount of the tax credit to which a recipient who is such a person is entitled in respect of the distribution.

160 Set-off of advance corporation tax. [FA83 s39]

160.—(1) In this section, “surplus advance corporation tax”, in relation to an accounting period, means advance corporation tax which cannot be set against the company's liability to corporation tax for that period because of a want or deficiency of income charged to corporation tax for that period or because of any relief from or reduction in the amount of corporation tax charged on such income for that period.

• (2) Advance corporation tax paid by a company (and not repaid) in respect of any distribution made by it in an accounting period shall be set, in so far as possible, against the company's liability to corporation tax on any income charged to corporation tax for that accounting period and shall accordingly discharge a corresponding amount of that liability.

• (3) Where in the case of any accounting period of a company there is an amount of surplus advance corporation tax, the company may, within 2 years after the end of that period, claim to have the whole or any part of that amount treated for the purposes of this section (but not of any further application of this subsection) as if it were advance corporation tax paid in respect of distributions made by the company in any of its accounting periods ending in the period of 12 months immediately preceding that accounting period (but so that the amount which is the subject of the claim is set, in so far as possible, against the company's liability for a more recent accounting period before a more remote one), and in so far as may be required corporation tax shall be repaid accordingly.

• (4) Where in the case of any accounting period of a company there is an amount of surplus advance corporation tax which has not been dealt with under subsection (3), that amount shall be treated for the purposes of this section (including any further application of this subsection) as if it were advance corporation tax paid in respect of distributions made by the company in the next accounting period.

• (5) For the purposes of this section, the income of a company charged to corporation tax for any accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to chargeable gains, and that part shall be taken to be the amount brought into the company's profits for that period for the purposes of corporation tax in respect of chargeable gains before any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.