Corporation tax. Accounting periods. “Within the charge to tax” – s.832(1) ICTA 1988.
ACT paid on a dividend cannot be carried back and set against an earlier year’s corporation tax unless the dividend was paid in an accounting period of the company (s.239(3) ICTA 1988). The taxpayer company ceased trading on 6 January 1992 and accordingly an accounting period then ended. No new accounting period started (s.12(2) ICTA 1988) unless the company continued to be “within the charge to corporation tax”. The company had no source of income after 6 January 1992, with the result that after that date it was not within the charge to corporation tax and had no accounting period until 30 September 1993 when it placed £2000 in an interest-bearing deposit account.
Upheld on appeal.