Corporation tax. Accounting periods. “Within the charge to tax” – s.832(1) ICTA 1988.
Decision of Court of Appeal (Click here) reversed. ACT paid on a dividend could be carried back and set against an earlier year’s corporation tax so long as 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 until 30 September 1993 when it placed £2000 in an interest-bearing deposit account. The Inland Revenue contended that between 6 January 1992 and 30 September 1993 the company was not within the charge to corporation tax and therefore had no accounting period and so could not carry back ACT.
Held: because the company actually became liable to pay corporation tax (in this case ACT, which is a kind of corporation tax) it was “within the charge to corporation tax” at the relevant time and so had an accounting period.