Corporation Tax Act 2010

Chapter 7 Tax credits

1109 Tax credits for certain recipients of exempt qualifying distributions

(1) This section applies if a company makes a qualifying distribution which is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

(2) If the person receiving the distribution is a UK resident company, that company is entitled to a tax credit equal to one-ninth of the amount or value of the distribution (but see subsection (5)).

(3) If the distribution is, or is treated under any provision of the Tax Acts as, the income of a person (“P”) other than the recipient (“R”), P (not R) is treated as receiving it for the purposes of subsection (2) (and so P (not R) is entitled to a tax credit if P falls within subsection (2)).

(4) Section 1102(2) to (6) (power to obtain certain information from close companies and others) applies for the purposes of this section as it applies for the purposes of section 1101.

(5) This section is subject to the following provisions—

(a) section 808 (no tax credits for borrower under stock lending arrangement),

(b) section 809 (no tax credits for lender under creditor repo or creditor quasi-repo),

(c) section 810 (no tax credits for borrower under debtor repo or debtor quasi-repo), and

(d) section 219(4B) of FA 1994 (no tax credit for distributions in respect of assets in Lloyd’s member’s premium trust fund).

1110 Recovery of overpaid tax credit etc

(1) If an officer of Revenue and Customs discovers that a payment or set-off of tax credit should not have been made or is excessive, the officer may act in accordance with subsection (3) or (4).

(2) For the purposes of subsection (1) it does not matter whether the payment or set-off was excessive when made or became so later.

(3) The officer may make any assessment that in the officer’s judgement is needed to recover—

(a) any corporation tax that should have been paid, or

(b) any payment of tax credit that should not have been made.

(4) More generally, the officer may make any assessment that in the officer’s judgement is needed to secure that the liabilities to corporation tax (and any liabilities to interest on corporation tax) of the persons concerned are what they would have been if only the correct set-offs and payments had been made.

(5) Subsection (6) applies if—

(a) interest on a payment of tax credit comprised in any franked investment income has been paid under section 826 of ICTA, and

(b) interest should not have been paid on the payment, or should only have been paid on part of it.

(6) An officer of Revenue and Customs may make an assessment for recovering the interest, so far as it should not have been paid.

1111 Section 1110: supplementary

(1) If—

(a) an assessment is made under section 1110 to recover tax credit paid to a company in respect of franked investment income received in an accounting period, and

(b) more than one payment of tax credit was made in respect of that period,

then as far as possible a sum recovered is treated as relating to a payment of tax credit made later rather than to one made earlier.

(2) TMA 1970 applies to an assessment under section 1110 for recovering a payment of tax credit, or of interest on a tax credit—

(a) as if it were an assessment to corporation tax for the accounting period in respect of which the payment was claimed, and

(b) as if the payment represented a loss of tax to the Crown.

(3) Any sum charged by an assessment such as is mentioned in subsection (2) is due within 14 days after the notice of assessment is issued.

(4) The duty to comply with subsection (3) is subject to any appeal against the assessment.