Income and Corporation Taxes Act 1988

803 Underlying tax reflecting interest on loans. U.K.

M1 (1) This section applies in a case where—

(a) a bank or a company connected with a bank makes a claim for an allowance by way of credit in accordance with this Chapter; and

(b) the claim relates to underlying tax on a dividend [F1 (“the overseas dividend")] paid by the overseas company, within the meaning of section 801; and

(c) that underlying tax is or includes tax payable under the law of a territory outside the United Kingdom on or by reference to [F2 interest or dividends earned or received] in the course of its business by that overseas company or by such third, fourth or successive company as is referred to in subsection (2) or (3) of that section; and

[F3 (d) if the company which received the interest or dividends (“the company") had been resident in the United Kingdom, [F4 section 798A] would apply in relation to that company.]

(2) In a case where this section applies, the amount of the credit for that part of the foreign tax which consists of the tax referred to in subsection (1)(c) above shall not exceed an amount determined under subsection (3) below.

(3) The amount referred to in subsection (2) above is a sum equal to corporation tax, at the rate in force at the time the foreign tax referred to in paragraph (c) of subsection (1) above was chargeable, [F5 on so much of the interest or dividends as exceeds the amount of the company’s relevant expenditure which is properly attributable to the earning of the interest or dividends].

(4) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F7 (10) In subsection (1) above “bank” means a company carrying on, in the United Kingdom or elsewhere, any trade which includes the receipt of interest or dividends, and [F8 , for the purposes of that subsection, whether a company is connected with a bank is determined in accordance with section 839.]]

Textual Amendments

F1 Words in s. 803(1)(b) inserted (with effect in accordance with s. 106(11)(12) of the amending Act) by Finance Act 1998 (c. 36), s. 106(2)(a)

F2 Words in s. 803(1)(c) substituted (with effect in accordance with s. 106(11)(12) of the amending Act) by Finance Act 1998 (c. 36), s. 106(2)(b)

F3 S. 803(1)(d) substituted (with effect in accordance with s. 106(11)(12) of the amending Act) by Finance Act 1998 (c. 36), s. 106(2)(c)

F4 Words in s. 803(1)(d) substituted (with effect in accordance with s. 86(3)(4) of the amending Act) by Finance Act 2005 (c. 7), s. 86(2)(a)

F5 Words in s. 803(3) substituted (with effect in accordance with s. 106(11)(12) of the amending Act) by Finance Act 1998 (c. 36), s. 106(3)

F6 S. 803(4)-(9) repealed (with effect in accordance with s. 86(3)(4) of the repealing Act) by Finance Act 2005 (c. 7), s. 86(2)(b), Sch. 11 Pt. 2(8), Note

F7 S. 803(10) substituted for s. 803(10)(11) (with effect in accordance with s. 106(11)(12) of the amending Act) by Finance Act 1998 (c. 36), s. 106(10)

F8 Words in s. 803(10) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 196 (with Sch. 2)

Marginal Citations

M1 Source—1982 s.66; 1987 (No.2) s.68