Finance Act 1952

Section 33.

SEVENTH SCHEDULE Profits Tax: Consequential and Transitional Provisions

Rates of Distribution Charges

1 (1) The rate of any distribution charge in respect of a trade or business for a chargeable accounting period ending after the end of the year nineteen hundred and fifty-one shall be determined as follows—

(a) the charge shall be at twenty per cent., subject to this, that the amount on which the charge is at twenty per cent. shall not, when added—

(i) to the total of the amounts, if any, on which distribution charges at twenty per cent. have fallen to be made for previous chargeable accounting periods ending after the end of the year nineteen hundred and fifty-one; and

(ii) to the total of the amounts, if any, on which distribution charges at forty per cent. have fallen to be made for previous chargeable accounting periods ending at or before the end of the year nineteen hundred and fifty-one,

exceed the total of the amounts on which reliefs for non-distribution have been given at forty per cent. for previous chargeable accounting periods or at twenty per cent. for previous chargeable accounting periods ending after the end of the year nineteen hundred and fifty-one ;

(b) on the amount on which, under the preceding paragraph, the charge cannot be at twenty per cent., it shall be at ten per cent., subject to this, that the amount on which the charge is at ten per cent. shall not, when added—

(i) to the total of the amounts, if any, on which distribution charges at ten per cent. have fallen to be made for previous chargeable accounting periods ending after the end of the year nineteen hundred and fifty-one; and

(ii) to the total of the amounts, if any, on which distribution charges at twenty per cent. have fallen to be made for previous chargeable accounting periods ending at or before the end of the year nineteen hundred and fifty-one,

exceed the total of the amounts on which reliefs for non-distribution have been given at twenty per cent. for previous chargeable accounting periods ending at or before the end of the year nineteen hundred and fifty ;

(c) on the amount on which, under the preceding paragraphs, the charge cannot be at twenty per cent. or ten per cent., it shall be at seven-and-a-half per cent.

References in this sub-paragraph to a distribution charge at a specified rate include references to so much of a distribution charge which is partly at that rate and partly at other rates as is at that rate.

(2) Where, under either of the following provisions of the Finance Act, 1947, that is to say—

(a) subsection (4) of section thirty-six (which relates to schemes of amalgamation or reconstruction); and

(b) subsection (2) of section thirty-eight (which relates to companies having subsidiaries),

a difference in respect of which a non-distribution relief was given to or in respect of any body corporate is to be treated (in whole or in part) as if it had been a difference arising in relation to another body corporate on which non-distribution relief has been given to that body, then, for the purposes of sub-paragraph (1) of this paragraph, relief shall be treated as having been given to the second-mentioned body on the difference or the relevant part thereof at the rate or rates at which it was given on the difference to or in respect of the first-mentioned body.

Repaid Loans

2 (1) Where, in the case of any body corporate, society or other body, the net relevant distributions to proprietors for any chargeable accounting period ending after the end of the year nineteen hundred and fifty-one are, under subsection (3) of section thirty-six of the Finance Act, 1947, as amended by section seventy of the Finance Act, 1948, to be treated as reduced by reference to the repayment, whether before, during or after that period, of a loan made after the end of the year nineteen hundred and fifty-one, the reduction shall be determined by reference to tax at twenty per cent.:

Provided that, if a distribution charge is or would but for that subsection be chargeable for that period, the reduction shall be equal to, or, as the case may be, to the sum of, whichever of the following amounts is or are applicable to the circumstances of the case, that is to say—

(a) if there is a distribution charge at seven-and-a-half per cent., thirteen-and-a-third times whichever of the following two amounts is the less, that is to say—

(i) the tax originally ascribable to the loan; or

(ii) the distribution charge at seven-and-a-half per cent.;

(b) if there is no distribution charge at seven-and-a-half per cent. or if the distribution charge at seven-and-a-half per cent. is less than the tax originally ascribable to the loan, ten times whichever of the following two amounts is the less, that is to say—

(i) the tax originally ascribable to the loan, less the distribution charge, if any, at seven-and-a-half per cent.; or

(ii) the distribution charge at ten per cent.;

(c) if there is no distribution charge at seven-and-a-half per cent. or ten per cent. or if the distribution charge at those rates is less than the tax originally ascribable to the loan, five times whichever of the following two amounts is the less, that is to say—

(i) the tax originally ascribable to the loan, less the distribution charge, if any, at the said rates; or

(ii) the distribution charge at twenty per cent.

In paragraphs (a) to (c) of the proviso to this sub-paragraph—

• " the tax originally ascribable to the loan " means the amount by which the tax for any chargeable accounting period has been increased by reason of the loan being treated as part of the gross relevant distributions to proprietors for that period;

• " distribution charge" means the distribution charge which would be chargeable but for the reduction;

and references to a distribution charge at a specified rate include references to so much of a distribution charge which is partly at that rate and partly at other rates as is at that rate.

(2) Sub-paragraph (1) of this paragraph shall apply in relation to loans made before the end of the year nineteen hundred and fifty-one as it applies in relation to loans made after the end of that year, but with the substitution for references to the tax originally ascribable to the loan of references to half the amount of that tax.

Building Societies

3 Section forty-two of the Finance Act, 1947 (which as amended by subsection (3) of section seven of the Finance (No. 2) Act, 1947, restricts the profits tax chargeable in the case of building societies to six per cent. of their profits, computed as therein mentioned), shall, in relation to any chargeable accounting period ending after the end of the year nineteen hundred and fifty-one, have effect as if the words " two per cent." were substituted for the words " six per cent. "

Payments between interconnected companies and payments by statutory undertakers

4 Subsection (3) of section sixty-nine of the Finance Act, 1948, and subsection (2) of section twenty-nine of the Finance Act, 1951 (which provide for a reduction of the tax chargeable on the recipient of certain payments where the payer is a body corporate connected with the recipient or is a statutory undertaker carrying on a public utility concern), shall, in relation to any chargeable accounting period ending after the end of the year nineteen hundred and fifty-one, have effect as if the words " two-and-a-half per cent." were substituted for the words " ten per cent. ".

Accounting Periods Divided by this Act

5 The provisions set out in the third column of the Schedule to the Profits Tax Act, 1949 (which modified the application of certain enactments in relation to accounting periods divided by subsection (1) of section one of that Act), shall have effect so as to modify the application of those enactments also in relation to accounting periods divided by subsection (3) of section thirty-three of this Act:

Provided that, as respects double taxation relief—

(a) the reference in the said Schedule to paragraph 3 of Part I of the Ninth Schedule to the Finance Act, 1947, shall be deemed to be a reference to paragraph 3 of the Sixteenth Schedule to, and paragraph 1 of Part II of the Seventeenth Schedule to, the Income Tax Act, 1952, or, where that Act does not apply, to paragraph 3 of the said Part I and paragraph 1 of Part II of the Sixth Schedule to the Finance Act, 1950; and

(b) any foreign tax which, but for this paragraph of this proviso, would, under paragraph 7 of the said Sixteenth Schedule as modified by paragraph 2 of Part II of the said Seventeenth Schedule, or, in a case in which the Income Tax Act, 1952, does not apply, under paragraph 7 of the said Part I as modified by paragraph 2 of Part II of the said Sixth Schedule, have gone to reduce the profits of the trade or business for the first of the two chargeable accounting periods shall instead be apportioned between the two chargeable accounting periods by reference to the number of months or fractions of months in each of them respectively and the profits of each reduced accordingly.