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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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Corporation Tax: computation of income: IT law: pre Tax Law Rewrite

Income Tax (IT) law

The concept of ‘IT law’ was needed when the charge to corporation tax on income was computed by reference to income tax principles (see CTM02010). The concept meant that, for any accounting period, the law applying to the charge on individuals for the IT year of assessment in which that period ended also applied to computing companies’ income for CT purposes. It:

  • included any IT enactment making special provision for companies, for example ICTA88/S402 (6), which provided that a payment for group relief is not to be taken into account in computing income, and
  • excluded any IT enactment making special provision for individuals.

Any provision of the Income Tax Acts which exempted certain income from IT, or provided for a person to be charged to IT on any amount, had the same effect for CT.

Income was computed by reference to the income arising in the accounting period. So IT law about basis periods had no relevance to CT.

The effect of this was that:

  • amounts which were, or were not to be taken into account in computing income,
  • amounts to be charged to tax as a person’s income, and
  • the time when any of these amounts arose,

were determined under IT law and practice as if accounting periods were tax years.