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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Distributions: impact on Corporation Tax: franked investment income under the ACT system abolished from 6 April 1999 - surplus - claims under ICTA88/S242 - purposes of claim

ICTA88/S242 (2) & (8)

For accounting periods beginning before 2 July 1997 the legislation talks about the ‘purposes’ for which a claim may be made under ICTA88/S242. These ‘purposes’ were the setting-off of various unused reliefs against surplus franked investment income (FII) in order to receive payment of the tax credit on the FII.

Different time limits applied to claims in respect of each type of unused relief. The types of relief, and the time limits were:

  • The deduction of charges under ICTA88/S338 (see CTM09000 onwards). The time limit was 6 years from the end of the accounting period in which the company paid the charges.
  • The deduction of management expenses (see CTM08000 onwards). The time limit was 6 years from the end of the accounting period in which the company incurred the management expenses. The claim could include management expenses brought forward. For the purposes of the claim time limit management expenses brought forward were treated as incurred in the accounting period to which they were carried forward.
  • The set-off of certain capital allowances against total profits under CAA90/S145 (3) (subsequently CAA01/S260 (3); see CA29450). The time limit was 2 years from the end of the accounting period for which the capital allowances fell to be made. The claim could not include capital allowances brought forward.
  • The set-off of trading losses against total profits under ICTA88/S393A (1) (see CTM04500 onwards). The time limit was 2 years from the end of the accounting period in which the company incurred the trading loss. The claim could not include losses brought forward, but see CTM16250 in relation to financial concerns.
  • The set-off of losses on shares in unquoted companies under ICTA88/S573 (see CG58300). The time limit was 2 years from the end of the accounting period in which the company incurred the loss.
  • The set-off of non-trading deficits on loan relationships under FA96/S83 (2)(a). The time limit was 2 years from the end of the accounting period to which the relievable amount relates, or such further period as the Board may allow.