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HMRC internal manual

Company Taxation Manual

Shadow ACT: accounting periods to which the Regulations apply: company not a member of a group: immediate opt out

SI1999/358, Reg. 4 (3)

There are some companies where the amount of the unrelieved surplus ACT is so small or their prospects of accessing it are so uncertain that they would prefer not to have to bother with the Regulations.

Provision is made for such companies to opt out. If they wish to do so, they must notify an officer of the Board before the end of the first accounting period beginning on or after 6 April 1999 that they will not seek recovery of any unrelieved surplus ACT in that or any subsequent period (immediate opt out).

The Regulations will not apply to a company that has given notification for at least as long as it remains a company that is not a member of a group. They will begin to apply if the company becomes a member of a group at least one other member of which had unrelieved surplus ACT at 6 April 1999 and has not passed its final accounting period in its capacity as a member of that group.

Where that happens, the regulations are applied from that accounting period. The company cannot set off the unrelieved surplus ACT that it opted to forgo. The group can make use of its shadow ACT capacity. Any distributions it makes are taken into account in computing the shadow ACT available to cover its capacity and that of the other members of the group.