Shadow ACT: computation of: company ceasing to be a member of a group
SI1999/358, Reg. 11 (7)
Where a company ceases to be a member of a group, shadow ACT is computed as if the part of the accounting period before it ceased to be a member and the part after were two separate accounting periods.
Accounting Period 1.1.2005 – 31.12.2005.
Company makes a distribution of £8,000. It receives a dividend from a non-associated company which, with the tax credit, totals £32,000. It has surplus franked investment income (FII) brought forward of £20,000.
Accounting Period 1.1.2006 – 31.12.2006.
Company pays a dividend of £80,000. It receives a dividend from a non-associate, which with the tax credit totals £24,000.
Accounting Period 1.1.2005 – 31.12.2005, (calculation of surplus FII).
|Surplus FII brought forward||£20,000|
|FII £32,000 x 9 / 8 =||£36,000|
|+ Shadow ACT||£2,000|
Accounting Period 1.1.2006 – 31.12.2006, (calculation of shadow ACT).
|Shadow ACT thereon||£20,000|
|FII £24,000 x 9 / 8 =||£27,000|
|+ Surplus FII||£46,000||£73,000|
Shadow ACT is 25% of the amount which, when the shadow ACT is added to it, is equal tothe excess = £5,400.