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HMRC internal manual

Company Taxation Manual

ACT: set-off against CT on profits: when a claim could be made

The earliest date at which a valid ICTA88/S239 (3) claim could be made was the day following the end of the accounting period from which the ACT derived. The reasoning for this is as follows.

A claim under Section 239 (3) could be made ‘where in the case of any accounting period of a company there is an amount of surplus ACT….’ so the surplus had therefore to exist at the time of the claim. Since the amount of ACT to be set-off against the company’s own CT liability could not be computed prior to the end of the accounting period it followed that until the end of the accounting period it was not known whether there was an amount of surplus ACT.

This view was reinforced by the judgement in Elliss v ICI Petroleum Ltd. 57TC176 where atp.196 Gibson J said ‘It is apparent from Section 85 (later Section 239) that until the income for the entire accounting period is ascertained (and that cannot be done before the end of the period) one cannot know what is the amount of ACT that can be set against the CT liability’).

Claims for repayment of CT for an earlier period in anticipation of a Section 239 (3)claim were not accepted. This principle also applied where the earlier period was under appeal and the company was seeking to revise the non-postponed amount for that year.

If a repayment was made prior to the Section 239 (3) claim being made there was a danger that repayment supplement would be claimed on the prior year repayment since it might not be ‘in consequence of’ the Section 239 (3) claim (ICTA88/S825 (4)(a)).