ACT: set-off against CT on profits: not creating surplus ACT
The ACT covered by a ICTA88/S239 (3) claim was treated as if it were ACT paid on distributions made in a previous accounting period. But this did not mean that the company could make a further Section 239 (3) claim in respect of any surplus ACT thus created in that earlier accounting period.
A company had:
- surplus ACT of £20,000 for its accounting period to 31 December 1990,
- profits charged to CT for its accounting periods to 31 December 1983 and 31 December 1989,
- no profits charged to CT for the five accounting periods to 31 December 1988.
The company could make a claim under Section 239 (3) to set-off the surplus ACT against the CT on its profits for the accounting period to 31 December 1989 which was within the time limit.
Assume the maximum set-off of ACT for the accounting period to 31 December 1989 was only £3,000. The company could not then claim that it had surplus ACT for that accounting period of £17,000 and make a claim under Section 239 (3) to take the ACT back to the accounting period to 31 December 1983.