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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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ACT: FID: international headquarters companies (IHC): further reckoning comparison

ICTA88/S246U (1) - (9)

A company that treated itself as an IHC at the time of paying an FID and was an IHC in the accounting period did not have to pay ACT under the usual ICTA88/SCH13 rules at the normal time. And, later in the same accounting period, that same company may perhaps not have treated itself as an IHC at the time of payment of an FID.

An IHC had to come to a reckoning with the Revenue after the end of its accounting period. This was intended to put the company in the same position that it would have been in had it not treated itself as an IHC, accounted for ACT and then received any repayment or set off of surplus ACT to which it would have been entitled under the FID provisions.

The reckoning was achieved by the comparison of two figures - amount A and amount B.

Amount A

Amount A was the ACT which, by treating itself as an IHC at the time of payment, the company did not pay in respect of FID paid in the accounting period.

Amount A was not found simply by applying the rate of ACT to the FID paid as an IHC - this would have taken no account of any FID received which would have been available to frank FID paid. Amount A was given by the calculation below.

  1. Add the FID paid in the accounting period, whether or not the company treated itself as an IHC when paying any of them.
  2. Subtract any FID received in the accounting period or brought forward to the accounting period and treated as received under ICTA88/S246F (3).
  3. Apply the appropriate rate of ACT to the resultant net FID paid in the accounting period.
  4. Subtract from this figure the ACT actually paid in respect of FID paid in the accounting period.
  5. The resultant figure was amount A.

Amount B

Amount B was the ACT (if any) which would have been repaid or set off on a claim under ICTA88/S246N made nine months from the end of the accounting period if the company had not treated itself as an IHC at any time in the accounting period.

Amount B was found by applying the FID repayment provisions at CTM21400 onwards.
Examples of the calculations of amounts A and B can be found in examples 3 and 4 of CTM21280.

Comparison of A with B

If amount A exceeded amount B, the excess was treated as an amount of ACT due from the company in respect of a distribution made in the last return period falling within the accounting period.

If amount B exceeded amount A, the excess was paid to the company and treated as are payment of ACT under ICTA88/S246N.

The payment to the company was not to be made until after nine months from the end of its accounting period. The company had to make a claim for payment. This claim could be made on a return or amended return of profits for the accounting period under TMA70/S11, or separate notice, and had to contain such particulars as were required.

In calculating the ACT which had already been dealt with (ICTA88/S246N (5), see CTM21410), any ACT actually paid by the company for an accounting period which had been carried back or surrendered was assumed to be treated in the same way.