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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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ACT collection: franked investment income received in a later return period

ICTA88/SCH13/PARA4

Where:

  • a company has paid ACT in respect of franked payments made in a return period,

and

  • receives franked investment income in a later return period but in the same accounting period,

it has to make a return for that later return period.

The return has to be made whether or not it made franked payments or paid any FID in that later return period.

The company is then due a repayment of ACT. The repayment is the smaller of:

  • the ACT so far paid (and not repaid) in respect of franked payments made in that accounting period, and
  • the amount of tax credit comprised in the excess (if any) of the franked investment income received over the franked payments made in that later return period.

The effect of this provision is that overall a company only accounts for the ACT due over the whole of the accounting period.

Example

A company has an accounting period to 31 March 1995. It pays out its one and only qualifying distribution in the return period to 31 December 1994. £10,000 ACT is paid to the Collector within the 14 days as required.

In its final return period to 31 March 1995, the company receives franked investment income. This includes a £3,000 tax credit. The company makes no distribution in that return period. The tax credit can be set against the earlier ACT payment allowing a £3,000 repayment.