Finance (No.2) Bill - continued        House of Commons
SCHEDULE 3, ADVANCE CORPORATION TAX - continued

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Section 498 of the Taxes Act 1988
     29. - (1) Section 498 of the Taxes Act 1988 (limited right to carry back surrendered ACT) shall cease to have effect.
 
      (2) Sub-paragraph (1) above has effect in relation to accounting periods of the surrendering company (as defined in section 240(1) of the Taxes Act 1988) beginning on or after 6th April 1999.
 
      (3) The limit under section 498(5) of the Taxes Act 1988 for an accounting period of the surrendering company (as defined in section 240(1) of that Act) beginning before, and ending on or after, 6th April 1999 (a "straddling period") shall be determined as if-
 
 
    (a) the straddling period were an accounting period beginning at the beginning of the straddling period and ending on 5th April 1999 ("the notional period"); and
 
    (b) there were apportioned to the notional period a proportionate amount of the limit which, apart from this sub-paragraph, would apply for the purposes of section 498(5) of the Taxes Act 1988.
 
Section 499 of the Taxes Act 1988
     30. - (1) Section 499 of the Taxes Act 1988 (surrender of ACT where oil extraction company etc owned by a consortium) shall cease to have effect.
 
      (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.
 
 
Section 703 of the Taxes Act 1988
     31. - (1) Section 703 of the Taxes Act 1988 (cancellation of tax advantage) shall be amended as follows.
 
      (2) After subsection (3) there shall be inserted-
 
 
    "(3A) The amount of income tax which may be specified in an assessment which is made under subsection (3) above to counteract a tax advantage-
 
 
    (a) obtained by a person in circumstances falling within paragraph D or paragraph E of section 704, and
 
    (b) consisting of the avoidance of a charge to income tax,
  shall not exceed the amount of income tax for which that person would be liable in respect of the receipt, on the date on which the consideration mentioned in paragraph D or paragraph E of section 704 is received, of a qualifying distribution of an amount equal to the amount or value of that consideration."
 
      (3) Subsections (4) to (6) (which make provision in relation to treating of amounts of ACT as paid) shall cease to have effect.
 
      (4) Sub-paragraph (2) above has effect in relation to assessments under section 703(3) of the Taxes Act 1988 made on or after 6th April 1999.
 
      (5) Sub-paragraph (3) above has effect for the year 1999-00 and subsequent years of assessment.
 
 
Section 704 of the Taxes Act 1988
     32. - (1) Section 704 of the Taxes Act 1988 (the prescribed circumstances) shall be amended as follows.
 
      (2) In paragraph A, sub-paragraph (d) (which relates to ACT) shall cease to have effect.
 
      (3) This paragraph has effect in relation to distributions made on or after 6th April 1999.
 
 
Section 705 of the Taxes Act 1988
     33. - (1) Section 705 of the Taxes Act 1988 (appeals against Board's notices under section 703) shall be amended as follows.
 
      (2) Subsections (6) to (8) (which make provision supplemental to section 703(5) and (6)) shall cease to have effect.
 
      (3) This paragraph has effect for the year 1999-00 and subsequent years of assessment.
 
 
Section 797 of the Taxes Act 1988
     34. - (1) Section 797 of the Taxes Act 1988 (limits on credit: corporation tax) shall be amended as follows.
 
      (2) Sub-paragraphs (4) and (5) (which make provision in relation to section 239) shall cease to have effect.
 
      (3) This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.
 
 
Section 802 of the Taxes Act 1988
     35. - (1) Section 802 of the Taxes Act 1988 (UK insurance companies trading overseas) shall be amended as follows.
 
      (2) In subsection (2)(a) the words "and group income" shall cease to have effect.
 
      (3) This paragraph has effect in relation to distributions made on or after 6th April 1999.
 
 
Section 813 of the Taxes Act 1988
     36. - (1) Section 813 of the Taxes Act 1988 (recovery of tax credits incorrectly paid) shall be amended as follows.
 
      (2) In subsection (6), paragraph (b) (which makes provision in relation to ACT) shall cease to have effect.
 
      (3) This paragraph has effect in relation to accounting periods beginning on or after 6th April 1999.
 
 
Section 826 of the Taxes Act 1988
     37. - (1) Section 826 of the Taxes Act 1988 (interest on tax overpaid) shall be amended as follows.
 
      (2) Subsection (2A) (material date for ACT) shall cease to have effect.
 
      (3) Subsection (7) (which make provision in relation to surplus ACT) shall cease to have effect.
 
      (4) Subsections (7AA) and (7CA) (which make further provision in relation to surplus ACT) shall cease to have effect.
 
      (5) Sub-paragraph (2) above has effect in relation to accounting periods beginning on or after 6th April 1999.
 
      (6) Sub-paragraph (3) above has effect where the later period mentioned in subsection (7) of section 826 begins on or after 6th April 1999.
 
      (7) Sub-paragraph (4) above has effect where the earlier period mentioned in subsections (7AA) and (7CA) of section 826 begins on or after 6th April 1999.
 
 
Section 832 of the Taxes Act 1988
     38. - (1) Section 832 of the Taxes Act 1988 (interpretation of the Tax Acts) shall be amended as follows.
 
      (2) In subsection (1) for the definition of "franked investment income" there shall be substituted-
 
 
    ""franked investment income" means income of a company resident in the United Kingdom which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit);".
      (3) In subsection (1) the definition of "franked payment" shall cease to have effect.
 
      (4) In subsection (1) the definition of "group income" shall cease to have effect.
 
      (5) In subsection (1) the definition of "the rate of advance corporation tax" shall cease to have effect.
 
      (6) In subsection (1) the definition of "surplus of franked investment income" shall cease to have effect.
 
      (7) After subsection (4) there shall be inserted-
 
 
    "(4A) Any reference in the Tax Acts to franked investment income received by a company apply to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person."
 
      (8) Sub-paragraphs (2), (3), (6) and (7) above have effect in relation to accounting periods beginning on or after 6th April 1999.
 
      (9) Sub-paragraphs (4) and (5) above have effect in relation to distributions made on or after 6th April 1999.
 
 
Section 835 of the Taxes Act 1988
     39. - (1) Section 835 of the Taxes Act 1988 ("total income" in the Income Tax Acts) shall be amended as follows.
 
      (2) In subsection (6), in paragraph (a) (which refers to an amount equal to a tax credit calculated by reference to the rate of ACT in force for any year) for the words from "amount" to "for any year" there shall be substituted "amount which is equal to a tax credit calculated by reference to the tax credit fraction".
 
      (3) This paragraph has effect in relation to distributions made on or after 6th April 1999.
 
 
Schedule 13 to the Taxes Act 1988
     40. - (1) Schedule 13 to the Taxes Act 1988 (collection of ACT) shall cease to have effect.
 
      (2) This paragraph has effect-
 
 
    (a) in relation to return periods beginning on or after 6th April 1999; and
 
    (b) in relation to accounting periods beginning on or after that date.
 
Schedule 13A to the Taxes Act 1988
     41. - (1) Schedule 13A to the Taxes Act 1988 (surrenders of ACT) shall cease to have effect.
 
      (2) This paragraph has effect in relation to accounting periods of the surrendering company (as defined in section 240(1) of the Taxes Act 1988) beginning on or after 6th April 1999.
 
 
Schedule 24 to the Taxes Act 1988
     42. - (1) Schedule 24 to the Taxes Act 1988 (assumptions in relation to controlled foreign companies etc) shall be amended as follows.
 
      (2) In paragraph 6-
 
 
    (a) in sub-paragraph (1), paragraph (a) (which makes provision in relation to section 247(1)) shall cease to have effect; and
 
    (b) in sub-paragraph (2), the words "dividends or" shall cease to have effect.
      (3) Paragraph 7 (which makes provision in relation to section 240) shall cease to have effect.
 
      (4) This paragraph has effect in relation to accounting periods of companies resident outside the United Kingdom which begin on or after 6th April 1999.
 
 
Schedule 26 to the Taxes Act 1988
     43. - (1) Schedule 26 to the Taxes Act 1988 (controlled foreign companies: relief against liability for tax in respect of chargeable profits) shall be amended as follows.
 
      (2) Paragraph 2 (which makes provision in relation to ACT) shall cease to have effect.
 
      (3) Sub-paragraphs (1) and (2) above have effect in relation to accounting periods beginning on or after 6th April 1999.
 
      (4) The relevant maximum (as defined in paragraph 2(3) of Schedule 26 to the Taxes Act 1988) for an accounting period beginning before, and ending on or after, 6th April 1999 (a "straddling period") shall be determined as if-
 
 
    (a) the straddling period were an accounting period beginning at the beginning of the straddling period and ending on 5th April 1999 ("the notional period"); and
 
    (b) there were apportioned to the notional period a proportionate amount of the amounts mentioned in paragraph 2(3)(a) and (b) of Schedule 26 to the Taxes Act 1988.
 
Paragraph 8 of Schedule 4 to the Finance (No. 2) Act 1997
     44. Paragraph 8 of Schedule 4 to the Finance (No. 2) Act 1997 (which prospectively amends section 238(1) of the Taxes Act 1988) shall not have effect.
 
 
Paragraph 9 of Schedule 4 to the Finance (No. 2) Act 1997
     45. Paragraph 9 of Schedule 4 to the Finance (No. 2) Act 1997 (which prospectively amends section 241 of the Taxes Act 1988) shall not have effect.
 
 
Paragraph 18 of Schedule 4 to the Finance (No. 2) Act 1997
     46. Paragraph 18 of Schedule 4 to the Finance (No. 2) Act 1997 (which prospectively amends section 703 of the Taxes Act 1988) shall not have effect.
 
 
Paragraph 23 of Schedule 4 to the Finance (No. 2) Act 1997
     47. Paragraph 23 of Schedule 4 to the Finance (No. 2) Act 1997 (which prospectively amends Schedule 13 to the Taxes Act 1988) shall not have effect.
 
 
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