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Corporation Tax Bill


Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration

451

 

where the previous holder is not a company, having regard to the application

of section 671(4) of ITTOIA 2005 to the previous holder).

(5)   

The calculation under section 951(1)(a) and (b) (amount of reduction in the

share of the residuary income of the company with an absolute interest at the

end of the administration period) is to be made by reference to all the absolute

5

interests taken together.

(6)   

If the amount resulting from that calculation is greater than the total amount of

the reductions which can be made under section 951(2) and (3), the share of the

residuary income of the estate of the last previous holder of the interest for the

last accounting period in which that last holder had that interest is to be

10

reduced, and so on.

(7)   

But if subsection (6) applies in a case where the last previous holder or any

earlier previous holder is not a company, in applying that subsection regard

must be had to the application of section 671(6) of ITTOIA 2005 to the previous

holder.

15

955     

Assumed income entitlement of holder of absolute interest following limited

interest

(1)   

This section applies if—

(a)   

two or more interests in the whole or part of the residue of an estate are

held successively during the administration period by different

20

persons,

(b)   

each later interest arises or is created on the cessation of the previous

interest otherwise than by death,

(c)   

at least one of the interests is an absolute interest, and

(d)   

at least one of the interests preceding that interest is a limited interest.

25

(2)   

Rules A and B apply to determine in relation to such an absolute interest—

(a)   

whether the company with the interest has an assumed income

entitlement in respect of the interest, and

(b)   

if so, its amount.

(3)   

Rule A is that the company’s share of the residuary income of the estate in

30

respect of the absolute interest for any accounting period is treated as including

any amount which would be included in it if—

(a)   

the interest had subsisted throughout the period when any such limited

interest subsisted, and

(b)   

no such limited interest had ever subsisted.

35

(4)   

Rule B is that the basic amounts relating to the absolute interest are treated as

including the basic amounts relating to any such limited interest.

956     

Payments in respect of limited interests followed by absolute interests

(1)   

This section applies if—

(a)   

two or more interests in the whole or part of the residue of an estate are

40

held successively during the administration period by different

persons,

(b)   

each later interest arises or is created on the cessation of the previous

interest otherwise than by death,

(c)   

at least one of the interests is an absolute interest, and

45

 
 

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration

452

 

(d)   

at least one of the interests preceding that interest is a limited interest.

(2)   

A sum to which a company (“C”) with such an absolute interest is entitled in

respect of any such limited interest which is paid while C has the absolute

interest is treated as paid in respect of the absolute interest (and not the limited

interest).

5

(3)   

Subsection (4) applies if—

(a)   

C’s absolute interest ceases during the administration period, and

(b)   

a sum to which C is entitled in respect of any such limited interest—

(i)   

is paid after the absolute interest ceases but before the end of the

administration period, or

10

(ii)   

remains payable at the end of it.

(4)   

This Chapter applies as respects any such sum as if the limited interest had

continued to subsist while that absolute interest subsisted and had been held

by C.

(5)   

Subsection (4) is subject to subsection (6).

15

(6)   

For the purposes only of section 951 (reduction in share of residuary income of

estate), any such sum is treated as paid or payable in respect of the absolute

interest.

957     

Holders of limited interests

(1)   

This section applies if—

20

(a)   

two or more interests in the whole or part of the residue of an estate are

held successively during the administration period by different

persons,

(b)   

the earlier or, if there are more than two, the earliest of the interests is a

limited interest, and

25

(c)   

each later interest arises or is created on the cessation of the previous

interest otherwise than by death.

(2)   

Income is treated as arising from a limited interest in the whole or part of the

residue of the estate in an accounting period in cases A, B and C.

(3)   

Case A is where—

30

(a)   

one of the successive interests subsists at the beginning of the

accounting period of a company which has or has had one of the

interests which is a limited interest (the “limited holder”),

(b)   

a sum is paid in respect of one of the interests in that period and before

the end of the administration period, and

35

(c)   

the limited holder is entitled to receive the payment.

(4)   

Case B is where—

(a)   

the accounting period of a limited holder is the final accounting period,

(b)   

one of the successive interests subsists at the beginning of that period,

(c)   

a sum remains payable in respect of one of the interests at the end of the

40

administration period, and

(d)   

the limited holder is entitled to receive the payment.

(5)   

Case C is where—

 
 

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration

453

 

(a)   

the accounting period of a limited holder is a period before the final

accounting period,

(b)   

the last of the successive interests ceases in the accounting period,

(c)   

a sum is either—

(i)   

paid in respect of one of the interests in a later accounting

5

period but before the end of the administration period, or

(ii)   

remains payable in respect of it at the end of the administration

period, and

(d)   

the limited holder is entitled to receive the payment.

958     

Basic amount of estate income: successive limited interests

10

The basic amount of estate income relating to a limited interest within section

957 for an accounting period is the total of the sums within section 957(3)(b),

(4)(c) and (5)(c) for that period.

959     

Apportionments

(1)   

Such apportionments as are just and reasonable are to be made for the

15

purposes of this Chapter if—

(a)   

the part of a residuary estate in which an interest within any of the

provisions specified in subsection (2) subsists does not wholly

correspond with the part in which another such interest held

successively subsists, or

20

(b)   

one of those interests is in the whole of the residuary estate and the

other is only in part of it.

(2)   

The provisions are—

section 954 (successive absolute interests),

section 955 (successive interests: assumed income entitlement of holder of

25

absolute interest following limited interest),

section 956 (successive interests: payments in respect of limited interests

followed by absolute interests),

section 957 (successive interests: holders of limited interest) and,

section 958 (basic amount of estate income: successive limited interests).

30

Relief where foreign estates have borne UK income tax

960     

Relief in respect of tax relating to absolute interests

(1)   

This section applies if—

(a)   

United Kingdom corporation tax has been charged on a company for an

accounting period on estate income treated as arising from an estate

35

under section 937 (estate income: absolute interests in residue),

(b)   

the estate is a foreign estate in relation to the relevant tax year, and

(c)   

United Kingdom income tax has already been borne by part of the

aggregate income of the estate for the relevant tax year.

 
 

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration

454

 

(2)   

If the company makes a claim under this section, the corporation tax charged

on the company on that estate income is to be reduced by an amount equal to—equation: cross[char[T],over[char[A],char[B]]]

   

where—

T is the corporation tax charged on the company,

A is so much of the aggregate income of the estate as has already borne

5

United Kingdom income tax for the relevant tax year, and

B is the aggregate income of the estate for the relevant tax year.

961     

Relief in respect of tax relating to limited or discretionary interests

(1)   

This section applies if—

(a)   

United Kingdom corporation tax has been charged on a company for an

10

accounting period on estate income from an estate treated as arising

under—

(i)   

section 939 (estate income: limited interests in residue), or

(ii)   

section 940 (estate income: discretionary interests in residue),

(b)   

the estate is a foreign estate in relation to the relevant tax year, and

15

(c)   

United Kingdom income tax has already been borne by part of the

aggregate income of the estate for the relevant tax year.

(2)   

If the company makes a claim under this section, the corporation tax charged

on the company on that estate income is to be reduced by an amount equal toequation: cross[char[T],over[plus[char[A],minus[char[C]]],plus[char[B],minus[char[C]]]]]

   

where—

20

T is the corporation tax charged on the company,

A is so much of the aggregate income of the estate as has already borne

United Kingdom income tax for the relevant tax year,

B is the aggregate income of the estate for the relevant tax year, and

C is the amount of United Kingdom income tax already borne by the

25

aggregate income of the estate for the relevant tax year.

General

962     

Income from which basic amounts are treated as paid

(1)   

The part of the aggregate income of the estate from which a basic amount is

treated as paid is determined by applying assumptions A and B in that order.

30

(2)   

Assumption A is that if there are different persons with interests in the residue

of the estate, payments in respect of their basic amounts are paid out of the

different parts of the aggregate income of the estate in such proportions as are

just and reasonable for their different interests.

(3)   

Assumption B is that payments are made from those parts in the following

35

order—

 
 

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration

455

 

(a)   

income bearing income tax at the basic rate, and

(b)   

income bearing income tax at the dividend ordinary rate.

(4)   

If some, but not all, of the aggregate income of the estate is income treated

under section 963 as bearing income tax, assumption C is applied before

assumptions A and B.

5

(5)   

Assumption C is that the basic amount is paid from income that is not within

section 963 before it is paid from income within that section.

(6)   

Assumptions A and B then apply—

(a)   

first to determine the part of the income not within that section from

which the basic amount is paid, and

10

(b)   

then to determine the part of the income within that section from which

the basic amount is paid.

963     

Income treated as bearing income tax

(1)   

This section has effect for the purposes of—

section 946 (the applicable rate for grossing up basic amounts of estate

15

income),

section 952 (applicable rate for determining assumed income entitlement

(UK estates)), and

section 962 (income from which basic amounts are treated as paid).

(2)   

If the aggregate income of the estate includes a sum within subsection (3) or (4),

20

the sum is treated as bearing income tax at the rate specified for it in that

subsection.

(3)   

The following sums are treated as bearing income tax at the dividend ordinary

rate—

(a)   

a sum charged under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc.

25

from UK resident companies etc.), or

(b)   

a sum that is part of the aggregate income of the estate because of

falling within—

(i)   

section 947(2)(c) (stock dividends), or

(ii)   

section 947(2)(d) (release of loan to participator in close

30

company where debt due from personal representatives).

(4)   

A sum that is part of the aggregate income of the estate because of falling

within section 947(2)(e) (gains from life insurance contracts etc.) is treated as

bearing income tax at the basic rate.

(5)   

Income tax treated as borne under section 941(3) or 942(4) (gross amount of

35

estate income treated as bearing tax at the applicable rate) is not repayable so

far as the basic amount of the estate income in question is paid from sums

within this section.

964     

Transfers of assets etc treated as payments

(1)   

For the purposes of this Chapter—

40

(a)   

a transfer of assets, or

(b)   

the appropriation of assets by personal representatives to themselves,

   

is treated as the payment of an amount equal to the assets’ value at the date of

transfer or appropriation.

 
 

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration

456

 

(2)   

The set off or release of a debt is treated for the purposes of this Chapter as the

payment of an amount equal to it.

(3)   

If at the end of the administration period—

(a)   

there is an obligation to transfer assets to any person, or

(b)   

personal representatives are entitled to appropriate assets to

5

themselves,

   

an amount equal to the assets’ value at that time is treated as payable then for

the purposes of this Chapter.

(4)   

If at the end of the administration period—

(a)   

there is an obligation to release or set off a debt owed by any person, or

10

(b)   

personal representatives are entitled to release or set off a debt in their

own favour,

   

a sum equal to the debt is treated as payable then for the purposes of this

Chapter.

965     

Assessments, adjustments and claims after the administration period

15

(1)   

This subsection applies if after the administration period ends it is apparent

that a company is liable for corporation tax on estate income for any accounting

period for which it previously appeared not to be so liable or to be liable for tax

on a lesser amount.

(2)   

If subsection (1) applies—

20

(a)   

the company may be assessed and taxed for the accounting period, and

(b)   

any relief or additional relief to which the company may be entitled for

the accounting period is to be allowed if a claim is made.

(3)   

This subsection applies if after the administration period ends it is apparent

that a company which previously appeared to be liable for corporation tax on

25

estate income for any accounting period is not so liable or is liable for tax on a

lesser amount.

(4)   

If subsection (3) applies—

(a)   

all necessary adjustments and repayments of corporation tax for the

accounting period are to be made, and

30

(b)   

if the company has been allowed relief which exceeds the relief that

could have been given by reference to the amount actually charged for

the accounting period, the excess is to be treated as chargeable for that

accounting period under the charge to corporation tax on income.

(5)   

An assessment or adjustment made for the purposes of this Chapter or a claim

35

made as a result of this Chapter may be made after the end of the period

otherwise allowed if it is made on or before the third anniversary of the 31

January following the accounting period in which the administration period

ends.

966     

Power to obtain information from personal representatives and beneficiaries

40

(1)   

An officer of Revenue and Customs may by notice require a person within

subsection (2) to provide the officer with such particulars as the officer thinks

necessary for the purposes of this Chapter.

(2)   

A person is within this subsection if—

 
 

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 4 — Income from holding an office

457

 

(a)   

the person is or has been a personal representative, or

(b)   

the person has or has had an absolute or limited interest in the whole or

part of the residue of the deceased person’s estate.

(3)   

The notice must specify the period within which the particulars must be

provided.

5

(4)   

That period must be at least 28 days.

967     

Statements relating to estate income

(1)   

If a company within subsection (2) requests it in writing, a personal

representative of a deceased person must provide the company with a

statement showing—

10

(a)   

the amount treated as estate income arising from the company’s

interest in the whole or part of the deceased person’s estate for which

the company is liable to corporation tax for an accounting period, and

(b)   

the amount of any tax at the applicable rate which any such amount is

treated as having borne.

15

(2)   

A company is within this subsection if—

(a)   

it has or has had an absolute or limited interest in the whole or part of

the residue of the estate, or

(b)   

estate income has arisen to it from a discretionary interest it has or has

had in the whole or part of the residue of the estate.

20

(3)   

A statement under subsection (1) must be in writing.

(4)   

The duty to comply with a request under this section is enforceable by the

company which made it.

Supplementary

968     

Meaning of “personal representatives”

25

In this Chapter “personal representatives”, in relation to a person who has

died, means—

(a)   

in the United Kingdom, persons responsible for administering the

estate of the deceased, and

(b)   

in a territory outside the United Kingdom, those persons having

30

functions under its law equivalent to those of administering the estate

of the deceased.

Chapter 4

Income from holding an office

969     

Charge to tax on income from holding an office

35

(1)   

The charge to corporation tax on income applies to income from the holding of

an office.

(2)   

The amount of any income charged to tax under this section is to be calculated

in accordance with income tax principles and all questions as to any of the

 
 

 
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