CTM20230 - ACT: set-off against CT on profits: not creating surplus ACT

ICTA88/S239 (3)

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.

Example

A company had:

  • surplus ACT of 拢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 拢3,000. The company could not then claim that it had surplus ACT for that accounting period of 拢17,000 and make a claim under Section 239 (3) to take the ACT back to the accounting period to 31 December 1983.