Finance Act 1965: The Corporation Tax
| DOI | http://doi.org/10.1111/j.1468-2230.1966.tb01098.x |
| Author | Leonard Lazar |
| Date | 01 January 1966 |
| Published date | 01 January 1966 |
STATUTES
FINANCE
ACT
1065:
THE
CORPORATION
TAX
TEE
income profits of
a
company will not be liablc to the income
tax
or
the profits tax after the fiscal year
1905-60.
Instead, the
profits of
a
company, defined to include any body corporate
or
unincorporated association other than
a
partnership, are chargeable
as from
1966-67
to
a
new corporation tax. The elaborate transi-
tional provisions cannot be given here.
It
is sufficient to note that
the prcccding accounting period basis gives way to an actual
or
current basis, the first day of the initial accounting period for
corporation tax being the day after the accounting period for the
year
1065-66
(income and profits tax) comes to an end. Thus,
although the rate for the new tax which is fixed annually at the
end of the fiscal year, April
1
to March
81,
is not known for
1966-
67,
some company profits arc alrcady subject thereto. There is to
be no tax gap and no double taxation.
Nor
is there to be tax
evasion by
a
wholesale unloading
of
Company funds during
1965-06
by cxcessive dividends.
The profits of
a
company are defined
as
meaning not only income
but also capital gains which, in the case of an individual, are
charged to the new capital gains tax. Subject only to the specified
statutory deductions, p.sofits
of
the relevant accounting period
of
n
company
are
charged in full, wherever arising
or
received. Such
profits include accruals for the company’s benefit under any trust,
those arising under any partnership including indirect accruals, and
the profits received on
a
winding up. Profits excluded
are
those
received in
a
rcprescntativc
or
fiduciary capacity (except
as
regards
the company’s own beneficial interest), those
of
local authorities and
of
duIy recognised unit investment trusts.
In
the case
of
non-
resident companies the tax is only chargeable in respect of the
trading profits of
a
United Kingdom branch
or
agency wherever
such profits arise.
The most noteworthy exclusion from the corporation tax is
‘‘
dividends and other distributions of
a
company resident in the
United Kingdom
”
which are neither regarded
as
profits
nor
are
to
be taken into account in computing income for the tax. Income
tax is chargeable on these dividends and distributions under
a
new
Schedule
F
as
from
196607
unless these
are
taxed
as
trading
profits under Schedule
D
or
as
income from an ofice
or
employment
under Schedule
E.
The definition of
‘‘
distributions
yy
is wide but,
in
the present context, docs not include those made in respect of
share capital in a winding up
or
any dividend
or
bonus deductible
50
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