Paragraph 2

United Kingdom

(1)

M1Subject to paragraphs 10and 12below, the relevant income of a company shall in no case be taken to exceed the company’s distributable investment income for the accounting period plus 50per cent. of the estate or trading income for the periodC1.

(2)

M2In the application of sub-paragraph (1)above to a company which is a trading company or a member of a trading group, the trading income shall be disregarded; and in the application of that sub-paragraph to a trading company, the estate income—

(a)

if it is less than the appropriate fraction of the relevant maximum amount, shall be treated as reduced by one-half of the amount required to make it up to that fraction of the relevant maximum amount; or

(b)

if it is less than the appropriate fraction of the relevant minimum amount, shall be disregarded;

and in this sub-paragraph the appropriate fraction is—

\frac{A}{A + B}

where—

Ais the amount of the estate income, and
Bis the amount of the trading income.

(3)

M3The relevant maximum and minimum amounts referred to above shall be determined as follows—

(a)

where the company has no associated company in the accounting period, those amounts are £75,000and £25,000respectively;

(b)

where the company has one or more associated companies in the accounting period—

(i)

the relevant maximum amount is—

\frac{£75,000}{1 + X}

(ii)

the relevant minimum amount is—

\frac{£25,000}{1 + X}

where Xis the number of those associated companies.

(4)

M4In applying sub-paragraphs (2)and (3)above to any accounting period of a trading company, an associated company shall be disregarded if—

(a)

it was not a trading company, or has not carried on any trade, at any time in that accounting period; or

(b)

where it was an associated company during part only of that accounting period, it was not a trading company, or has not carried on any trade, at any time in that part of that accounting period;

and for the purposes of this paragraph a company is to be treated as an associated company of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.

(5)

M5In determining how many associated companies a trading company has in an accounting period or whether a trading company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.

(6)

For an accounting period of less than 12months the relevant maximum and minimum amounts determined in accordance with sub-paragraphs (1)to (5)above shall be proportionately reduced.

Annotations

Marginal citations

M1: Source—1972 Sch.16 9(1)
M2: Source—1972 Sch.16 9(2); 1980 Sch.9 2
M3: Source—1972 Sch.16 9(3); 1978 s.35(1)]
M4: Source—1972 Sch.16 9(4); 1978 s.35(2)]
M5: Source—1972 Sch.16 9(5), (6)

Modifications

C1: See 1976(D) s.34and Sch.6 para.9(6)(7)—development land tax. 1976(D)repealed by 1985 s.98(6)and Sch.27 Pt.X.

Notes on Schedule 19

Textual amendments

F1: Sch. 19 repealed by Finance Act 1989 (c. 26), ss. 103, 187, Sch. 17 Pt. V, Notes 1, 3