OT21100 - Corporation Tax Ring Fence and Supplementary Charge

Treatment of ACT: Introduction

ACT is abolished from 6th April 1999 and Sections 497 - 499 cease to have effect from that date. Surplus ACT accumulated at 6 April 1999 may be utilised in subsequent accounting periods, subject to restrictions under the "shadow ACT" regime. The "shadow ACT" regime is the same for oil companies as for other companies, and hence outwith the scope of this manual.

This section is concerned only with the pre 6 April 1999 legislation which specifically affects companies within the oil industry with ring-fenced activities. Subject to the matters covered in this section, all the general ACT rules apply to these oil companies as they would apply to companies generally.

Most dividends paid between UK resident companies within groups are paid under election, without accounting for ACT (ICTA88/s247). Such dividends are unaffected by ICTA88/s497 - ICTA88/s499. These three sections are concerned with situations where either the intentions of the ring-fence legislation could be avoided by the paying of dividends outside a ICTA88/s247 election or where the ring fence legislation could be over-restrictive.