Finance Act 1989

44Investment and insurance companies: computation

(1)Subsection (2) below applies where—

(a)a calculation is made for the purposes of corporation tax of the profits of an investment company for an accounting period ending after 5th April 1989,

(b)relevant emoluments would (apart from that subsection) be deducted in making the calculation, and

(c)the emoluments are not paid before the end of the period of nine months beginning with the end of the relevant period of account.

(2)The emoluments—

(a)shall not be deducted in making the calculation mentioned in subsection (1)(a) above, but

(b)shall be deducted in calculating for the purposes of corporation tax the profits of the company concerned for the accounting period in which the emoluments are paid.

(3)Subsections (4) and (5) below apply where—

(a)a calculation such as is mentioned in subsection (1)(a) above is made,

(b)the calculation is made before the end of the period of nine months beginning with the end of the relevant period of account,

(c)relevant emoluments would (apart from subsection (2) above) be deducted in making the calculation, and

(d)the emoluments have not been paid when the calculation is made.

(4)It shall be assumed for the purpose of making the calculation that the emoluments will not be paid before the end of that period of nine months.

(5)But the calculation shall be adjusted if—

(a)the emoluments are paid after the calculation is made but before the end of that period of nine months,

(b)a claim to adjust the calculation is made to the inspector by or on behalf of the company concerned, and

(c)the claim is made before the end of the period of two years beginning with the end of the period of account concerned.

(6)In a case where the accounting period mentioned in subsection (1)(a) above begins before 6th April 1989 and ends before 6th April 1990, the references in subsections (1)(c), (3)(b), (4) and (5)(a) above to nine months shall be construed as references to eighteen months.

(7)In this section “investment company” has the same meaning as in Part IV of the Taxes Act 1988.

(8)For the purposes of this section “relevant emoluments” are emoluments for a period after 5th April 1989 allocated either—

(a)in respect of particular offices or employments (or both), or

(b)generally in respect of offices or employments (or both).

(9)This section applies in relation to potential emoluments as it applies in relation to relevant emoluments, and for this purpose—

(a)potential emoluments are amounts or benefits reserved in the accounts of an employer, or held by an intermediary, with a view to their becoming relevant emoluments;

(b)potential emoluments are paid when they become relevant emoluments which are paid.

(10)For the purpose of this section the relevant period of account is the period of account which—

(a)includes the accounting period concerned, or

(b)begins when the accounting period concerned begins and ends when the accounting period concerned ends.

(11)In deciding for the purposes of this section whether emoluments are paid at any time after 5th April 1989, section 202B of the Taxes Act 1988 (time when emoluments are treated as received) shall apply as it applies for the purposes of section 202A(1)(a) of that Act, but reading “paid” for “received” throughout.

(12)Where the profits of a company carrying on life assurance business are not charged under Case I of Schedule D, this section shall apply in calculating the profits as it applies in calculating the profits of an investment company; but the effect of section 86 below shall be ignored in construing subsection (1)(b) above.

(13)In a case where, apart from this subsection and by virtue of subsection (2)(b) above as it applies by virtue of subsection (12) above, emoluments fall to be deducted in calculating profits for a particular accounting period—

(a)subsection (2)(b) above shall have effect subject to section 86 below;

(b)in construing section 86 the emoluments shall be treated as expenses for that accounting period.