3166.This section deals with the treatment of certain grants under the Industrial Development Act 1982 or the corresponding provision in Northern Ireland. It is based on section 93 of ICTA. The corresponding rule for trading income is in section 102.
3167.Under section 93(1) of ICTA the payment of a grant is “taken into account as a receipt in computing [the company’s] profits under Case VI of Schedule D”. Under section 70(1) of ICTA the basis of assessment for Schedule D is the “profits gains or income arising” in an accounting period. But there is no explicit rule to say into which accounting period the grant falls.
3168.This section sets out what happens if a company (or a connected person) receives a benefit in connection with a contribution to a local enterprise organisation or urban regeneration company (see section 1244). It is based on sections 79, 79A and 79B of ICTA. The corresponding rule for trading income is in section 82.
3169.Section 79(9) of ICTA refers to relief having been given “under subsection (1) above”. Strictly, relief for management expenses is given under subsection (2) by reference to a “deduction under subsection (1)”. But it is clear in the context of the section that the recovery under subsection (9) is intended to apply to management expenses as it applies to a trading deduction. The same analysis applies to the corresponding provisions in sections 79A and 79B of ICTA. This section clarifies the position.
3170.The charge is restricted to the amount of the “disqualifying benefit”. That expression is explained in section 1244(5). See the commentary on that section and Change 18 in Annex 1.
3171.This section charges tax on a repayment made to a company under FISMA. It is based on section 76B of ICTA. The corresponding rule for trading income is in section 92.
3172.Under section 76B(2) of ICTA the repayment is “charged to tax under Case VI of Schedule D”. Under section 70(1) of ICTA the basis of assessment for Schedule D is the “profits gains or income arising” in an accounting period. But there is no explicit rule to say in which accounting period the repayment falls.