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Amendment of section 486C (relief from tax for certain start-up companies) of Principal Act.
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34.— (1) Section 486C of the Principal Act is amended—
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(a) in subsection (2)(a) by substituting “at any time” for “in at any time”,
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(b) by substituting the following for subsection (3):
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“(3) Where a company carries on a qualifying trade in an accounting period falling partly within the relevant period in relation to that qualifying trade, then, for the purposes of this section, the income from the qualifying trade for that accounting period shall be the amount of the income of the qualifying trade for that part of the accounting period and that part of the accounting period shall be treated as a separate accounting period.”,
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(c) in subsection (4)(a) by deleting “wholly or partly”,
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(d) in subsection (4)(b) by deleting “wholly or partly”,
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(e) in subsection (4)(c) by substituting “For the purposes of this subsection and subsection (4A)” for “For the purposes of this subsection”,
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(f) in subsection (4)(d) by substituting “For the purposes of this subsection and subsection (4A)” for “For the purposes of this subsection”,
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(g) by inserting the following after subsection (4):
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“(4A) (a) In this subsection—
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‘accounting period following the relevant period’, in relation to a company carrying on a qualifying trade, means an accounting period commencing on a date which occurs after the expiry of the relevant period in relation to the qualifying trade;
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‘corporation tax referable to the qualifying trade’, in relation to an accounting period of a company, means the corporation tax payable by the company for the accounting period, so far as it is referable to—
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(i) income from the qualifying trade for that accounting period, and
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(ii) chargeable gains on the disposal of relevant assets in relation to the trade in that accounting period.
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(b) (i) Where for an accounting period of a company falling within the relevant period in relation to a qualifying trade carried on by the company—
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(I) the total corporation tax payable by the company for the accounting period does not exceed the lower relevant maximum amount, and
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(II) the total contribution for the accounting period exceeds the corporation tax referable to the qualifying trade for that accounting period,
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the amount (in paragraph (c) referred to as a ‘first relevant amount’) of the excess referred to in clause (II) shall be available to reduce, in accordance with this subsection, the corporation tax referable to the qualifying trade for an accounting period following the relevant period.
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(ii) Where for an accounting period of a company falling within the relevant period in relation to a qualifying trade carried on by a company—
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(I) the total corporation tax payable by the company for the accounting period exceeds the lower relevant maximum amount but does not exceed the upper relevant maximum amount, and
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(II) the total contribution for the accounting period exceeds the corporation tax referable to the qualifying trade for that accounting period,
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an amount (in paragraph (c) referred to as a ‘second relevant amount’) determined by the following formula:
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[C — (3 x (T — M) x C/T)] — R
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where—
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C is the total contribution for the accounting period,
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T is the total corporation tax payable by the company for the accounting period,
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M is the lower relevant maximum amount, and
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R is the amount of relief to which the company is entitled under subsection (4)(b) for the accounting period,
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shall be available to reduce, in accordance with this subsection, the corporation tax referable to the qualifying trade for an accounting period following the relevant period.
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(c) For the purposes of this subsection, the aggregate of all amounts which are—
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(i) the first relevant amount, or
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(ii) the second relevant amount,
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if any, for each accounting period falling within the relevant period, shall be referred to as a ‘specified aggregate’.
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(d) (i) Subject to paragraphs (e) and (f), where a company carries on a qualifying trade in an accounting period following the relevant period, the corporation tax referable to the qualifying trade for that accounting period shall be reduced by the specified aggregate.
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(ii) Subject to paragraphs (e) and (f), where there is a reduction in the corporation tax for an accounting period following the relevant period by virtue of subparagraph (i) and the specified aggregate exceeds the amount of that reduction, the corporation tax referable to the qualifying trade for the next accounting period shall be reduced by the amount of that excess and so much of that excess as is not applied to reduce that corporation tax shall, in turn, be applied by the company to reduce the corporation tax referable to the qualifying trade for the succeeding accounting period and so on for each succeeding accounting period.
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(e) As respects a qualifying trade carried on by a company, the amount by which the corporation tax referable to the qualifying trade for an accounting period following the relevant period may be reduced under this subsection shall not exceed the lesser of—
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(i) such corporation tax, and
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(ii) the total contribution,
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for that accounting period.
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(f) So much of a specified aggregate as is applied by a company to reduce corporation tax under this subsection shall be so applied only once.”,
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(h) in subsection (5) by substituting “subsections (4) and (4A)” for “subsection (4)”, and
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(i) in subsection (7) by substituting “subsections (4) and (4A)” for “subsection (4)”.
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(2) Paragraphs (e) to (i) of subsection (1) have effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C of the Principal Act (as amended by subsection (1))) for accounting periods ending on or after 1 January 2013.
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