EXPLANATORY NOTE

This clause makes two changes. The first removes from the rules for the collection of income tax on company payments (Schedule 16 ICTA 1988) references to the provisions for the collection of Advance Corporation Tax (ACT) (Schedule 13 ICTA 1988). This is because, following the abolition of ACT on qualifying distributions made on or after 6 April 1999, Schedule 13 will cease to have effect. The second change puts right an incorrect cross reference in the Shadow ACT regulation-making power.

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Subsection (1) provides for amendments to be made to Schedule 16 ICTA 1988.

Subsection (2) repeals paragraph 4(3) of Schedule 16 because this sub-paragraph will have no application once Schedule 13 has ceased to have effect on the abolition of ACT.

Subsection (3) removes a reference to Schedule 13 from paragraph 8 that will similarly become redundant.

Subsection (4) corrects a cross reference (to paragraph 12 of Schedule 3 FA 1998) in section 32 FA 1998 which provides for shadow ACT regulations to be made.

Subsection (5) provides for the amendments to Schedule 16 to have effect in relation to periods for which a Schedule 16 return is required, which begin on or after 6 April 1999, and in relation to accounting periods beginning on or after that date.

Subsection (6) provides that the correction to section 32 FA 1998 is deemed always to have effect, so that it will apply to regulations that have already been made.

Clause 80 to 84, and Schedule 11, correct omissions, and make the minor and consequential amendments, to remedy minor technical defects that have been identified since the introduction, by Finance Act 1998, of core provisions for CTSA, payment of corporation tax by instalments and the abolition of ACT. A summary of these major changes is provided in the Background to the note on Clause 80.

Schedule 16 of ICTA 1988 provides machinery for collecting and accounting for income tax on company payments which are not distributions. Such payments, described as relevant payments, are annual payments made by UK resident companies.

Broadly, a company is required to make quarterly returns to the Collector showing the relevant payments it has made in that return period and the amount of income tax for which it is accountable, and to make payment of that amount.

Where a company has received payments in that period from which income tax has been deducted, it may set that income tax against any income tax for which it is accountable.