Annex 1: Minor Changes in the Law Change 80: Expenses of management: credit unions: section 1218
This change makes clear that a credit union cannot be the subject of a charge to tax on a FISMA repayment or an industrial development grant under Part 16 of this Act.
Section 487(4) of ICTA provides that a credit union is not a company with investment business for the purpose of section 75 of ICTA. As a result, such a company cannot have expenses of management deducted under section 75. And it follows that there can be no charge on a “reversal amount” under section 75B of ICTA.
But the charge under section 76B of ICTA on a repayment under FISMA is not dependent on there having been a previous deduction under section 75. It is arguable that the rule in section 487(4) of ICTA is not wide enough to remove the possibility of a charge under section 76B.
In the unlikely event that a credit union receives an industrial development grant it is similarly arguable that section 487(4) of ICTA does not remove the charge under section 93(1) of ICTA.
Section 1218(2) of this Act takes credit unions completely outside the rules in Part 16. So there can be no charge under the rules in Chapter 5 of that Part.
This change is in taxpayers’ favour in principle. But it is expected to have no practical effect as it is in line with generally accepted practice.