Annex 1: Minor changes in the law Change 7: Industrial and provident societies: enactment of ESC C5: section 47
This change gives statutory effect to ESC C5.
ESC C5 stated that:
“TA 1988 s 393(8) enables a company with a trading loss brought forward under TA 1988 s 393(1) to set off the loss not only against the trading income of the accounting period but also against any interest or dividends on investments which would have been taken into account as trading income but for the fact that they are charged to tax under other provisions.In the case of a registered industrial and provident society carrying on a trade, the following items of income may be regarded as trading income for the purposes of s 393(8)--(a)interest brought into the computation of corporation tax profits as income underSchedule D Case III;(b)annual interest received under deduction of tax;(c)amounts assessable under Schedule D Case V.”
Section 47 gives effect to this concession with a number of necessary modifications.
The reference to interest in (a) has been replaced with a reference to amounts that are chargeable under section 299 of CTA 2009 (charge to tax on non-trading profits from loan relationships) and the reference to amounts assessable under Case V in (c) has been replaced with a reference to amounts arising from possessions out of the United Kingdom. The reference to annual interest received under deduction of tax has not been rewritten as any such income would now be caught within the reference to amounts chargeable under section 299 of CTA 2009.
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.