Introduction Overview Overview Section 628: Company in liquidation: corporation tax rates
1963.This section sets out the corporation tax rates that are to be applied in the final or penultimate year of the liquidation period of a company that is being wound up. It is based on section 342(2), (3) and (8) of ICTA.
1964.If the rates of corporation tax have been either fixed or proposed for the final year or the penultimate year then the proposed or fixed rates are to be used. Accordingly in the vast majority of cases the normal corporation tax rates apply.
1965.Corporation tax rates are generally proposed in the PBR (Pre-Budget Report). The PBR takes place in autumn. The PBR in the autumn of Financial Year 1 proposes corporation tax rates for Financial Year 3. The same PBR proposes the rate of corporation tax for companies with small profits and fractions for Financial Year 2. The associated Finance Act usually becomes law in July of Financial Year 2. The corporation tax rates for Financial Year 3 become fixed in Financial Year 2 and the rate for companies with small profits and fractions for Financial Year 2 also become fixed in Financial Year 2.
1966.The section assists liquidators seeking to finalise a company’s liability in advance of a formal winding up by setting out the rates to be used even in those rare cases where corporation tax rates have not been fixed at the time when a liquidator wishes to make an assessment to tax.