Annex 1: Minor Changes in the Law Change 99: Repeal of sections 586 and 587 of ICTA: Schedule 1
This change concerns the repeal of sections 586 and 587 of ICTA.
Section 586 of ICTA was enacted in 1940 and denies relief for payments made in connection with certain war damage indemnity schemes. Section 587 of ICTA was enacted in 1941 and denies relief for certain payments in respect of war injuries of employees.
Both sections apply only if the United Kingdom is in a declared state of war and were a response to the particular circumstances of the Second World War. Because of the very high rates of taxation during the war (seen most clearly in the case of Excess Profits Tax at 100%) these payments could often be made entirely at the Exchequer’s expense. The likelihood of the sections becoming operative and accurately reflecting policy at that time is remote. Sections 586 and 587 are for all practical purposes obsolete.
Both sections apply only for corporation tax. They were effectively repealed for income tax by the consequential amendments made by paragraphs 247 and 248 of Schedule 1 to ITTOIA.
This change completes the repeal of a prohibition on relief for all tax purposes.
This change is in taxpayers’ favour in principle. But it is expected to have no practical effect.