CLAUSE 32.—(Provisions as to subsidiary companies.) (Hansard, 16 July 1947)

I beg to move, in page 29, line 3, at the end, to insert: (3) Where—

(a) such a notice as aforesaid is in force; and
(b) the subsidiary to which the notice relates pays to the principal company an amount by way of reimbursement of profits tax which by virtue of the notice having been given is payable by that company for any chargeable accounting period ending after the thirty-first day of December, nineteen hundred and forty-six; and
(c) the principal company and the subsidiary jointly so elect by notice in writing given to the Commissioners of Inland Revenue within six months from the end of that chargeable accounting period or such longer time as those Commissioners may in any case allow,

the amount so paid, and any amount so paid in relation to a subsequent chargeable accounting period, by the subsidiary to the principal company shall for all the purposes of the Income Tax Acts be treated—

(i) as regards the subsidiary, as an amount of profits tax payable in respect of its profits arising in the chargeable accounting period of the subsidiary corresponding to the chargeable accounting period to which the payment relates; and
(ii) as regards the principal company, as reducing the amount of the profits tax payable by the principal company for the chargeable accounting period to which the payment relates."

This Amendment provides for the case where group treatment is opted for by a group of companies. It is optional for 494 the principal company to claim that Profits Tax be imposed on the group. If it does so, and charges out to the subsidiary companies part of the Profits Tax which accordingly has to be paid, as the law at present stands, there is no provision whereby the subsidiary company can use that Profits Tax charged out to it as a deduction for its own Income Tax. The Amendment seeks to provide that where such group treatment is opted for and the principal company charges out a proportion of the tax, as a consequence of having opted for group treatment, the subsidiary company shall be entitled to apply for the purposes of deduction for its own Income Tax the amount of Profits Tax which the principal company charges out.