Finance Act, 1978

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Amendment of provisions relating to relief in respect of increase in stock values.

27.—(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1978” for “1977s”—

(a) in paragraph (iii) of the proviso (inserted by the Finance Act, 1977 ) to subsection (4) (a),

(b) in subsection (7) (inserted by the Finance Act, 1977 ), and

(c) in subsection (9) (inserted by the Finance Act, 1977 ) in each place where it occurs,

and the said paragraph, the said subsection (7) (other than the proviso) and the said subsection (9) (other than the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(iii) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1978.

(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's “decrease in stock value”) shall, if the accounting period ends on a date before the 6th day of April, 1978, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1978, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C where—

A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1978,

B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1978, and

C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

(2) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution in subsection (3) of “1978-79” for “1977-78” (inserted by the Finance Act, 1977 ),

(b) by the substitution of the following subsection for subsection (5) (inserted by the Finance Act, 1977 )—

“(5) In the computation of a person's trading income for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1978, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

Provided that the amount which is so treated for any accounting period shall not exceed an amount determined by the formula—

A−C

where—

A is the aggregate amount of the deductions which, under the provisions of this section, the person was entitled to make in computing his trading income for preceding accounting periods which ended on or after the 6th day of April, 1975, and

C is the aggregate of the amounts which, under the provisions of this subsection, were treated as trading receipts of the person's trade for preceding accounting periods.”,

(c) by the substitution of “1978” for “1977” in each place where it occurs in subsection (6) (inserted by the Finance Act, 1977 ), and

(d) by the insertion of the following subsection after subsection (7) (inserted by the Finance Act, 1977 )—

“(7A) Where a deduction allowed by virtue of this section in computing a person's trading profits of a trade for an accounting period has effect for the year 1978-79, the provisions of paragraphs (a), (b) and (c) of subsection (7) shall apply as they apply where a deduction allowed by virtue of this section has effect for the year 1977-78 with the modifications that—

(a) the reference to 1978-79 shall be construed as a reference to 1979-80,

(b) the reference to 1977 shall be construed as a reference to 1978,

(c) the reference to 1976-77 shall be construed as a reference to 1977-78, and

(d) the reference to 1977-78 shall be construed as a reference to 1978-79.”,

and the said subsection (3) and the said subsection (6) (other than the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1978-79.

(6) In the computation of a person's trading income for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1978, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1978,

B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1978, and

C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1978: