Commentary

A1.104 Annual nature and provisional collection of income tax and corporation tax

Administration and compliance

A1.104 Annual nature and provisional collection of income tax and corporation tax

A1.104 Annual nature and provisional collection of income tax and corporation tax

Income tax and corporation tax are annual taxes which must be imposed by Parliament for each tax year or financial year respectively. This is normally done by the annual Finance Act fixing the rates of income tax for the current year and the main rate of corporation tax for the next year.

In anticipation of its re-imposition, the income tax machinery is kept in operation by ICTA 1988, s 820, which provides for the carrying forward into each new tax year all provisions contained in the Income Tax Acts which were in force on the last day of the preceding year. This provision does not itself authorise the payment or deduction of tax but ensures administrative continuity.

When an Act is passed providing that income tax shall be charged, the Income Tax Acts have effect1.

Similarly, when an Act charges corporation tax for any financial year this automatically causes the Corporation Tax Acts to apply for that year2. Income for an accounting period is computed according to the income tax law and practice for the tax year in which the period ends3.

The provisional collection of tax, as provided for in the Provisional Collection of Taxes Act 1968 (PCTA) and described below, applies to income tax,

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