I move:—
(1) That where a post-appointed day company is an auxiliary of a pre-appointed day company, the post-appointed day company shall be deemed, for the purposes of this Resolution, to be a subsidiary of the pre-appointed day company.
(2) That where—
(a) a post-appointed day company (in this paragraph referred to as the second company) is an auxiliary of another post-appointed day company (in this paragraph referred to as the first company), and
(b) the first company is deemed by paragraph (1) of this Resolution to be a subsidiary of a pre-appointed day company,
the second company shall also be deemed, for the purposes of this Resolution, to be a subsidiary of the pre-appointed day company.
(3) That where—
(a) of three or more post-appointed day companies, one is deemed by paragraph (1) of this Resolution, to be a subsidiary of a pre-appointed day company, and
(b) each of the other post-appointed day companies is an auxiliary of any one of the post-appointed day companies,
each of the other post-appointed day companies shall also be deemed, for the purposes of this Resolution, to be a subsidiary of the pre-appointed day company.
(4) That where by virtue of the preceding provisions of this Resolution a post-appointed day company would, but for this paragraph, be deemed to be a subsidiary of two or more pre-appointed day companies, it shall be treated as being a subsidiary of such one only of those pre-appointed day companies as the Revenue Commissioners may direct.
(5) That where a post-appointed day company is deemed by this Resolution to be a subsidiary of a pre-appointed day company, then, unless the Revenue Commissioners otherwise direct, the following provisions shall, for the purpose of a charge to corporation profits tax, apply, that is to say—
(a) the post-appointed day company shall be deemed not to be a company,
(b) the trade or business or undertaking of a similar character, including the holding of investments, carried on by the post-appointed day company shall be deemed to be carried on by the pre-appointed day company,
(c) the assets of the post-appointed day company shall be deemed to be the assets of the pre-appointed day company.
(6) (a) That where the Revenue Commissioners are satisfied that part of the issued capital of a post-appointed day company, which is deemed by this Resolution to be a subsidiary of a pre-appointed day company, would, if the said capital had been issued by the pre-appointed day company as its own capital, have entitled the pre-appointed day company either to a deduction from profits under Section 41 of the Act of 1941 or to any increase in its substituted standard under Section 39 of the Act of 1941, they may, for the purposes of the said sections, deem the said part of the issued capital of the post-appointed day company to be capital issued by the pre-appointed day company.
(b) That in this paragraph the word "capital" has the same meaning as in sub-paragraph (i) of paragraph (c) of sub-section (2) of Section 16 of the Finance Act, 1942 (No. 14 of 1942).
(7) That where, as the result of the application to a pre-appointed day company and one and only one post-appointed day company of the provisions set out in paragraph (5) of this Resolution, the pre-appointed day company is liable to pay corporation profits tax on an amount in excess of the amount for which it would otherwise be liable, the following provisions shall have effect, that is to say—
(a) the said companies shall be liable jointly and severally to pay the excess,
(b) if the said excess is paid by the pre-appointed day company, the pre-appointed day company may recover from the post-appointed day company an amount equal to the said excess.
(8) That where as the result of the application to a pre-appointed day company and two or more post-appointed day companies of the provisions set out in paragraph (5) of this Resolution, the pre-appointed day company is liable to pay corporation profits tax of an amount in excess of the amount for which it would otherwise be liable, the following provisions shall have effect, that is to say—
(a) the pre-appointed day company and each of the post-appointed day companies shall be liable jointly and severally to pay the excess,
(b) if the said excess is paid by the pre-appointed day company, the Special Commissioners may, on the application of the pre-appointed day company, apportion (which apportionment shall be final) the said excess between the post-appointed day companies in such proportions as the Special Commissioners think proper, and in that case the amount so apportioned to any post-appointed day company shall be recoverable from that post-appointed day company by the pre-appointed day company.
(9) (a) That a company (in this sub-paragraph referred to as the second company) shall, for the purposes of this Resolution, be deemed to be an auxiliary of another company (in this sub-paragraph referred to as the first company) if
(i) the second company is incorporated after the first company, and
(ii) the first company holds more than 50 per cent. of the paid up ordinary issued capital of the second company.
(b) That for the purposes of this paragraph—
(i) any shares of a company held by the nominees or the shareholders of another company shall be deemed to be held by that other company,
(ii) preference stock (other than preference stock carrying voting rights only when dividends are in arrear) which carry voting rights or preference shares (other than preference shares carrying voting rights only when dividends are in arrear) which carry voting rights shall be deemed to be ordinary stock or ordinary shares.
(10) That in this Resolution— the expression "the Act of 1941" means the Finance Act, 1941 (No. 14 of 1941), as amended by any subsequent enactment;
the expression "pre-appointed day company" means a company incorporated before the 7th day of May, 1941;
the expression "post-appointed day company" means a company incorated on or after the 7th day of May, 1941;
references to corporation profits tax shall be construed as including references to excess corporation profits tax.
(11) (a) That subject to sub-paragraph (b) of this paragraph, the provisions of this Resolution shall apply and have effect in relation to any accounting period ending after the 31st day of December, 1943.
(b) That where the provisions set out in paragraph (5) of this Resolution apply to a pre-appointed day company and a post-appointed day company, and the said companies inform the Revenue Commissioners that they desire the provisions of this Resolution to apply and have effect in relation to all accounting periods ending after the date of the incorporation of the post-appointed day company, then the provisions of this Resolution shall apply and have effect accordingly.
This Resolution is designed to counter the device referred to in the course of my Budget statement to which some companies resort to reduce their liability to excess corporation profits tax by forming new companies usually with a nominal, or very small, capital, most of which is held either by the principal company or by the proprietors of the principal company, and through which they may get an additional allowance of £2,500, the minimum standard allowance, for each one of these separate companies that might be formed to run part or parts of the business of the old-established company.