CTM18420 | Shadow ACT: accounting periods to which the Regulations apply: company not a member of a group: no immediate opt out

Where the company does not make an immediate opt out, the regulations will apply to any accounting period other than one subsequent to 'its final accounting period'. The final accounting period is triggered by

• the exhaustion of the unrelieved surplus ACT available for set-off, or

• the company notifying that it will not seek recovery of unrelieved surplus ACT in any subsequent accounting period.

The rules determining the final accounting period are complicated by the need to ensure that relief for unrelieved surplus ACT is not obtained through the simple expedient of postponing a distribution to the following year. If the accounting period in which the unrelieved surplus ACT was exhausted were taken as the final accounting period, any company with unused unrelieved surplus ACT below its capacity could obtain permanent set-off by deferring any distribution until the following accounting period. A company with unrelieved surplus ACT slightly in excess of its capacity could achieve the same result by giving notification in the period that it wanted to forgo any future recovery. The rules fixing the 'final accounting period' are designed to frustrate such strategies.