Advance corporation tax (ACT)
A tax which was abolished with effect from 6 April 1999. When a company (other than an international headquarters company in respect of a foreign income dividend ( www.practicallaw.com/9-107-5778) ) made a qualifying distribution ( www.practicallaw.com/9-107-7094) prior to this date, it paid ACT to HM Revenue & Customs ( www.practicallaw.com/6-200-6399) . The rate of ACT was fixed by reference to the lower rate of income tax. ACT was effectively a pre-payment of the company’s corporation tax ( www.practicallaw.com/1-107-5999) liability. A company with surplus ACT ( www.practicallaw.com/7-107-7349) built up prior to 6 April 1999 may use the shadow ACT ( www.practicallaw.com/1-107-7248) rules to recover the ACT paid in certain circumstances.
For more detail, see Practice note, Shadow ACT ( www.practicallaw.com/7-366-8038) .