ABSTRACT
The classical system of taxation of companies, introduced by the FA 1965, charged the profits of companies neither to income tax nor capital gains tax but only to corporation tax. This rule is similar to the imputation system of taxation of the profits of companies, introduced by the FA 1972. The major difference between the two systems is that the classical system treated companies and its
shareholders as separate entities. Corporation tax at the rate in force was levied on the profits of companies. Distributions made by companies suffered income tax at the current standard rate without allowing the company to deduct the income tax from its liability to corporation tax.
