Corporation Tax Act 2009

Reallocation of degrouping charge within group and recovery U.K.

792 Reallocation of charge within group U.K.

(1) This section applies if a chargeable realisation gain (see section 741) accrues to a company (“A”) under section 780 or 785 in respect of an asset.

(2) A and a company (“B”) that was a member of the relevant group at the relevant time may jointly elect that the gain, or such part of it as may be specified in the election, must be treated as accruing to B, and not A.

(3) In a case within section 780—

(a) “the relevant group” is the group of which A was a member at the relevant time, and

(b) “the relevant time” is immediately before A ceases to be a member of the group.

(4) In a case within section 785—

(a) “the relevant group” is the second group (within the meaning of that section), and

(b) “the relevant time” is immediately before A ceases to meet the qualifying condition (within the meaning of that section).

F1 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Section 793 [F2 sets out further requirements] about elections under this section.

[F3 (6A) Section 793A makes provision about the effect of elections under this section.]

(7) Section 794 makes provision for enabling claims under Chapter 7 to be made by B.

(8) In sections 793[F4 , 793A] and 794 references to “A” and “B” and “the relevant time” must be read in accordance with this section.

Textual Amendments

F1 S. 792(5) omitted (6.4.2020) by virtue of Finance Act 2019 (c. 1), Sch. 5 paras. 23(2), 35 (with Sch. 5 para. 36)

F2 Words in s. 792(6) substituted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 23(3), 35 (with Sch. 5 para. 36)

F3 S. 792(6A) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 23(4), 35 (with Sch. 5 para. 36)

F4 Word in s. 792(8) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 23(5), 35 (with Sch. 5 para. 36)

793 Further requirements about elections under section 792 U.K.

(1) An election under section 792 may be made only if subsection (2)[F5 , (3), (3A) or (3B)] applies to B.

(2) This subsection applies if at the relevant time B was UK resident.

(3) This subsection applies if [F6 subsection (2) does not apply and] at the relevant time—

(a) B carried on a trade in the United Kingdom through a permanent establishment, and

(b) B was not exempt from corporation tax in respect of the income or chargeable gains of that permanent establishment because of [F7 arrangements that have effect under section 2(1) of TIOPA 2010] (double taxation relief).

[F8 (3A) This subsection applies if neither of subsections (2) and (3) apply and at the relevant time—

(a) B carried on a trade of dealing in or developing UK land, and

(b) B was not exempt from corporation tax in respect of profits of that trade because of arrangements that have effect under section 2(1) of TIOPA 2010.

(3B) This subsection applies if none of subsections (2), (3) and (3A) apply and at the relevant time—

(a) B carried on a UK property business, and

(b) B was not exempt from corporation tax in respect of the income of its UK property business because of arrangements that have effect under section 2(1) of TIOPA 2010.]

(4) An election under section 792 may not be made if at the relevant time B was—

(a) a qualifying society within the meaning of section 461A of ICTA (incorporated friendly societies entitled to exemption from tax), or

(b) a dual resident investing company within the meaning of [F9 section 949 of CTA 2010 (dual resident investing companies)].

(5) An election under section 792 may only be made—

(a) by notice in writing to an officer of Revenue and Customs, and

(b) not later than 2 years after the end of the accounting period of A in which the relevant time falls.

Textual Amendments

F5 Words in s. 793(1) substituted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 24(2), 35 (with Sch. 5 para. 36)

F6 Words in s. 793(3) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 24(3), 35 (with Sch. 5 para. 36)

F7 Words in s. 793(3)(b) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 95 (with Sch. 9 paras. 1-9, 22)

F8 S. 793(3A)(3B) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 24(4), 35 (with Sch. 5 para. 36)

F9 Words in s. 793(4)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 652 (with Sch. 2)

[F10 793A Effect of election under section 792 U.K.

(1) This section applies if an election is made under section 792.

(2) If subsection (2) of section 793 applies to B the gain, or the part specified in the election, is treated as if it had accrued to B at the relevant time as a non-trading credit for the purposes of Chapter 6 (how credits and debits are given effect).

(3) If subsection (3) of section 793 applies to B the gain, or the part specified in the election, is treated—

(a) as if it had accrued to B at the relevant time as a non-trading credit for the purposes of Chapter 6, and

(b) as if it had accrued in respect of an asset held for the purposes of a permanent establishment of B in the United Kingdom.

(4) If subsection (3A) of section 793 applies to B the gain, or the part specified in the election, is treated for the purposes of Chapter 6 as if it had accrued to B at the relevant time as a credit in respect of an asset held for the purposes of B's trade of dealing in or developing UK land.

(5) If subsection (3B) of section 793 applies to B the gain, or the part specified in the election, is treated for the purposes of Chapter 6 as if it had accrued to B at the relevant time as a credit in respect of an asset held for the purposes of B's UK property business.]

Textual Amendments

F10 S. 793A inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 25, 35 (with Sch. 5 para. 36)

794 Application of roll-over relief in relation to reallocated charge U.K.

(1) This section applies where an election has been made under section 792 for the purpose of enabling B to make a claim under Chapter 7 (roll-over relief on realisation and reinvestment).

(2) Chapter 7 applies as if the realisation of the asset treated as occurring under section 780 or 785 had been by B, and not A.

(3) The conditions in section 755 (conditions relating to the old asset) are treated as met in relation to the asset if they would have been met if there had been no election and A had made the claim.

(4) The proceeds of realisation and the cost of the old asset recognised for tax purposes are what they would have been if there had been no election and A had made the claim.

(5) If the election relates to only part of the gain on the realisation of an asset treated as occurring under section 780 or 785, Chapter 7 and this section apply as if the realisation treated as occurring had been of a separate asset representing a corresponding part of the asset.

(6) If subsection (5) applies, any necessary apportionments must be made accordingly.

795 Recovery of charge from another group company or controlling director U.K.

(1) This section applies if—

(a) a company (“A”) is liable to a degrouping charge,

(b) an amount of corporation tax has been assessed on A for the relevant accounting period, and

(c) the whole or part of that amount is unpaid at the end of the period of 6 months after the time when it became payable.

(2) An officer of Revenue and Customs may serve a notice on the persons to whom this subsection applies (see subsections (3) and (4)) requiring them to pay the lesser of—

(a) the amount of corporation tax referable to the degrouping charge (see section 796(2)), or

(b) the amount that remains unpaid of the corporation tax payable for the relevant accounting period by A.

(3) If A was a member of a group at the relevant time, subsection (2) applies to—

(a) a company that was at that time the principal company of the group, and

(b) any other company that at any time in the period of 12 months ending with the relevant time—

(i) was a member of that group, and

(ii) owned the relevant asset or any part of it.

(4) If at the relevant time A is not UK resident F11 ... , subsection (2) applies to any person who is a controlling director—

(a) of A,

(b) of a company that has control of A,

(c) of a company that had control of A within the period of 12 months ending with the relevant time,

or was such a controlling director during that period.

(5) Section 796 applies for the interpretation of this section and in that section references to “A” must be read in accordance with this section.

Textual Amendments

F11 Words in s. 795(4) omitted (6.4.2020) by virtue of Finance Act 2019 (c. 1), Sch. 5 paras. 26, 35 (with Sch. 5 para. 36)

796 Interpretation of section 795 U.K.

(1) For the purposes of section 795 and this section—

• “the relevant accounting period” is the accounting period in which the degrouping charge falls to be brought into account by A,

• “the relevant time” is—

  (a)

  in a case within section 780, when A ceased to be a member of the group,

  (b)

  in a case within section 785, when A ceased to meet the qualifying condition (within the meaning of that section), and

  (c)

  if there has been an election under section 792, the time that would have been the relevant time under paragraph (a) or (b) had there been no such election, and

• “the relevant asset” is the asset in respect of which the degrouping charge arises.

(2) For the purposes of section 795 the amount of corporation tax referable to a degrouping charge is the difference between—

(a) the tax in fact payable for the relevant accounting period, and

(b) the tax that would have been payable for that period in the absence of the degrouping charge.

(3) References in section 795 and this section to a degrouping charge are to—

(a) a credit required to be brought into account under section 780(3) or 785(4), or

(b) if there has been an election under section 792, a credit required to be brought into account as a result of the election.

(4) In section 795 and this section—

• “director”, in relation to a company—

  (a)

  has the meaning given by section 67(1) of ITEPA 2003 (read with section 67(2) of that Act) and

  (b)

  includes any person falling within [F12 section 452(1) of CTA 2010] ,

• “controlling director”, in relation to a company, means a director of the company who has control of it, and

• “group” and “principal company” have the meaning that would be given by Chapter 8 if in that Chapter for references to 75% subsidiaries there were substituted references to 51% subsidiaries.

(5) In subsection (4) “control” [F13 is to be read in accordance with sections 450 and 451 of CTA 2010].

Textual Amendments

F12 Words in s. 796(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 653(2) (with Sch. 2)

F13 Words in s. 796(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 653(3) (with Sch. 2)

797 Recovery under section 795: procedure etc U.K.

(1) A notice served under section 795(2) may require the payment of the amount required to be paid by the notice within 30 days of the service of the notice.

(2) The notice must state—

(a) the amount of the tax referable to the degrouping charge (within the meaning given in section 796(2)),

(b) the amount of corporation tax assessed on A for the relevant accounting period that remains unpaid,

(c) the date when it first became payable, and

(d) the amount required to be paid by the person on whom the notice is served.

(3) The notice has effect—

(a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and

(b) for the purposes of appeals,

as if it were a notice of assessment and that amount were an amount of tax due from that person.

(4) A person who has paid an amount required to be paid by a notice under section 795(2) may recover the amount paid from A.

(5) A payment required to be made by such a notice is not allowed as a deduction in calculating any income, profits or losses for any tax purposes.

(6) In this section “A” and “the relevant accounting period” have the same meaning as in section 795 (see section 795(1) and section 796(1) respectively).

798 Recovery under section 795: time limit U.K.

(1) A notice under section 795(2) must be served before the end of the period of 3 years beginning with the date on which A's liability to corporation tax for the relevant accounting period is finally determined.

(2) In subsection (1) “A” and “the relevant accounting period” have the same meaning as in section 795 (see section 795(1) and section 796(1) respectively).

(3) If the unpaid tax is charged because of a determination under paragraph 36 or 37 of Schedule 18 to FA 1998 (determination where no return delivered or return incomplete), the date mentioned in subsection (1) is the date on which the determination was made.

(4) If the unpaid tax is charged in a self-assessment, the date mentioned in subsection (1) is the latest of—

(a) the last date on which notice of enquiry may be given into the return containing the self-assessment,

(b) if notice of enquiry is given, 30 days after the enquiry is completed,

(c) if more than one notice of enquiry is given, 30 days after the last notice of completion,

(d) if after such an enquiry an officer of Revenue and Customs amends the return, 30 days after notice of the amendment is issued, and

(e) if an appeal is brought against such an amendment, 30 days after the appeal is finally determined.

(5) If the unpaid tax is charged in a discovery assessment, the date mentioned in subsection (1) is—

(a) if there is no appeal against the assessment, the date when the tax becomes due and payable, and

(b) if there is such an appeal, the date on which the appeal is finally determined.

(6) In this section—

• “self-assessment” includes a self-assessment that supersedes a determination as a result of paragraph 40 of Schedule 18 to FA 1998, and

• “discovery assessment” means an assessment under paragraph 41(1) of that Schedule.