Taxes Management Act 1970

[F1 PART 3 U.K. Entering into [F3 a CT exit charge payment plan]

Textual Amendments

F1 Sch. 3ZB inserted (with effect in accordance with Sch. 49 para. 8 of the amending Act) by Finance Act 2013 (c. 29), Sch. 49 para. 6

F3 Words in Sch. 3ZB substituted (12.2.2019) by Finance Act 2019 (c. 1), Sch. 7 para. 6(1)(a)

Introduction U.K.

7 (1) As to when this Part of this Schedule applies, see— U.K.

(a) Part 1 of this Schedule (companies ceasing to be resident in the United Kingdom), and

(b) Part 2 of this Schedule (companies with permanent establishments in the United Kingdom).

(2) In this Part of this Schedule, as it applies to a company in relation to which Part 1 of this Schedule applies, terms and expressions which are used in this Part and in that Part have the same meanings in this Part as in that Part.

(3) In this Part of this Schedule, as it applies to a company in relation to which Part 2 of this Schedule applies, terms and expressions which are used in this Part and in that Part have the same meanings in this Part as in that Part.

Entering into [F3 a CT exit charge payment plan] U.K.

8 (1) A Part 1 company or a Part 2 company enters into [F3 a CT exit charge payment plan] in respect of qualifying corporation tax in accordance with this Schedule if— U.K.

(a) the company agrees to pay, and an officer of Revenue and Customs agrees to accept payment of, the tax in accordance with [F4 paragraphs 11 to 14],

(b) the company agrees to pay interest on the tax in accordance with paragraph 9(3), and

(c) the plan meets the requirements set out in [F5 paragraph 10] as to the matters that must be specified in it.

(2) The [F6 CT exit charge payment plan] may, in the circumstances mentioned in sub-paragraph (3), contain appropriate provision regarding security for Her Majesty's Revenue and Customs in respect of the deferred payment of the tax.

(3) Those circumstances are where an officer of Her Majesty's Revenue and Customs considers that agreeing to accept payment of qualifying corporation tax in accordance with the plan would present a serious risk as to collection of the tax in the absence of provision regarding security in respect of that tax.

(4) [F3 A CT exit charge payment plan] is void if any information furnished by the company in connection with the plan does not fully and accurately disclose all facts and considerations material to the decision of the officer of Revenue and Customs to accept payment of qualifying corporation tax in accordance with the plan.

Textual Amendments

F4 Words in Sch. 3ZB para. 8(1)(a) substituted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 4(a)

F5 Words in Sch. 3ZB para. 8(1)(c) substituted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 4(b)

F6 Words in Sch. 3ZB substituted (12.2.2019) by Finance Act 2019 (c. 1), Sch. 7 para. 6(1)(b)

Effect of [F6 CT exit charge payment plan] U.K.

9 (1) This paragraph applies where [F3 a CT exit charge payment plan] is entered into by a company in respect of qualifying corporation tax in accordance with this Schedule. U.K.

(2) As regards when the tax is payable—

(a) the plan does not prevent the tax becoming due and payable under section 59D or 59E, but

(b) the Commissioners for Her Majesty's Revenue and Customs—

(i) may not seek payment of the tax otherwise than in accordance with the plan;

(ii) may make repayments in respect of any amount of the tax paid, or any amount paid on account of the tax, before the plan is entered into.

(3) As regards interest—

(a) the tax carries interest in accordance with Part 9 as if the plan had not been entered into, and

(b) each time a payment is made under the plan, it is to be paid together with any interest payable on it.

(4) As regards penalties, the company will be liable to penalties for late payment of the tax only if it fails to make payments in accordance with the plan (see item 6ZA of the Table at the end of paragraph 1 of Schedule 56 to the Finance Act 2009).

(5) Qualifying corporation tax payable in accordance with [F3 a CT exit charge payment plan] which is for the time being unpaid may be paid at any time before it becomes payable under the plan together with interest payable on it to the date of payment.

Content of [F6 CT exit charge payment plan] U.K.

10 (1) [F3 A CT exit charge payment plan] entered into by a Part 1 company must specify— U.K.

(a) the date on which the company ceased to be resident in the United Kingdom, and

(b) the [F7 relevant] EEA state in which the company has become resident.

(2) [F3 A CT exit charge payment plan] entered into by a Part 2 company must specify—

(a) the EEA state in which the company is resident, and

(b) if the company has ceased to carry on a trade in the United Kingdom through a permanent establishment there, the date on which it ceased to do so.

[F8 (2A) In either case a CT exit charge payment plan entered into by a company must specify requirements as to the ongoing provision of information by the company to Her Majesty's Revenue and Customs in relation to the exit charge assets and liabilities.]

(3) In either case [F3 a CT exit charge payment plan] entered into by a company must also specify—

(a) the amount of qualifying corporation tax which, in the company's opinion, is payable by it in respect of the migration accounting period,

(b) the amount of that qualifying corporation tax which the company wishes to defer paying under the [F6 CT exit charge payment plan] (“ECPP tax”), and

[F9 (c) the amount of ECPP tax attributable to each exit charge asset or liability.]

F10 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) The amount of ECPP tax attributable to each exit charge asset or liability is—

where—

“A” is the income, profits or gains arising in respect of the asset or liability in the migration accounting period by virtue of the relevant exit charge provision only,

“B” is the total income, profits or gains arising in respect of all the exit charge assets and liabilities in the migration accounting period by virtue of the exit charge provisions only, and

“T” is the ECPP tax.

Textual Amendments

F7 Word in Sch. 3ZB para. 10(1)(b) inserted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 5(2)

F8 Sch. 3ZB para. 10(2A) inserted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 5(3)

F9 Sch. 3ZB para. 10(3)(c) substituted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 5(4)

F10 Sch. 3ZB para. 10(4) omitted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 8 para. 5(5)

F11 Sch. 3ZB para. 10(5) omitted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 8 para. 5(5)

[F12 The payment method U.K.

Textual Amendments

F12 Sch. 3ZB paras. 11-14 and cross-headings substituted for Sch. 3ZB paras. 11-17 (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 6

11 (1) Where a CT exit charge payment plan is entered into the ECPP tax is due in 6 instalments of equal amounts as follows— U.K.

(a) the first instalment is due on the first day after the period of 9 months beginning immediately after the end of the migration accounting period, and

(b) the other 5 instalments are due one on each of the first 5 anniversaries of that day.

(2) But see paragraphs 12, 13 and 14 for circumstances in which all or part of the outstanding balance of the ECPP tax becomes due otherwise than by those instalments.

All of outstanding balance due U.K.

12 (1) Where an event mentioned in subparagraph (2) occurs, the outstanding balance of the ECPP tax is due on the date on which the next instalment of that tax would otherwise have been due. U.K.

(2) The events are—

(a) the company becoming insolvent or entering administration,

(b) the appointment of a liquidator,

(c) an event under the law of a country or territory outside the United Kingdom corresponding to an event specified in paragraph (a) or (b),

(d) the company ceasing to be resident in a relevant EEA state and, on so ceasing, not becoming resident in another relevant EEA state, or

(e) the company failing to pay any amount of the ECPP tax for a period of 12 months after the date on which the amount becomes due.

All of outstanding balance attributable to particular exit charge asset or liability due U.K.

13 (1) This paragraph applies where— U.K.

(a) a trigger event occurs in relation to an exit charge asset or liability during the instalments period, and

(b) a trigger event has not previously occurred in relation to that asset or liability during that period.

(2) A trigger event occurs in relation to a TCGA or trading stock exit charge asset or an intangible exit charge asset if the company—

(a) disposes of the asset, or

(b) ceases to hold the asset for the purposes of a business carried on by the company in a relevant EEA state and, on so ceasing, does not begin to hold it for the purposes of another such business.

(3) A trigger event occurs in relation to a financial exit charge asset or liability if the company—

(a) ceases to be a party to the loan relationship or derivative contract in question, or

(b) ceases to be a party to the loan relationship or derivative contract in question for the purposes of a business carried on by the company in a relevant EEA state and, on so ceasing, does not begin to be a party to it for the purposes of another such business.

(4) On the occurrence of the trigger event an amount of the ECPP tax is due.

(5) The amount due is—

Where—

“A” is the amount of ECPP tax attributable to the exit charge asset or liability (see paragraph 10(6)),

“B” is the amount of ECPP tax that has previously become due under paragraph 14 by reason of a partial trigger event occurring in relation to the exit charge asset or liability,

“O” is the amount of ECPP tax that is outstanding at the time of the trigger event, and

“T” is the amount of ECPP tax.

(6) In this paragraph and paragraph 14 “the instalments period” means the period—

(a) beginning immediately after—

(i) the company ceases to be resident in the United Kingdom (in the case of a Part 1 company), or

(ii) the occurrence of the PE qualifying event in respects of the asset or liability concerned (in the case of a Part 2 company), and

(b) ending with the day on which the final instalment of the ECPP tax is due under paragraph 11.

Part of outstanding balance attributable to particular exit charge asset or liability due U.K.

14 (1) This paragraph applies if— U.K.

(a) a partial trigger event occurs in relation to an exit charge asset or liability during the instalments period, and

(b) a trigger event has not previously occurred in relation to that asset or liability during that period.

(2) A partial trigger event occurs in relation to a TCGA or trading stock exit charge asset if the company disposes of part (but not all) of the asset.

(3) A partial trigger event occurs in relation to a financial exit charge asset or liability if there is a disposal of a right or liability under the loan relationship or derivative contract in question which amounts to a related transaction (as defined in section 304 or 596 of CTA 2009 as the case may be).

(4) A partial trigger event occurs in relation to an intangible exit charge asset if there is a transaction which results in a reduction in the accounting value of the asset but not in the asset ceasing to be recognised in the company's balance sheet.

(5) On the occurrence of the partial trigger event an amount of the outstanding ECPP tax is due.

(6) The amount due is the amount that is just and reasonable having regard to the amount that would have been due had a trigger event occurred in relation to the exit charge asset or liability instead.

(7) In this paragraph “trigger event” has the same meaning as in paragraph 13.]]