Taxes Management Act 1970

[F1 PART 2 U.K. Non-UK resident companies with UK permanent establishments

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

Circumstances in which [F2 CT exit charge payment plan] may be entered into U.K.

Textual Amendments

F2 Words in Sch. 3ZB substituted (12.2.2019) by Finance Act 2019 (c. 1), Sch. 7 para. 6(1)(b)

4 (1) This Part of this Schedule and Part 3 of this Schedule apply where— U.K.

(a) at any time during an accounting period (“the migration accounting period”) an eligible company which is not resident in the United Kingdom carries on a trade in the United Kingdom through a permanent establishment there,

(b) one or more PE qualifying events occurs in respect of any assets or liabilities of the company as mentioned in sub-paragraph (4), and

(c) the company is liable to pay qualifying corporation tax in respect of the migration accounting period.

(2) The company may defer payment of some or all of the qualifying corporation tax if it enters into [F3 a CT exit charge payment plan] in respect of it in accordance with this Schedule.

(3) The company may enter into [F3 a CT exit charge payment plan] only if before the end of the period of 9 months beginning immediately after the migration accounting period—

(a) an application to enter into the [F2 CT exit charge payment plan] is made to Her Majesty's Revenue and Customs, and

(b) the application contains details of all the matters which are required by Part 3 of this Schedule to be specified in the plan.

(4) For the purposes of this Part of this Schedule, a “PE qualifying event” occurs in respect of an asset or liability of a company if—

(a) an event occurs which triggers—

(i) a deemed disposal and reacquisition of the asset or liability under the exit charge provision mentioned in paragraph 5(3)(a), (c), (d) or (e), or

(ii) a valuation of the asset under the exit charge provision mentioned in paragraph 5(3)(b),

(b) the event—

(i) occurs during the migration accounting period, or

(ii) causes the migration accounting period to come to an end, F4 ...

(c) at the time of the event, the company is not treated as resident in a territory outside the European Economic Area for the purposes of any double taxation arrangements[F5 , and

(d) immediately after the event—

(i) the asset or liability is held or owed by the company for the purposes of a permanent establishment of the company in a relevant EEA state, or

(ii) the asset or liability is held or owed by the company otherwise than for the purposes of a permanent establishment of the company and the company is resident in a relevant EEA state].

(5) In this Part of this Schedule, references to a PE qualifying asset or liability are to an asset or liability in respect of which a PE qualifying event occurs.

(6) In this paragraph “double taxation arrangements”[F6 ,] “eligible company” [F7 and “relevant EEA state”] have the meanings given in paragraph 1(7).

(7) In this Part of this Schedule—

(a) references to the migration accounting period are to be read in accordance with this paragraph;

(b) references to a Part 2 company are to a company in relation to which this Part of this Schedule applies,

(c) references to Part 3 of this Schedule are to Part 3 of this Schedule as it applies to a Part 2 company, and

(d) “permanent establishment”, in relation to a company, is to be read in accordance with Chapter 2 of Part 24 of CTA 2010.

Textual Amendments

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

F4 Word in Sch. 3ZB para. 4(4)(b) 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. 3(2)(a)

F5 Sch. 3ZB para. 4(4)(d) and preceding word inserted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 3(2)(b)

F6 Comma in Sch. 3ZB para. 4(6) substituted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 3(3)(a)

F7 Words in Sch. 3ZB para. 4(6) inserted (with effect in accordance with Sch. 8 para. 8 of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 3(3)(b)

Qualifying corporation tax U.K.

5 (1) The company is liable to pay qualifying corporation tax in respect of the migration accounting period if CT1 is greater than CT2 where— U.K.

• CT1 is the corporation tax which the company is liable to pay for the accounting period, and

• CT2 is the corporation tax which the company would be liable to pay for the accounting period if any income, profits, gains, losses or debits arising as a result of any PE qualifying events, and arising only by virtue of the exit charge provisions, were ignored,

(CT2 will be zero if the company would not be liable to pay any corporation tax for the period).

(2) The amount of qualifying corporation tax which the company is liable to pay is the difference between CT1 and CT2.

(3) Exit charge provisions means—

(a) section 25 of the 1992 Act,

(b) section 162 of CTA 2009, where that section applies by virtue of section 41(2)(b) of that Act,

(c) section 334 of that Act,

(d) section 610 of that Act, and

(e) section 859 of that Act, where that section applies by virtue of section 859(2)(b).

(4) References in this Part of this Schedule and Part 3 of this Schedule to qualifying corporation tax are to be read in accordance with this paragraph.

Interpretation: exit charge assets and liabilities U.K.

6 (1) This paragraph applies for the purposes of this Part of this Schedule and Part 3 of this Schedule. U.K.

(2) “Exit charge assets” and “exit charge liabilities” means any PE qualifying assets or liabilities (as the case may be) in respect of which income, profits or gains arise in the migration accounting period by virtue of the exit charge provisions, and in particular—

(a) “TCGA or trading stock exit charge assets” means those exit charge assets, other than pre-FA 2002 intangible fixed assets, in respect of which income, profits or gains arise by virtue of the exit charge provision mentioned in paragraph 5(3)(a) or (b);

(b) “financial exit charge assets or liabilities” means those exit charge assets or liabilities in respect of which income, profits or gains arise by virtue of the exit charge provision mentioned in paragraph 5(3)(c) or (d);

(c) “intangible exit charge assets” means—

(i) those exit charge assets in respect of which income, profits or gains arise by virtue of the exit charge provision mentioned in paragraph 5(3)(e), and

(ii) those exit charge assets which are pre-FA 2002 intangible fixed assets in respect of which income, profits or gains arise by virtue of the exit charge provision mentioned in paragraph 5(3)(a).

(3) In sub-paragraph (2)—

(a) “exit charge provisions” has the meaning given in paragraph 5(3);

(b) “pre-FA 2002 intangible fixed asset” means an intangible fixed asset which is a pre-FA 2002 asset (as defined in section 881 of CTA 2009).]