Finance Act 2022

PART 1 U.K. Key definitions

1 U.K. This Part applies for the purposes of this Schedule.

“Company” and “qualifying company” U.K.

2 (1) “Company” means a body corporate (wherever incorporated) but does not include—

(a) a limited liability partnership that is a partnership for the purposes of this Schedule (see paragraph 4);

(b) a public authority as defined by the Freedom of Information Act 2000 or a Scottish public authority as defined by the Freedom of Information (Scotland) Act 2002 (asp 13);

(c) an open-ended investment company within the meaning of section 613 of CTA 2010;

(d) a registered society within the meaning of—

(i) the Co-operative and Community Benefit Societies Act 2014, or

(ii) the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 (c. 24 (N.I.)).

(2) A company is a “qualifying company” in any financial year if, in the previous financial year, the company had either or both of the following—

(a) relevant UK turnover of more than £200 million;

(b) a relevant UK balance sheet total of more than £2 billion.

(3) If the company was not a member of a group at the end of the previous financial year—

(a) “relevant UK turnover” means the company’s UK turnover;

(b) “relevant UK balance sheet total” means the company’s UK balance sheet total.

(4) If the company was a member of a group at the end of the previous financial year—

(a) “relevant UK turnover” means the aggregate UK turnover of the company (“C”) and each other company that was—

(i) a member of the same group as C at the end of C’s previous financial year, and

(ii) within the charge to corporation tax on income at any time during C’s previous financial year;

(b) “relevant UK balance sheet total” means the aggregate UK balance sheet totals of C and each other such company.

(5) If the financial year of a company that was a member of the same group as C does not end on the same day as C’s previous financial year, the figures for that company that are to be included in the aggregate figures are the figures for that company’s financial year ending last before the end of C’s previous financial year.

(6) The Treasury may by regulations provide that a company of a description specified in the regulations is not a qualifying company for the purposes of this Schedule (or any such purpose specified in the regulations).

“Group” U.K.

3 (1) A company is a member of a group if—

(a) another company is its 51% subsidiary, or

(b) it is a 51% subsidiary of another company.

(2) Two companies are members of the same group if—

(a) one is a 51% subsidiary of the other, or

(b) both are 51% subsidiaries of another company.

(3) Sub-paragraph (4) applies where a company (“Q”)—

(a) is a qualifying asset holding company for the purposes of Schedule 2 to this Act, and

(b) is a member of a worldwide group, within the meaning given by section 473 of TIOPA 2010.

(4) Another company is not a member of the same group as Q for the purposes of this Schedule if, by virtue of paragraph 42(2)(a) of Schedule 2 to this Act, that other company is not a member of the same worldwide group as Q for the purposes of Part 10 of TIOPA 2010 (corporate interest restriction).

(5) Chapter 3 of Part 24 of CTA 2010 (meaning of 51% subsidiary) applies for the purposes of this Schedule as it applies for the purposes of the Corporation Tax Acts.

“Partnership” and “qualifying partnership” U.K.

4 (1) “Partnership” means a partnership (wherever formed) or a limited liability partnership incorporated in the United Kingdom that is carrying on a trade, business or profession with a view to profit.

(2) A partnership is not a partnership for the purposes of this Schedule if it is—

(a) a collective investment scheme, within the meaning of Part 17 of FISMA 2000, or

(b) an AIF, as defined by regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773).

(3) A partnership is a “qualifying partnership” in any financial year if, in the previous financial year, the partnership had either or both of the following—

(a) UK turnover of more than £200 million;

(b) a UK balance sheet total of more than £2 billion.

(4) The Treasury may by regulations provide that a partnership of a description specified in the regulations is not a qualifying partnership for the purposes of this Schedule (or any such purpose specified in the regulations).

“Relevant tax” and “relevant return” U.K.

5 (1) A tax that is listed in the first column of the following table is a “relevant tax” and a return which appears in the corresponding entry in the second column of the table is, in relation to the relevant tax concerned, a “relevant return”.

Tax to which return relates	Return
Corporation tax	Company tax return
Income tax or corporation tax	Partnership return
Income tax	PAYE return
VAT	VAT return

(2) In this Schedule—

• “company tax return” means a return under paragraph 3 of Schedule 18 to FA 1998;

• “corporation tax” includes any amount chargeable under section 330(1), 455 or 464A of CTA 2010 as if it were corporation tax but does not include—

  (a)

  an amount chargeable under section 269DA of CTA 2010 (surcharge on banking companies);

  (b)

  an amount chargeable under Part 9A of TIOPA 2010 (controlled foreign companies);

  (c)

  an amount of the bank levy (see Schedule 19 to FA 2011);

• “partnership return” has the same meaning as in TMA 1970;

• “PAYE return” means a return under PAYE regulations;

• “VAT” means value added tax charged in accordance with VATA 1994;

• “VAT return” means a return under regulations under paragraph 2 of Schedule 11 to VATA 1994.

(3) A relevant return is delivered to HMRC “for” a financial year if it relates to—

(a) the whole of that financial year, or

(b) a part of that financial year.

(4) References to a return being required to be made include a requirement to file, deliver or submit a return (however expressed).

“Financial year” U.K.

6 (1) “Financial year”—

(a) in relation to a company which is (or is treated as if it is) formed and registered under the Companies Act 2006, has the meaning given by that Act (see section 390 of the Companies Act 2006);

(b) in relation to a company to which Chapter 3 of Part 5 of the Overseas Companies Regulations 2009 (S.I. 2009/1801) (companies not required to prepare and disclose accounts under parent law) applies, has the meaning given by regulation 37 of those regulations (which modifies the application of sections 390 to 392 of the Companies Act 2006);

(c) in relation to a company to which Chapter 3 of Part 6 of the Overseas Companies Regulations 2009 (institutions not required to prepare and disclose accounts under parent law) applies, has the meaning given by regulation 52 of those regulations (which modifies the application of sections 390 to 392 of the Companies Act 2006);

(d) in relation to any other company or a non-UK resident partnership, means any period in respect of which a profit and loss account for the company’s or (as the case may be) the partnership’s undertaking is required to be made up (whether by its constitution or by the law under which it is formed), whether that period is 12 months or not;

(e) in relation to a UK resident partnership, means any period of account for which its representative partner has provided, or is required to provide, a partnership statement [F1 within the meaning] of TMA 1970.

(2) In this paragraph—

• “UK resident partnership” means a partnership which is resident in the United Kingdom;

• “non-UK resident partnership” means a partnership which is not resident in the United Kingdom;

• “representative partner”, in relation to a UK resident partnership, means

  (a)

  [F2 the partner who is required by a notice served under or by virtue of section 12AA(2) or (3) of TMA 1970 to make and deliver returns to an officer of Revenue and Customs] [F3 , or]

  (b)

  [F4 the nominated partner within the meaning of paragraph 5 of Schedule A1 to TMA 1970.]

(3) For the purposes of this paragraph a partnership is resident in the territory in which the control and management of the activities of the partnership take place.

Textual Amendments

F1 Words in Sch. 17 para. 6(1)(e) substituted (1.4.2022 in relation to relevant returns that are required to be made on or after that date) by 2017 c. 32, Sch. 14 para. 50(2) (as inserted by Finance Act 2022 (c. 3), Sch. 17 para. 31)

F2 Words in Sch. 17 para. 6(2) renumbered (1.4.2022 in relation to relevant returns that are required to be made on or after that date) by 2017 c. 32, Sch. 14 para. 50(3)(a) (as inserted by Finance Act 2022 (c. 3), Sch. 17 para. 31)

F3 Word in Sch. 17 para. 6(2) inserted (1.4.2022 in relation to relevant returns that are required to be made on or after that date) by 2017 c. 32, Sch. 14 para. 50(3)(b) (as inserted by Finance Act 2022 (c. 3), Sch. 17 para. 31)

F4 Words in Sch. 17 para. 6(2) inserted (1.4.2022 in relation to relevant returns that are required to be made on or after that date) by 2017 c. 32, Sch. 14 para. 50(3)(c) (as inserted by Finance Act 2022 (c. 3), Sch. 17 para. 31)

“Turnover” and “balance sheet total” U.K.

7 (1) “Turnover”—

(a) in relation to a company which is (or is treated as if it is) formed and registered under the Companies Act 2006, has the same meaning as in Part 15 of that Act (see section 474 of the Companies Act 2006);

(b) in relation to any other company or a partnership, has a corresponding meaning.

(2) “UK turnover”—

(a) in relation to a UK resident company, means all of its turnover;

(b) in relation to a non-UK resident company, means so much of its turnover as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income;

(c) in relation to a UK resident partnership, means all of its turnover;

(d) in relation to a non-UK resident partnership, means so much of its turnover as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.

(3) “Balance sheet total”, in relation to a company or partnership and a financial year, means the aggregate of the amounts shown as assets in its balance sheet at the end of the financial year.

(4) “UK balance sheet total”—

(a) in relation to a UK resident company, means its balance sheet total;

(b) in relation to a non-UK resident company, means so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income;

(c) in relation to a UK resident partnership, means its balance sheet total;

(d) in relation to a non-UK resident partnership, means so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.

(5) In this paragraph—

• “UK resident company” and “non-UK resident company” have the same meaning as in the Corporation Tax Acts;

• “UK resident partnership” means a partnership which is resident in the United Kingdom;

• “non-UK resident partnership” means a partnership which is not resident in the United Kingdom.

(6) For the purposes of this paragraph—

(a) a partnership is resident in the territory in which the control and management of the activities of the partnership take place;

(b) a non-UK resident partnership is to be regarded as having a permanent establishment in the United Kingdom if, were it a company within the meaning of the Corporation Tax Acts, it would have a permanent establishment in the United Kingdom by virtue of Chapter 2 of Part 24 of CTA 2010.