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Finance (No. 2) Bill


Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

592

 

      (2)  

The company may defer payment of some or all of the qualifying

corporation tax if it enters into an exit charge payment plan in

respect of it in accordance with this Schedule.

      (3)  

The company may enter into an exit charge payment plan only if

conditions A to C are met.

5

      (4)  

Condition A is that before the end of the period of 9 months

beginning immediately after the migration accounting period—

(a)   

an application to enter into the 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

10

required by Part 3 of this Schedule to be specified in the

plan.

      (5)  

Condition B is that on ceasing to be resident in the United

Kingdom, the company carries on a business in an EEA state.

      (6)  

Condition C is that, on becoming resident in the other EEA state,

15

the company is not treated as resident in a territory outside the

European Economic Area for the purposes of any double taxation

arrangements.

      (7)  

In this paragraph—

“double taxation arrangements” means arrangements which

20

are made by two or more territories with a view to

affording relief from double taxation and which have

effect at the time when the company ceases to be resident

in the United Kingdom;

“eligible company” means a company that has a right to

25

freedom of establishment protected by Article 49 of the

Treaty on the functioning of the European Union or

established by Article 31 of the Agreement on the

European Economic Area.

      (8)  

In this Part of this Schedule—

30

(a)   

references to the migration accounting period are to—

(i)   

in a case where an accounting period comes to an

end on the company ceasing to be resident in the

United Kingdom, that accounting period, and

(ii)   

in a case not falling within sub-paragraph (i), the

35

accounting period during which the company

ceases to be resident in the United Kingdom,

(b)   

references to a Part 1 company are to a company in relation

to which this Part of this Schedule applies, and

(c)   

references to Part 3 of this Schedule are to Part 3 of this

40

Schedule as it applies to a Part 1 company.

Qualifying corporation tax

2     (1)  

The company is liable to pay qualifying corporation tax in respect

of the migration accounting period if CT1 is greater than CT2

where—

45

CT1 is the corporation tax which the company is liable to pay

for the accounting period, and

 
 

Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

593

 

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 only by virtue of the

exit charge provisions were ignored,

           

(CT2 will be zero if the company would not be liable to pay any

5

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 185 of the 1992 Act,

10

(b)   

section 187(4) of that Act, where that subsection applies by

virtue of section 187(4)(c),

(c)   

section 162 of CTA 2009, where that section applies by

virtue of section 41(2)(b) of that Act,

(d)   

section 333 of that Act,

15

(e)   

section 609 of that Act,

(f)   

section 859 of that Act, where that section applies by virtue

of section 859(2)(a), and

(g)   

section 862 of that Act, where that section applies by virtue

of section 862(1)(c).

20

      (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

3     (1)  

This paragraph applies for the purposes of this Part of this

25

Schedule and Part 3 of this Schedule.

      (2)  

“Exit charge assets” and “exit charge liabilities” means 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—

30

(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

2(3)(a), (b) or (c),

35

(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 2(3)(d) or (e),

(c)   

“intangible exit charge assets” means—

40

(i)   

those exit charge assets in respect of which income,

profits or gains arise by virtue of the exit charge

provision mentioned in paragraph 2(3)(f) or (g),

and

(ii)   

those exit charge assets which are pre-FA 2002

45

intangible fixed assets in respect of which income,

profits or gains arise by virtue of the exit charge

provision mentioned in paragraph 2(3)(a) or (b).

 
 

Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

594

 

      (3)  

In sub-paragraph (2)—

(a)   

“exit charge provisions” has the meaning given in

paragraph 2(3);

(b)   

“pre-FA 2002 intangible fixed asset” means an intangible

fixed asset which is a pre-FA 2002 asset (as defined in

5

section 881 of CTA 2009).

Part 2

Non-UK resident companies with UK permanent establishments

Circumstances in which exit charge payment plan may be entered into

4     (1)  

This Part of this Schedule and Part 3 of this Schedule apply

10

where—

(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

15

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

20

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 an exit charge payment plan in

respect of it in accordance with this Schedule.

      (3)  

The company may enter into an exit charge payment plan only if

25

before the end of the period of 9 months beginning immediately

after the migration accounting period—

(a)   

an application to enter into the 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

30

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—

35

(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),

40

(b)   

the event—

(i)   

occurs during the migration accounting period, or

(ii)   

causes the migration accounting period to come to

an end, and

(c)   

at the time of the event, the company is not treated as

45

resident in a territory outside the European Economic Area

for the purposes of any double taxation arrangements.

 
 

Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

595

 

      (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” and “eligible

company” have the meanings given in paragraph 1(7).

5

      (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,

10

(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.

15

Qualifying corporation tax

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—

CT1 is the corporation tax which the company is liable to pay

20

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

25

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.

30

      (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,

35

(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

40

paragraph.

Interpretation: exit charge assets and liabilities

6     (1)  

This paragraph applies for the purposes of this Part of this

Schedule and Part 3 of this Schedule.

 
 

Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

596

 

      (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

5

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

10

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,

15

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

20

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

25

fixed asset which is a pre-FA 2002 asset (as defined in

section 881 of CTA 2009).

Part 3

Entering into an exit charge payment plan

Introduction

30

7     (1)  

As to when this Part of this Schedule applies, see—

(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).

35

      (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

40

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.

 
 

Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

597

 

Entering into an exit charge payment plan

8     (1)  

A Part 1 company or a Part 2 company enters into an exit charge

payment plan in respect of qualifying corporation tax in

accordance with this Schedule if—

(a)   

the company agrees to pay, and an officer of Revenue and

5

Customs agrees to accept payment of, the tax in

accordance with the standard instalment method (see

paragraph 13) or the realisation method (see paragraphs 14

to 17) or a combination of the two methods,

(b)   

the company agrees to pay interest on the tax in

10

accordance with paragraph 9(3), and

(c)   

the plan meets the requirements set out in paragraphs 10

to 12 as to the matters that must be specified in it.

      (2)  

The exit charge payment plan may, in the circumstances

mentioned in sub-paragraph (3), contain appropriate provision

15

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

20

present a serious risk as to collection of the tax in the absence of

provision regarding security in respect of that tax.

      (4)  

An 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

25

decision of the officer of Revenue and Customs to accept payment

of qualifying corporation tax in accordance with the plan.

Effect of exit charge payment plan

9     (1)  

This paragraph applies where an exit charge payment plan is

entered into by a company in respect of qualifying corporation tax

30

in accordance with this Schedule.

      (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

35

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

40

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

45

together with any interest payable on it.

 
 

Finance (No. 2) Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge

598

 

      (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 an exit

5

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 exit charge payment plan

10    (1)  

An exit charge payment plan entered into by a Part 1 company

10

must specify—

(a)   

the date on which the company ceased to be resident in the

United Kingdom, and

(b)   

the EEA state in which the company has become resident.

      (2)  

An exit charge payment plan entered into by a Part 2 company

15

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.

20

      (3)  

In either case an 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,

25

(b)   

the amount of that qualifying corporation tax which the

company wishes to defer paying under the exit charge

payment plan (“ECPP tax”), and

(c)   

whether the ECPP tax is to be paid in accordance with—

(i)   

the standard instalment method (see paragraph

30

13),

(ii)   

the realisation method (see paragraphs 14 to 17), or

(iii)   

a combination of the two methods.

      (4)  

If the ECPP tax is to be paid in accordance with a combination of

the two methods, the exit charge payment plan must also

35

specify—

(a)   

in the case of each of the company’s exit charge assets or

liabilities (see paragraphs 3(2) or 6(2), as the case may be),

the method in accordance with which the amount of ECPP

tax attributable to the asset or liability (see sub-paragraph

40

(6)) is to be paid, and

(b)   

the amount of the ECPP tax specified under sub-paragraph

(3)(b) that is to be paid in accordance with each method.

      (5)  

But an exit charge payment plan may specify that any ECPP tax is

to be paid in accordance with the standard instalment method

45

only if—

(a)   

in the case of a plan entered into by a Part 1 company, the

company’s ceasing to be resident in the United Kingdom is

 
 

 
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Revised 28 March 2013