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Finance (No. 2) Bill


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

599

 

not part of arrangements the main purpose of which, or

one of the main purposes of which, is to defer the payment

of any qualifying corporation tax payable by it;

(b)   

in the case of a plan entered into by a Part 2 company, none

of the PE qualifying events occurring during the migration

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accounting period, or bringing that period to an end, is

part of arrangements the main purpose of which, or one of

the main purposes of which, is to defer the payment of any

qualifying corporation tax payable by it.

      (6)  

The amount of ECPP tax attributable to each exit charge asset or

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liability is—equation: cross[over[char[A],char[B]],char[T]]

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

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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

20

   

“T” is the ECPP tax.

Content: realisation method

11    (1)  

This paragraph applies if, under an exit charge payment plan, the

amount of ECPP tax attributable to any exit charge asset or

liability is to be paid in accordance with the realisation method.

25

      (2)  

The plan must specify—

(a)   

each such asset or liability (so far as not already specified

under paragraph 10(4)(a)), and

(b)   

the amount of ECPP tax attributable to the asset or liability,

calculated in accordance with paragraph 10(6).

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      (3)  

The plan must also include requirements as to the ongoing

provision of information by the company to Her Majesty’s

Revenue and Customs in relation to the asset or liability.

Content: additional information relating to assets and liabilities

12    (1)  

This paragraph applies if, under an exit charge payment plan, the

35

amount of ECPP tax attributable to an exit charge asset or liability

is to be paid in accordance with the realisation method.

      (2)  

The plan must specify any additional information required by this

paragraph in relation to the asset or liability.

      (3)  

Sub-paragraph (4) applies in the case of a financial exit charge

40

asset or liability if, immediately after the migration accounting

period, the remaining term of the loan relationship or derivative

contract in question is less than 10 years.

 
 

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

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      (4)  

The plan must specify, in relation to the asset or liability, how

many years of the term of the loan relationship or derivative

contract remain (rounded up to the nearest whole year).

      (5)  

Sub-paragraph (6) applies in the case of an intangible exit charge

asset if, immediately after the migration accounting period, the

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remaining useful life of the asset for accountancy purposes is less

than 10 years.

      (6)  

The plan must specify, in relation to the asset, how many years of

the useful life of the asset remain (rounded up to the nearest whole

year).

10

The standard instalment method

13    (1)  

This paragraph applies if, under an exit charge payment plan,

some or all of the ECPP tax is to be paid in accordance with the

standard instalment method.

      (2)  

The amount of the ECPP tax that is to be paid in accordance with

15

the standard instalment method is payable in 6 instalments of

equal amounts as follows—

(a)   

the first instalment is due on the first day after the period

of 9 months beginning immediately after the migration

accounting period, and

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(b)   

the other 5 instalments are due one on each of the first 5

anniversaries of that day.

      (3)  

But if a relevant event occurs, the outstanding balance of the ECPP

tax that is payable in accordance with the standard instalment

method is payable on the date on which the next instalment of that

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tax would otherwise have been due under the plan.

      (4)  

A “relevant event” means—

(a)   

the company becoming insolvent or entering into

administration,

(b)   

the appointment of a liquidator,

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(c)   

any event under the law of an EEA state outside the United

Kingdom corresponding to an event specified in

paragraph (a) or (b), or

(d)   

the company ceasing to be resident in an EEA state and, on

so ceasing, not becoming resident in any other EEA state.

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The realisation method: TCGA or trading stock exit charge assets

14    (1)  

This paragraph applies if—

(a)   

under an exit charge payment plan, the amount of ECPP

tax attributable to an exit charge asset is to be paid in

accordance with the realisation method, and

40

(b)   

the asset is a TCGA or trading stock exit charge asset (see

paragraph 3(2)(a) or 6(2)(a), as the case may be).

      (2)  

The amount of ECPP tax attributable to the asset under paragraph

10(6) is payable in relation to whichever is the first to occur of the

following events—

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(a)   

the disposal of that asset at any time after—

 
 

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

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(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 respect

of the asset (in the case of a Part 2 company),

(b)   

the tenth anniversary of the end of the migration

5

accounting period, or

(c)   

a relevant event (as defined in paragraph 13(4)).

      (3)  

The date on which the amount is payable is—

(a)   

in a case falling within sub-paragraph (2)(a) or (b), the date

of the event referred to, and

10

(b)   

in a case falling within sub-paragraph (2)(c), the relevant

date or, if that date has already passed, the next

anniversary of that date.

      (4)  

In sub-paragraph (3)(b), “relevant date” means the first day after

the period of 9 months beginning immediately after the migration

15

accounting period.

      (5)  

Section 21(2) of the 1992 Act (part disposals of assets) applies for

the purposes of sub-paragraph (2)(a) as it applies for the purposes

of that Act.

      (6)  

Where part of an asset is disposed of at any time after the event

20

mentioned in sub-paragraph (2)(a), the amount of ECPP tax

attributable to the asset under paragraph 10(6) is to be

apportioned on a just and reasonable basis for the purpose of

applying this paragraph to the part of the asset disposed of and the

part which remains undisposed of.

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The realisation method: other exit charge assets and liabilities

15    (1)  

This paragraph applies if—

(a)   

under an exit charge payment plan, the ECPP tax

attributable to an exit charge asset or liability is to be paid

in accordance with the realisation method, and

30

(b)   

the asset or liability is—

(i)   

a financial exit charge asset or liability, or

(ii)   

an intangible exit charge asset,

   

(see paragraph 3(2)(b) and (c) or 6(2)(b) and (c), as the case

may be).

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      (2)  

The amount of ECPP tax attributable to any such asset or liability

under paragraph 10(6) is payable in a number of annual

instalments of equal amounts.

      (3)  

The number of annual instalments is—

(a)   

in a case where a number of years is specified in the plan

40

in relation to the asset or liability by virtue of paragraph

12(4) or (6), that number, and

(b)   

otherwise, 10.

      (4)  

The instalments are due as follows—

 
 

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

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(a)   

the first instalment is due on the first day after the period

of 9 months beginning immediately after the migration

accounting period, and

(b)   

the other instalments are due one on each of the

subsequent anniversaries of that day (until they are all

5

paid).

      (5)  

But see paragraphs 16 and 17 for circumstances in which all or part

of the outstanding balance of the amount of ECPP tax attributable

to the asset or liability under paragraph 10(6) (“the outstanding

balance in respect of the asset or liability”) becomes payable.

10

Outstanding balance becoming payable in full

16    (1)  

This paragraph applies where the amount of ECPP tax attributable

to an asset or liability under paragraph 10(6) is payable in

instalments in accordance with paragraph 15.

      (2)  

All of the outstanding balance in respect of the asset or liability (as

15

defined in paragraph 15(5)) is payable in accordance with sub-

paragraph (3) if—

(a)   

a trigger event occurs in relation to the asset or liability (see

sub-paragraph (4)), or

(b)   

a relevant event occurs (as defined in paragraph 13(4)),

20

           

before the last instalment is payable in accordance with paragraph

15.

      (3)  

The outstanding balance is payable—

(a)   

in a case falling within sub-paragraph (2)(a), on the date of

the trigger event, and

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(b)   

in a case falling within sub-paragraph (2)(b), on the date on

which the next instalment would otherwise have been due

under the plan.

      (4)  

For the purposes of this paragraph, a trigger event occurs in

relation to an asset or liability if—

30

(a)   

in the case of a financial exit charge asset or liability, the

company ceases to be party to the loan relationship or

derivative contract in question, or

(b)   

in the case of an intangible fixed asset, the asset is disposed

of.

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Outstanding balance becoming payable in part

17    (1)  

This paragraph applies where—

(a)   

the amount of ECPP tax attributable to an asset or liability

under paragraph 10(6) is payable in instalments in

accordance with paragraph 15, and

40

(b)   

a partial trigger event occurs in relation to the asset or

liability (see sub-paragraph (4)) before the last instalment

is payable.

      (2)  

On the occurrence of that event, part of the outstanding balance in

respect of the asset or liability (as defined in paragraph 15(5)) is

45

payable.

 
 

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

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      (3)  

The part payable under sub-paragraph (2) is so much of the

outstanding balance in respect of the asset or liability as is

attributable to the transaction mentioned in sub-paragraph (4)(a)

or (b).

      (4)  

For the purposes of sub-paragraph (2), a partial trigger event

5

occurs in relation to an asset or liability if—

(a)   

in the case of a financial exit charge asset or liability—

(i)   

there is a disposal of rights or liabilities under the

loan relationship or derivative contract in question

which amounts to a related transaction (as defined

10

in section 304 or 596 of CTA 2009 as the case may

be), but

(ii)   

the transaction does not result in the company

ceasing to be party to the relationship or contract,

and

15

(b)   

in the case of an intangible exit charge asset, there is a

transaction which—

(i)   

results in a reduction in the accounting value of the

asset, but

(ii)   

does not result in the asset ceasing to be recognised

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in the company’s balance sheet.

      (5)  

Where part of the outstanding balance in respect of an asset or

liability is paid in accordance with sub-paragraphs (2) and (3), the

remaining instalments due under paragraph 15 in respect of the

asset or liability continue to be payable so far as they relate to the

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remaining asset or liability (subject to paragraph 16 and this

paragraph).

      (6)  

In sub-paragraph (5), the “remaining asset or liability” means—

(a)   

in a case within sub-paragraph (4)(a), the loan relationship

or derivative contract as it exists following the related

30

transaction,

(b)   

in a case within sub-paragraph (4)(b), the asset as it

continues to be recognised on the balance sheet following

the transaction mentioned in that sub-paragraph.

      (7)  

For the purposes of sub-paragraphs (3) and (5)—

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(a)   

the outstanding balance in respect of the asset or liability,

and

(b)   

the remaining instalments due under paragraph 15 in

respect of the asset or liability,

           

are to be apportioned on a just and reasonable basis between the

40

transaction mentioned in sub-paragraph (4)(a) or (b) and the

remaining asset or liability.

      (8)  

In relation to an intangible exit charge asset that has no balance

sheet value (or no longer has a balance sheet value), sub-

paragraph (4)(b) applies as if, immediately before the transaction,

45

it did have a balance sheet value.”

Amendments of FA 2009

7          

In Schedule 56 to FA 2009 (penalty for failure to make payments on time), in

 
 

Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

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the Table at the end of paragraph 1, after entry 6 insert—

 

“6ZA

Corporation tax

Amount payable

The later of—

 
   

under an exit

(a)   

the first day

 
   

charge payment

after the period

 
   

plan entered into

of 12 months

 

5

   

in accordance

beginning

 
   

with Schedule

immediately

 
   

3ZB to TMA 1970

after the

 
    

migration

 
    

accounting

 

10

    

period (as

 
    

defined in Part

 
    

1 or 2 of

 
    

Schedule 3ZB

 
    

to TMA 1970,

 

15

    

as the case may

 
    

be), and

 
    

(b)   

the date on

 
    

which the

 
    

amount is

 

20

    

payable under

 
    

the plan.”

 

Commencement

8     (1)  

The amendments made by this Schedule are treated as having come into

force on 11 December 2012 in relation to an accounting period if the relevant

25

day, in relation to that period, falls on or after 11 December 2012.

      (2)  

In sub-paragraph (1) “the relevant day”, in relation to an accounting period,

means the first day after the period of 9 months beginning immediately after

the accounting period.

      (3)  

But if the relevant day falls between 11 December 2012 and 31 March 2013

30

(inclusive), paragraphs 1(4) and 4(3) of Schedule 3ZB to TMA 1970 (inserted

by this Schedule) have effect as if, in each case, for “before the end of the

period of 9 months beginning immediately after the migration accounting

period” there were substituted “on or before 31 March 2013”.

Schedule 48

35

Section 227

 

Penalties: late filing, late payment and errors

Amendments to Schedule 24 to FA 2007: penalties for errors

1     (1)  

In Schedule 24 to FA 2007 (penalties for errors), paragraph 13 (procedure:

assessment) is amended as follows.

      (2)  

In sub-paragraph (1)(c), after “assessed” insert “(subject to sub-paragraph

40

(1ZB))”.

 
 

Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

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      (3)  

After sub-paragraph (1) insert—

  “(1ZA)  

Sub-paragraph (1ZB) applies where—

(a)   

a person is at any time liable for two or more penalties

relating to PAYE returns, or for two or more penalties

relating to CIS returns, and

5

(b)   

the penalties (“the relevant penalties”) are assessed in

respect of more than one tax period (“the relevant tax

periods”).

    (1ZB)  

A notice under sub-paragraph (1) in respect of any of the relevant

penalties may, instead of stating the tax period in respect of which

10

the penalty is assessed, state the tax year or the part of a tax year

to which the penalty relates.

    (1ZC)  

For that purpose, a relevant penalty relates to the tax year or the

part of a tax year in which the relevant tax periods fall.

    (1ZD)  

For the purposes of sub-paragraph (1ZA)—

15

“a PAYE return” means a return for the purposes of PAYE

regulations;

“a CIS return” means a return for the purposes of regulations

under section 70(1)(a) of FA 2004 in connection with

deductions on account of tax under the Construction

20

Industry Scheme.”

Amendments to Schedule 55 to FA 2009: penalty for failure to make returns

2          

Schedule 55 (penalty for failure to make returns etc) to FA 2009 is amended

in accordance with paragraphs 3 to 9.

3          

In paragraph 1 (returns etc in respect of which penalties are to be paid under

25

that Schedule)—

(a)   

in the definition of “penalty date” in sub-paragraph (4), after

“document” insert “falling within any of items 1 to 3 and 5 to 13 in

the Table”;

(b)   

after sub-paragraph (4) insert—

30

   “(4A)  

The Treasury may by order make such amendments to

item 4 in the Table as they think fit in consequence of any

amendment, revocation or re-enactment of the regulations

mentioned in that item.”

4          

In the Table at the end of paragraph 1, in item 4 (annual return of payments

35

for purposes of PAYE regulations etc), for the words in the third column

substitute—

“Return under any of the following provisions of the Income

Tax (PAYE) Regulations 2003 (S.I. 2003/2682)—

(a)   

regulation 67B (real time returns)

40

(b)   

regulation 67D (exceptions to regulation 67B)”.

5          

In paragraph 2 (amount of penalty: occasional returns and returns for

periods of 6 months or more), for “1 to 5” substitute “1 to 3, 5”.

 
 

 
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Revised 28 March 2013