Finance (No. 2) Bill (HC Bill 154)

(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) 5“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) 10“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) 15those 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,
20profits 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) 25“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).

Part 3 Entering into an exit charge payment plan

30Introduction

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
35establishments 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) 40In 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 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) 5the company agrees to pay, and an officer of Revenue and
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) 10the company agrees to pay interest on the tax in
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
15mentioned 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
20of 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) An exit charge payment plan is void if any information furnished
by the company in connection with the plan does not fully and
25accurately 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.

Effect of exit charge payment plan

9 (1) This paragraph applies where an exit charge payment plan is
30entered into by a company in respect of qualifying corporation tax
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) 35the 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
40the 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) 45each 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) 5Qualifying corporation tax payable in accordance with an 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 exit charge payment plan

10 (1) 10An exit charge payment plan entered into by a Part 1 company
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) 15An 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
20date on which it ceased to do so.

(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
25migration accounting period,

(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) 30the standard instalment method (see paragraph
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
35the two methods, the exit charge payment plan must also
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
40tax attributable to the asset or liability (see sub-paragraph
(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
45to be paid in accordance with the standard instalment method
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

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
5of the PE qualifying events occurring during the migration
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) 10The amount of ECPP tax attributable to each exit charge asset or
liability is—

• where—

  (None)

  “A” is the income, profits or gains arising in respect of
  15the asset or liability in the migration accounting
  period by virtue of the relevant exit charge provision
  only,

  (None)

  “B” is the total income, profits or gains arising in
  respect of all the exit charge assets and liabilities in
  20the migration accounting period by virtue of the exit
  charge provisions only, and

  (None)

  “T” is the ECPP tax.

Content: realisation method

11 (1) This paragraph applies if, under an exit charge payment plan, the
25amount of ECPP tax attributable to any exit charge asset or
liability is to be paid in accordance with the realisation method.

(2) The plan must specify—

(a) each such asset or liability (so far as not already specified
under paragraph 10(4)(a)), and

(b) 30the amount of ECPP tax attributable to the asset or liability,
calculated in accordance with paragraph 10(6).

(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.

35Content: additional information relating to assets and liabilities

12 (1) This paragraph applies if, under an exit charge payment plan, the
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
40paragraph in relation to the asset or liability.

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

(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
5asset if, immediately after the migration accounting period, the
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
10year).

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) 15The amount of the ECPP tax that is to be paid in accordance with
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
20accounting period, and

(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
25method is payable on the date on which the next instalment of that
tax would otherwise have been due under the plan.

(4) A “relevant event” means—

(a) the company becoming insolvent or entering into
administration,

(b) 30the appointment of a liquidator,

(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
35so ceasing, not becoming resident in any other EEA state.

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
40accordance with the realisation method, and

(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
45following events—

(a) the disposal of that asset at any time 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 respect
of the asset (in the case of a Part 2 company),

(b) 5the tenth anniversary of the end of the migration
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
10of the event referred to, and

(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
15the period of 9 months beginning immediately after the migration
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) 20Where part of an asset is disposed of at any time after the event
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
25part which remains undisposed of.

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
30in accordance with the realisation method, and

(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
35may be).

(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) 40in a case where a number of years is specified in the plan
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—

(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
5subsequent anniversaries of that day (until they are all
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
10balance in respect of the asset or liability”) becomes payable.

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) 15All of the outstanding balance in respect of the asset or liability (as
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) 20a relevant event occurs (as defined in paragraph 13(4)),

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
25the trigger event, and

(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
30relation to an asset or liability if—

(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
35of.

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
40accordance with paragraph 15, and

(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
45respect of the asset or liability (as defined in paragraph 15(5)) is
payable.

(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) 5For the purposes of sub-paragraph (2), a partial trigger event
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
10which amounts to a related transaction (as defined
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,
15and

(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) 20does not result in the asset ceasing to be recognised
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
25asset or liability continue to be payable so far as they relate to the
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
30or derivative contract as it exists following the related
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) 35For the purposes of sub-paragraphs (3) and (5)—

(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,

40are to be apportioned on a just and reasonable basis between the
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-
45paragraph (4)(b) applies as if, immediately before the transaction,
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

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

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

(2) 35In 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
(inclusive), paragraphs 1(4) and 4(3) of Schedule 3ZB to TMA 1970 (inserted
40by 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”.

Section 227

SCHEDULE 48 Penalties: late filing, late payment and errors

45Amendments 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
(1ZB))”.

(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
5relating to CIS returns, and

(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
10penalties may, instead of stating the tax period in respect of which
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) 15For the purposes of sub-paragraph (1ZA)—

• “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
  20deductions on account of tax under the Construction
  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 25In paragraph 1 (returns etc in respect of which penalties are to be paid under
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) 30after sub-paragraph (4) insert—

“(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 35In the Table at the end of paragraph 1, in item 4 (annual return of payments
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. 2003/2682S.I. 2003/2682)—

  (a)

  40regulation 67B (real time returns)

  (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”.