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Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 47 — Corporation tax: deferral of payment of exit charge
599

Schedule 47
Section 226

Corporation tax: deferral of payment of exit charge
Amendments of TMA 1970
1
TMA 1970 is amended in accordance with paragraphs 2 to 6.
2
After section 59F insert—
5
“59FA
Exit charge payment plans
(1)
Schedule 3ZB contains provisions about exit charge payment plans
in accordance with which companies may defer payment of certain
corporation tax.
(2)
Parts 1 and 2 of the Schedule each make provision about the
10
circumstances in which an exit charge payment plan may be entered
into, and about determining the amount of corporation tax that may
be deferred—
(a)
see Part 1 in relation to a company which ceases to be resident
in the United Kingdom, and
15
(b)
see Part 2 in relation to a company which is not resident in the
United Kingdom but which carries on, or has carried on, a
trade in the United Kingdom through a permanent
establishment there.
(3)
Part 3 of the Schedule contains provision about—
20
(a)
entering into an exit charge payment plan,
(b)
the effect of such a plan,
(c)
the content of such a plan, and
(d)
the methods in accordance with which tax deferred under
such a plan may be paid.”
25
3
Immediately before section 59G insert—
“Managed payment plans”.
4     (1)
Section 109B (provision for securing payment by company of outstanding
tax) is amended as follows.
      (2)
In subsection (1), at the end insert “, subject to subsection (5A).”
30
      (3)
In subsection (4)(b), at the end insert “(which may include a proposal to
enter into an exit charge payment plan in accordance with Schedule 3ZB).”
      (4)
After subsection (5) insert—
“(5A)
Condition D does not apply to the extent that payment of the tax is
to be secured by the company entering into an exit charge payment
35
plan in accordance with Schedule 3ZB.”
5     (1)
Section 109E (liability of other persons for unpaid tax) is amended as
follows.
      (2)
After subsection (1) insert—
“(1A)
The reference in subsection (1)(b) to the time when tax becomes
40
payable is a reference to—

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Schedule 47 — Corporation tax: deferral of payment of exit charge
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(a)
in a case where an exit charge payment plan has been entered
into in accordance with Schedule 3ZB in respect of the tax, the
time when the tax becomes payable under the plan, and
(b)
in any other case, the time when the tax becomes payable in
accordance with section 59D or 59E.”
5
      (3)
In subsection (2), for “the time when the amount of the tax is finally
determined” substitute “the relevant time”.
      (4)
After subsection (2) insert—
“(2A)
In subsection (2) the “relevant time” means—
(a)
in a case where an exit charge payment plan has been entered
10
into in accordance with Schedule 3ZB in respect of the tax, the
later of—
(i)
the first day after the period of 12 months beginning
immediately after the migration accounting period
(as defined in Part 1 or 2 of Schedule 3ZB, as the case
15
may be), and
(ii)
the date on which the tax is payable under the plan,
and
(b)
in any other case, the time when the amount of the tax is
finally determined.”
20
6
After Schedule 3ZA insert—
“Schedule 3ZB
Exit charge payment plans
Part 1
company ceasing to be resident in UK
25
Circumstances in which exit charge payment plan may be entered into
1     (1)
This Part of this Schedule and Part 3 of this Schedule apply where
an eligible company—
(a)
ceases to be resident in the United Kingdom,
(b)
on ceasing to be so resident, becomes resident in another
30
EEA state, and
(c)
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 an exit charge payment plan in
35
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.
      (4)
Condition A is that before the end of the period of 9 months
beginning immediately after the migration accounting period—
40
(a)
an application to enter into the exit charge payment plan is
made to Her Majesty’s Revenue and Customs, and

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Schedule 47 — Corporation tax: deferral of payment of exit charge
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(b)
the application contains details of all the matters which are
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.
5
      (6)
Condition C is that, on becoming resident in the other EEA state,
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—
10
“double taxation arrangements” means arrangements which
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;
15
“eligible company” means a company that has a right to
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.
20
      (8)
In this Part of this Schedule—
(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
25
(ii)
in a case not falling within sub-paragraph (i), the
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
30
(c)
references to Part 3 of this Schedule are to Part 3 of this
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
35
where—
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,
40
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
corporation tax for the period).
      (2)
The amount of qualifying corporation tax which the company is
45
liable to pay is the difference between CT1 and CT2.
      (3)
“Exit charge provisions” means—

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Schedule 47 — Corporation tax: deferral of payment of exit charge
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(a)
section 185 of the 1992 Act,
(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,
5
(d)
section 333 of that Act,
(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
10
of section 862(1)(c).
      (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
15
3     (1)
This paragraph applies for the purposes of this Part of this
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
20
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
25
2(3)(a), (b) or (c),
(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),
30
(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 2(3)(f) or (g),
and
35
(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 2(3)(a) or (b).
      (3)
In sub-paragraph (2)—
40
(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
section 881 of CTA 2009).
45

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Schedule 47 — Corporation tax: deferral of payment of exit charge
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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
where—
5
(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,
10
(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.
15
      (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
before the end of the period of 9 months beginning immediately
20
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
required by Part 3 of this Schedule to be specified in the
25
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
30
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—
35
(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
resident in a territory outside the European Economic Area
40
for the purposes of any double taxation arrangements.
      (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
45
company” have the meanings given in paragraph 1(7).

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Schedule 47 — Corporation tax: deferral of payment of exit charge
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      (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,
5
(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.
10
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
15
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
20
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.
25
      (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,
30
(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
35
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.
      (2)
“Exit charge assets” and “exit charge liabilities” means any PE
40
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
45
assets, in respect of which income, profits or gains arise by

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Schedule 47 — Corporation tax: deferral of payment of exit charge
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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
5
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
10
(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)—
15
(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).
20
Part 3
Entering into an exit charge payment plan
Introduction
7     (1)
As to when this Part of this Schedule applies, see—
(a)
Part 1 of this Schedule (companies ceasing to be resident in
25
the United Kingdom), and
(b)
Part 2 of this Schedule (companies with permanent
establishments 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
30
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
to which Part 2 of this Schedule applies, terms and expressions
which are used in this Part and in that Part have the same
35
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—
40
(a)
the 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,
45