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

606

 

(b)   

the 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

5

mentioned 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

10

of 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

15

accurately 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

20

entered 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

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(b)   

the 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

30

the 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

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(b)   

each 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

40

paragraph 1 of Schedule 56 to the Finance Act 2009).

      (5)  

Qualifying 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.

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

607

 

Content of exit charge payment plan

10    (1)  

An 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

5

(b)   

the EEA state in which the company has become resident.

      (2)  

An 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

10

Kingdom through a permanent establishment there, the

date 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

15

company’s opinion, is payable by it in respect of the

migration 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

20

(c)   

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

(i)   

the standard instalment method (see paragraph

13),

(ii)   

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

(iii)   

a combination of the two methods.

25

      (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

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),

30

the method in accordance with which the amount of ECPP

tax 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.

35

      (5)  

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

to 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

40

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

45

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.

 
 

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

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      (6)  

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

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

5

period by virtue of the relevant exit charge provision

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

10

charge provisions only, and

   

“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

15

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)   

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

20

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.

Content: additional information relating to assets and liabilities

25

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

paragraph in relation to the asset or liability.

30

      (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

35

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

remaining useful life of the asset for accountancy purposes is less

40

than 10 years.

 
 

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

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      (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).

The standard instalment method

13    (1)  

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

5

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

the standard instalment method is payable in 6 instalments of

equal amounts as follows—

10

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

anniversaries of that day.

15

      (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

tax would otherwise have been due under the plan.

      (4)  

A “relevant event” means—

20

(a)   

the company becoming insolvent or entering into

administration,

(b)   

the appointment of a liquidator,

(c)   

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

Kingdom corresponding to an event specified in

25

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.

The realisation method: TCGA or trading stock exit charge assets

14    (1)  

This paragraph applies if—

30

(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

(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).

35

      (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—

(a)   

the disposal of that asset at any time after—

(i)   

the company ceases to be resident in the United

40

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

accounting period, or

45

(c)   

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

 
 

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

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      (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

(b)   

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

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

5

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

accounting period.

      (5)  

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

10

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

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

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

15

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.

The realisation method: other exit charge assets and liabilities

15    (1)  

This paragraph applies if—

20

(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

(b)   

the asset or liability is—

(i)   

a financial exit charge asset or liability, or

25

(ii)   

an intangible exit charge asset,

   

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

may 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

30

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

in relation to the asset or liability by virtue of paragraph

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

35

(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

40

(b)   

the other instalments are due one on each of the

subsequent 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

45

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

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

 
 

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

611

 

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

5

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)),

10

           

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

15

(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—

20

(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.

25

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

30

(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

35

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).

40

      (4)  

For 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

45

which amounts to a related transaction (as defined

 
 

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

612

 

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

5

(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

10

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

15

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

20

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)—

25

(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

30

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,

35

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

 
 

 
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