Finance (No. 3) Bill (HC Bill 282)

Extension of the review period

11 (1) In section 101 (HMRC review of charging notice)—

(a) in subsection (2) (meaning of “review period”) for “12 months”
substitute “15 months”, and

(b) 5in subsection (13) (events that bring the review period to an end
early) for “12 months” substitute “15 months”.

(2) The amendments made by this paragraph do not have effect in relation to a
review period that, but for the amendments, expires before 29 October 2018.

Extension of period for amendment of company tax return

12 10After section 101 insert—

“101A Amendment of CT return during review period: section 80 or 81 case

(1) This section applies where a charging notice is issued to a company
by reason of section 80 or 81 applying in relation to it for an
accounting period.

(2) 15At any time during the first 12 months of the review period, the
company may amend its company tax return for the accounting
period so as to reduce the taxable diverted profits arising to it in the
accounting period.

101B Amendment of CT return during review period: section 86 case

(1) 20This section applies where a charging notice is issued to a company
(“the foreign company”) by reason of section 86 applying in relation
to it for an accounting period.

(2) At any time during the first 12 months of the review period, the
avoided PE may amend a company tax return made by it so as to
25reduce the taxable diverted profits arising to the foreign company in
the accounting period.”

Section 22

SCHEDULE 7 Payment of CGT exit charges

CGT exit charge payment plans

1 30In TMA 1970, after section 59BA insert—

“59BB CGT exit charge payment plans

Schedule 3ZAA contains provision for the payment in instalments of
capital gains tax to which liability arises by virtue of section 25 or 80
of the 1992 Act.”

2 After Schedule 3ZA to TMA 1970 insert—

Section 59BB

““Schedule 3ZAA CGT exit charge payment plans

Introduction

1 (1) This Schedule makes provision for certain persons who are liable
5to pay an exit charge under section 25 or 80 of the 1992 Act to agree
with HMRC to pay the charge in instalments.

(2) An agreement under this Schedule is called a “CGT exit charge
payment plan”.

Eligibility

2 (1) 10This paragraph applies where a person resident in an EEA state
outside the United Kingdom is liable to pay an exit charge for a tax
year by virtue of section 25(1) or (3) of the 1992 Act (deemed
disposals by non-residents).

(2) The person is eligible to enter into a CGT exit charge payment plan
15in relation to any one or more of the assets to which the exit charge
relates if—

(a) at the time of the event giving rise to the exit charge, the
person had a right to freedom of establishment, or

(b) at any time after that event, the person carries on a trade in
20an EEA state other than the United Kingdom through a
branch or agency and the asset or assets is or are—

(i) used in or for the purposes of that trade, or

(ii) used or held for the purposes of the branch or
agency.

3 (1) 25This paragraph applies where the relevant trustees of a settlement
are liable to pay an exit charge for a tax year by virtue of section 80
of the 1992 Act (charge on ceasing to be resident in the UK).

(2) The relevant trustees are eligible to enter into a CGT exit charge
payment plan in relation to any one or more of the assets to which
30the exit charge relates if—

(a) at the time the trustees of the settlement ceased to be
resident in the United Kingdom for the purposes of that
section, they had a right to freedom of establishment,

(b) immediately before that time, the trustees of the settlement
35used the asset or assets for an economically significant
activity carried on in the United Kingdom, and

(c) immediately after that time, those trustees—

(i) become resident in another EEA state for the
purposes of the 1992 Act, and

(ii) 40use the asset or assets for an economically
significant activity carried on there.

Tax to which a plan relates

4 (1) A CGT exit charge payment plan may relate to—

(a) the whole of the exit charge attributable to the asset or
assets to which the plan relates (the “deferrable exit
5charge”), or

(b) only part of the deferrable exit charge.

(2) In this Schedule—

• “deferred exit charge” means the amount of the exit charge to
  which a plan relates;

• 10“taxpayer”, in relation to a plan, means the person eligible
  under paragraph 2 or 3 to enter into the plan.

(3) For the purposes of this Schedule the exit charge attributable to an
asset is such proportion of the exit charge as any gain accruing to
the taxpayer in respect of the asset by virtue of section 25(1) or (3)
15or 80 of the 1992 Act in the tax year bears to the total gains to which
the exit charge relates.

Payment by instalments

5 A CGT exit charge payment plan must provide for the deferred
exit charge to be payable in 6 equal instalments where—

(a) 20the 1st instalment is due on the day on which payment of
the exit charge is (apart from the plan) due and payable
under section 59B, and

(b) the other 5 instalments are due one on each of the first 5
anniversaries of that day.

25Entering into a plan

6 (1) To enter into a CGT exit charge payment plan, the taxpayer must
apply to HMRC.

(2) An application for a CGT exit charge payment plan must—

(a) be made on or before the date specified in section 59B as
30the date by which the exit charge is payable, and

(b) contain details of all the matters which are required by this
Schedule to be specified in the plan.

(3) A CGT exit charge payment plan is entered into when—

(a) the taxpayer agrees to pay the deferred exit charge, and
35any interest on it, in accordance with the plan, and

(b) an officer of Revenue and Customs agrees to accept
payment of the deferred exit charge in accordance with the
plan.

(4) A CGT exit charge payment plan is void if—

(a) 40an event giving rise to the exit charge is part of
arrangements the main purpose of which, or one of the
main purposes of which, is to defer the payment by the
taxpayer of the exit charge, or

(b) any information furnished by the taxpayer in connection
45with the plan does not fully and accurately disclose all

facts and considerations material to the decision of the
officer of Revenue and Customs to accept payment in
accordance with the plan.

Contents of a plan

7 (1) 5If the taxpayer is eligible under paragraph 2, a CGT exit charge
payment plan must specify—

(a) the EEA state in which the person entering into the plan is
resident, and

(b) if the person has ceased to carry on a trade in the United
10Kingdom through a branch or agency there, the date on
which the person ceased to do so.

(2) If the taxpayer is eligible under paragraph 3, a CGT exit charge
payment plan must specify—

(a) the date on which the trustees of the settlement became not
15resident in the United Kingdom for the purposes of section
80 of the 1992 Act, and

(b) the EEA state in which those trustees became resident.

(3) A CGT exit charge payment plan must specify—

(a) the amount of the exit charge which, in the taxpayer’s
20opinion, the taxpayer is liable to pay under section 25 or (as
the case may be) section 80 of the 1992 Act in respect of the
tax year, and

(b) the amount of the deferred exit charge.

(4) A CGT exit charge payment plan may contain appropriate
25provision regarding security for HMRC if an officer of Revenue
and Customs considers that there would be a serious risk to
collection of any amount of deferred exit charge without it.

Effect of a plan

8 (1) This paragraph applies where a CGT exit charge payment plan is
30entered into by the taxpayer.

(2) The deferred exit charge remains due and payable under section
59B (payment of income tax and capital gains tax: assessments
other than simple assessments).

(3) However, the Commissioners for Her Majesty’s Revenue and
35Customs—

(a) may not seek payment of any of the deferred exit charge
otherwise than in accordance with the plan, and

(b) may make repayments in respect of any of the deferred exit
charge paid, or any amount paid on account of the
40deferred exit charge, before the plan is entered into.

(4) The deferred exit charge carries interest in accordance with Part 9
as if the plan had not been entered into; and each time a payment
is made under the plan, it is to be paid together with any interest
payable on it.

(5) The taxpayer is liable to penalties for late payment of the deferred
exit charge only if the taxpayer fails to make payments in
accordance with the plan (see item 3B of the Table at the end of
paragraph 1 of Schedule 56 to the Finance Act 2009).

(6) 5Any of the deferred exit charge 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.

(7) If—

(a) the taxpayer becomes bankrupt under the law of England
10and Wales or Northern Ireland or the taxpayer’s estate is
sequestrated under the law of Scotland,

(b) an event corresponding to an event in paragraph (a) occurs
under the law of an EEA state outside the United
Kingdom, or

(c) 15the taxpayer becomes resident in a country or territory that
is not an EEA state,

the outstanding balance of the deferred exit charge is payable on
the date on which the next instalment would otherwise have been
due under the plan.

20Supplementary

9 If, for the purposes of any double taxation arrangements, a person
is treated at any time as resident in a territory other than an EEA
state, the person is also to be treated as resident there at that time
for the purposes of this Schedule.

10 25In this Schedule—

• “deferrable exit charge” has the meaning given by paragraph
  4(1)(a);

• “deferred exit charge” has the meaning given by paragraph
  4(2);

• 30“double taxation arrangements” means arrangements made
  by two or more territories with a view to affording relief
  from double taxation;

• “economically significant activity” has the meaning given by
  section 13A(4) of the 1992 Act (reading references to a
  35company as references to trustees);

• “exit charge” means—

  (a)

  for the purposes of paragraph 2, any amount of
  capital gains tax which a person is liable to pay for a
  tax year which the person would not be liable to pay
  40if gains arising by virtue of section 25 of the 1992 Act
  in the tax year were ignored;

  (b)

  for the purposes of paragraph 3, any amount of
  capital gains tax which the relevant trustees are liable
  to pay for a tax year which they would not be liable to
  45pay if gains arising by virtue of section 80 of the 1992
  Act in the tax year were ignored;

• “right to freedom of establishment” means a right protected
  by—

  Finance (No. 3) BillPage 225

  (a)

  Article 49 of the Treaty on the Functioning of the
  European Union, or

  (b)

  Article 31 of the EEA agreement;

• “taxpayer” has the meaning given by paragraph 4(2);

• 5“trade” includes a profession or vocation.”

Penalties

3 (1) Schedule 56 to FA 2009 (penalty for failure to make payments on time) is
amended as follows.

(2) In the Table at the end of paragraph 1, after entry 3A insert—

(3) In paragraph 3(1)(a), after “3” insert “, 3B”.

4 In section 107A of TMA 1970 (relevant trustees), in subsection (3)(c)(i), after
30“1,” insert “3B,”.

5 In paragraph 5(3) of Schedule 11 to F(No.3)A 2010 (penalties for failure to
make payments on time), omit “items 1, 3” in both places.

CT exit charge payment plans

6 (1) In sections 59FA, 109B and 109E of and Schedule 3ZB to TMA 1970
35(including any headings of, and in, those provisions)—

(a) for “an exit charge payment plan”, in each case it occurs, substitute
“a CT exit charge payment plan”,

(b) for “exit charge payment plan”, in each case where it occurs without
“an” before it, substitute “CT exit charge payment plan” (but this
40does not apply to paragraph 10(2A) or 11(1) of Schedule 3ZB to
TCGA 1992 as respectively inserted and substituted by Schedule 8 to
this Act), and

(c) for “exit charge payment plans” in each case it occurs, substitute “CT
exit charge payment plans”.

(2) 45In Schedule 56 to FA 2009 (penalties), in the Table at the end of paragraph 1,
in entry 6ZA, in the third column, for “an exit charge payment plan”
substitute “a CT exit charge payment plan”.

Commencement

7 The amendments made by paragraphs 1 and 2 have effect in relation to
amounts of capital gains tax which a person is liable to pay by virtue of
section 25(1) or (3) or 80 of TCGA 1992 in relation to events occurring on or
5after 6 April 2019.

Section 23

SCHEDULE 8 Corporation tax exit charges

Part 1 CT exit charge payment plans

1 10Schedule 3ZB to TMA 1970 (CT exit charge payment plans) is amended as
follows.

2 In paragraph 1 (circumstances in which plan may be entered into: company
ceasing to be resident in UK)—

(a) in subparagraph (1)(b) for “another” substitute “a relevant”,

(b) 15in subparagraph (5) for “an” substitute “a relevant”,

(c) in subparagraph (6) for “other” substitute “relevant”, and

(d) in subparagraph (7) at the end insert “;

• “relevant EEA state” means an EEA state that is—

  (a)

  a member of the European Union, or

  (b)

  20a party to an agreement with the United
  Kingdom that provides for mutual assistance
  equivalent to that provided for by Council
  Directive 2010/24/EU of 16 March 2010
  concerning mutual assistance for the recovery
  25of claims relating to taxes.”

3 (1) Paragraph 4 (circumstances in which plan may be entered into: non-UK
resident companies with UK permanent establishments) is amended as
follows.

(2) In subparagraph (4) (meaning of “PE qualifying event”)—

(a) 30omit “and” at the end of paragraph (b), and

(b) after paragraph (c) insert “, and

(d) immediately after the event—

(i) the asset or liability is held or owed by the
company for the purposes of a permanent
35establishment of the company in a relevant
EEA state, or

(ii) the asset or liability is held or owed by the
company otherwise than for the purposes of a
permanent establishment of the company and
40the company is resident in a relevant EEA
state.”

(3) In subparagraph (6)—

(a) for “and” substitute “,”, and

(b) after ““eligible company”” insert “and “relevant EEA state””.

4 In paragraph 8(1) (entering into a plan)—

(a) in paragraph (a) for the words from “the standard” to the end
5substitute “paragraphs 11 to 14”, and

(b) in paragraph (c) for “paragraphs 10 to 12” substitute “paragraph 10”.

5 (1) Paragraph 10 (contents of plan) is amended as follows.

(2) In subparagraph (1)(b) before “EEA state” insert “relevant”.

(3) After subparagraph (2) insert—

“(2A) 10In either case a CT exit charge payment plan entered into by a
company must specify requirements as to the ongoing provision
of information by the company to Her Majesty’s Revenue and
Customs in relation to the exit charge assets and liabilities.”

(4) In subparagraph (3) for paragraph (c) substitute—

“(c) 15the amount of ECPP tax attributable to each exit charge
asset or liability.”

(5) Omit subparagraphs (4) and (5).

6 For paragraphs 11 to 17, and the italic heading before those paragraphs,
substitute—

20““The payment method

11 (1) Where a CT exit charge payment plan is entered into the ECPP tax
is due 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 end of the
25migration accounting period, and

(b) the other 5 instalments are due one on each of the first 5
anniversaries of that day.

(2) But see paragraphs 12, 13 and 14 for circumstances in which all or
part of the outstanding balance of the ECPP tax becomes due
30otherwise than by those instalments.

All of outstanding balance due

12 (1) Where an event mentioned in subparagraph (2) occurs, the
outstanding balance of the ECPP tax is due on the date on which
the next instalment of that tax would otherwise have been due.

(2) 35The events are—

(a) the company becoming insolvent or entering
administration,

(b) the appointment of a liquidator,

(c) an event under the law of a country or territory outside the
40United Kingdom corresponding to an event specified in
paragraph (a) or (b),

(d) the company ceasing to be resident in a relevant EEA state
and, on so ceasing, not becoming resident in another
relevant EEA state, or

(e) the company failing to pay any amount of the ECPP tax for
5a period of 12 months after the date on which the amount
becomes due.

All of outstanding balance attributable to particular exit charge asset or liability due

13 (1) This paragraph applies where—

(a) a trigger event occurs in relation to an exit charge asset or
10liability during the instalments period, and

(b) a trigger event has not previously occurred in relation to
that asset or liability during that period.

(2) A trigger event occurs in relation to a TCGA or trading stock exit
charge asset or an intangible exit charge asset if the company—

(a) 15disposes of the asset, or

(b) ceases to hold the asset for the purposes of a business
carried on by the company in a relevant EEA state and, on
so ceasing, does not begin to hold it for the purposes of
another such business.

(3) 20A trigger event occurs in relation to a financial exit charge asset or
liability if the company—

(a) ceases to be a party to the loan relationship or derivative
contract in question, or

(b) ceases to be a party to the loan relationship or derivative
25contract in question for the purposes of a business carried
on by the company in a relevant EEA state and, on so
ceasing, does not begin to be a party to it for the purposes
of another such business.

(4) On the occurrence of the trigger event an amount of the ECPP tax
30is due.

(5) The amount due is—

(6) In this paragraph and paragraph 14 “the instalments period”
means the period—

(a) beginning immediately after—

(i) 45the 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
respects of the asset or liability concerned (in the
case of a Part 2 company), and

(b) ending with the day on which the final instalment of the
5ECPP tax is due under paragraph 11.

Part of outstanding balance attributable to particular exit charge asset or liability due

14 (1) This paragraph applies if—

(a) a partial trigger event occurs in relation to an exit charge
asset or liability during the instalments period, and

(b) 10a trigger event has not previously occurred in relation to
that asset or liability during that period.

(2) A partial trigger event occurs in relation to a TCGA or trading
stock exit charge asset if the company disposes of part (but not all)
of the asset.

(3) 15A partial trigger event occurs in relation to a financial exit charge
asset or liability if there is a disposal of a right or liability under the
loan relationship or derivative contract in question which
amounts to a related transaction (as defined in section 304 or 596
of CTA 2009 as the case may be).

(4) 20A partial trigger event occurs in relation to an intangible exit
charge asset if there is a transaction which results in a reduction in
the accounting value of the asset but not in the asset ceasing to be
recognised in the company’s balance sheet.

(5) On the occurrence of the partial trigger event an amount of the
25outstanding ECPP tax is due.

(6) The amount due is the amount that is just and reasonable having
regard to the amount that would have been due had a trigger
event occurred in relation to the exit charge asset or liability
instead.

(7) 30In this paragraph “trigger event” has the same meaning as in
paragraph 13.”

7 In Schedule 56 to FA 2009 (penalty for failure to make payments on time) in
paragraph 4 (amount of penalty in respect of certain late payments) in
subparagraph (1) for “item 5, 6 or 6ZZA” substitute “any of items 5 to 6ZA”.

8 35The amendments made by paragraphs 1 to 6 have effect in relation to
accounting periods ending on or after 1 January 2020.

Part 2 Repeal of certain postponement provisions

9 (1) Section 187 of TCGA 1992 (postponement of charge on deemed disposal
40under section 185) is repealed.