Finance Bill (HL Bill 123)

continued    Part 3 continued    

(3)In this Schedule “deferred tax”, in relation to a CT payment plan,
means the qualifying corporation tax to which the plan relates.

Application to enter a CT payment plan

5A company that is liable to pay qualifying corporation tax for an
5accounting period may enter into a CT payment plan in respect of
the tax only if—

(a)an application to enter into the plan is made to HMRC
before the end of the period of 9 months beginning
immediately after the accounting period, and

(b)10the application contains details of all the matters which are
required by paragraph 7 to be specified in the plan.

Entering into a CT payment plan

6 (1) A company enters into a CT payment plan if—

(a)the company agrees to pay, and an officer of Revenue and
15Customs agrees to accept payment of, the deferred tax in
accordance with paragraphs 9 to 12,

(b)the company agrees to pay interest on the deferred tax in
accordance with paragraph 8(3) and (5), and

(c)the plan meets the requirements of paragraph 7 as to the
20matters that must be specified in it.

(2)The CT payment plan may, in the circumstances mentioned in
sub-paragraph (3), contain appropriate provision regarding
security for HMRC in respect of the payment of the deferred tax.

(3)Those circumstances are where an officer of Revenue and
25Customs considers that agreeing to accept payment of the
deferred tax in accordance with paragraphs 9 to 12 would present
a serious risk as to collection of the tax in the absence of provision
regarding security in respect of its payment.

(4)A CT payment plan is void if any information furnished by the
30company in connection with 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 of the deferred
tax in accordance with paragraphs 9 to 12.

Content of CT payment plan

7 (1) 35A CT payment plan entered into by a company must—

(a)specify the accounting period to which the plan relates
(“the accounting period concerned”),

(b)specify the amount of qualifying corporation tax which, in
the company’s opinion, is payable by it in respect of the
40accounting period concerned,

(c)specify the amount of the deferred tax,

(d)identify each qualifying transaction of the company in
respect of which gains or credits arose in the accounting
period concerned, and

(e)specify in relation to each of those qualifying
transactions—

(i)the name of the transferee,

(ii)the EEA state in which the transferee was resident
5at the time of the transaction, and

(iii)the amount of the deferred tax that is attributable to
the transaction.

(2)The amount of the deferred tax that is attributable to a qualifying
transaction of the company in respect of which a gain or credit
10arose in the accounting period concerned is—

where—

• A is the gain or credit that arose in the accounting period
  concerned in respect of the qualifying transaction,

• 15B is the total gains or credits that arose in the accounting
  period concerned in respect of all qualifying transactions
  of the company,

• T is the amount of the deferred tax.

Effect of CT payment plan

8 (1) 20This paragraph applies where a CT payment plan is entered into
by a company in accordance with this Schedule.

(2)As regards when the deferred tax is payable—

(a)the CT payment plan does not prevent the deferred tax
becoming due and payable under section 59D or 59E, but

(b)25the Commissioners for Her Majesty’s Revenue and
Customs—

(i)may not seek payment of the deferred tax
otherwise than in accordance with paragraphs 9 to
12;

(ii)30may make repayments in respect of any amount of
the deferred tax paid, or any amount paid on
account of the deferred tax, before the CT payment
plan is entered into.

(3)As regards interest—

(a)35the deferred tax carries interest in accordance with Part 9
as if the CT payment plan had not been entered into, and

(b)each time a payment is made in accordance with
paragraphs 9 to 12, it is to be paid together with any
interest payable on it.

(4)40As regards penalties, the company will be liable to penalties for
late payment of the deferred tax only if it fails to make payments
in accordance with paragraphs 9 to 12 (see item 6ZAA of the Table
at the end of paragraph 1 of Schedule 56 to the Finance Act 2009).

(5)Any of the deferred tax which is for the time being unpaid may be
45paid at any time before it becomes payable under paragraphs 9 to
12 together with interest payable on it to the date of payment.

The payment method: instalments

9 (1) Where a CT payment plan is entered into by a company, the
deferred tax is due in 6 instalments of equal amounts as follows—

(a)the first instalment is due on the first day after the period
5of 9 months beginning immediately after the end of the
accounting period to which the plan relates, and

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

(2)But see paragraphs 10 to 12 for circumstances in which all or part
10of the outstanding balance of the deferred tax becomes due
otherwise than by those instalments.

The payment method: all of outstanding balance due

10 (1) Where at any time after a CT payment plan is entered into by a
company an event mentioned in sub-paragraph (2) occurs the
15outstanding balance of the deferred tax is due on the date on
which the next instalment of that tax would otherwise be due.

(2)The events are—

(a)the company becoming insolvent or entering
administration;

(b)20the appointment of a liquidator in respect of the company;

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

(d)the company failing to pay any amount of the deferred tax
25for a period of 12 months after the date on which the
amount becomes due;

(e)the company ceasing to be within the charge to corporation
tax.

All of outstanding balance attributable to particular qualifying transaction due

11 (1) 30This paragraph applies where—

(a)a CT payment plan is entered into by a company,

(b)during the instalments period a trigger event occurs in
relation to a qualifying transaction identified in the plan,
and

(c)35a trigger event has not previously occurred in relation to
that qualifying transaction during the instalments period.

(2)A trigger event occurs in relation to a qualifying transaction if the
transferee ceases to be resident in an EEA state and, on so ceasing,
does not become resident another EEA state.

(3)40A trigger event occurs in relation to a qualifying transaction if the
company and the transferee cease to be members of the same
group as one another.

(4)A trigger event occurs in relation to a qualifying transaction
within sub-paragraph (2) or (5) of paragraph 3 if the transferee
45disposes of the asset that is the subject of the transaction.

(5)A trigger event occurs in relation to a qualifying transaction
within sub-paragraph (3) or (4) of paragraph 3 if the transferee
ceases to be a party to the loan relationship or derivative contract
concerned.

(6)5On the occurrence of the trigger event an amount of the deferred
tax is due.

(7)The amount due is—

where—

• 10“A” is the amount of the deferred tax that is attributable to the
  qualifying transaction (see paragraph 7(2)),

• “B” is the amount of the deferred tax that has previously
  become due under paragraph 12 by reason of a partial
  trigger event occurring in relation to the qualifying
  15transaction,

• “O” is the amount of the deferred tax that is outstanding at
  the time of the trigger event, and

• “T” is the amount of the deferred tax.

(8)In this paragraph “the instalments period” means the period—

(a)20beginning with the time the CT payment plan is entered
into, and

(b)ending with the day on which the final instalment of the
deferred tax is due under paragraph 9.

Part of outstanding balance attributable to particular qualifying transaction due

12 (1) 25This paragraph applies where—

(a)a CT payment plan is entered into by a company,

(b)during the instalments period a partial trigger event occurs
in relation to a qualifying transaction listed in the plan, and

(c)a trigger event has not previously occurred in relation to
30that qualifying transaction during the instalments period.

(2)A partial trigger event occurs in relation to a qualifying
transaction within sub-paragraph (2) of paragraph 3 if the
transferee disposes of part (but not all) of the asset that is the
subject of the transaction.

35Section 21(2)(b) of TCGA 1992 (meaning of part disposal of an
asset) applies for the purposes of this sub-paragraph as it applies
for the purposes of that Act.

(3)A partial trigger event occurs in relation to a qualifying
transaction within sub-paragraph (3) or (4) of paragraph 3 if there
40is a disposal by the transferee of a right or liability under the loan
relationship or derivative contract concerned which amounts to a
related transaction (as defined in section 304 or 596 of CTA 2009 as
the case may be).

(4)A partial trigger event occurs in relation to a qualifying
45transaction within sub-paragraph (5) of paragraph 3 if the
transferee enters into a subsequent transaction which results in a

reduction in the accounting value of the intangible fixed asset that
is the subject of the qualifying transaction but does not result in the
intangible fixed asset ceasing to be recognised in the transferee’s
balance sheet.

(5)5In relation to an intangible fixed asset that has no balance sheet
value (or no longer has a balance sheet value) sub-paragraph (4)
applies as if, immediately before the subsequent transaction, it did
have a balance sheet value.

(6)On the occurrence of the partial trigger event an amount of the
10deferred tax is due.

(7)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 qualifying transaction instead.

(8)In this paragraph “the instalments period” and “trigger event”
15have the same meaning as in paragraph 11.”

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 6ZA insert—

(3)In paragraph 4 (amount of penalty in respect of certain late payments) in
sub-paragraph (1) for “6ZA” substitute “6ZAA”.

35Commencement

4(1)The amendments made by this Schedule—

(a)have effect in relation to accounting periods ending on or after 10
October 2018, and

(b)are to be treated as having come into force on 11 July 2019.

(2)40The condition for entering into a CT payment plan that is specified in
paragraph (a) of paragraph 5 of Schedule 3ZC to TMA 1970 is to be treated
as met if an application to enter into the plan is made to HMRC on or before
30 June 2020.

Power of repeal

5(1)The Treasury may by regulations—

(a)repeal section 59FB of TMA 1970,

(b)repeal Schedule 3ZC to TMA 1970, and

(c)5amend Schedule 56 to FA 2009 in consequence of those repeals.

(2)Regulations under this paragraph may contain savings and transitional
provisions.

(3)Regulations under this paragraph are to be made by statutory instrument.

(4)A statutory instrument containing regulations under this paragraph is
10subject to annulment in pursuance of a resolution of the House of Commons.

Section 56

Schedule 8 Digital services tax: returns, enquiries, assessments and appeals

Part 1 Introduction

1(1)15References in this Schedule—

(a)to the delivery of a DST return are to the delivery of a return by the
responsible member for an accounting period where the return
complies with the requirements of paragraph 2(2);

(b)to the filing date, in relation to a DST return, are to the last day of the
20period within which the return must be delivered.

(2)In this Schedule—

• “relevant person” has the same meaning as in section 47;

• “tax” means digital services tax;

• “tribunal” means the First-tier Tribunal, or where determined by or
  25under Tribunal Procedure Rules, the Upper Tribunal.

Part 2 DST returns

DST returns

2(1)A DST return for an accounting period must be delivered before the end of
30one year from the end of the accounting period.

(2)A DST return must—

(a)be in the specified form,

(b)contain specified information,

(c)contain an assessment (“a self-assessment”) of the amount of tax
35payable by the group for the accounting period (including a
breakdown showing the amount of tax payable by each relevant
person), and

(d)contain a declaration by the person making the return that the return
is, to the best of the person’s knowledge, correct and complete.

(3)In this paragraph “specified” means specified in a notice published by
HMRC.

5Amendment of return by responsible member

3(1)This paragraph applies where a DST return has been delivered.

(2)The responsible member may amend the DST return by notice to HMRC.

(3)The notice must—

(a)be in the specified form, and

(b)10contain specified information.

(4)In this paragraph “specified” means specified in a notice published by
HMRC.

(5)No amendment may be made under this paragraph more than 12 months
after the filing date.

15Part 3 Duty to keep and preserve records

Duty to keep and preserve records

4(1)This paragraph applies in relation to a group for an accounting period if the
responsible member is required by section 56 to deliver a DST return for that
20period.

(2)The responsible member must—

(a)keep such records as may be needed to enable it to deliver a correct
and complete DST return, and

(b)preserve those records in accordance with this paragraph.

(3)25The records must be preserved until the end of the relevant day.

(4)In this paragraph “the relevant day” means—

(a)the sixth anniversary of the last day of the accounting period, or

(b)such earlier day as may be specified (and different days may be
specified for different cases).

(5)30In this paragraph “specified” means specified in a notice published by
HMRC.

Preservation of information etc

5The duty under paragraph 4 to preserve records may be satisfied—

(a)by preserving them in any form and by any means, or

(b)35by preserving the information contained in them in any form and by
any means,

subject to any conditions or exceptions specified in a notice published by
HMRC.

Part 4 Enquiry into return

Notice of enquiry

6(1)An officer of Revenue and Customs may enquire into a DST return if, within
5the time allowed, the officer gives notice to the responsible member of the
officer’s intention to do so.

(2)The time allowed is—

(a)if the return was delivered on or before the filing date, up to the end
of the period of 12 months after the filing date;

(b)10if the return was delivered after the filing date, up to and including
the quarter day next following the first anniversary of the day on
which the return was delivered;

(c)if the return is amended under paragraph 3, up to and including the
quarter day next following the first anniversary of the day on which
15the return was amended.

The quarter days are the 31 January, 30 April, 31 July and 31 October.

(3)A return that has been the subject of one notice of enquiry may not be the
subject of another, except one given in consequence of an amendment (or
another amendment) of the return under paragraph 3.

(4)20A notice under this paragraph is referred to as a “notice of enquiry”.

Scope of enquiry

7(1)An enquiry extends to anything contained in the return, or required to be
contained in the return, including anything that relates—

(a)to the question of whether tax is chargeable in respect of the
25accounting period, or

(b)to the amount of tax so chargeable.

This is subject to the following exception.

(2)If the notice of enquiry is given as a result of an amendment of the return
under paragraph 3—

(a)30at a time when it is no longer possible to give notice of enquiry under
paragraph 6(2)(a) or (b), or

(b)after an enquiry into a return has been completed,

the enquiry into the return is limited to matters to which the amendment
relates or that are affected by the amendment.

35Amendment of self-assessment during enquiry to prevent loss of tax

8(1)If at a time when an enquiry is in progress into a DST return an officer of
Revenue and Customs forms the opinion—

(a)that the amount stated in the self-assessment contained in the return
as the amount of tax payable is insufficient, and

(b)40that unless the assessment is immediately amended there is likely to
be a loss of tax to the Crown,

the officer may by notice in writing to the responsible member amend the
assessment to make good the deficiency.

(2)In the case of an enquiry that under paragraph 7(2) is limited to matters
arising from an amendment of the return, sub-paragraph (1) applies only so
far as the deficiency is attributable to the amendment.

(3)For the purposes of this paragraph the period during which an enquiry is in
5progress is the whole of the period—

(a)beginning with the day on which notice of enquiry is given, and

(b)ending with the day on which the enquiry is completed.

Amendment of return by responsible member during enquiry

9(1)This paragraph applies if a DST return is amended under paragraph 3 at a
10time when an enquiry is in progress into the return.

(2)The amendment does not restrict the scope of the enquiry but may be taken
into account (together with any matters arising) in the enquiry.

(3)While the enquiry is in progress, so far as the amendment affects the amount
stated in the self-assessment as the amount of tax payable, the amendment
15does not take effect in relation to any matter to which it relates or which is
affected by it.

(4)An amendment whose effect is deferred under sub-paragraph (3) takes
effect as follows—

(a)if the conclusions in a closure notice state either—

(i)20that the amendment was not taken into account in the
enquiry, or

(ii)that no amendment of the return is required arising from the
enquiry,

the amendment takes effect when the closure notice is issued (see
25paragraph 14);

(b)in any other case, the amendment takes effect as part of the
amendments made by the closure notice.

(5)For the purposes of this paragraph the period during which an enquiry is in
progress is the whole of the period—

(a)30beginning with the day on which notice of enquiry is given, and

(b)ending with the day on which the enquiry is completed.

Referral of questions to the tribunal during enquiry

10(1)At any time when an enquiry is in progress into a DST return any question
arising in connection with the subject-matter of the enquiry may be referred
35to the tribunal for determination.

(2)Notice of referral must be given to the tribunal, jointly by the responsible
member and an officer of Revenue and Customs.

(3)More than one notice of referral may be given under this paragraph in
relation to an enquiry.

(4)40For the purposes of this paragraph the period during which an enquiry is in
progress is the whole of the period—

(a)beginning with the day on which notice of enquiry is given, and

(b)ending with the day on which the enquiry is completed.

Withdrawal of notice of referral

11An officer of Revenue and Customs or the responsible member may
withdraw a notice of referral under paragraph 10.

Effect of referral on enquiry

12(1)5While proceedings on a referral under paragraph 10 are in progress in
relation to an enquiry—

(a)no closure notice may be given in relation to the enquiry (see
paragraph 14), and

(b)no application may be made for a direction to give such a notice.

(2)10For the purposes of this paragraph proceedings on a referral are in progress
where—

(a)notice of referral has been given,

(b)the notice has not been withdrawn, and

(c)the questions referred have not been finally determined.

(3)15For the purposes of sub-paragraph (2)(c) a question referred is finally
determined when—

(a)it has been determined by the tribunal, and

(b)there is no further possibility of the determination being varied or set
aside (disregarding any power to grant permission to appeal out of
20time).

Effect of determination

13(1)The determination of a question referred to the tribunal under paragraph 10
is binding on the parties to the referral in the same way, and to the same
extent, as a decision on a preliminary issue in an appeal.

(2)25The determination must be taken into account by an officer of Revenue and
Customs—

(a)in reaching the officer’s conclusions on the enquiry, and

(b)in formulating any amendments of the return required to give effect
to those conclusions.

(3)30The question determined may not be reopened on an appeal, except to the
extent that it could be reopened if it had been determined as a preliminary
issue in that appeal.

Completion of enquiry

14(1)An enquiry is completed when an officer of Revenue and Customs by notice
35(a “closure notice”) informs the responsible member that the enquiry is
complete and states the conclusions reached in the enquiry.

(2)A closure notice must either—

(a)state that in the opinion of an officer of Revenue and Customs no
amendment of the return is required, or

(b)40make the amendments of the return required to give effect to the
conclusions stated in the notice.

(3)A closure notice takes effect when it is issued.