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[AS AMENDED IN THE JOINT COMMITTEE] |
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restate, with minor changes, certain enactments relating to corporation tax; |
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and for connected purposes. |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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(1) | Part 2 of this Act contains basic provisions about the charge to corporation tax |
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(a) | the imposition of the charge to corporation tax on the income and |
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chargeable gains of companies (referred to collectively as “profits”), |
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(b) | the exclusion of income and chargeable gains subject to corporation tax |
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from income tax and capital gains tax (see sections 3 and 4), |
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(c) | provision about the territorial scope of the charge to corporation tax |
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(see section 5 and Chapter 4), |
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(d) | provision about how corporation tax is charged and assessed, in |
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particular its charging and assessment by reference to accounting |
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(e) | provision about accounting periods (see Chapter 2), and |
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(f) | rules for determining the residence of companies (see Chapter 3). |
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(2) | Under section 2(4) the charge to corporation tax on income has effect in |
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accordance with the provisions of the Corporation Tax Acts that deal with its |
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application, the main provisions of this Act that do so being— |
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(a) | Part 3 (trading income), |
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(b) | Part 4 (property income), |
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(c) | Parts 5 and 6 (profits arising from loan relationships), |
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(d) | Part 7 (profits arising from derivative contracts), |
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(e) | Part 8 (gains in respect of intangible fixed assets), |
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(f) | Part 9 (profits arising from disposals of know-how and sales of patent |
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(g) | Part 10 (miscellaneous income). |
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(3) | Part 7 also applies the charge to corporation tax on chargeable gains to certain |
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profits arising from derivative contracts. |
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(4) | Parts 5 to 8 also deal with how deficits or losses arising from, or in respect of, |
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the matters to which they relate are brought into account for corporation tax |
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(5) | The following Parts provide relief for particular types of expenditure— |
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(a) | Part 11 (relief for particular employee share acquisition schemes), |
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(b) | Part 12 (other relief for employee share acquisitions), |
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(c) | Part 13 (additional relief for expenditure on research and |
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(d) | Part 14 (remediation of contaminated land), and |
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(e) | Part 15 (film production). |
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(6) | The following Parts contain special rules for particular cases— |
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(a) | Part 15 (film production), |
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(b) | Part 16 (companies with investment business), |
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(c) | Part 17 (partnerships), and |
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(d) | Part 18 (unremittable income). |
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(7) | The following Parts contain provisions of general application— |
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(a) | Part 19 (general exemptions), |
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(b) | Part 20 (general calculation rules), and |
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(c) | Part 21 (other general provisions, including definitions for the purposes |
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(8) | For abbreviations and defined expressions used in this Act, see section 1312 |
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Charge to corporation tax: basic provisions |
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The charge to corporation tax |
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2 | Charge to corporation tax |
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(1) | Corporation tax is charged on profits of companies for any financial year for |
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which an Act so provides. |
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(2) | In this Part “profits” means income and chargeable gains, except in so far as the |
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context otherwise requires. |
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(3) | In this Act “the charge to corporation tax on income” means the charge under |
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subsection (1) so far as relating to income. |
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(4) | The charge to corporation tax on income has effect in accordance with the |
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provisions of the Corporation Tax Acts that deal with its application. |
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3 | Exclusion of charge to income tax |
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(1) | The provisions of the Income Tax Acts relating to the charge to income tax do |
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not apply to income of a company if— |
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(a) | the company is UK resident, or |
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(b) | the company is not UK resident and the income is within its chargeable |
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profits as defined by section 19. |
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(2) | Subsection (1) does not apply to income accruing to a company in a fiduciary |
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or representative capacity. |
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4 | Exclusion of charge to capital gains tax |
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Capital gains tax is not charged on gains accruing to a company in respect of |
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which the company is chargeable to corporation tax, or would be so chargeable |
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General scheme of corporation tax |
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5 | Territorial scope of charge |
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(1) | A UK resident company is chargeable to corporation tax on all its profits |
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(2) | A non-UK resident company is within the charge to corporation tax only if it |
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carries on a trade in the United Kingdom through a permanent establishment |
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(3) | A non-UK resident company which carries on a trade in the United Kingdom |
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through a permanent establishment in the United Kingdom is chargeable to |
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corporation tax on all its profits wherever arising that are chargeable profits as |
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defined in section 19 (profits attributable to its permanent establishment in the |
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(4) | Subsections (1) and (3) are subject to any exceptions provided for by the |
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6 | Profits accruing in fiduciary or representative capacity |
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(1) | A company is not chargeable to corporation tax on profits which accrue to it in |
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a fiduciary or representative capacity except as respects its own beneficial |
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interest (if any) in the profits. |
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(2) | The exception under subsection (1) from chargeability does not apply to profits |
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arising in the winding up of the company. |
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7 | Profits accruing under trusts |
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Profits that accrue for the benefit of a company under a trust are treated for the |
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purposes of the charge to corporation tax under section 2(1) as accruing |
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8 | How tax is charged and assessed |
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(1) | Corporation tax for a financial year is charged on profits arising in the year. |
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(2) | Corporation tax is calculated and chargeable, and assessments to corporation |
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tax are made, by reference to accounting periods. |
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(3) | Corporation tax which is assessed and charged for an accounting period of a |
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company is assessed and charged on the full amount of profits arising in the |
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(4) | Subsection (3) is subject to any contrary provision in the Corporation Tax Acts. |
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(5) | If a company’s accounting period falls within more than one financial year, the |
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amount of the profits arising in the accounting period that is chargeable to |
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corporation tax must be apportioned between the financial years in which the |
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9 | Beginning of accounting period |
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(1) | An accounting period of a company begins— |
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(a) | when the company comes within the charge to corporation tax, or |
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(b) | immediately after the end of the previous accounting period of the |
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company, if the company is still within the charge to corporation tax. |
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(2) | For the purposes of this section a UK resident company is treated as coming |
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within the charge to corporation tax when it starts to carry on business, if it |
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would not otherwise be within the charge to corporation tax. |
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(3) | If a chargeable gain or allowable loss accrues to a company at a time which is |
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not (ignoring this subsection) within an accounting period of the company— |
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(a) | an accounting period of the company begins at that time, and |
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(b) | the gain or loss accrues in that accounting period. |
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(4) | This section does not apply if section 12 (companies being wound up) applies. |
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(5) | This section is subject to any provision of the Corporation Tax Acts which |
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provides for an accounting period of a company to which this section applies |
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to begin at a different time. |
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10 | End of accounting period |
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(1) | An accounting period of a company comes to an end on the first occurrence of |
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(a) | the ending of 12 months from the beginning of the accounting period, |
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(b) | an accounting date of the company, |
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(c) | if there is a period for which the company does not make up accounts, |
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(d) | the company starting or ceasing to trade, |
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(e) | if the company carries on only one trade, coming, or ceasing to be, |
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within the charge to corporation tax in respect of that trade, |
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(f) | if the company carries on more than one trade, coming, or ceasing to be, |
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within the charge to corporation tax in respect of all the trades it carries |
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(g) | the company becoming, or ceasing to be, UK resident, |
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(h) | the company ceasing to be within the charge to corporation tax, |
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(i) | the company entering administration, and |
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(j) | the company ceasing to be in administration. |
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(2) | If subsection (1)(i) applies, the accounting period is treated as having ended |
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immediately before the day on which the company enters administration. |
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(3) | For the purposes of this section a company enters administration— |
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(a) | when it enters administration under Schedule B1 to the Insolvency Act |
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(b) | when it is subject to a corresponding procedure, other than one under |
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(4) | For the purposes of this section a company ceases to be in administration— |
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(a) | when it ceases to be in administration under Schedule B1 to the |
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(b) | when a corresponding event occurs, other than under that Act. |
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(5) | This section does not apply if section 12 (companies being wound up) applies. |
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(6) | This section is subject to any provision of the Corporation Tax Acts which |
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provides for an accounting period of a company to which this section applies |
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to end at a different time. |
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11 | Companies with more than one accounting date |
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(1) | This section applies if a company carrying on more than one trade— |
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(a) | does not have the same accounting date for each of the trades, and |
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(b) | does not make up general accounts for the whole of the company’s |
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(2) | The company may choose which of the accounting dates for the trades is to be |
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used for the purpose of section 10(1)(b). |
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(3) | But if an officer of Revenue and Customs thinks, on reasonable grounds, that |
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the date chosen by the company is inappropriate, the officer may give notice to |
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the company directing one of the other accounting dates to be used for that |
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12 | Companies being wound up |
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(1) | This section applies if a company is being wound up. |
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(2) | An accounting period of the company ends immediately before the winding |
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(3) | An accounting period of the company begins when the winding up starts. |
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(4) | After the winding up starts, an accounting period of the company ends— |
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(a) | at the end of the period of 12 months beginning on the first day of the |
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(b) | if earlier, when the winding up is completed. |
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(5) | After the winding up starts, an accounting period of the company begins |
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immediately after the end of the previous accounting period of the company, |
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if the winding up has not been completed. |
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(6) | This section is subject to any provision of the Corporation Tax Acts which |
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provides for an accounting period of a company to which this section applies |
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to begin or end at a different time. |
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(7) | For the purposes of this section a winding up of a company starts— |
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(a) | when the company passes a resolution for the winding up of the |
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(b) | when a petition for the winding up of the company is presented, if the |
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company has not already passed such a resolution and a winding up |
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order is made on the petition, or |
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(c) | when an act is done in relation to the company for a similar purpose, if |
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the winding up is not under the Insolvency Act 1986 (c. 45). |
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(1) | This Chapter contains rules for determining the residence of companies. |
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(2) | Section 14 gives the main rule for companies incorporated in the United |
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Kingdom (including SEs and SCEs incorporated in the United Kingdom). |
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(3) | Section 15 deals with companies which have been UK resident under the rules |
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of common law and provides for their continued residence when certain |
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(4) | Sections 16 and 17 deal with SEs and SCEs which transfer their registered office |
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(5) | Section 18 contains a special rule for companies treated as non-UK resident |
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under double taxation arrangements. |
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14 | Companies incorporated in the United Kingdom |
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(1) | A company which is incorporated in the United Kingdom is UK resident for |
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the purposes of the Corporation Tax Acts. |
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(2) | Accordingly, even if a different place of residence is given by a rule of law, the |
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company is not resident in that place for the purposes of the Corporation Tax |
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15 | Continuation of residence established under common law |
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(1) | This section applies to a company which is neither— |
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(a) | incorporated in the United Kingdom, nor |
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(b) | resident in the United Kingdom by virtue of section 16 or 17. |
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(a) | is no longer carrying on a business, and |
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(b) | was UK resident for the purposes of the Corporation Tax Acts |
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immediately before it ceased to carry on business, |
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| the company continues to be UK resident for the purposes of the Corporation |
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(a) | is being wound up outside the United Kingdom, and |
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(b) | was UK resident for the purposes of the Corporation Tax Acts |
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immediately before any of its activities came under the control of a |
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| the company continues to be UK resident for the purposes of the Corporation |
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(4) | In subsection (3) “foreign liquidator” means a person exercising functions |
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which, in the United Kingdom, would be exercisable by a liquidator. |
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16 | SEs which transfer registered office to the United Kingdom |
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(1) | This section applies to an SE which transfers its registered office to the United |
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Kingdom in accordance with Article 8 of Council Regulation (EC) No 2157/ |
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2001 on the Statute for a European company (Societas Europaea). |
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(2) | The SE is UK resident for the purposes of the Corporation Tax Acts from the |
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time of its registration in the United Kingdom. |
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(3) | Accordingly, even if a different place of residence is given by a rule of law, the |
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SE is not resident in that place for the purposes of the Corporation Tax Acts. |
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(4) | The SE does not cease to be UK resident merely because it later transfers its |
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registered office from the United Kingdom. |
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17 | SCEs which transfer registered office to the United Kingdom |
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(1) | This section applies to an SCE which transfers its registered office to the United |
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Kingdom in accordance with Article 7 of Council Regulation (EC) No 1435/ |
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2003 on the Statute for a European Cooperative Society (SCE). |
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(2) | The SCE is UK resident for the purposes of the Corporation Tax Acts from the |
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time of its registration in the United Kingdom. |
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(3) | Accordingly, even if a different place of residence is given by a rule of law, the |
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SCE is not resident in that place for the purposes of the Corporation Tax Acts. |
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(4) | The SCE does not cease to be UK resident merely because it later transfers its |
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registered office from the United Kingdom. |
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18 | Companies treated as non-UK resident under double taxation arrangements |
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(1) | This section applies to a company which is treated as— |
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(a) | resident in a territory outside the United Kingdom, and |
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| for the purposes of any double taxation arrangements. |
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