Corporation Tax Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 22 — Miscellaneous provisions
Chapter 6 — Collection etc of tax from UK representatives of non-UK resident companies
478

970
Obligations and liabilities in relation to corporation tax
(1)
The obligations and liabilities of a non-UK resident company are to be treated,
for the purposes of the enactments to which this Chapter applies, as if they
were also the obligations and liabilities of its UK representative.
(2)
Subsection (3) applies if—
5
(a)
the UK representative of a non-UK resident company discharges an
obligation or liability that corresponds to one to which the non-UK
resident company is subject, or
(b)
a non-UK resident company discharges an obligation or liability that
corresponds to one to which its UK representative is subject.
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(3)
The corresponding obligation or liability—
(a)
of the non-UK resident company (in a case within subsection (2)(a)), or
(b)
of the UK representative (in a case within subsection (2)(b)),

is discharged.
(4)
A non-UK resident company is bound, as if they were its own, by acts or
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omissions of its UK representative in the discharge of the obligations and
liabilities imposed on the UK representative by this section.
(5)
This section is subject to section 971.
971
Exceptions
(1)
An obligation or liability attaching to a non-UK resident company by reason of
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its having been given or served with a notice or other document does not also
attach to its UK representative by virtue of section 970 unless the notice or
other document (or a copy of it) has been given to or served on the
representative.
(2)
An obligation or liability attaching to a non-UK resident company by reason of
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its having received a request or demand does not also attach to its UK
representative by virtue of section 970 unless the representative has been
notified of the request or demand.
(3)
A non-UK resident company is not bound by mistakes in information provided
by its UK representative in pursuance of an obligation imposed on the
30
representative by section 970 unless—
(a)
the mistake is the result of an act or omission of the company, or
(b)
the mistake is one to which the company consented or in which it
connived.
(4)
The UK representative of a non-UK resident company is not by virtue of
35
section 970 liable to be proceeded against for a criminal offence unless the
representative—
(a)
committed the offence, or
(b)
consented to or connived in its commission.
972
Interpretation of Chapter
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(1)
In this Chapter—
“enactment” includes an enactment contained in subordinate legislation
within the meaning of the Interpretation Act 1978, and

Corporation Tax Bill
Part 22 — Miscellaneous provisions
Chapter 7 — Recovery of unpaid corporation tax due from non-UK resident company
479

“information” includes anything contained in a return, self-assessment,
account, statement or report required to be provided to the
Commissioners for Her Majesty’s Revenue and Customs or to any
officer of Revenue and Customs.
(2)
In this Chapter references to carrying on a trade include holding an office.
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Chapter 7
Recovery of unpaid corporation tax due from non-UK resident company
973
Introduction to Chapter
(1)
This Chapter enables unpaid corporation tax due from a non-UK resident
company to be recovered from a related company.
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(2)
See also Chapter 6 of Part 14 (recovery of unpaid corporation tax from a linked
person in some cases where there is a change in the ownership of a company).
(3)
In subsection (1) and the following provisions of this Chapter, “company”
means any body corporate.
(4)
For the meaning of “related company”, see section 976.
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974
Case in which this Chapter applies
(1)
This Chapter applies if—
(a)
an amount of corporation tax has been assessed on a company for an
accounting period,
(b)
the whole or any part of that amount is unpaid at the end of the period
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of 6 months after the time when it became payable, and
(c)
the company is non-UK resident.
(2)
In this Chapter “the taxpayer company” means the company mentioned in
subsection (1).
975
Meaning of “the relevant period”
25
In this Chapter “the relevant period”, in relation to an amount of unpaid
corporation tax for an accounting period of the taxpayer company, means the
period—
(a)
beginning 12 months before the start of the accounting period, and
(b)
ending when the unpaid tax became payable.
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976
Meaning of “related company”
(1)
A company is a “related company”, for the purposes of this Chapter, if, at any
time in the relevant period, it was a member—
(a)
of the same group as the taxpayer company,
(b)
of a consortium which at that time owned the taxpayer company, or
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(c)
of the same group as a company which at that time was a member of a
consortium owning the taxpayer company.
(2)
For the purposes of subsection (1)(a), two companies are members of the same
group if—

Corporation Tax Bill
Part 22 — Miscellaneous provisions
Chapter 7 — Recovery of unpaid corporation tax due from non-UK resident company
480

(a)
one is the 51% subsidiary of the other, or
(b)
both are 51% subsidiaries of a third company.
(3)
For the purposes of subsection (1)(c), two companies are members of the same
group if they are members of the same group of companies within the meaning
of Part 5 (group relief).
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(4)
For the purposes of this Chapter—
(a)
a company is a member of a consortium if it is a member of a
consortium within the meaning of Part 5, and
(b)
a company is owned by a consortium if it is owned by a consortium
within the meaning of that Part.
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977
Notice requiring payment of unpaid tax
(1)
An officer of Revenue and Customs may serve a notice on a related company
requiring it, within 30 days of the service of the notice, to pay—
(a)
in a case which is not a consortium case, the amount of the unpaid tax,
or
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(b)
in a consortium case, the proportion of that amount found under
section 979.
(2)
The notice must state—
(a)
the amount of corporation tax assessed on the taxpayer company for
the accounting period in question that remains unpaid,
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(b)
the date when it first became payable, and
(c)
the amount which is to be paid by the company on which the notice is
served.
(3)
The notice has effect—
(a)
for the purposes of the recovery from that company of the amount
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required to be paid and of interest on that amount, and
(b)
for the purposes of appeals,

as if it were a notice of assessment and that amount were an amount of tax due
from that company.
(4)
In this Chapter “consortium case” means a case where the related company is
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not within section 976(1)(a).
978
Time limit for giving notice
(1)
A notice under this Chapter must be served before the end of the period of 3
years beginning with the date when the liability of the taxpayer company to
corporation tax for the accounting period in question is finally determined.
35
(2)
If the unpaid tax is charged as a result of a determination under paragraph 36
or 37 of Schedule 18 to FA 1998 (determination where no return delivered or
return incomplete), the date mentioned in subsection (1) is taken to be the date
when the determination is made.
(3)
If the unpaid tax is charged in a self-assessment, the date mentioned in
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subsection (1) is taken to be the latest of—
(a)
the last date when notice of enquiry may be given into the return
containing the self-assessment,
(b)
if notice of enquiry is given, 30 days after the enquiry is completed,

Corporation Tax Bill
Part 22 — Miscellaneous provisions
Chapter 7 — Recovery of unpaid corporation tax due from non-UK resident company
481

(c)
if more than one notice of enquiry is given, 30 days after the last notice
of completion,
(d)
if after such an enquiry an officer of Revenue and Customs amends the
return, 30 days after notice of the amendment is issued, and
(e)
if an appeal is brought against such an amendment, 30 days after the
5
appeal is finally determined.
(4)
If the unpaid tax is charged in a discovery assessment, the date mentioned in
subsection (1) is taken to be—
(a)
if there is no appeal against the assessment, the date when the tax
becomes due and payable, or
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(b)
if there is such an appeal, the date when the appeal is finally
determined.
(5)
The reference in subsection (3) to a self-assessment includes a self-assessment
that supersedes a determination (see paragraph 40 of Schedule 18 to FA 1998).
979
Amount payable in consortium case
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(1)
In a consortium case, the amount that the related company may be required to
pay by notice under this Chapter is the proportion of the unpaid tax
corresponding—
(a)
if the company is only within section 976(1)(b), to the share which the
company has had in the consortium for the relevant period,
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(b)
if the company is only within section 976(1)(c), to the share which
companies that have been members of the same group of companies as
the company have had in the consortium for the relevant period, or
(c)
if the company is within section 976(1)(b) and (c), to whichever is the
greater of the amounts given by paragraphs (a) and (b).
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(2)
For the purposes of this section, a member’s share in a consortium, in relation
to the relevant period, is whichever is the lowest in that period of the
percentages specified in subsection (3).
(3)
Those percentages are—
(a)
the percentage of the ordinary share capital of the taxpayer company
30
which is beneficially owned by the member,
(b)
the percentage to which the member is beneficially entitled of any
profits available for distribution to equity holders of the taxpayer
company, and
(c)
the percentage to which the member would be beneficially entitled of
35
any assets of the taxpayer company available for distribution to its
equity holders on a winding up.
(4)
If any of the percentages mentioned in subsection (3) has fluctuated in the
relevant period, the average percentage over the period is to be taken.
(5)
Chapter 6 of Part 5 (equity holders and profits or assets available for
40
distribution) applies for the purposes of subsection (3) as it applies for the
purposes of sections 143(3)(b) and (c) and 144(3)(b) and (c).
980
Chapter 7: supplementary
(1)
A company that has paid an amount in pursuance of a notice under this
Chapter may recover that amount from the taxpayer company.
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Corporation Tax Bill
Part 22 — Miscellaneous provisions
Chapter 8 — Exemptions
482

(2)
A payment in pursuance of a notice under this Chapter is not allowed as a
deduction in calculating income, profits or losses for any tax purposes.
Chapter 8
Exemptions
Trade unions and employers’ associations
5
981
Exemption for trade unions and eligible employers’ associations
(1)
No liability to corporation tax arises in respect of qualifying income or gains of
a trade union or eligible employers’ association if conditions A and B are met.
(2)
Condition A is that the trade union or employers’ association is prevented by
its rules or by Act of Parliament from assuring to any person a sum
10
exceeding—
(a)
£4,000 by way of gross sum, or
(b)
£825 by way of annuity.
(3)
Condition B is that the trade union or employers’ association makes a claim for
exemption under this section.
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(4)
The following are to be ignored in determining whether condition A is met—
(a)
an annuity contract which constitutes a registered pension scheme, and
(b)
an annuity contract which is issued or held in connection with a
registered pension scheme other than an occupational pension scheme
(within the meaning of section 150(5) of FA 2004).
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(5)
The Treasury may by order—
(a)
amend the sum for the time being specified in subsection (2)(a) or (b) so
as to increase it, and
(b)
make provision about the income or gains in relation to which an
amendment under paragraph (a) has effect.
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982
Qualifying income or gains
(1)
In section 981(1)—
(a)
the reference to qualifying income of a trade union or eligible
employers’ association is to income which is not trading income and
which is applicable and applied for the purposes of provident benefits,
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and
(b)
the reference to qualifying gains of a trade union or eligible employers’
association is to chargeable gains which are applicable and applied for
the purpose of provident benefits.
(2)
In subsection (1) references to provident benefits include—
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(a)
a payment expressly authorised by the rules of the trade union or
employers’ association which is made—
(i)
to a member during sickness or incapacity from personal injury
or while out of work,
(ii)
to a member by way of superannuation by reason of age,
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sickness or incapacity from personal injury,

Corporation Tax Bill
Part 22 — Miscellaneous provisions
Chapter 8 — Exemptions
483

(iii)
to a member who has met with an accident, or
(iv)
to a member who has lost tools by fire or theft,
(b)
a payment in discharge or aid of funeral expenses on the death of a
member or the spouse or civil partner of a member, and
(c)
a payment as provision for the children of a deceased member.
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983
Meaning of “trade union” and “eligible employers’ association”
(1)
This section applies for the purposes of sections 981 and 982.
(2)
“Trade union” means—
(a)
an organisation the name of which is entered in the list maintained by
the Certification Officer under section 2 of the Trade Union and Labour
10
Relations (Consolidation) Act 1992 (list of trade unions),
(b)
an organisation the name of which is entered in the list maintained by
the Certification Officer for Northern Ireland under Article 5 of the
Industrial Relations (Northern Ireland) Order 1992 (S. I. 1992/807 (N.I.
5)) (corresponding provision for Northern Ireland), and
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(c)
the Police Federation for England and Wales, the Police Federation for
Scotland, the Police Federation for Northern Ireland and any other
organisation of persons in police service which has similar functions.
(3)
“Employers’ association” means—
(a)
an organisation the name of which is entered in the list maintained by
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the Certification Officer under section 123 of the Trade Union and
Labour Relations (Consolidation) Act 1992 (list of employers’
associations), and
(b)
an organisation the name of which is entered in the list maintained by
the Certification Officer for Northern Ireland under Article 5 of the
25
Industrial Relations (Northern Ireland) Order 1992 (corresponding
provision for Northern Ireland).
(4)
An employers’ association is eligible if—
(a)
in the case of an organisation falling with subsection (3)(a), it was a
registered trade union for the purpose of section 338 of the Income and
30
Corporation Taxes Act 1970 on 30 September 1971, and
(b)
in the case of an organisation falling within subsection (3)(b), it was a
trade union for the purposes of section 467 of ICTA immediately before
the coming into operation of Article 5 of the Industrial Relations
(Northern Ireland) Order 1992 (S.I. 1992/807 (N.I. 5)).
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Local authorities etc
984
Local authorities and local authority associations
(1)
A local authority in the United Kingdom is not liable to corporation tax.
(2)
A local authority association in the United Kingdom is not liable to corporation
tax.
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