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248 | The rule against deduction for untaxable payments |
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(1) | The rule referred to in section 243(3)(b) is that the total deduction amount must |
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(2) | In this section “the total deduction amount” means the total of the amounts |
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allowable as a deduction for the purposes of the Corporation Tax Acts in |
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calculating any profits arising to the company from any transaction forming |
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part of the deduction scheme. |
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(3) | If the payee is not liable to tax for the purposes of section 245(4) in respect of |
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the payment or payments that the payee receives or is entitled to receive, the |
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total deduction amount must be reduced to nil. |
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(4) | If the payee is liable to tax for those purposes in respect of part of that payment |
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or those payments, the total deduction amount must be reduced by the same |
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proportion of that amount as the proportion of the payment or payments on |
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which the payee is not liable to tax. |
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(5) | If the payee’s liability to tax is reduced as described in section 245(4)(b), the |
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total deduction amount must be reduced by the same proportion of that |
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amount as the reduction in the payee’s liability bears to that liability before |
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(1) | An officer of Revenue and Customs may give a company a notice under this |
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(a) | the company is UK resident, and |
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(b) | the officer considers on reasonable grounds that each of the receipt |
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scheme conditions is or may be met in relation to the company. |
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(a) | a notice under this section is referred to as a “receipt notice”, and |
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(b) | “the receipt scheme conditions” means the conditions specified in |
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(3) | For the consequences of a receipt notice, see section 254. |
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250 | The receipt scheme conditions |
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(1) | This section sets out the receipt scheme conditions. |
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(2) | Receipt scheme condition A is that a scheme makes or imposes provision as |
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between the company and another person (“the paying party”) by means of a |
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transaction or series of transactions. |
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(3) | Receipt scheme condition B is that that provision includes the paying party |
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making, by means of a transaction or series of transactions, a payment— |
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(a) | which is a qualifying payment in relation to the company, and |
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(b) | at least part of which is not an amount to which section 251 (amounts |
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within corporation tax) applies. |
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(4) | A payment is a qualifying payment in relation to a company for the purposes |
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of this section and sections 251 to 254 if it constitutes a contribution to the |
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(5) | Receipt scheme condition C is that on entering into the scheme the company |
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and the paying party expected that a benefit would arise because at least part |
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of the qualifying payment was not an amount to which section 251 applies. |
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(6) | Receipt scheme condition D is that there is an amount in relation to the |
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(a) | is a deductible amount, and |
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(b) | is not set against any scheme income arising to the paying party for |
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income tax purposes or corporation tax purposes. |
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“deductible amount” means an amount that— |
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(a) | is available as a deduction for the purposes of the Tax Acts, or |
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(b) | may be deducted or otherwise allowed under the tax law of any |
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territory outside the United Kingdom, and |
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“scheme income” means income arising from the transaction or |
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transactions forming part of the scheme. |
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(8) | Section 253 (exception for dealers) specifies a case where receipt scheme |
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condition D is treated as not met. |
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251 | Amounts within corporation tax |
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(1) | This section applies to an amount if it falls within subsection (2) or (4). |
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(2) | An amount is within this subsection if for the purposes of the Corporation Tax |
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(a) | income or chargeable gains arising to the company in the accounting |
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period in which the qualifying payment was made, or |
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(b) | income arising to any other UK resident company in a corresponding |
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(3) | For the purposes of this section, the accounting period of one company (“the |
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first period”) corresponds to the accounting period of another company (“the |
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second period”) if at least one day of the first period falls within the second |
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(4) | An amount is within this subsection if it is brought into account as a result of |
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Chapter 2A or 6A of Part 6 of CTA 2009 (relationships treated as loan |
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relationships: disguised interest, and shares accounted for as liabilities). |
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252 | Further provisions about receipt notices |
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(1) | A receipt notice must inform the company to which it is given that the officer |
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of Revenue and Customs giving it considers that each of the receipt scheme |
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conditions is or may be met in relation to the company. |
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(2) | A receipt notice must specify the qualifying payment by reference to which the |
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officer of Revenue and Customs considers receipt scheme conditions B, C and |
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(3) | A receipt notice must specify the accounting period of the company in which |
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the qualifying payment is made. |
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(4) | A receipt notice must inform the company that, as a result of the service of the |
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notice, section 254(2) (rule for calculation or recalculation of income etc |
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following receipt notice) will apply in relation to the payment if each of the |
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receipt scheme conditions is met in relation to the company. |
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253 | Exception for dealers |
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(1) | Receipt scheme condition D (see section 250(6)) is treated as not met if— |
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(a) | the paying party (“P”) is a dealer, |
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(b) | in the ordinary course of P’s business, P incurs losses in respect of the |
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transaction or transactions forming part of the scheme to which P is |
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(c) | the amount by reference to which that condition would be met, but for |
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this section, is an amount in respect of those losses. |
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(2) | In subsection (1) “dealer” means a person who— |
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(a) | is charged to corporation tax under Part 3 of CTA 2009 (trading income) |
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in respect of distributions of companies that are received in the course |
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of a trade not consisting of insurance business, or |
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(b) | would be so charged if UK resident. |
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(3) | In this section “the paying party” has the same meaning as in section 250. |
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254 | Rule for calculation or recalculation of income etc following receipt notice |
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(1) | This section applies in relation to a qualifying payment if— |
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(a) | a receipt notice specifying the payment is given to the company in |
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relation to which it is a qualifying payment, and |
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(b) | when the notice is given, each of the receipt scheme conditions is met |
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in relation to the company. |
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(2) | The company must calculate (or recalculate)— |
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(a) | its income or chargeable gains for the purposes of corporation tax for |
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the accounting period specified in the notice, or |
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(b) | its liability to corporation tax for that period, |
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| as if so much of the qualifying payment as falls within subsection (3) were a |
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receipt of the company that is chargeable for that period under the charge to |
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corporation tax on income. |
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(3) | The qualifying payment falls within this subsection so far as— |
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(a) | receipt scheme condition D (see section 250(6)) is met in relation to it, |
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(b) | it is not an amount to which section 251 (amounts within corporation |
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General provisions about deduction notices and receipt notices |
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255 | Notices given before tax return made |
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(1) | This section applies if an officer of Revenue and Customs gives a company a |
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deduction notice or a receipt notice before the company has made its company |
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tax return for the accounting period specified in the notice. |
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(2) | If the company makes that return before the end of the period of 90 days |
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beginning with the day on which the notice is given, it may— |
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(a) | make a return that disregards the notice, and |
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(b) | at any time after making the return and before the end of that 90 day |
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period, amend the return for the purpose of complying with the |
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provision referred to in the notice. |
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(3) | Subsection (2)(b) does not prevent a company tax return for a period becoming |
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(a) | a deduction notice or a receipt notice is given to the company in relation |
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(b) | the return is not amended in accordance with subsection (2)(b) for the |
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purpose of complying with the provision referred to in the notice, and |
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(c) | it ought to have been so amended. |
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256 | Notices given after tax return made |
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(1) | If a company has made a company tax return for an accounting period, an |
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officer of Revenue and Customs may only give the company a deduction notice |
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or a receipt notice if a notice of enquiry has been given to the company in |
| |
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(2) | After any enquiries into the return have been completed, an officer of Revenue |
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and Customs may only give the company a deduction notice or a receipt notice |
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if conditions A and B are met. |
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(3) | Condition A is that the officer could not have been reasonably expected to have |
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been aware that the circumstances were such that a deduction notice or a |
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receipt notice could have been given to the company in relation to the period. |
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(4) | Whether condition A is met must be determined on the basis of information |
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made available to the Commissioners for Her Majesty’s Revenue and Customs |
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or an officer of Revenue and Customs before the time the enquiries into the |
| |
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(5) | Paragraph 44(2) and (3) of Schedule 18 to FA 1998 (information made available) |
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applies for the purposes of subsection (4) as it applies for the purposes of |
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paragraph 44(1) of that Schedule. |
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(a) | the company was requested to provide information during an enquiry |
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(b) | if the company had duly complied with the request, an officer of |
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Revenue and Customs could reasonably have been expected to give the |
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company a deduction notice or a receipt notice in relation to the period. |
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