Finance Act 1998

(755A) (1) This section applies in any case where— (a) an amount (“the apportioned profit") of a controlled foreign company’s chargeable profits for an accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom (“the UK company"); (b) the UK company carries on life assurance business in that one of its accounting periods (“the relevant accounting period") in which ends the accounting period of the controlled foreign company; and (c) the property or rights which represent the UK company’s relevant interest in the controlled foreign company constitute to any extent assets of the UK company’s long term business fund. (2) Subsections (3) and (4) below apply if, in the case of the relevant accounting period, the UK company is not charged to tax under Case I of Schedule D in respect of its profits from life assurance business. (3) Where this subsection applies, the “appropriate rate” for the purposes of section 747(4)(a) and paragraph 1 of Schedule 26 in relation to the policy holders’ part of any BLAGAB apportioned profit shall be— (a) if a single rate of tax under section 88A(1) of the Finance Act 1989 (lower corporation tax rate on certain insurance company profits) is applicable in relation to the relevant accounting period, that rate; or (b) if more than one such rate of tax is applicable in relation to the relevant accounting period, the average of those rates over the whole of that period. (4) Where this subsection applies, the “appropriate rate” for the purposes of section 747(4)(a) and paragraph 1 of Schedule 26 shall be nil in relation to so much of the apportioned profit as is referable to— (a) pension business, (b) life reinsurance business, or (c) overseas life assurance business, carried on by the UK company. (5) If, in the case of the relevant accounting period, the UK company is charged to tax under Case I of Schedule D in respect of its profits from life assurance business, the “appropriate rate” for the purposes of— (a) section 747(4)(a), and (b) paragraph 1 of Schedule 26, shall be nil in relation to so much of the apportioned profit as is referable to the UK company’s relevant interest so far as represented by assets of its long term business fund. (6) If, in the case of the relevant accounting period,— (a) the UK company is not charged to tax under Case I of Schedule D in respect of its profits from life assurance business, (b) any creditable tax of the controlled foreign company falls to be apportioned to the UK company, and (c) the apportioned profit is to any extent referable to a category of business specified in paragraphs (a) to (c) of subsection (4) above, so much of the creditable tax so apportioned as is attributable to the apportioned profit so far as so referable shall be left out of account for the purposes of this Chapter, other than section 747(3) and this section, and shall be treated as extinguished. (7) If, in the case of the relevant accounting period,— (a) the UK company is charged to tax under Case I of Schedule D in respect of its profits from life assurance business, and (b) any creditable tax of the controlled foreign company falls to be apportioned to the UK company, so much of the creditable tax so apportioned as is attributable to so much of the apportioned profit as is referable to the UK company’s relevant interest so far as represented by assets of the UK company’s long term business fund shall be left out of account for the purposes of this Chapter, other than section 747(3) and this section, and shall be treated as extinguished. (8) Any set off under paragraph 1 or 2 of Schedule 26 against the UK company’s liability to tax under section 747(4)(a) in respect of the apportioned profit shall be made against only so much of that liability as is attributable to the eligible part of the apportioned profit. (9) Accordingly, in the application of paragraph 2 of Schedule 26 in relation to the apportioned profit, in the definition of “the relevant maximum” in sub-paragraph (3)— (a) the reference to the liability to tax referred to in sub-paragraph (1) of that paragraph shall be taken as a reference to only so much of that liability as is attributable to the eligible part of the apportioned profit; and (b) in paragraph (a), for the amount there described there shall be substituted a reference to the eligible part of the apportioned profit. (10) For the purposes of this section, the “eligible part" of the apportioned profit is any BLAGAB apportioned profit, other than the policy holders’ part. (11) For the purposes of this section, the “policy holders’ part” of any BLAGAB apportioned profit is— (a) in a case where subsection (4) of section 88A of the Finance Act 1989 applies, the whole; and (b) in any other case, the fraction described in subsection (5)(b) of that section. (12) In this section— - “BLAGAB apportioned profit” means so much of the apportioned profit as is referable to basic life assurance and general annuity business carried on by the UK company; - “long term business fund” has the meaning given by section 431(2). (13) For the purposes of this section, the part of the apportioned profit which is referable to— (a) pension business, (b) life reinsurance business, (c) overseas life assurance business, or (d) basic life assurance and general annuity business, carried on by the UK company is the part which would have been so referable under section 432A had the apportioned profit been a dividend paid to the UK company at the end of the accounting period mentioned in subsection (1)(a) above in respect of the property or rights which represent the UK company’s relevant interest in the controlled foreign company. (14) For the purposes of this section, any attribution of creditable tax to a particular part of the apportioned profit shall be made in the proportion which that part of the apportioned profit bears to the whole of the apportioned profit.

Amendment of return where general insurance business of foreign company accounted for on non-annual basis

14

After section 755A of the Taxes Act 1988 there shall be inserted—

(755B) (1) This section applies where— (a) a controlled foreign company carries on general insurance business in an accounting period; (b) an amount of the company’s chargeable profits, and an amount of its creditable tax (if any), for that accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom (“the UK company"); (c) the UK company delivers a company tax return for that one of its accounting periods in which the controlled foreign company’s accounting period ends; and (d) in making or amending the return, the UK company has regard to accounts of the controlled foreign company drawn up using a method falling within subsection (2) below. (2) The methods which fall within this subsection are— (a) the method described in paragraph 52 of Schedule 9A to the Companies Act 1985 (which provides for a technical provision to be made in the accounts which is later replaced by a provision for estimated claims outstanding); and (b) any method which would have fallen within paragraph (a) above, had final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 52 of that Schedule, taken place, and been required to take place, no later than the end of the year referred to in that sub-paragraph as the third year following the underwriting year. (3) Where this section applies— (a) the UK company may make any amendments of its company tax return arising from the replacement of the technical provision in the controlled foreign company’s accounts at any time within twelve months from the date on which the provision was replaced; and (b) notice of intention to enquire into the return under paragraph 24 of Schedule 18 to the Finance Act 1998 may be given at any time up to two years from that date (or at any later time in accordance with the general rule in sub-paragraph (3) of that paragraph). (4) If, in a case where this section applies, the accounts of the controlled foreign company are drawn up using a method falling within paragraph (b) of subsection (2) above— (a) the controlled foreign company, and (b) any person with an interest in the controlled foreign company, shall be treated for the purposes of this section as if final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 52 of Schedule 9A to the Companies Act 1985, had taken place at, and been required to take place no later than, the end of the year referred to in that sub-paragraph as the third year following the underwriting year. (5) Regulations under section 755C may make provision with respect to the determination of the amount of the provision by which the technical provision is to be treated as replaced in cases falling within subsection (4) above. (6) In this section “general insurance business” means insurance business which is general business, as defined in section 1 of the Insurance Companies Act 1982.

Application of Chapter where general insurance business of foreign company accounted for on non-annual basis.

15

After section 755B of the Taxes Act 1988 there shall be inserted—

(755C) (1) The Treasury may by regulations provide for the provisions of this Chapter to have effect with prescribed modifications in any case where a non-resident company— (a) carries on general insurance business; and (b) draws up accounts relating to that business using a method falling within subsection (2) of section 755B. (2) Regulations under subsection (1) above may— (a) make different provision for different cases; (b) make provision having effect in relation to accounting periods of non-resident companies ending not more than one year before the date on which the regulations are made; and (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit. (3) In this section— - “general insurance business” has the same meaning as in section 755B; - “non-resident company” means a company resident outside the United Kingdom; - “prescribed” means prescribed in regulations under this section.

Section 756

16

• (1) Section 756 of the Taxes Act 1988 (interpretation and construction of Chapter IV) shall be amended as follows.

• (2) In subsection (1), after “In this Chapter” there shall be inserted the following definition—

“company tax return” means a return required to be made under Schedule 18 to the Finance Act 1998;

.

Paragraph 1 of Schedule 24

17

• (1) In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies) paragraph 1 shall be amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) Sub-paragraph (4) (assumption for applying provisions of Schedule 24 which refer to the first accounting period for which a direction is given in cases where, as respects the accounting period in question and any earlier ones, no direction has been given) shall be amended in accordance with sub-paragraphs (7) to (9) below.

• (7) In paragraph (a) (necessity to determine chargeable profits) after “to determine" there shall be inserted “ in the case of any person ”.

• (8) For paragraph (b) (no direction given) there shall be substituted—

(b) at that time it has not been established in the case of that person that that or any earlier accounting period of the company is an accounting period in respect of which an apportionment under section 747(3) falls to be made,

.

• (9) For the words following paragraph (b) (assumption for the purpose of the provisions in question that the accounting period is the first for which a direction is given) there shall be substituted—

in determining the chargeable profits of the company for the accounting period mentioned in paragraph (a) above, it shall be assumed, for the purposes of those provisions of paragraph 9 below which refer to the first accounting period in respect of which an apportionment under section 747(3) falls to be made, that such an apportionment falls to be made in respect of that period (but not in respect of any earlier period).

Paragraph 2 of Schedule 24

18

In paragraph 2(1) of Schedule 24 to the Taxes Act 1988 (foreign company assumed to become resident in UK at beginning of first accounting period in respect of which a direction is given or which is an ADP exempt period)—

• (a) in paragraph (a), for “a direction is given under section 747(1)" there shall be substituted “ an apportionment under section 747(3) falls to be made ”; and

• (b) in the words following paragraph (b), for “a direction is given" there shall be substituted “ an apportionment falls to be made ”.

Paragraph 4 of Schedule 24

19

• (1) Paragraph 4 of Schedule 24 to the Taxes Act 1988 (assumption that claims or elections giving maximum relief have been made, subject to notice to the contrary) shall be amended as follows.

• (2) In sub-paragraph (1A)(a) (sub-paragraph (2) to apply to accounting period of foreign company in respect of which a direction is given) for “a direction is given under section 747(1)" there shall be substituted “ an apportionment under section 747(3) falls to be made ”.

• (3) In sub-paragraph (2) (notice to be given to the Board at any time not later than the expiry of the appropriate period etc)—

• (a) for “given to the Board" there shall be substituted “ given to an officer of the Board ”; and

• (b) for “the appropriate period" there shall be substituted “ the period of twenty months following the end of the accounting period ”.

• (4) In consequence of sub-paragraph (3)(b) above, sub-paragraph (2A) shall cease to have effect.

• (5) In sub-paragraph (3) (majority interest in foreign company) in paragraph (b) for “an assessment" there shall be substituted “ any liability ”.

• (6) In sub-paragraph (3A) (application of sub-paragraph (3) to ADP exempt periods)—

• (a) in paragraph (a), for “a direction had been duly given under section 747(1)" there shall be substituted “ an apportionment under section 747(3) had fallen to be made ”;

• (b) for paragraph (b) there shall be substituted—

(b) such apportionments as are mentioned in sub-paragraph (3) above had been made and such liabilities as are mentioned in that sub-paragraph had arisen.

Paragraph 9 of Schedule 24

20

• (1) Paragraph 9 of Schedule 24 to the Taxes Act 1988 (losses in pre-direction accounting periods) shall be amended as follows.

• (2) For “pre-direction", wherever occurring, there shall be substituted “ pre-apportionment ”.

• (3) In sub-paragraph (1) (which provides that, subject to sub-paragraph (2), the paragraph applies where the foreign company incurs a loss in an accounting period preceding the first in respect of which a direction is given etc)—

• (a) the words “Subject to sub-paragraph (2) below," shall cease to have effect; and

• (b) in paragraph (a), for “a direction is given under section 747(1)" there shall be substituted “ an apportionment under section 747(3) falls to be made ”.

• (4) Sub-paragraph (2) (which provides that the paragraph does not apply where a declaration is made under paragraph 11(3)) shall cease to have effect.

• (5) In sub-paragraph (3) (assumption that pre-direction period was first accounting period in respect of which a direction was given) for “a direction was given under section 747(1)" there shall be substituted “ an apportionment under section 747(3) fell to be made ”.

• (6) For sub-paragraph (4) (claim to be made by notice given to Board within 60 days of notice under section 753(1) or (3) relating to starting period etc) there shall be substituted—

(4) A claim under sub-paragraph (3) above shall be made by notice given to an officer of the Board within the period of twenty months following the end of the starting period or within such longer period as the Board may in any particular case allow.

• (7) Sub-paragraph (5) (which provides for an assumption that Chapter IV was in force before the beginning of the first of the pre-direction periods, and which is of no further practical utility) shall cease to have effect.

• (8) Sub-paragraph (6) (no account to be taken of declaration under paragraph 11(3)) shall cease to have effect.

• (9) At the end of the paragraph there shall be added—

(7) Nothing in— (a) paragraph 10 of Schedule 18 to the Finance Act 1998 (claims or elections in company tax returns), or (b) Schedule 1A to the Management Act (claims or elections not included in returns), shall apply, whether by virtue of section 754 or otherwise, to a claim under sub-paragraph (3) above.

Paragraph 10 of Schedule 24

21

In paragraph 10 of Schedule 24 to the Taxes Act 1988 (capital allowances) in sub-paragraph (1) (which, subject to paragraphs 11 and 12, provides an assumption where capital expenditure is incurred in an accounting period falling before the first accounting period in respect of which a direction is given or which is an ADP exempt period)—

• (a) for “Subject to paragraphs 11 and 12 below," there shall be substituted “ Subject to paragraph 12 below, ”; and

• (b) in paragraph (a), for “a direction is given under section 747(1)" there shall be substituted “ an apportionment under section 747(3) falls to be made ”.

Paragraph 11 of Schedule 24

22

Paragraph 11 of Schedule 24 to the Taxes Act 1988 (power of Board by notice to declare that a specified accounting period is to be treated as the first direction period where it appears that no direction was given as respects that period as a result of capital allowances being claimed) shall cease to have effect.

Paragraph 11A of Schedule 24

23

In paragraph 11A of Schedule 24 to the Taxes Act 1988 (capital allowances) sub-paragraphs (3) and (6) (which relate to the application of paragraph 11(1)(c)) shall cease to have effect.

Transfer pricing

24

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 25

25

For the heading to Schedule 25 to the Taxes Act 1988 (cases excluded from direction-making powers) there shall be substituted—

.

Paragraph 1 of Schedule 25

26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph 2A of Schedule 25

27

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph 3 of Schedule 25

28

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph 5 of Schedule 25

29

In paragraph 5(2)(a) of Schedule 25 to the Taxes Act 1988, for “749(3)" there shall be substituted “ 749(5) ”.

Paragraph 6 of Schedule 25

30

• (1) Paragraph 6 of Schedule 25 to the Taxes Act 1988 (exemption for controlled foreign companies engaged in exempt activities) shall be amended as follows.

• (2) In sub-paragraph (1)(c) (which provides that for a company to be engaged in exempt activities, any of sub-paragraphs (2) to (4) must apply) for “(4)" there shall be substituted “ (4A) ”.

• (3) In sub-paragraph (2)(b) (which in certain cases requires less than 50 per cent. of gross trading receipts to be derived from connected or associated persons or persons who have an interest in the company at any time during the accounting period) for “an interest in the company at any time during" there shall be substituted “ a 25 per cent. assessable interest in the company in the case of ”.

• (4) In sub-paragraph (3) (local holding companies) in paragraph (b) (controlled companies which are not themselves holding companies but which are otherwise engaged in exempt activities)—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) after “exempt activities" there shall be inserted “ or are, in terms of sub-paragraph (5A) below, exempt trading companies ”.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) After sub-paragraph (4B) there shall be inserted—

(4C) For the purposes of sub-paragraph (2)(b) above, a person has a 25 per cent. assessable interest in a controlled foreign company in the case of an accounting period of the company if, on an apportionment of the chargeable profits and creditable tax (if any) of the company for that accounting period under section 747(3), at least 25 per cent. of the controlled foreign company’s chargeable profits for the accounting period would be apportioned to that person.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) After sub-paragraph (5) there shall be inserted—

(5A) For the purposes of sub-paragraphs (3) to (4B) above, a company is an exempt trading company throughout any period if— (a) it is a trading company throughout each of its accounting periods which falls wholly or partly within that period; and (b) each of those accounting periods is one as regards which— (i) the condition in section 747(1)(c) is not satisfied; or (ii) the conditions in section 748(1)(e) are satisfied; or (iii) the conditions in section 748(3)(a) and (b) are satisfied.

Paragraph 8 of Schedule 25

31

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph 12 of Schedule 25

32

• (1) Paragraph 12 of Schedule 25 to the Taxes Act 1988 (meaning of “holding company" in paragraphs 6 and 8(3)) shall be amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In sub-paragraph (5) (exclusion of income derived from certain sources) in paragraph (a)—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) after “engaged in exempt activities" there shall be inserted “ or, in terms of sub-paragraph (5A) of that paragraph, is an exempt trading company ”.

Superior holding companies: supplementary provisions

33

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph 1 of Schedule 26

34

• (1) In Schedule 26 to the Taxes Act 1988 (reliefs against liability for tax in respect of chargeable profits apportioned to UK resident company) paragraph 1 (trading losses and group relief etc) shall be amended as follows.

• (2) In sub-paragraph (1) (set-off against liability to tax under section 747(4)(a) where UK resident company entitled to deduction in respect of relevant allowance) the following provisions shall cease to have effect—

• (a) paragraph (c) (set-off only available if company has no profits or relevant allowance exceeds profits) and the word “and" immediately preceding that paragraph; and

• (b) in the words following paragraph (c), the words “or, as the case may be, of the excess of it referred to in paragraph (c) above".

• (3) In sub-paragraph (2)(a) (which defines the appropriate accounting period as that for which by virtue of section 754(2) the company is regarded as assessed to corporation tax in respect of the chargeable profits concerned) for “regarded as assessed to corporation tax" there shall be substituted “ chargeable to tax by virtue of this Chapter ”.

• (4) Sub-paragraph (4) (time limit for making claims for group relief) shall cease to have effect.

• (5) Sub-paragraph (6) (which modifies section 43 of the Taxes Management Act 1970 in its application for the purposes of the paragraph) shall cease to have effect.

Paragraph 3 of Schedule 26

35

• (1) Paragraph 3 of Schedule 26 to the Taxes Act 1988 (gains on disposal of shares in controlled foreign companies) shall be amended as follows.

• (2) In sub-paragraph (1), for paragraph (a) (which refers to a direction having been given in respect of an accounting period of a controlled foreign company) there shall be substituted—

(a) an accounting period of a controlled foreign company (“the apportionment period”) is one in respect of which an apportionment under section 747(3) falls to be made; and

.

• (3) Accordingly, in paragraphs (b) and (c) of sub-paragraph (1), for the words “the direction period", in each place where they occur, there shall be substituted “ the apportionment period ”.

• (4) In paragraph (d) of sub-paragraph (1) (which refers to a sum being, under section 747(1)(a), assessed and recoverable from a company) for “assessed on and recoverable from" there shall be substituted “ chargeable on ”.

• (5) In sub-paragraph (3), for “the direction period" there shall be substituted “ the apportionment period ”.

• (6) In sub-paragraph (4), in the words following paragraph (c), for “assessed and recoverable" there shall be substituted “ chargeable under section 747(4)(a) ”.

• (7) After subsection (6) there shall be inserted—

(6A) Nothing in— (a) paragraph 10 of Schedule 18 to the Finance Act 1998 (claims or elections in company tax returns), or (b) Schedule 1A to the Management Act (claims or elections not included in returns), shall apply, whether by virtue of section 754 or otherwise, to a claim under sub-paragraph (6) above.

Paragraph 4 of Schedule 26

36

• (1) Paragraph 4 of Schedule 26 to the Taxes Act 1988 (dividends from the controlled foreign company) shall be amended as follows.

• (2) In sub-paragraph (1), for paragraph (a) (which refers to a direction having been given in respect of an accounting period of a controlled foreign company) there shall be substituted—

(a) an accounting period of a controlled foreign company is one in respect of which an apportionment under subsection (3) of section 747 falls to be made; and

.

• (3) Accordingly, in paragraph (b) of that sub-paragraph for “subsection (3) of that section" there shall be substituted “ that subsection ”.

• (4) In sub-paragraph (2) (which refers to sums assessed on and recoverable from companies in accordance with s.747(4)(a)) for “assessed on and recoverable from" there shall be substituted “ chargeable on ”.

• (5) In sub-paragraph (5)(a) (which refers to the amount of tax assessed on and recoverable from the company in accordance with s.747(4)(a)) for “assessed on and recoverable from" there shall be substituted “ chargeable on ”.

Commencement and transitional provision

37

• (1) The preceding provisions of this Schedule have effect as respects accounting periods of companies resident in the United Kingdom which end on or after the corporation tax self-assessment appointed day.

• (2) Where by virtue of sub-paragraph (1) above any question as to liability (if any) to tax by virtue of Chapter IV of Part XVII of the Taxes Act 1988 as respects any particular accounting period of a non-resident company which ends before the corporation tax self-assessment appointed day falls to be determined—

• (a) in the case of at least one company resident in the United Kingdom, for an accounting period of its which ends on or after that day, and

• (b) in the case of at least one other such company, for an accounting period of its which ends before that day,

such separate determinations and computations shall be made as are necessary for determining the liability of the companies which fall within paragraph (a) above and the liability of the companies which fall within paragraph (b) above.

• (3) For the purposes of sub-paragraph (2) above—

• (a) any question as to the liability (if any) of a company falling within paragraph (a) shall be determined as if, in the case of every company resident in the United Kingdom, the accounting period of the non-resident company ended in an accounting period of the company ending on or after the corporation tax self-assessment appointed day; and

• (b) any question as to the liability (if any) of a company falling within paragraph (b) shall be determined as if, in the case of every company resident in the United Kingdom, the accounting period of the non-resident company ended in an accounting period of the company ending before the corporation tax self-assessment appointed day.

• (4) In this paragraph—

• “accounting period”, in relation to a non-resident company, has the same meaning as it has in Chapter IV of Part XVII of the Taxes Act 1988;

• “the corporation tax self-assessment appointed day” means the day which is the appointed day for the purposes of section 199 of the Finance Act 1994 (corporation tax self-assessment);

• “non-resident company” means a company resident outside the United Kingdom.

SCHEDULE 18

Part I — Introduction

Meaning of “tax"

1

In this Schedule “tax” means corporation tax including, except as otherwise indicated, any amount assessable or chargeable as if it was corporation tax.

Duty to give notice of chargeability

2

• (1) A company which—

• (a) is chargeable to tax for an accounting period, and

• (b) has not received a notice requiring a company tax return,

must give notice to an officer of Revenue and Customs that it is so chargeable.

• (1A) But a company is not required to give notice under sub-paragraph (1) in respect of an accounting period if for the period—

• (a) all the income on which it is chargeable to tax consists of payments on which it bears income tax by deduction, ...

• (b) the company has no chargeable gains , and

• (c) having deducted the income tax mentioned in paragraph (a) at the fourth step in paragraph 8 (calculation of tax payable), the amount of tax payable for the period is nil.

• (2) A notice required to be given under this paragraph must be given within twelve months from the end of the accounting period.

• (2A) Where sub-paragraph (1A) would apply as regards a company if the company were to make a claim to obtain relief under section 6(2)(a) or (3)(a) of TIOPA 2010 in respect of a disposal that has an appropriate connection to a collective investment vehicle for the purposes of paragraph 6 of Schedule 5AAA to TCGA 1992, the company is not required to make such a claim in order to obtain relief in respect of the disposal (despite section 6(6) of TIOPA 2010).

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II — Company tax return

Company tax return

3

• (1) An officer of Revenue and Customs may by notice require a company to deliver a return (a “company tax return") of such information, accounts, statements and reports—

• (a) relevant to the tax liability of the company, or

• (b) otherwise relevant to the application of the Corporation Tax Acts to the company,

as may reasonably be required by the notice.

• (2) Different information, accounts, statements and reports may be required from different descriptions of company.

• (3) A company tax return must include a declaration by the person making the return that the return is to the best of his knowledge correct and complete.

• (4) The return must be delivered to the officer of the Board by whom the notice was issued not later than the filing date.

• (5) Sub-paragraph (1)(b) has effect as if the reference to the Corporation Tax Acts included a reference to sections 911 and 912 of the Income Tax Act 2007.

3A

• (1) Her Majesty's Revenue and Customs may from time to time publish requirements as to the information, accounts, statements and reports which a company must deliver as part of its company tax return where the company has a tax liability by virtue of paragraph 50 or 51 of Schedule 19 to the Finance Act 2011 (the bank levy); and such information, accounts, statements and reports must be delivered as if the notice to the company under paragraph 3(1) had required them to be delivered (and paragraph 4 is to be read accordingly).

• (2) The publication of any requirements under sub-paragraph (1) does not stop a notice under paragraph 3(1) requiring the delivery of any additional information, accounts, statements and reports as part of a company tax return.

Meaning of delivery of return

4

References in this Schedule to the delivery of a company tax return are to the delivery of all the information, accounts, statements and reports required to comply with the notice requiring the return.

Period for which return required

5

• (1) A notice requiring a company tax return must specify the period to which the notice relates.

• (2) If an accounting period of the company ended during (or at the end of) the specified period, a return is required for that accounting period.

If there is more than one, a separate company tax return is required for each of them.

• (3) If sub-paragraph (2) does not apply but an accounting period of the company began during the specified period, a company tax return is required for the part of the specified period before the accounting period began.

• (4) If the company was outside the charge to corporation tax for the whole of the specified period, a company tax return is required for the whole of the specified period.

• (5) If none of the above provisions applies, no company tax return is required in response to the notice.

Notice relating to period beginning before appointed day

6

• (1) A notice requiring a company tax return may be given on or after the self-assessment appointed day in relation to a period beginning before that day.

• (2) Where the effect of such a notice is to require a return for an accounting period ending before that day, the provisions of the Tax Acts apply as if it were a notice under section 11 of the Taxes Management Act 1970.

• (3) The provisions of this Act relating to company tax returns, or amending other provisions of the Tax Acts so as to refer to such returns, do not affect the operation of those Acts in relation to such a notice.

Return to include self-assessment

7

• (1) Every company tax return for an accounting period must include an assessment (a “self-assessment") of the amount of tax which is payable by the company for that period—

• (a) on the basis of the information contained in the return, and

• (b) taking into account any relief or allowance for which a claim is included in the return or which is required to be given in relation to that accounting period.

• (2) For this purpose a company tax return is regarded as a return for an accounting period if the period is treated in the return as an accounting period and is not longer than twelve months, even though it is not, or may not be, an accounting period.

Residential property developer tax

7A

• (1) A residential property developer must include in its company tax return for an accounting period a statement of—

• (a) its RPD profits in relation to the accounting period,

• (b) its adjusted trading profits or adjusted trading losses for that period,

• (c) the amount of any joint venture profits that are attributable to the developer for that period,

• (d) any allowable RPDT loss relief which the developer is given for that period,

• (e) any allowable RPDT group relief claimed by the developer for that period,

• (f) any allowable RPDT group relief for carried-forward losses claimed by the developer for that period, and

• (g) its allowance for that period,

unless sub-paragraph (2) applies in relation to the accounting period.

• (2) This sub-paragraph applies where it is reasonable to assume that the developer would have no liability to residential property developer tax in relation to the accounting period if no amount were deducted in the calculation at section 38 of the Finance Act 2022 in relation to that accounting period in respect of any—

• (a) allowable RPDT loss relief,

• (b) allowable RPDT group relief, or

• (c) allowable RPDT group relief for carried-forward losses.

• (3) Terms used in Part 2 of the Finance Act 2022 have the same meaning in this paragraph as in that Part (unless the contrary intention appears).

Energy (oil and gas) profits levy

7B

• (1) A company which has made any qualifying levy profits or loss in an accounting period must include in its company tax return for the accounting period a statement of—

• (a) the qualifying levy profits or loss, and

• (b) any relief which the company is given for that period under Schedule 1 to the Energy (Oil and Gas) Profits Levy Act 2022.

• (2) Terms used in the Energy (Oil and Gas) Profits Levy Act 2022 have the same meaning in this paragraph as in that Act.

Calculation of tax payable

8

• (1) The amount of tax payable for an accounting period is calculated as follows.

• First stepCalculate the corporation tax chargeable on the company’s profits:Take the amount of the company’s profits for that period on which corporation tax is chargeable (see section 4(1) and (2) of the Corporation Tax Act 2010).Apply the rate or rates of corporation tax applicable to the company (other than the restitution payments rate).

• Second stepThen give effect to any reliefs or set-offs available against corporation tax chargeable on profits:Any reduction under Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits).Any relief under Part V of Schedule 15 to the Finance Act 2000 (corporate venturing scheme: investment relief).Any relief under Part 7 of the Corporation Tax Act 2010 (community investment tax relief).Any double taxation relief under under sections 2 and 6 of TIOPA 2010 or under section 18(1)(b) and (2) of that Act.Any set off for advance corporation tax under section 239 of the Taxes Act 1988 or under regulations made under section 32 of this Act.

• Third stepThen add any amounts assessable or chargeable as if they were corporation tax (reduced by any reliefs specific to those amounts):Any amount due under section 455 or 464A of the Corporation Tax Act 2010 (tax on a loan, advance or benefit to a participator). Any sum chargeable under section 269DA of that Act (surcharge on banking companies). Any sum chargeable under section 330(1) of that Act (supplementary charge in respect of ring fence trades). Any sum charged at step 5 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies). Any amount of the bank levy chargeable by virtue of paragraph 50 or 51 of Schedule 19 to the Finance Act 2011 (the bank levy). Any amount of residential property developer tax chargeable by virtue of section 33 of the Finance Act 2022. Any amount chargeable by virtue of section 1 of the Energy (Oil and Gas) Profits Levy Act 2022.

• Fourth stepThen deduct any amounts to be set off against the company’s overall tax liability for that period:Any amount to be set off under section 967 or 968 of the Corporation Tax Act 2010 (income tax borne by deduction).Any amount to be set off under section 246N or 246Q of the Taxes Act 1988 (advance corporation tax paid in respect of foreign income dividend).

• Fifth stepCalculate the corporation tax chargeable on any profits of the company that are charged as restitution interest.Find the amount in respect of which the company is chargeable for the period under the charge to corporation tax on income under Part 8C of CTA 2010.Apply the restitution payments rate in accordance with section 357YK(1) of that Act.The amount of tax payable for the accounting period is the sum of the amounts resulting from the first to fourth steps and this step.

• (1A) Sub-paragraph (1B) applies if an amount of the bank levy chargeable by virtue of paragraph 50 or 51 of Schedule 19 to the Finance Act 2011 (the bank levy) is added at the third step.

• (1B) Any deductions made at the fourth step are to be treated as made from all other amounts before being made from the amount of the bank levy.

• (2) Except as otherwise provided, references in this Schedule to the amount of tax payable by a company for an accounting period are to the amount shown in the company’s self-assessment as the amount payable.

Claims that cannot be made without a return

9

• (1) No claim to which this paragraph applies may be made by a company before it delivers a company tax return for the period to which the claim relates.

• (2) This paragraph applies to a claim by a company for any repayment of income tax called for by virtue of—

• (a) section 3 of the Corporation Tax Act 2009 (exclusion of income tax charge in case of UK resident company or income within chargeable profits for corporation tax), or

• (b) exemptions from income tax conferred by the Corporation Tax Acts.

This is subject to sub-paragraphs (2A) and (2B).

• (2A) This paragraph does not apply to a claim by a company for repayment of income tax treated as having been paid by virtue of—

• (a) section 471 of the Corporation Tax Act 2010 (gifts qualifying for gift aid relief: charitable companies),

• (b) section 475 of that Act (gifts qualifying for gift aid relief: eligible bodies), or

• (c) section 661D of that Act (gifts qualifying for gift aid relief: community amateur sports clubs).

• (2B) This paragraph also does not apply to a claim by a company for repayment of income tax deducted at source from income which is exempt from tax by virtue of—

• (a) section 486 of the Corporation Tax Act 2010 (investment income and non-trading profits from loan relationships),

• (b) section 487 of that Act (public revenue dividends),

• (c) section 488 of that Act (certain miscellaneous income),

• (d) section 489 of that Act (income from estates in administration), or

• (e) section 664 of that Act (interest and gift aid income: community amateur sports clubs).

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) This paragraph applies to a claim by a company for relief under Part V of Schedule 15 to the Finance Act 2000 (corporate venturing scheme: investment relief).

Other claims and elections to be included in return

10

• (1) In Part VII of this Schedule (general provisions as to claims and elections) paragraphs 57 to 59 contain provisions as to the circumstances in which a claim or election may or must be made, or is to be treated as having been made, in a company tax return.

• (2) A claim to which Part VIII, IX or IXA of this Schedule applies (claims for group relief, capital allowances, first-year tax credits, R&D expenditure credits or R&D tax relief) can only be made by being included in a company tax return (see paragraphs 67, 79, 83ZA and 83B).

• (2A) A claim to which Part 9B of this Schedule applies (claims for land remediation tax credit and life assurance company tax credit) can only be made by being included in a company tax return (see paragraph 83H).

• (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) A claim to which Part 9D of this Schedule applies (certain claims under Parts 14A to 15E of the Corporation Tax Act 2009) can only be made by being included in a company tax return (see paragraph 83T).

• (4A) An election under section 1179B of the Corporation Tax Act 2009 (opting into Part 14A of that Act) can only be made by being included in a company tax return.

• (5) An election under section 1182(7) of the Corporation Tax Act 2009 (election not to be a film production company) can only be made by being included in a company tax return (see section 1182(8)(a) of that Act).

• (6) An election under section 1216AE(7) of the Corporation Tax Act 2009 (election not to be a television production company) can only be made by being included in a company tax return (see section 1216AE(8)(a) of that Act).

• (7) An election under section 1217AB(6) of the Corporation Tax Act 2009 (election not to be a video games development company) can only be made by being included in a company tax return (see section 1217AB(7)(a) of that Act).

Accounts required in case of Companies Act company

11

• (1) In the case of a company which—

• (a) is required to deliver a company tax return for a period,

• (b) is resident in the United Kingdom throughout that period, and

• (c) is required under the Companies Act 2006 to prepare accounts for a period consisting of or including the whole of that period,

the power to require the delivery of accounts as part of the return is limited to such accounts, containing such information and having annexed to them such documents, as are required to be prepared under that Act.

• (2) Sub-paragraph (1) does not affect—

• (a) the power to require the delivery of accounts, information or documents in relation to a company's tax liability by virtue of paragraph 50 or 51 of Schedule 19 to the Finance Act 2011 (the bank levy), or

• (b) the requirements which may be imposed under paragraph 3A.

Information about business carried on in partnership

12

• (1) A company tax return of a company which carries on a trade, profession or business in partnership must include any amount which in a relevant partnership statement is stated to be its share of any income, loss, consideration, tax, credit or charge.

• (2) A “relevant partnership statement” means a statement under section 12AB of the Taxes Management Act 1970 for the period for which the return is made or a period which includes that period or any part of it.

Information about chargeable gains

13

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Filing date

14

• (1) The filing date for a company tax return is the last day of whichever of the following periods is the last to end—

• (a) twelve months from the end of the period for which the return is made;

• (b) if the company’s relevant period of account is not longer than 18 months, twelve months from the end of that period;

• (c) if the company’s relevant period of account is longer than 18 months, 30 months from the beginning of that period;

• (d) three months from the date on which the notice requiring the return was served.

• (2) In sub-paragraph (1) “relevant period of account” means, in relation to a return for an accounting period, the period of account of the company in which the last day of that accounting period falls.

. . .

Amendment of return by company

15

• (1) A company may amend its company tax return by notice to an officer of Revenue and Customs.

• (2) The notice must be in such form as an officer of Revenue and Customs may require.

• (3) The notice must contain such information and be accompanied by such statements as an officer of Revenue and Customs may reasonably require.

• (4) Except as otherwise provided, an amendment may not be made more than twelve months after—

• (a) the filing date, or

• (b) in the case of a return for the wrong period, what would be the filing date if the period for which the return was made were an accounting period.

Correction of return by Revenue

16

• (1) An officer of Revenue and Customs may amend a company tax return so as to correct—

• (a) obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise), and

• (b) anything else in the return that the officer has reason to believe is incorrect in the light of information available to the officer.

• (2) A correction under this paragraph is made by notice to the company concerned.

• (3) No such correction may be made more than nine months after—

• (a) the day on which the return was delivered, or

• (b) if the correction is required in consequence of an amendment by the company under paragraph 15, the day on which that amendment was made.

• (4) A correction under this paragraph is of no effect if the company—

• (a) amends its return so as to reject the correction, or

• (b) after the end of the period within which it may amend its return, but within three months from the date of issue of the notice of correction, gives notice rejecting the correction.

• (5) Notice under sub-paragraph (4)(b) must be given—

• (a) in writing,

• (b) to the officer of the Board by whom notice of the correction was given.

Failure to deliver return: flat-rate penalty

17

• (1) A company which is required to deliver a company tax return and fails to do so by the filing date is liable to a flat-rate penalty under this paragraph.

It may also be liable to a tax-related penalty under paragraph 18.

• (2) The penalty is—

• (a) £200, if the return is delivered within three months after the filing date, and

• (b) £400, in any other case.

• (3) The amounts are increased to £1000 and £2000 for a third successive failure, that is, where—

• (a) the company is within the charge to corporation tax for three consecutive accounting periods (and at no time between the beginning of the first of those periods and the end of the last is it outside the charge to corporation tax),

• (b) a company tax return is required for each of those accounting periods,

• (c) the company was liable to a penalty under this paragraph in respect of each of the first two of those periods, and

• (d) the company is again liable to a penalty under this paragraph in respect of the third period.

• (4) The first or second period mentioned in sub-paragraph (3) may be a period ending before the self-assessment appointed day, in relation to which—

• (a) the reference in paragraph (b) to a company tax return shall be construed as a reference to a return under section 11 of the Taxes Management Act 1970, and

• (b) the references in paragraphs (c) and (d) to a penalty under this paragraph shall be construed as a reference to a penalty under section 94 of that Act.

• (5) The Commissioners for His Majesty’s Revenue and Customs may by regulations amend sub-paragraph (2) or (3) so as to increase or decrease the amount of a penalty for the time being specified in those sub-paragraphs.

• (6) Regulations under sub-paragraph (5) may include transitional and saving provision.

• (7) A statutory instrument containing regulations under sub-paragraph (5) which increase the amount of a penalty by more than is necessary to reflect changes in the value of money may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

Failure to deliver return: tax-related penalty

18

• (1) A company which is required to deliver a company tax return for an accounting period and fails to do so—

• (a) within 18 months after the end of that period, or

• (b) if the filing date is later than that, by the filing date,

is liable to a tax-related penalty under this paragraph.

This is in addition to any flat-rate penalty under paragraph 17.

• (2) The penalty is—

• (a) 10 per cent. of the unpaid tax, if the return is delivered within two years after the end of the period for which the return is required, and

• (b) 20 per cent. of the unpaid tax, in any other case.

• (3) The “unpaid tax” means the amount of tax payable by the company for the accounting period for which the return was required which remains unpaid on the date when the liability to the penalty arises under sub-paragraph (1).

• (4) In determining that amount no account is to be taken of—

• (a) any relief under section 458 of the Corporation Tax Act 2010 (relief in respect of repayment, etc of loan) which is deferred under subsection (5) of that section, or

• (b) any relief under section 464B of that Act (relief in respect of return payment) which is deferred under subsection (5) of that section.

Excuse for late delivery of return

19

A company is not liable to a penalty under paragraph 17 (flat rate penalty) if—

• (a) the period for which the return is required is one for which the company is required to deliver accounts under the Companies Act 2006, and

• (b) the return is delivered no later than the last day for the delivery of those accounts to the registrar of companies.

Penalty for incorrect or uncorrected return

20

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Voluntary returns

20A

• (1) This paragraph applies where—

• (a) a company delivers a purported return (“the relevant return”) for a period (“the relevant period”),

• (b) no notice under paragraph 3 has been given to the company in respect of the relevant period, and

• (c) Her Majesty’s Revenue and Customs treats the relevant return as a return made and delivered in pursuance of such a notice.

• (2) For the purposes of the Taxes Acts—

• (a) treat a relevant notice as having been given to the company on the day the relevant return was delivered, and

• (b) treat the relevant return as having been made and delivered in pursuance of that notice (and, accordingly, treat it as if it were a company tax return under paragraph 3).

• (3) “Relevant notice” means a notice under paragraph 3 requiring the company to deliver a return for the relevant period.

• (4) In sub-paragraph (1)(a) “purported return” means anything that—

• (a) is in a form, and is delivered in a way, that a corresponding return could have been made and delivered had a relevant notice been given, and

• (b) purports to be a company tax return.

• (5) Nothing in this paragraph affects paragraph 46 or any other provisions of the Taxes Acts specifying a time limit for the making of an assessment.

Part III — Duty to keep and preserve records

Duty to keep and preserve records

21

• (1) A company which may be required to deliver a company tax return for any period must—

• (a) keep such records as may be needed to enable it to deliver a correct and complete return for the period, and

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

• (2) The records must be preserved until the end of the relevant day.

• (2A) In this paragraph “relevant day” means—

• (a) the sixth anniversary of the end of the period for which the company may be required to deliver a company tax return, or

• (b) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).

• (3) If the company is required to deliver a company tax return by notice given before the end of the relevant day, the records must be preserved until any later date on which—

• (a) any enquiry into the return is completed, or

• (b) if there is no enquiry, an officer of Revenue and Customs no longer has power to enquire into the return.

• (4) If the company is required to deliver a company tax return by notice given after the end of the relevant day and has in its possession at that time any records that may be needed to enable it to deliver a correct and complete return, it is under a duty to preserve those records until the date on which—

• (a) any enquiry into the return is completed, or

• (b) if there is no enquiry, an officer of Revenue and Customs no longer has power to enquire into the return.

• (5) The records required to be kept and preserved under this paragraph include records of—

• (a) all receipts and expenses in the course of the company’s activities, and the matters in respect of which the receipts and expenses arise, and

• (b) in the case of a trade involving dealing in goods, all sales and purchases made in the course of the trade.

• (5A) The Commissioners for Her Majesty's Revenue and Customs may by regulations—

• (a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and

• (b) provide that those records include supporting documents so specified.

• (5AA) Regulations under this paragraph may make provision, in relation to relevant transfer pricing records specified, or of a description specified, in the regulations—

• (a) as to the form or manner in which those records are to be kept and preserved;

• (b) by reference to things specified in the transfer pricing guidelines (within the meaning of section 164 of TIOPA 2010 (interpretation in accordance with OECD principles)).

• (5B) Regulations under this paragraph may—

• (a) make different provision for different cases, and

• (b) make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).

• (6) For the purposes of this paragraph—

• (a) records are “relevant transfer pricing records” if the Commissioners for His Majesty’s Revenue and Customs reasonably consider that the records may relate to the calculation of profits or losses in accordance with Part 4 of TIOPA 2010 (transfer pricing);

• (b) “supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.

Preservation of information etc

22

• (1) The duty under paragraph 21 to preserve records may be discharged—

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

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

subject to sub-paragraph (3) and any conditions or exceptions specified in writing by the Commissioners for Her Majesty's Revenue and Customs.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Sub-paragraph (1)(b) does not apply in the case of the following kinds of records—

• (a) any statement in writing such as is mentioned in—

• (i) section 1100(1) of the Corporation Tax Act 2010 (amount of distribution, but formerly amount of qualifying distribution and tax credit), or

• (ii) section 495(1) or 975(2) or (4) of the Income Tax Act 2007 (statements about deduction of income tax),

provided by the company or person there mentioned whether after the making of a request or otherwise;

• (b) any record (however described) which is required by regulations under section 70(1)(c) of the Finance Act 2004 to be given to a sub-contractor (within the meaning of section 58 of that Act) on the making of a payment to which section 61 of that Act (deductions on account of tax) applies;

• (c) any record relating to an amount of tax—

• (i) paid under the law of a territory outside the United Kingdom, or

• (ii) which would have been payable under the law of a territory outside the United Kingdom (“territory F”) but for a development relief.

• (4) In sub-paragraph (3)(c) “development relief” means a relief—

• (a) given under the law of territory F with a view to promoting industrial, commercial, scientific, educational or other development in a territory outside the United Kingdom, and

• (b) about which provision is made in arrangements which have effect under section 2(1) of TIOPA 2010 (double taxation relief by agreement with territories outside the United Kingdom).

Penalty for failure to keep and preserve records

23

• (1) A company which fails to comply with paragraph 21 in relation to an accounting period is liable to a penalty not exceeding £3,000, subject to the following exceptions.

• (2) No penalty is incurred if the records which the company fails to keep or preserve are records which might have been needed only for the purposes of claims, elections or notices not included in the return.

• (3) No penalty is incurred if—

• (a) the records which the company fails to keep or preserve are statements in writing such as are mentioned in—

• (i) section 1100(1) of the Corporation Tax Act 2010 (amount of distribution, but formerly amount of qualifying distribution and tax credit), or

• (ii) section 495(1) or 975(2) or (4) of the Income Tax Act 2007 (statements about deduction of income tax),

provided by the company or person there mentioned whether after the making of a request or otherwise, and

• (b) an officer of Revenue and Customs is satisfied that any facts which he reasonably requires to be proved, and which would have been proved by the records, are proved by other documentary evidence furnished to him.

Part IV — Enquiry into company tax return

Notice of enquiry

24

• (1) An officer of Revenue and Customs may enquire into a company tax return if he gives notice to the company of his intention to do so (“notice of enquiry") within the time allowed.

• (2) If the return was delivered on or before the filing date, notice of enquiry may be given at any time up to twelve months from the day on which the return was delivered (subject to sub-paragraph (6)).

• (3) If the return was delivered after the filing date, notice of enquiry may be given at any time up to and including the 31st January, 30th April, 31st July or 31st October next following the first anniversary of the day on which the return was delivered.

• (4) If the company amends its return, notice of enquiry may be given at any time up to and including the 31st January, 30th April, 31st July or 31st October next following the first anniversary of the day on which the amendment was made.

• (5) A return which 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) by the company of its return.

• (6) In the case of a company which is a member of a group other than a small group, the 12-month period in sub-paragraph (2) shall start not from the day on which the return was delivered but from the filing date.

• (7) In sub-paragraph (6) “group” and “small group” have the same meaning as in sections 474(1) and 383 of the Companies Act 2006.

Scope of enquiry

25

• (1) An enquiry into a company tax return extends to anything contained in the return, or required to be contained in the return, including—

• (a) any claim or election included in the return,

• (b) any amount that affects or may affect—

• (i) the tax payable by that company for another accounting period, or

• (ii) the tax liability of another company for any accounting period,

and also extends to consideration of whether to give the company a notice within sub-paragraph (3). But this is subject to the following limitation.

• (2) If the notice of enquiry is given—

• (a) as a result of an amendment by the company of its return, and

• (b) at a time when it is no longer possible to give notice of enquiry under paragraph 24(2) or (3),

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

• (3) A notice is within this sub-paragraph if it is—

• (a) a notice under section 184G or 184H of the Taxation of Chargeable Gains Act 1992 (avoidance involving capital losses),

• (b) a notice under section 81(2) of TIOPA 2010 (schemes and arrangements designed to increase relief), or

• (c) a transfer pricing notice under section 168(1) of TIOPA 2010 (provision not at arm's length: medium-sized enterprise), ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enquiry into return for wrong period

26

• (1) In the case of a company tax return which it appears to an officer of Revenue and Customs —

• (a) is or may be a return for the wrong period, or

• (b) has become a return for the wrong period as a result of a direction under section 11(3) of the Corporation Tax Act 2009 (power of officer of Revenue and Customs to direct which accounting date to be used where company carries on several trades),

the power to enquire into the return includes power to enquire into the period for which the return ought to have been made.

• (2) A return is a “return for the wrong period” in the following cases.

• (3) The first case is where the return is made for a period which is treated in the return as an accounting period, but which is not an accounting period of the company.

• (4) The second case is where the return is made on the basis that there is no accounting period ending in or at the end of the specified period, but there is such an accounting period.

• (5) In relation to a return for the wrong period the references to the filing date in paragraph 24(2) and (3) (period within which notice of enquiry may be given) are to the date that would be the filing date if the period for which the return was made were a period of the kind it is treated as in the return.

• (6) In this paragraph “the specified period” means the period specified in the notice requiring a company tax return.

Notice to produce documents, etc. for purposes of enquiry

27

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Appeal against notice to produce documents, etc

28

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Penalty for failure to produce documents, etc

29

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

30

• (1) If after notice of enquiry has been given and while the enquiry is in progress in relation to a matter an officer of Revenue and Customs forms the opinion—

• (a) that the amount stated in the company’s self-assessment as the amount of tax payable is insufficient, and

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

he may by notice to the company amend its self-assessment to make good the deficiency so far as it relates to the matter.

• (2) In the case of an enquiry which under paragraph 25(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above only applies so far as the deficiency is attributable to the amendment.

• (3) An appeal may be brought against an amendment of a company’s self-assessment by an officer of Revenue and Customs under this paragraph.

• (4) Notice of appeal must be given—

• (a) in writing,

• (b) within 30 days after the amendment was notified to the company,

• (c) to the officer of the Board by whom the notice of amendment was given.

• (5) None of the steps mentioned in section 49A(2)(a) to (c) of the Taxes Management Act 1970 may be taken in relation to the appeal before the completion of the enquiry.

• (6) For the purposes of this paragraph, the period during which an enquiry is in progress in relation to any matter 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 a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued.

Amendment of return by company during enquiry

31

• (1) This paragraph applies if a company amends its company tax return at a time when an enquiry into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.

• (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) So far as the amendment affects—

• (a) the amount stated in the company’s self-assessment as the amount of tax payable, or

• (b) any amount that affects or may affect—

• (i) the tax payable by the company for another accounting period, or

• (ii) the tax liability of another company for any accounting period,

it does not take effect while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.

This does not affect any claim by the company under section 59DA of the Taxes Management Act 1970 (claim for repayment in advance of liability being established).

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

• (a) if the conclusions in a partial or final closure notice state either—

• (i) that 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 a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued;

• (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 in relation to any matter is the whole of the period—

• (a) beginning with the day on which an officer of Revenue and Customs gives notice of enquiry into the return, and

• (b) ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued.

Referral of questions to the tribunal during enquiry

31A

• (1) At any time when an enquiry is in progress in relation to any matter relating to a company’s tax return any question arising in connection with the subject-matter of the enquiry may be referred to the tribunal for ... determination.

• (2) Notice of referral must be given—

• (a) jointly by the company and an officer of Revenue and Customs,

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) to the tribunal.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (5) For the purposes of this paragraph the period during which an enquiry is in progress in relation to any matter is the whole of the period—

• (a) beginning with the day on which an officer of Revenue and Customs gives notice of enquiry into the return, and

• (b) ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued.

Withdrawal of notice of referral

31B

• (1) An officer of Revenue and Customs or the company may withdraw a notice of referral under paragraph 31A ...

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of referral on enquiry

31C

• (1) While proceedings on a referral under paragraph 31A are in progress in relation to an enquiry—

• (a) no partial closure notice relating to the question referred shall be given,

• (aa) no final closure notice shall be given in relation to the enquiry, and

• (b) no application may be made for a direction to give a notice referred to in paragraph (a) or (aa).

• (2) For 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) For 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 that determination being varied or set aside (disregarding any power to grant permission to appeal out of time).

Effect of determination

31D

• (1) The determination of a question referred to the tribunal under paragraph 31A 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) The determination shall be taken into account by an officer of Revenue and Customs in reaching his conclusions on the enquiry.

• (3) Any right of appeal under paragraph 30 or 34(3) may not be exercised so as to reopen the question determined except to the extent (if any) that it could be reopened if it had been determined as a preliminary issue in that appeal.

Completion of enquiry

32

• (1) Any matter to which an enquiry relates is completed when an officer of Revenue and Customs informs the company by notice (a “partial closure notice”) that they have completed their enquiries into that matter.

• (1A) An enquiry is completed when an officer of Revenue and Customs informs the company by notice (a “final closure notice”)—

• (a) in a case where no partial closure notice has been given, that they have completed their enquiries, or

• (b) in a case where one or more partial closure notices have been given, that they have completed their remaining enquiries.

• (1B) A partial or final closure notice takes effect when it is issued.

• (2) If an officer of Revenue and Customs concludes in a partial or final closure notice that the return was a return for the wrong period, the closure notice must designate the accounting period for which a return should have been made (specifying the dates on which the period begins and ends).

• (3) If there is more than one accounting period ending in or at the end of the period specified in the notice requiring a return, the closure notice shall only designate the first of those accounting periods for which no return has been delivered.

Paragraph 35 provides for a return to be delivered for any other outstanding accounting period.

• (4) In the Taxes Acts, references to a closure notice under this paragraph are to a partial or final closure notice under this paragraph.

Direction to complete enquiry

33

• (1) The company may apply to the tribunal for a direction that an officer of Revenue and Customs give a partial or final closure notice within a specified period.

• (2) Any such application is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).

• (3) The tribunal shall give a direction unless ... satisfied that an officer of Revenue and Customs has reasonable grounds for not giving a partial or final closure notice within a specified period.

Amendment of return after enquiry

34

• (1) This paragraph applies where a partial or final closure notice is given to a company by an officer.

• (2) The partial or final closure notice must state the officer's conclusions and—

• (a) state that, in the officer's opinion, no amendment is required of the return that was the subject of the enquiry, or

• (b) make the amendments of that return that are required—

• (i) to give effect to the conclusions stated in the notice, and

• (ii) in the case of a return for the wrong period, to make it a return appropriate to the designated period.

• (2A) The officer may by further notice to the company make any amendments of other company tax returns delivered by the company that are required to give effect to the conclusions stated in the partial or final closure notice.

• (3) An appeal may be brought against an amendment of a company's return under sub-paragraph (2) or (2A).

• (4) Notice of appeal must be given—

• (a) in writing,

• (b) within 30 days after the amendment was notified to the company,

• (c) to the officer of the Board by whom the partial or final closure notice was given.

• (5) In this paragraph “the designated period” means the period designated in the partial or final closure notice.

Further return for outstanding period

35

• (1) Where, following an enquiry into a company tax return—

• (a) it is finally determined—

• (i) that the return is a return for the wrong period, and

• (ii) what the period is for which the return should have been made, and

• (b) the effect of the determination is that there is a further period (“the outstanding period") for which a company tax return should have been made under the original notice requiring a return,

then, if there is no such return delivered by the company which can be amended so as to become a return for the outstanding period, the original notice shall be taken to require the company to deliver a return in respect of that period.

• (2) The filing date for such a return for an outstanding period is whichever is the later of—

• (a) the original filing date, and

• (b) the last day of the period of 30 days beginning with the day on which the matters mentioned in sub-paragraph (1)(a) are finally determined.

Part V — Revenue determinations and assessments

Determination of tax payable if no return delivered in response to notice

36

• (1) If no return is delivered in response to a notice requiring a company tax return, an officer of Revenue and Customs may determine to the best of his information and belief the amount of tax payable by the company.

• (2) The power to make a determination under this paragraph becomes exercisable if no return is delivered on or before the following date—

• (a) if the filing date for any return required by the notice can be ascertained, that date;

• (b) if no such date can be ascertained, the later of—

• (i) 18 months from the end of the period specified in the notice, or

• (ii) three months from the day on which the notice was served.

• (3) The accounting period or periods for which a determination may be made are—

• (a) if there is only one accounting period ending in or at the end of the period specified in the notice, that period;

• (b) if there is more than one accounting period ending in or at the end of the period specified in the notice, each of those periods;

• (c) if an officer of Revenue and Customs has insufficient information to identify the accounting periods of the company, such period or periods ending in or at the end of the period specified in the notice as he may determine.

• (4) Notice of a determination under this paragraph must be served on the company, stating the date on which the determination is issued.

• (5) No determination under this paragraph may be made more than 3 years after the day on which the power becomes exercisable.

• (6) If the company shows—

• (a) that there is no accounting period of the company ending in or at the end of the period specified in the notice, or

• (b) that it has delivered a return for the accounting period, or each accounting period, ending in or at the end of the period specified in the notice, or

• (c) that no return is yet due for any such period,

any determination under this paragraph is of no effect.

Determination of tax payable if notice complied with in part

37

• (1) If a notice requiring a company tax return is served on a company and—

• (a) a return is delivered for an accounting period ending in or at the end of the period specified in the notice, but

• (b) there is another period so ending (the “outstanding period") which appears to an officer of Revenue and Customs is or may be an accounting period,

an officer of Revenue and Customs may determine to the best of his information and belief the amount of corporation tax payable by the company for the outstanding period.

• (2) The power to make a determination under this paragraph becomes exercisable—

• (a) if the filing date for the outstanding period can be ascertained and no return is delivered on or before that date;

• (b) if no such date can be ascertained and no return for that period is delivered by the later of—

• (i) 30 months from the end of the period specified in the notice, or

• (ii) three months from the day on which the notice was served.

• (3) Notice of a determination under this paragraph must be served on the company, stating the date on which the determination is issued.

• (4) No determination under this paragraph may be made more than 3 years after the day on which the power first became exercisable.

• (5) If the company shows—

• (a) that the outstanding period is not an accounting period, or

• (b) that it has delivered a return for that period,

any determination under this paragraph is of no effect.

Extent of power to make determination

38

• (1) The power to make a determination under paragraph 36 or 37 includes power to determine—

• (a) any of the amounts mentioned in paragraph 8(1) (calculation of amount of tax payable), and

• (b) any amount forming part of the calculation of any of those amounts.

• (2) Notice of a determination under either of those paragraphs may be accompanied by notice of any determination by an officer of Revenue and Customs relating to the dates on which amounts of tax become due and payable under section 59D or 59E of the Taxes Management Act 1970.

Determination to have effect as self-assessment

39

• (1) A determination under paragraph 36 or 37 has effect for enforcement purposes as if it were a self-assessment by the company.

• (2) In sub-paragraph (1) “for enforcement purposes” means for the purposes of —

• (a) the following Parts of the Taxes Management Act 1970—

Part VA (payment),

Part VI (collection and recovery),

• (b) the provisions of this Schedule imposing tax-related penalties; and

• (c) the provisions of the Corporation Tax Acts enabling unpaid tax assessed on a company to be assessed on other persons.

• (3) For those purposes the period for which the determination is made shall be treated as an accounting period of the company, even though—

• (a) in the case of a determination under paragraph 36, an officer of Revenue and Customs has insufficient information to determine the accounting periods of the company and exercises his power under sub-paragraph (3)(c) of that paragraph, or

• (b) in the case of a determination under paragraph 37, an officer of Revenue and Customs has insufficient information to determine whether the outstanding period is an accounting period.

Determination superseded by actual self-assessment

40

• (1) If after a determination has been made under paragraph 36—

• (a) the company delivers a company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and

• (b) the period is, or is treated in the return as, an accounting period,

the self-assessment included in that return supersedes the determination or, if there is more than one, the determination for the period which is, or most closely approximates to, the period for which the return is made.

• (2) If after a determination has been made under paragraph 37—

• (a) the company delivers a further company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and

• (b) the period is, or is treated in the return as, an accounting period,

the self-assessment included in that return supersedes the determination.

• (3) Sub-paragraphs (1) and (2) do not apply to a return made—

• (a) more than 3 years after the day on which the power to make the determination first became exercisable (see paragraph 36(2) or 37(2)), or

• (b) more than twelve months after the date of the determination,

whichever is the later.

• (4) Where—

• (a) proceedings have been begun for the recovery of any tax charged by a determination under paragraph 36 or 37, and

• (b) before the proceedings are concluded the determination is superseded by a self-assessment,

the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.

• (5) Where—

• (a) action is being taken under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement of deduction from accounts) for the recovery of an amount (“the original amount”) of any tax charged by a determination under paragraph 36 or 37, and

• (b) before that action is concluded, the determination is superseded by a self-assessment,

that action may be continued as if it were action for the purposes of the recovery of so much of the tax charged by the self-assessment as is due and payable, has not been paid and does not exceed the original amount.

Assessment where loss of tax discovered or determination of amount discovered to be incorrect

41

• (1) If an officer of Revenue and Customs discovers as regards an accounting period of a company that—

• (a) an amount which ought to have been assessed to tax has not been assessed, or

• (b) an assessment to tax is or has become insufficient, or

• (c) relief has been given which is or has become excessive,

he may make an assessment (a “discovery assessment") in the amount or further amount which ought in his opinion to be charged in order to make good to the Crown the loss of tax.

• (2) If an officer of Revenue and Customs discovers that a company tax return delivered by a company for an accounting period incorrectly states—

• (a) an amount that affects, or may affect, the tax payable by that company for another accounting period, or

• (b) an amount that affects, or may affect, the tax liability of another company,

he may make a determination (a “discovery determination") of the amount which in his opinion ought to have been stated in the return.

Restrictions on power to make discovery assessment or determination

42

• (1) The power to make—

• (a) a discovery assessment for an accounting period for which the company has delivered a company tax return, or

• (b) a discovery determination,

is only exercisable in the circumstances specified in paragraph 43 or 44 and subject to paragraph 45 below.

• (2) Those restrictions do not apply to an assessment or determination which only gives effect to a discovery determination duly made with respect to an amount stated in another company’s company tax return.

• (2A) Those restrictions, other than the restriction in paragraph 45, do not apply so far as regards any income or chargeable gains of the company in relation to which the company has been given, a notice within sub-paragraph (4) after any enquiries have been completed into the return (so far as relating to the matters to which the notice relates).

• (3) Any objection to a discovery assessment or determination on the ground that those paragraphs have not been complied with can only be made on an appeal against the assessment or determination.

• (4) A notice is within this sub-paragraph if it is—

• (a) a notice under section 184G or 184H of the Taxation of Chargeable Gains Act 1992 (avoidance involving capital losses), or

• (b) a notice under section 81(2) of TIOPA 2010 (schemes and arrangements designed to increase relief), ...