Finance Act 2020

(4A) A deduction in respect of an aggregate loss accruing in a chargeable period that is (in accordance with subsection (4)(b) and (c)) allowable as a deduction against an aggregate gain treated as accruing in a later period is to be ignored for the purposes of section 269ZBA of CTA 2010 (corporate capital loss restriction: restriction on deductions from chargeable gains).

Clogged losses

17

In section 18 of TCGA 1992 (transactions between connected persons) at the end insert—

(9) If deductible clogged losses have accrued to a company, the company may make a claim in respect of an accounting period for— (a) an amount of the deductible clogged losses to be treated, for the purposes of section 2A(1)(a), as allowable losses accruing in the accounting period, and (b) the same amount of allowable losses accruing to the company in the period to be treated, for the purposes of section 2A(1)(b), as allowable losses previously accruing to the company while it was within the charge to corporation tax. (10) The amount in respect of which the claim is made may not exceed the total amount of any allowable losses accruing to the company in the accounting period for which the claim is made. (11) In subsection (9), “deductible clogged losses” means losses which would, apart from Part 7ZA of CTA 2010, be deductible under subsection (3) from chargeable gains accruing to the company in an accounting period. (12) A claim under subsection (9) must be made by being included in the company's tax return for the accounting period for which the claim is made.

Pre-entry losses

18

• (1) Schedule 7A to TCGA 1992 (restriction on set-off of pre-entry losses) is amended in accordance with this paragraph.

• (2) In paragraph 6(1)(b), after “from that gain” insert “ (subject to sub-paragraphs (1A) to (1C)) ”.

• (3) In paragraph 6(1)(c), after “section 2A(1)” insert “ (subject to sub-paragraphs (1A) to (1C)) ”.

• (4) After sub-paragraph (1) insert—

(1A) Sub-paragraph (1B) applies, in respect of an accounting period, if the amount of chargeable gains accruing to the company in the period exceeds the total of— (a) the amount of pre-entry losses accruing to the company in the period that are deductible under sub-paragraph (1)(a), and (b) the amount of allowable losses, other than pre-entry losses, accruing to the company in the period. (1B) Where this sub-paragraph applies in respect of an accounting period— (a) the sum of any deductions under sub-paragraph (1)(b) may not exceed the total of— (i) the amount of pre-entry losses that, on the assumption in sub-paragraph (1C), would be deductible under sub-paragraph (1)(b), and (ii) the amount of allowable losses (other than pre-entry losses) that, on the assumption in sub-paragraph (1C), would be deductible under section 2A(1), and (b) for the purposes of sub-paragraph (1)(c), the deductions made under section 2A(1) may not exceed the difference between— (i) the total of the amounts mentioned in paragraph (a)(i) and (ii), and (ii) the amount of pre-entry losses deducted under sub-paragraph (1)(b). (1C) The assumption is that deductions under sub-paragraph (1)(b) are treated for the purposes of Part 7ZA of CTA 2010 (restrictions on obtaining certain deductions) as if they were made under section 2A(1)(b) of this Act.

Real estate investment trusts

19

Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.

20

In section 535B (use of pre-April 2019 residual business losses or deficits) at the end insert—

(4) In determining, for the purposes of subsection (2)(a), the amount of allowable losses accruing on disposals made before 6 April 2019 which would otherwise have been deducted from gains accruing to residual business of the company, section 269ZBA (restriction on deductions) is to be ignored.

21

In section 550 (attribution of distributions) at the end insert—

(4) In determining the amount of relevant non-chargeable gains for the purposes of this section, section 269ZBA (restriction on deductions) is to be ignored.

22

In section 556 (disposal of assets) in subsection (7), for “and 535A” substitute “ , 535A and 535B ”.

Counteraction of avoidance arrangements

23

• (1) Section 19 of F(No.2)A 2017 (losses: counteraction of avoidance arrangements) is amended in accordance with this paragraph.

• (2) In subsection (8), before paragraph (a) insert—

(za) section 2A(1) of TCGA 1992 (allowable capital losses);

.

• (3) At the end insert—

(13) In the case of a tax advantage as a result of a deduction (or increased deduction) under section 2A(1) of TCGA 1992, subsections (10) and (11) have effect as if the references to 1 April 2017 were to 1 April 2020.

Minor and consequential amendments to Part 7ZA of CTA 2010

24

Part 7ZA of CTA 2010 is amended as follows.

25

• (1) Section 269ZB (restriction on deductions from trading profits) is amended in accordance with this paragraph.

• (2) In subsection (8), for paragraph (b) substitute—

(b) the total of— (i) the amount of the company's total non-trading profits deductions allowance for the period (see section 269ZC(3A)), and (ii) in the case of an insurance company, any amount specified for the period under section 269ZFC(5)(a) (BLAGAB deductions allowance).

• (3) Omit subsection (9) (meaning of a company's “deductions allowance”).

26

In section 269ZC (restriction on deductions from non-trading profits) omit subsection (7) (meaning of a company's “deductions allowance”).

27

In section 269ZD (restriction on deductions from total profits) omit subsection (6) (meaning of a company's “deductions allowance”).

28

After section 269ZD insert—

(269ZDA) (1) This section applies for the purposes of sections 269ZB to 269ZD and 269ZFC. (2) A company's “deductions allowance” for an accounting period is to be determined in accordance with section 269ZR where, at any time in that period— (a) the company is a member of a group (see section 269ZZB), and (b) one or more other companies within the charge to corporation tax are members of that group. (3) Otherwise, a company's “deductions allowance” for an accounting period is to be determined in accordance with section 269ZW. (4) But subsections (2) and (3) are subject to section 269ZYA (deductions allowance for company without a source of chargeable income).

29

• (1) Section 269ZF (“relevant trading profits” and “relevant non-trading profits”) is amended in accordance with this paragraph.

• (2) In subsection (2)—

• (a) for “ “relevant non-trading profits””, in both places it occurs, substitute “ “relevant non-trading income profits” ”,

• (b) in paragraph (a), for “qualifying non-trading profits” substitute “ qualifying non-trading income profits ”, and

• (c) in paragraph (b) for “non-trading profits deductions allowance” substitute “ non-trading income profits deductions allowance ”.

• (3) In subsection (3), in the words before step 1, for “and qualifying non-trading profits” substitute “ , qualifying non-trading income profits and qualifying chargeable gains ”.

• (4) In subsection (3), in paragraph (3) of step 1—

• (a) for “and relevant non-trading profits” substitute “ , qualifying non-trading income profits and qualifying chargeable gains ”, and

• (b) for “both” substitute “ each ”.

• (5) In subsection (3), in paragraph (3) of step 2—

• (a) for “and the qualifying non-trading profits” substitute “ , qualifying non-trading income profits and qualifying chargeable gains ”, and

• (b) for “both” substitute “ each ”.

• (6) In the heading, for “and “relevant non-trading profits”” substitute “ , “total relevant non-trading profits” etc ”.

30

• (1) Section 269ZFA (“relevant profits”) is amended as follows.

• (2) In subsection (1)(b), for “section 269ZD(6)” substitute “ section 269ZDA ”.

• (3) In subsection (2)—

• (a) in paragraph (a), for “qualifying trading profits and qualifying non-trading profits” substitute “ modified total profits ”, and

• (b) in paragraph (b), for “in determining” substitute “ which could be relieved against ”.

31

In section 269ZG (general insurance companies: excluded accounting periods), in subsection (1), for “269ZE” substitute “ 269ZD ”.

32

In section 269ZR (deductions allowance for company in a group), at the end insert—

(5) See section 269ZYA for further provision about the deductions allowance for a company without a source of chargeable income which is a member of a group.

33

In section 269ZW (deductions allowance for company not in a group), at the end insert—

(4) See section 269ZYA for further provision about the deductions allowance for a company without a source of chargeable income.

34

In section 269ZZ (company tax return to specify amount of deductions allowance), in subsection (2)—

• (a) after “section 269ZB(2),” insert “ 269ZBA(2), ”, and

• (b) for “or 269ZD(2) or section 124D(1) of FA 2012” substitute “ , 269ZD(2) or 269ZFC(2) ”.

35

• (1) Section 269ZZA(1) (excessive specification of deductions allowance: application of section) is amended in accordance with this paragraph.

• (2) After paragraph (b) insert—

(ba) the company's chargeable gains deductions allowance for the period,

.

• (3) In paragraph (c) for “non-trading profits deductions allowance” substitute “ non-trading income profits deductions allowance ”.

• (4) After paragraph (d) insert—

(da) the company's BLAGAB deductions allowance for the period.

• (5) Omit paragraph (e).

Minor and consequential amendments to Part 7A of CTA 2010

36

Part 7A of CTA 2010 (banking companies: restrictions on obtaining certain deductions) is amended as follows.

37

• (1) Section 269CB (restriction on deductions for non-trading deficits from loan relationships) is amended as follows.

• (2) In subsection (2)—

• (a) for “relevant non-trading profits”, in both places it occurs, substitute “ total relevant non-trading profits ”, and

• (b) for “subsection (2)” substitute “ subsection (2B) ”.

• (3) In subsection (3), for “relevant non-trading profits”, in both places it occurs, substitute “ total relevant non-trading profits ”.

38

In section 269CN (definitions)—

• (a) omit the definition of “relevant non-trading profits”, and

• (b) at the end insert—

“total relevant non-trading profits”, in relation to a company, has the meaning given by section 269ZF(2B).

PART 2 — Corporate capital loss deductions: miscellaneous provision

Companies without a source of chargeable income: carry back of losses

39

In section 2A of TCGA 1992 (company's total profits to include chargeable gains), after subsection (2) insert—

(3) Subsection (4) applies if— (a) a company has two or more accounting periods that fall wholly within the same financial year, (b) the company is chargeable to corporation tax for each of those accounting periods only because of a chargeable gain accruing to the company on the disposal of asset, and (c) in the period (if any) between each of those accounting periods, the company is not within the charge to corporation tax. (4) For the purposes of determining the amount of chargeable gains to be included in the company's total profits for each of the accounting periods by reference to which this subsection applies, subsection (1) has effect as if after paragraph (a) (before the “and”) there were inserted— (aa) so far as not otherwise deducted under this section, any allowable losses accruing to the company in another accounting period that falls wholly within the same financial year as the period mentioned in paragraph (a),

Insurance companies: minor amendments to TCGA 1992 and FA 2012

40

In section 210A of TCGA 1992, in subsection (10C), for the words from “In determining” to “an accounting period” substitute “ For the purposes of subsections (10A) and (10B) ”.

41

In section 93 of FA 2012 (minimum profits test), at the end insert—

(6) For the purposes of this section, assume that non-BLAGAB allowable losses cannot be deducted to any extent from BLAGAB chargeable gains (and, accordingly, assume that section 95 is not included in this Act).

PART 3 — Commencement and anti-forestalling provision

Commencement

42

The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 April 2020.

43

• (1) Paragraph 44 applies where a company has an accounting period beginning before 1 April 2020 and ending on or after that date (the “straddling period”).

• (2) For the purposes of paragraph 44—

• (a) the “pre-commencement period” means the part of the straddling period falling before 1 April 2020, and

• (b) the “post-commencement period” means the part of the straddling period falling on or after that date.

44

• (1) The amount of chargeable gains to be included in the company's total profits for the straddling period is the total of—

• (a) the chargeable gains accruing to the company in the pre-commencement period, after making any deductions under section 2A(1) of TCGA 1992, and

• (b) the chargeable gains accruing to the company in the post-commencement period, after making any deductions under that section.

• (2) For the purposes of sub-paragraph (1)(a) and (b), section 2A of TCGA 1992 applies as if the pre-commencement period and the post-commencement period were separate accounting periods, subject to the modification in sub-paragraph (3).

• (3) For the purposes of determining the amount to be included in the company's total profits in respect of chargeable gains for a period, the reference in section 2A(1)(a) of TCGA 1992 to any allowable losses accruing to the company in the period is to be treated as including—

• (a) for the purposes of the pre-commencement period, a reference to any allowable losses accruing to the company in the post-commencement period so far as they exceed the chargeable gains accruing to the company in the post-commencement period, and

• (b) for the purposes of the post-commencement period, a reference to any available allowable losses accruing to the company in the pre-commencement period so far as they exceed the chargeable gains accruing to the company in the pre-commencement period.

• (4) For the purposes of applying Part 7ZA of CTA 2010 in relation to the straddling period—

• (a) section 269ZBA of that Act applies in relation to the post-commencement period as if it were a separate accounting period,

• (b) the reference in section 269ZF(4)(h) to deductions under section 2A(1)(b) of TCGA 1992 is to be treated as if it were a reference only to deductions under that provision from the chargeable gains of the post-commencement period, and

• (c) the reference in step 3(c) of section 269ZF to the chargeable gains included in the company's total profits is to be treated as if it were a reference to the total of—

• (i) the chargeable gains accruing to the company in the pre-commencement period, after making any deductions under section 2A(1)(a) or (b) of TCGA 1992, and

• (ii) the chargeable gains accruing to the company in the post-commencement period, after making any deductions under section 2A(1)(a) of that Act.

45

• (1) This paragraph applies in relation to a non-UK resident company which carries on a UK property business or has other UK property income—

• (a) if the conditions in sub-paragraph (2) are met, and

• (b) unless the company has elected that this paragraph is not to apply.

• (2) The conditions are met if the company—

• (a) is within the charge to income tax for the tax year 2019-20,

• (b) is chargeable to corporation tax for an accounting period falling wholly within the period beginning with 1 April 2020 and ending with 5 April 2020 because of a chargeable gain accruing to the company on the disposal of an asset, and

• (c) is within the charge to corporation tax on income for an accounting period beginning on 6 April 2020.

• (3) For the purposes of determining the amount to be included in the company's total profits in respect of chargeable gains for an accounting period mentioned in sub-paragraph (2)(b) or (2)(c), the reference in section 2A(1)(a) of TCGA 1992 to any allowable losses accruing to the company in the period is to be treated as including—

• (a) for the purposes of an accounting period mentioned in sub-paragraph (2)(b), a reference to any allowable losses accruing to the company in the accounting period mentioned in sub-paragraph (2)(c) (so far as those losses are not otherwise deducted under section 2A(1) of TCGA 1992), and

• (b) for the purposes of the accounting period mentioned in sub-paragraph (2)(c), a reference to any allowable losses accruing to the company in an accounting period mentioned in sub-paragraph (2)(b) (so far as those losses are not otherwise deducted under section 2A(1) of TCGA 1992).

• (4) For the purposes of the application of Part 7ZA of CTA 2010 in relation to the accounting periods mentioned in sub-paragraphs (2)(b) and (2)(c)—

• (a) section 269ZYA of CTA 2010 (deductions allowance for company without a source of chargeable income) applies as if the company had made a claim under that section in respect of each accounting period mentioned in sub-paragraph (2)(b), and

• (b) the company's deductions allowance for the accounting period mentioned in sub-paragraph (2)(c) is treated as being reduced by the amount of the company's deductions allowance for each accounting period mentioned in sub-paragraph (2)(b).

Anti-forestalling provision

46

• (1) This sub-paragraph applies if—

• (a) a company has an accounting period ending before 1 April 2020,

• (b) the company would, apart from this paragraph, obtain a tax advantage as a result of a deduction, or an increased deduction, under section 2A(1)(b) of TCGA 1992,

• (c) the tax advantage arises as a result of arrangements entered into on or after 29 October 2018, and

• (d) the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage as a result of the fact that section 269ZBA of CTA 2010, inserted by this Schedule, is not to have effect for the accounting period for which the deduction would be made.

• (2) If sub-paragraph (1) applies, the deductions made by the company for the accounting period under section 2A(1)(b) of TCGA 1992 may not exceed 50% of the company's qualifying chargeable gains for the period.

• (3) So far as necessary for the purposes of this paragraph, Part 7ZA of CTA 2010 is treated as having come into force on the same day as this paragraph.

• (4) This paragraph is treated as having come into force on 29 October 2018.

• (5) Where a company has a straddling period, the pre-commencement period and the post-commencement period are treated for the purposes of this paragraph as separate accounting periods.

• (6) In this paragraph—

• (a) “arrangements” includes any agreement, understanding, scheme transaction or series of transactions (whether or not legally enforceable),

• (b) “straddling period”, “pre-commencement period” and “post-commencement period” have the same meaning as they have for the purposes of paragraph 44, and

• (c) “tax advantage” has the meaning given by section 1139 of CTA 2010.

SCHEDULE 5

Introduction

1

CAA 2001 is amended as follows.

Research and development allowances

2

In Part 2A (structures and buildings allowances), for section 270EC substitute—

(270EC) (1) This section applies if, at any time, a person sells the relevant interest in a building or structure to another. (2) The total amount of the allowances under this Part by reference to the building or structure that is available to the person buying the relevant interest is reduced (but not below nil) by the amount of any Part 6 allowance to which the person is entitled by reference to the building or structure. (3) There is another restriction on the total amount of those allowances which applies if— (a) the sale in question, or a sale of the relevant interest at an earlier time, is by a person entitled to a Part 6 allowance by reference to the building or structure, and (b) the amount paid for the relevant interest on any of those sales is less than the ordinary Part 2A amount (see subsection (6)). (4) The other restriction is that the total amount of the allowances under this Part by reference to the building or structure that is available to the person buying the relevant interest may not exceed the permitted maximum. (5) For this purpose “the permitted maximum” is— (a) the lowest sum paid for the relevant interest on the sale in question or any earlier sale within subsection (3)(a), less (b) the total amount of the allowances under this Part arising by reference to the building or structure since the earliest sale identified for the purposes of paragraph (a) of this subsection. (6) In this section “the ordinary Part 2A amount” means— (a) the amount of the qualifying expenditure, by reference to which an allowance can be made under this Part, incurred in relation to the building or structure before the time of the sale in question, less (b) the total amount of the allowances under this Part arising before that time by reference to the building or structure. (7) In this section any reference to allowances under this Part is to allowances to which an entitlement has arisen under this Part or would have arisen under this Part if the building or structure had been in continuous qualifying use since it was first brought into non-residential use. (8) In this section “Part 6 allowance”, in relation to a person and a building or structure, means an allowance under Part 6 in respect of expenditure incurred by the person on its construction or acquisition.

Contribution allowances

3

• (1) Section 538A (contributions: buildings and structures) is amended as follows.

• (2) For subsection (3)(b) substitute—

(b) the building or structure were brought into qualifying use, for the purposes of the allowance in relation to the contribution, on— (i) the day on which R first brought the building or structure into qualifying use, or (ii) if R is a public body, the earlier of the day mentioned in sub-paragraph (i) and the day on which R first brought the building or structure into non-residential use.

• (3) For subsection (4) substitute—

(4) If, at any time in the period beginning with the day on which C made the contribution and ending with the day on which R first brought the building or structure into non-residential use, C did not have a relevant interest in the building or structure— (a) C is to be treated for the purposes of allowances under Part 2A as having had a relevant interest in the building or structure when that period begins, and (b) C is not to be treated for those purposes as ceasing to have that interest on any subsequent sale of R's relevant interest in the building or structure.

• (4) After subsection (6) insert—

(7) In determining, for the purposes of this section, the day on which R first brings a building or structure into non-residential use, ignore any use of the building or structure which is insignificant.

Minor amendments

4

In section 270AA(2) (entitlement to structures and buildings allowances), at the beginning of paragraph (b)(i) insert “ on or ”.

5

In section 270BB (capital expenditure incurred on construction), in subsection (2)(a), for “qualifying use” substitute “ non-residential use ”.

6

In section 270BL (apportionment of sums partly referable to non-qualifying assets), for “qualifying expenditure” substitute “ expenditure for which an allowance can be made under this Part ”.

7

In section 270IA (evidence of qualifying expenditure etc), in subsection (4)(a), omit “written”.

Commencement

8

The amendment made by paragraph 2 has effect in the case of any sale within subsection (1) of the substituted section 270EC(1) of CAA 2001 that takes place on or after 11 March 2020.

9

The amendments made by paragraph 3 have effect in relation to contributions made on or after 11 March 2020.

10

Part 2A of CAA 2001 has effect, and is to be deemed always to have had effect, with the amendments made by paragraphs 4 to 7.

SCHEDULE 6

Calculation of non-trading profits and deficits from loan relationships or derivative contracts

1

In section 301 of CTA 2009 (calculation of non-trading profits and deficits from loan relationships), for the subsection (1A) inserted into that section by paragraph 15(3) of Schedule 5 to FA 2019 substitute—

(1A) In the case of a non-UK resident company, subsections (4) to (7) need to be read with section 5(3), (3A)(b) and (3B)(b) (territorial scope of charge to corporation tax).

2

In section 574 of CTA 2009 (derivative contracts: non-trading credits and debits to be brought into account), for the subsection (2A) inserted into that section by paragraph 18 of Schedule 5 to FA 2019 substitute—

(2A) In the case of a non-UK resident company, subsection (2) needs to be read with section 5(3), (3A)(b) and (3B)(b) (territorial scope of charge to corporation tax).

Debits referable to times before UK property business etc is carried on

3

After section 330 of CTA 2009 insert—

(330ZA) (1) This section applies if— (a) a non-UK resident company has debits in respect of a loan relationship to which it is a party for the purposes of its UK property business, (b) the debits are referable to times (“the pre-rental times”) before (but not more than 7 years before) the date on which it starts to carry on the business, and (c) the debits are not otherwise brought into account for tax purposes. (2) If, on the assumption that the company had been carrying on the business at the pre-rental times, the debits— (a) would have been recognised in determining its profit or loss for a period consisting of or including those times, and (b) would have been brought into account for the purposes of this Part, the debits are (so far as they exceed relevant credits) treated for the purposes of this Part as if they were debits for the accounting period in which it started to carry on the business. (3) For this purpose “relevant credits” means credits of the company in respect of the loan relationship which, on the assumption that the company had been carrying on the business at the pre-rental times— (a) would have been recognised in determining its profit or loss for a period consisting of or including those times, (b) would have been brought into account for the purposes of this Part, and (c) would not otherwise have been brought into account for tax purposes. (4) This section is subject to section 327 (disallowance of imported losses etc). (5) This section also applies in relation to a non-UK resident company which is a party to a loan relationship for the purpose of enabling it to generate other UK property income (within the meaning given by section 5(6)).

4

After section 607 of CTA 2009 insert—

(607ZA) (1) This section applies if— (a) a non-UK resident company has debits in respect of a derivative contract to which it is a party for the purposes of its UK property business, (b) the debits are referable to times (“the pre-rental times”) before (but not more than 7 years before) the date on which it starts to carry on the business, and (c) the debits are not otherwise brought into account for tax purposes. (2) If, on the assumption that the company had been carrying on the business at the pre-rental times, the debits— (a) would have been recognised in determining its profit or loss for a period consisting of or including those times, and (b) would have been brought into account for the purposes of this Part, the debits are (so far as they exceed relevant credits) treated for the purposes of this Part as if they were debits for the accounting period in which it started to carry on the business. (3) For this purpose “relevant credits” means credits of the company in respect of the derivative contract which, on the assumption that the company had been carrying on the business at the pre-rental times— (a) would have been recognised in determining its profit or loss for a period consisting of or including those times, (b) would have been brought into account for the purposes of this Part, and (c) would not otherwise have been brought into account for tax purposes. (4) This section also applies in relation to a non-UK resident company which is a party to a derivative contract for the purpose of enabling it to generate other UK property income (within the meaning given by section 5(6)).

5

In paragraph 40 of Schedule 5 to FA 2019 (transitional provision: imported losses in respect of derivative contracts), at the end insert—

(7) Section 607ZA of CTA 2009 (debits referable to times before UK property business carried on) has effect subject to this paragraph.

Duty to notify chargeability to corporation tax: exceptions

6

In paragraph 2 of Schedule 18 to FA 1998 (duty of company to notify HMRC that it is chargeable for an accounting period if it has not received a notice requiring a company tax return), in sub-paragraph (1A) (which provides an exception to that duty), as inserted into that paragraph by paragraph 6(2) of Schedule 5 to FA 2019—

• (a) omit the “and” before paragraph (b), and

• (b) after that paragraph insert

, 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.

7

In section 55A(1) of FA 2004 (exception to duty of company to give notice of coming within the charge to corporation tax), as inserted by paragraph 7 of Schedule 5 to FA 2019—

• (a) omit the “and” before paragraph (b), and

• (b) after that paragraph insert

, and (c) in consequence of the deduction of the income tax mentioned in paragraph (a) at the fourth step in paragraph 8 of Schedule 18 to the Finance Act 1998 (calculation of tax payable), the amount of tax payable for the period will be nil.

Period for making election under regulation 6A of the Disregard Regulations

8

In regulation 6A of the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004—

• (a) in paragraph (5)(b), after “fair value” insert “ (but see paragraph (6)) ”, and

• (b) at the end insert—

(6) For the purposes of the definition of “the first relevant period” an accounting period of a company is to be ignored if— (a) the accounting period begins solely as a result of a disposal of an asset by the company, and (b) any gain accruing to the company on the disposal would be chargeable to corporation tax as a result of section 2B(4) of the Taxation of Chargeable Gains Act 1992.

9

In paragraph 44 of Schedule 5 to FA 2019, at the end insert—

(4) In determining for the purposes of this paragraph whether, on the commencement date, a company comes within the charge to corporation tax by reason of this Schedule, no account is to be taken of any disposal made by the company before that date where any gain accruing to the company on the disposal would be chargeable to corporation tax as a result of section 2B(4) of TCGA 1992.

Commencement

10

Schedule 5 to FA 2019 has effect as if the amendments made by paragraphs 1 to 7 had at all times been incorporated into the provision made by that Schedule.

11

The amendments made by paragraphs 8 and 9 have effect in relation to disposals made on or after 6 April 2019.

SCHEDULE 7

CT payment plans

1

In TMA 1970, after section 59FA insert—

(59FB) Schedule 3ZC makes provision enabling a company that is liable to pay corporation tax arising in connection with certain transactions to defer payment of the tax by entering into a CT payment plan.

2

After Schedule 3ZB to TMA 1970 insert—

SCHEDULE 3ZC (1) This Schedule makes provision enabling a company that is liable to pay qualifying corporation tax for an accounting period to defer payment of the tax by entering into a CT payment plan. (2) (1) For the purposes of this Schedule a company is liable to pay qualifying corporation tax for an accounting period if CT1 is greater than CT2 where— - CT1 is the corporation tax which the company is liable to pay for the accounting period, and - CT2 is the corporation tax which the company would be liable to pay for the accounting period if any gains, credits, losses or debits arising in respect of qualifying transactions of the company were ignored. (CT2 will be zero if the company would not be liable to pay any corporation tax for the period). (2) The amount of qualifying corporation tax which the company is liable to pay is the difference between CT1 and CT2. (3) (1) For the purposes of this Schedule each of the following is a qualifying transaction of a company (“the company concerned”)— (a) a disposal within sub-paragraph (2), (b) a transaction within sub-paragraph (3), (c) a transaction within sub-paragraph (4), and (d) a transfer within sub-paragraph (5). (2) A disposal is within this sub-paragraph if— (a) it is a disposal by the company concerned of an asset, (b) it is a disposal to a company (“the transferee”) that at the time of the disposal is resident outside the United Kingdom in an EEA state, and (c) it is a disposal to which section 139 or 171 of TCGA 1992 would apply were the transferee resident at the time of the disposal in the United Kingdom instead. (3) A transaction is within this sub-paragraph if— (a) it is a transaction, or the first in a series of transactions, as a result of which the company concerned is directly or indirectly replaced as a party to a loan relationship by another company (“the transferee”), (b) at the time of the transaction the transferee is resident outside the United Kingdom in an EEA state, and (c) it is a transaction to which section 340(3) of CTA 2009 would apply were the transferee resident at the time of the transaction in the United Kingdom instead. (4) A transaction is within this sub-paragraph if— (a) it is a transaction, or the first in a series of transactions, as a result of which the company concerned is directly or indirectly replaced as a party to a derivative contract by another company (“the transferee”), (b) at the time of the transaction the transferee is resident outside the United Kingdom in an EEA state, and (c) it is a transaction to which section 625(3) of CTA 2009 would apply were the transferee resident at the time of the transaction in the United Kingdom instead. (5) A transfer is within this sub-paragraph if— (a) it is a transfer from the company concerned of an intangible fixed asset, (b) it is a transfer to a company (“the transferee”) that immediately after the transfer is resident outside the United Kingdom in an EEA state, and (c) it is a transfer to which section 775(1) of CTA 2009 would apply were the transferee resident immediately after the transfer in the United Kingdom instead. (6) In this Schedule “transferee”, in relation to a qualifying transaction of a company, means the transferee referred to in sub-paragraph (2), (3), (4) or (5) (as the case may be). (4) (1) A company that is liable to pay qualifying corporation tax for an accounting period may enter into a CT payment plan in respect of the tax in accordance with this Schedule. (2) The CT payment plan may relate to— (a) all of the qualifying corporation tax that the company is liable to pay for the accounting period, or (b) only part of the qualifying corporation tax that the company is liable to pay for the accounting period. (3) In this Schedule “deferred tax”, in relation to a CT payment plan, means the qualifying corporation tax to which the plan relates. (5) A company that is liable to pay qualifying corporation tax for an accounting period may enter into a CT payment plan in respect of the tax only if— (a) an application to enter into the plan is made to HMRC before the end of the period of 9 months beginning immediately after the accounting period, and (b) the application contains details of all the matters which are required by paragraph 7 to be specified in the plan. (6) (1) A company enters into a CT payment plan if— (a) the company agrees to pay, and an officer of Revenue and Customs agrees to accept payment of, the deferred tax in accordance with paragraphs 9 to 12, (b) the company agrees to pay interest on the deferred tax in accordance with paragraph 8(3) and (5), and (c) the plan meets the requirements of paragraph 7 as to the matters that must be specified in it. (2) The CT payment plan may, in the circumstances mentioned in sub-paragraph (3), contain appropriate provision regarding security for HMRC in respect of the payment of the deferred tax. (3) Those circumstances are where an officer of Revenue and Customs considers that agreeing to accept payment of the deferred tax in accordance with paragraphs 9 to 12 would present a serious risk as to collection of the tax in the absence of provision regarding security in respect of its payment. (4) A CT payment plan is void if any information furnished by the company in connection with the plan does not fully and accurately disclose all facts and considerations material to the decision of the officer of Revenue and Customs to accept payment of the deferred tax in accordance with paragraphs 9 to 12. (7) (1) A CT payment plan entered into by a company must— (a) specify the accounting period to which the plan relates (“the accounting period concerned”), (b) specify the amount of qualifying corporation tax which, in the company's opinion, is payable by it in respect of the accounting period concerned, (c) specify the amount of the deferred tax, (d) identify each qualifying transaction of the company in respect of which gains or credits arose in the accounting period concerned, and (e) specify in relation to each of those qualifying transactions— (i) the name of the transferee, (ii) the EEA state in which the transferee was resident at the time of the transaction, and (iii) the amount of the deferred tax that is attributable to the transaction. (2) The amount of the deferred tax that is attributable to a qualifying transaction of the company in respect of which a gain or credit arose in the accounting period concerned is— $$A B × T$where—A is the gain or credit that arose in the accounting period concerned in respect of the qualifying transaction,B is the total gains or credits that arose in the accounting period concerned in respect of all qualifying transactions of the company,T is the amount of the deferred tax.$ (8) (1) This paragraph applies where a CT payment plan is entered into by a company in accordance with this Schedule. (2) As regards when the deferred tax is payable— (a) the CT payment plan does not prevent the deferred tax becoming due and payable under section 59D or 59E, but (b) the Commissioners for Her Majesty's Revenue and Customs— (i) may not seek payment of the deferred tax otherwise than in accordance with paragraphs 9 to 12; (ii) may make repayments in respect of any amount of the deferred tax paid, or any amount paid on account of the deferred tax, before the CT payment plan is entered into. (3) As regards interest— (a) the deferred tax carries interest in accordance with Part 9 as if the CT payment plan had not been entered into, and (b) each time a payment is made in accordance with paragraphs 9 to 12, it is to be paid together with any interest payable on it. (4) As regards penalties, the company will be liable to penalties for late payment of the deferred tax only if it fails to make payments in accordance with paragraphs 9 to 12 (see item 6ZAA of the Table at the end of paragraph 1 of Schedule 56 to the Finance Act 2009). (5) Any of the deferred tax which is for the time being unpaid may be paid at any time before it becomes payable under paragraphs 9 to 12 together with interest payable on it to the date of payment. (9) (1) Where a CT payment plan is entered into by a company, the deferred tax is due in 6 instalments of equal amounts as follows— (a) the first instalment is due on the first day after the period of 9 months beginning immediately after the end of the accounting period to which the plan relates, and (b) the other 5 instalments are due one on each of the first 5 anniversaries of that day. (2) But see paragraphs 10 to 12 for circumstances in which all or part of the outstanding balance of the deferred tax becomes due otherwise than by those instalments. (10) (1) Where at any time after a CT payment plan is entered into by a company an event mentioned in sub-paragraph (2) occurs the outstanding balance of the deferred tax is due on the date on which the next instalment of that tax would otherwise be due. (2) The events are— (a) the company becoming insolvent or entering administration; (b) the appointment of a liquidator in respect of the company; (c) an event under the law of a country or territory outside the United Kingdom corresponding to an event in paragraph (a) or (b); (d) the company failing to pay any amount of the deferred tax for a period of 12 months after the date on which the amount becomes due; (e) the company ceasing to be within the charge to corporation tax. (11) (1) This paragraph applies where— (a) a CT payment plan is entered into by a company, (b) during the instalments period a trigger event occurs in relation to a qualifying transaction identified in the plan, and (c) a trigger event has not previously occurred in relation to that qualifying transaction during the instalments period. (2) A trigger event occurs in relation to a qualifying transaction if the transferee ceases to be resident in an EEA state and, on so ceasing, does not become resident another EEA state. (3) A trigger event occurs in relation to a qualifying transaction if the company and the transferee cease to be members of the same group as one another. (4) A trigger event occurs in relation to a qualifying transaction within sub-paragraph (2) or (5) of paragraph 3 if the transferee disposes of the asset that is the subject of the transaction. (5) A trigger event occurs in relation to a qualifying transaction within sub-paragraph (3) or (4) of paragraph 3 if the transferee ceases to be a party to the loan relationship or derivative contract concerned. (6) On the occurrence of the trigger event an amount of the deferred tax is due. (7) The amount due is— $$( A − B ) × O T$where—“A” is the amount of the deferred tax that is attributable to the qualifying transaction (see paragraph 7(2)),“B” is the amount of the deferred tax that has previously become due under paragraph 12 by reason of a partial trigger event occurring in relation to the qualifying transaction,“O” is the amount of the deferred tax that is outstanding at the time of the trigger event, and“T” is the amount of the deferred tax.$ (8) In this paragraph “the instalments period” means the period— (a) beginning with the time the CT payment plan is entered into, and (b) ending with the day on which the final instalment of the deferred tax is due under paragraph 9. (12) (1) This paragraph applies where— (a) a CT payment plan is entered into by a company, (b) during the instalments period a partial trigger event occurs in relation to a qualifying transaction listed in the plan, and (c) a trigger event has not previously occurred in relation to that qualifying transaction during the instalments period. (2) A partial trigger event occurs in relation to a qualifying transaction within sub-paragraph (2) of paragraph 3 if the transferee disposes of part (but not all) of the asset that is the subject of the transaction. Section 21(2)(b) of TCGA 1992 (meaning of part disposal of an asset) applies for the purposes of this sub-paragraph as it applies for the purposes of that Act. (3) A partial trigger event occurs in relation to a qualifying transaction within sub-paragraph (3) or (4) of paragraph 3 if there is a disposal by the transferee of a right or liability under the loan relationship or derivative contract concerned which amounts to a related transaction (as defined in section 304 or 596 of CTA 2009 as the case may be). (4) A partial trigger event occurs in relation to a qualifying transaction within sub-paragraph (5) of paragraph 3 if the transferee enters into a subsequent transaction which results in a reduction in the accounting value of the intangible fixed asset that is the subject of the qualifying transaction but does not result in the intangible fixed asset ceasing to be recognised in the transferee's balance sheet. (5) In relation to an intangible fixed asset that has no balance sheet value (or no longer has a balance sheet value) sub-paragraph (4) applies as if, immediately before the subsequent transaction, it did have a balance sheet value. (6) On the occurrence of the partial trigger event an amount of the deferred tax is due. (7) The amount due is the amount that is just and reasonable having regard to the amount that would have been due had a trigger event occurred in relation to the qualifying transaction instead. (8) In this paragraph “the instalments period” and “trigger event” have the same meaning as in paragraph 11.

Penalties

3

• (1) Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended as follows.

• (2) In the Table at the end of paragraph 1, after entry 6ZA insert—

6ZAA	Corporation tax	Amount payable under a CT payment plan entered into in accordance with Schedule 3ZC to TMA 1970	The later of—the first day after the period of 12 months beginning immediately after the accounting period to which the CT payment plan relates, andthe date on which the amount is payable under the plan.

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

Commencement

4

• (1) The amendments made by this Schedule—

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

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

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

Power of repeal

5

• (1) The Treasury may by regulations—

• (a) repeal section 59FB of TMA 1970,

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

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

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

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

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

SCHEDULE 8

PART 1 — Introduction

1

• (1) References in this Schedule—

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

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

• (2) In this Schedule—

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

• “tax” means digital services tax;

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

PART 2 — DST returns

DST returns

2

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

• (2) A DST return must—

• (a) be in the specified form,

• (b) contain specified information,

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

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

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

Amendment of return by responsible member

3

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

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

• (3) The notice must—

• (a) be in the specified form, and

• (b) contain specified information.

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

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

PART 3 — Duty to keep and preserve records

Duty to keep and preserve records

4

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

• (2) The responsible member must—

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

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

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

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

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

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

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

Preservation of information etc

5

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

• (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 any conditions or exceptions specified in a notice published by HMRC.

PART 4 — Enquiry into return

Notice of enquiry

6

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

• (2) The time allowed is—

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

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

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

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

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

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

Scope of enquiry

7

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

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

• (b) to the amount of tax so chargeable.

This is subject to the following exception.

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

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

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

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

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

8

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

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

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

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

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

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

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

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

Amendment of return by responsible member during enquiry

9

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

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

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

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

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

• (i) 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 the closure notice is issued (see paragraph 14);

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

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

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

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

Referral of questions to the tribunal during enquiry

10

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

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

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

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

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

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

Withdrawal of notice of referral

11

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

Effect of referral on enquiry

12

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

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

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

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

Effect of determination

13

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

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

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

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

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

Completion of enquiry

14

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

• (2) A closure notice must either—

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

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

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

Direction to complete enquiry

15

• (1) The responsible member may apply to the tribunal for a direction that an officer of Revenue and Customs give a closure notice under paragraph 14 within a specified period.

• (2) The tribunal hearing the application must give a direction unless satisfied that HMRC have reasonable grounds for not giving an enquiry closure notice within a specified period.

• (3) Paragraphs 44 (settling of appeals by agreement) and 51 (tribunal determinations) apply to an application under sub-paragraph (1) as they apply to an appeal under paragraph 33, subject to any necessary modifications.

PART 5 — HMRC determinations

Determination of tax chargeable if no return delivered

16

• (1) An officer of Revenue and Customs may determine to the best of the officer's information and belief the total amount of tax payable by relevant persons for an accounting period (“an HMRC determination”) if the conditions in sub-paragraph (2) are met.

• (2) The conditions in this sub-paragraph are met if—

• (a) no DST return for the accounting period has been delivered by the end of the filing date, and

• (b) the officer has reasonable grounds for believing the responsible member is under a duty to deliver a DST return for the accounting period.

• (3) Notice of an HMRC determination—

• (a) must state the date on which it is issued, and

• (b) must be served on the responsible member.

• (4) No HMRC determination may be made more than 3 years after the filing date.

Determination to have effect as a self-assessment

17

• (1) An HMRC determination has effect for enforcement purposes as if it were a self-assessment (within the meaning of paragraph 2(2)).

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

• (a) tax-related penalties,

• (b) collection and recovery of tax, and

• (c) interest on overdue tax.

• (3) Nothing in this paragraph affects any liability to a penalty for failure to deliver a return.

Determination superseded by actual self-assessment

18

• (1) If, after an HMRC determination has been made, a DST return is delivered for the accounting period, the self-assessment included in the return supersedes the determination.

• (2) Sub-paragraph (1) does not apply to a return delivered—

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

• (b) more than 12 months after the date of the determination,

whichever is the later.

• (3) Where—

• (a) proceedings have been begun for the recovery of any tax charged by an HMRC determination, 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.

• (4) Where—

• (a) action is being taken under Part 1 of Schedule 8 to F(No.2)A 2015 (enforcement of deduction from accounts) for the recovery of an amount (“the original amount”) of tax charged by an HMRC determination, and

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

that action may be continued as if it were an action for 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.

PART 6 — HMRC assessments

Assessments where loss of tax discovered

19

• (1) If, in respect of an accounting period of a group, an officer of Revenue and Customs discovers that—

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

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

the officer may make an assessment (a “discovery assessment”) in the amount or further amount which ought in the officer's opinion to be charged in order to make good to the Crown the loss of tax.

• (2) This is subject to the restrictions in paragraph 20.

Restrictions on assessments

20

• (1) If a DST return has been delivered in respect of the accounting period, the power to make a discovery assessment—

• (a) may only be made in the two cases specified in sub-paragraphs (2) and (3), and

• (b) may not be made in the circumstances specified in sub-paragraph (5).

• (2) The first case is where the situation mentioned in paragraph 19(1) was brought about carelessly or deliberately on the part of—

• (a) a relevant person, or

• (b) a person acting on behalf of a relevant person.

• (3) The second case is where an officer of Revenue and Customs, at the time the officer—

• (a) ceased to be entitled to give a notice of enquiry into the return, or

• (b) completed an enquiry into the return,

could not have been reasonably expected, on the basis of the information made available to the officer before that time, to be aware of the situation mentioned in paragraph 19(1).

• (4) For this purpose information is regarded as made available to the officer of Revenue and Customs if—

• (a) it is contained in the DST return for the accounting period in question or either of the two immediately preceding accounting periods,

• (b) it is contained in any documents produced or information provided by the responsible member for the purposes of an enquiry into any such return, or

• (c) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 19(1)—

• (i) could reasonably be expected to be inferred by the officer of Revenue and Customs from information falling within paragraph (a) or (b), or

• (ii) are notified in writing to an officer of Revenue and Customs by the responsible member or another person acting on the responsible member's behalf.

• (5) No discovery assessment may be made if—

• (a) the situation mentioned in paragraph 19(1) is attributable to a mistake in the return as to the basis on which the tax liability ought to have been calculated, and

• (b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time it was made.

Time limits for discovery assessments

21

• (1) The general rule is that no discovery assessment may be made more than 4 years after the end of the accounting period to which it relates.

• (2) An assessment in a case involving a loss of tax brought about carelessly by a relevant person (or a person acting on their behalf) may be made at any time not more than 6 years after the end of the accounting period to which it relates.

• (3) An assessment in a case involving a loss of tax—

• (a) brought about deliberately by a relevant person (or a person acting on their behalf), or

• (b) attributable to a failure by the responsible member to comply with an obligation under section 54,

may be made at any time not more than 20 years after the end of the accounting period to which it relates.

Assessment procedure etc

22

• (1) Where notice of a discovery assessment is issued, the notice must be served on the responsible member.

• (2) The notice must state—

• (a) the tax due,

• (b) the date on which the notice is issued, and

• (c) the time within which any appeal against the assessment must be made.

• (3) After notice of the assessment has been served under this paragraph, the assessment may not be altered except as provided for by or under this Part of this Act.

• (4) Where an officer of Revenue and Customs has—

• (a) decided to make an assessment to tax, and

• (b) taken all other decisions needed for arriving at the amount of the assessment,

the officer may entrust to some other officer of Revenue and Customs the responsibility for completing the assessing procedure, whether by means involving the use of a computer or otherwise, including responsibility for serving notice of the assessment.

Liability to amounts charged by way of discovery assessment

23

• (1) This paragraph applies where—

• (a) notice of a discovery assessment has been issued under paragraph 22, and

• (b) no appeal has been brought against the assessment under paragraph 33(1)(c).

• (2) The responsible member is liable to the tax due, subject as follows.

• (3) The responsible member may make a request to an officer of Revenue and Customs for one or more other relevant persons to be liable to the tax due (or any part of it).

• (4) The request must be made within 30 days of the date of issue of the notice of assessment.

• (5) Within 30 days of receiving the request, the officer must—

• (a) either agree to the request or refuse it,

• (b) notify the responsible member of the decision, and

• (c) if the officer agrees to the request, give effect to it by making all necessary adjustments.

• (6) An officer may not agree to the request unless satisfied it is reasonable in all the circumstances.

• (7) A request or notification under this paragraph must be in writing.

PART 7 — Relief in case of overpaid tax

Claim for relief for overpaid tax

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• (1) This paragraph applies where, in relation to a group, an amount has been paid by way of tax for an accounting period which was not tax due.

• (2) The responsible member may make a claim to the Commissioners for repayment of the amount.

• (3) The Commissioners must give effect to such a claim; but this is subject to—

• (a) paragraph 26 (cases where no liability to give effect to claim), and

• (b) paragraph 27 (power to enquire into claims).

• (4) Except as provided for by or under this Part of this Act, the Commissioners are not liable to repay any amount paid by way of tax by reason of the fact it was not tax due.

• (5) This paragraph is to be read with paragraph 25.

Making a claim

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• (1) A claim under paragraph 24 may not be made—

• (a) if the amount paid is excessive by reason of a mistake in a DST return or returns, more than 4 years after the end of the accounting period to which the return (or, if more than one, the first return) relates, and

• (b) otherwise, more than 4 years after the end of the accounting period in respect of which the amount was paid.

• (2) A claim must—

• (a) be in the specified form, and

• (b) contain specified information.

• (3) A claim may not be made by being included in a DST return.

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

Cases in which Commissioners not liable to give effect to claim

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• (1) If, or to the extent that, a claim under paragraph 24 falls within any of Cases A to D, the Commissioners are not liable to give effect to the claim.

• (2) Case A is where, in relation to the group, there is unpaid DST liability for the accounting period.

• (3) Case B is where the responsible member is or will be able to seek relief by taking other steps under this Part of this Act.

• (4) Case C is where the responsible member—

• (a) could have sought relief by taking such steps within a period that has now expired, and

• (b) knew, or ought reasonably to have known, before the end of that period that such relief was available.

• (5) Case D is where—

• (a) the amount paid is excessive by reason of a mistake in calculating the amount of tax payable by the group for the accounting period, and

• (b) the amount was calculated in accordance with the practice generally prevailing at the time.

• (6) In this paragraph “DST liability” has the same meaning as in section 66.

Power to enquire into claims

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• (1) An officer of Revenue and Customs may enquire into a claim under paragraph 24 if the officer gives notice to the responsible member of the officer's intention to do within the time allowed.

• (2) The time allowed is the period ending with the quarter day next following the first anniversary of the day on which the claim was made.

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

• (3) A claim enquired into under sub-paragraph (1) may not be the subject of a further notice under that sub-paragraph.

Completion of enquiry into claim etc

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• (1) An enquiry under paragraph 27 is completed when the officer by notice (a “closure notice”) informs the responsible member that the enquiry is complete and states the conclusions reached in the enquiry.

• (2) A closure notice must either—