Finance Act 2024

• (i) in the words before paragraph (a), omit “blended”, and

• (ii) in paragraph (b), in the words before sub-paragraph (i), omit “blended”, and

• (f) omit subsection (10).

• (5) In Schedule 17 (index of defined expressions), in the table, at the appropriate place insert—

CFC entity	section 179(4)

.

Blended CFC regimes

19

• (1) Section 180 (blended CFC regimes) is amended as follows.

• (2) In subsection (5)(a), after “C” insert “in relation to the CFC entity”.

• (3) In subsection (7)—

• (a) after “C” insert “in relation to a CFC entity in which C has an ownership interest”, and

• (b) for “F” substitute “the entity”.

• (4) In subsection (8)(b) for sub-paragraph (ii) substitute—

(ii) the result of Step 2 in section 132(1) for those entities were the aggregate of their profits (and losses) before tax as shown in their financial accounts, (iia) the combined covered tax balance for those entities were the aggregate of the taxes shown in their financial accounts,

.

Qualifying foreign tax credits (substitute loss carry forward assets)

20

• (1) Section 183 (substitute loss carry forward assets) is amended as follows.

• (2) In subsection (3), in paragraph (b), for “in respect of which the foreign tax was calculated” substitute “in the territory in which the member is located”.

• (3) In subsection (4), after “qualifying” insert “foreign”.

• (4) In subsection (5), after “section” insert “and in section 183A“

• (5) After section 183 insert—

(183A) (1) A special foreign tax asset of a member of a multinational group is to be used to increase its covered tax balance in accordance with this section. (2) Subsection (3) applies where— (a) the territory in which a member of a multinational group is located requires that domestic losses are offset against relevant foreign income before foreign tax credits can be applied against tax on foreign income, (b) the territory limits the extent to which foreign tax credits can be applied against tax in a taxable period, (c) the territory allows foreign tax credits to be used to a greater extent where a domestic loss has been used to offset (in whole or in part) relevant foreign income in a prior period, and (d) the member has used a domestic loss to offset (in whole or in part) relevant foreign income. (3) Where this subsection applies, the member has a special foreign tax asset arising in the accounting period in which the loss was used. (4) The amount of that special foreign tax asset is the amount of the domestic loss used to offset relevant foreign income multiplied by the lesser of— (a) the nominal rate of tax in the member’s territory for the taxable period in which it was used, and (b) 15%. (5) Where a member of a multinational group has a special foreign tax asset that arose in any previous accounting period, the member is to use that amount to increase its covered tax balance. (6) The amount of the special foreign tax asset that is to be used in an accounting period is the lesser of— (a) the amount of the asset, and (b) so much of the amount of foreign tax credits credited against tax in the taxable period corresponding to that accounting period as is capable of being credited only as a result of the prior use of the domestic loss. Any remainder continues to be a special foreign tax asset (and is available for use in subsequent account periods where subsection (5) applies).

Substance based income exclusion: inter-jurisdictional employees and assets

21

• (1) In section 196 (eligible payroll costs)—

• (a) in subsection (1), in paragraph (c) for “those activities are substantially performed” substitute “at least some of the work is carried out”, and

• (b) after that subsection insert—

(1A) But where— (a) an employee carries out the work in the period both in the territory in which the member is located and outside that territory, and (b) the proportion of the time spent carrying out the work in that territory in the period is 50% or less, the payroll costs in respect of the employee are to be multiplied by that proportion to determine how much of those costs are eligible payroll costs.

• (2) In section 197 (eligible tangible asset amounts) after subsection (6) insert—

(6A) Where an asset falling within paragraph (a), (c) or (d) of subsection (6) is only located in the same territory as the member for part of the period— (a) it is to be regarded for the purposes of this section as located in that territory for the whole period, but (b) where the proportion of the period in which the asset (or in the case of a right, the asset to which the right relates) is located in the territory is 50% or less, the carrying values for the purposes of subsection (1)(a) and (b) are to be multiplied by that proportion.

Substance based income exclusion: inclusion of payroll costs and assets voluntary

22

• (1) In section 196, in subsection (1)—

• (a) omit the “and” after paragraph (c), and

• (b) at the end of paragraph (d) insert

, and, (e) the filing member chooses to include those costs in calculating the substance based income exclusion for the period.

• (2) In section 197, in subsection (5)—

• (a) in the words before paragraph (a), omit “it is”,

• (b) in paragraph (a), at the beginning insert “it is”,

• (c) omit the “and” after that paragraph,

• (d) in paragraph (b), at the beginning insert “it is”, and

• (e) at the end of that paragraph insert

and, (c) the filing member chooses to include the asset in calculating the substance based income exclusion for the period.

Substance based income exclusion: impairment losses

23

In section 197(4)—

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

• (b) after paragraph (c) insert—

(d) any impairment loss, and (e) so much of the reversal of a previous impairment loss as does not cause the carrying value to exceed the value it would have been had the impairment loss not been recognised,

.

Substance based income exclusion: dual use assets

24

In section 197, after subsection (7) insert—

(7A) Where part of an asset comprising property is held by a member of a multinational group for lease, but another part of that property is retained for use by the member— (a) the parts are to be treated as separate assets for the purposes of this section and section 197A, and (b) the carrying value of the asset is to be allocated between the separate parts on a just and reasonable basis.

Substance based income exclusion: leases

25

• (1) In section 195 (calculation of substance based income exclusion), after subsection (7) insert—

(7A) Section 197A sets out the treatment of operating leases.

• (2) After section 197 insert—

(197A) (1) Subsection (2) applies where— (a) a member of a multinational group holds property located in the same territory as the member in an accounting period, (b) that property is held for lease by the member, and (c) the lease is accounted for in the underlying profits accounts of the member as an operating lease for that period. (2) The operating lease is to be regarded as an eligible tangible asset of the member for that period (despite the exclusion in section 197(7)(a)). (3) But where the property is not a short-term rental asset for that period, any carrying value of the operating lease recorded at the start or the end of the period is to be reduced by the right-of-use amount for the property at that time for the purposes of carrying out the calculation in section 197(1). (4) In a case where the lessee is a member of the same multinational group as the lessor, the right-of-use amount in relation to the property at the start or the end of the period is the carrying value of the lessee’s right-of-use asset in relation to the property recorded at that time. (5) Where the lessee is not a member of the same multinational group as the lessor, the right-of-use amount in relation to the property at the start or end of the period is the undiscounted value of any outstanding payments under the lease at that time. (6) In determining the value of those outstanding payments— (a) apply the accounting standard used in determining the underlying profits of the member, (b) include the value of any outstanding payments that would be due under any extension to the lease that would fall to be accounted for in accordance with that standard. (7) For the purposes of this section, property held for lease is a short-term rental asset in an accounting period if— (a) the property was leased regularly during that period to different lessees, and (b) the average length of the periods for which it was leased does not exceed 30 days.

Substance based income exclusion: power to make further provision

26

After section 198 insert—

(198A) (1) The Treasury may by regulations make provision about the treatment of payroll costs and tangible assets in specified circumstances. (2) Regulations may, in particular, provide that in determining the substance based income exclusion for a territory— (a) specified eligible tangible assets or eligible payroll costs are to be treated as having a different value; (b) specified eligible tangible assets or eligible payroll costs are to be attributed to a different member of a multinational group or to a different territory; (c) specified eligible tangible assets or eligible payroll costs are to be excluded from that determination; (d) specified assets that are not eligible tangible assets are to be treated as eligible tangible assets; (e) specified costs that are not eligible payroll costs are to be treated as eligible payroll costs. (3) In this section “specified” means specified or described in regulations.

Transfer of assets or liabilities to a member of a multinational group

27

In section 211 (transfer of assets or liabilities to a member of a multinational group)—

• (a) for subsection (1) substitute—

(1) Subsection (1A) applies where there has been a transfer of assets or liabilities to a member of a multinational group and— (a) the transfer forms part of a qualifying reorganisation (see section 212), or (b) the transferor is a member of the group and— (i) the transferee is located in the same territory as the transferor, (ii) the transferee and transferor are included in the same tax consolidation group in that territory (within the meaning of section 164(5)), and (iii) an election under section 164 (election to exclude intra-group transactions) has effect in relation to those members at the time of the transfer. (1A) The value of the assets or liabilities is, for the purpose of determining the adjusted profits of the member, the carrying value of the assets or liabilities in the hands of the transferor immediately before the transfer. (1B) Subsection (1C) applies where there has been a transfer of assets or liabilities to a member of a multinational group and subsection (1A) does not apply. (1C) The value of the assets or liabilities is, for the purpose of determining the adjusted profits of the member, the carrying value of the assets or liabilities immediately after the transfer as determined under the accounting standard used in determining the underlying profits of the member for the purposes of this Part and subject to the adjustments to those profits made in accordance with Chapter 4.

, and

• (b) in subsection (2)(a), for “subsection (1)(b) applies” substitute “subsection (1C) applies in relation”.

Investment entity tax transparency election

28

In section 213 (investment entity tax transparency election), after subsection (6) insert—

(6A) Where, ignoring the election, profits and amounts of qualifying tax expense would be allocated to M in accordance with sections 168 and 178 to 181, those profits and amounts are to be allocated— (a) first to M, and then (b) to O in proportion to the direct ownership interests O is treated as having in M.

Meaning of country-by-country report

29

• (1) After section 251 insert—

(251A) (1) In this Part “country-by-country report” means a country-by-country report in respect of a multinational group that is prepared and filed in accordance with legislation implementing the OECD’s guidance on country-by-country reporting. (2) But where the legislation of a territory permits the preparation and filing of a partial country-by country report, such a partial report is not to be regarded as country-by-country report for the purposes of this Part. (3) Reference to a country-by-country report in respect of a multinational group that is a multi-parent group is to a report in respect of all of the constituent groups. (4) “The OECD’s guidance on country-by-country reporting” means the guidance on country-by-country reporting contained in the Organisation for Economic Co-operation and Development (“OECD”) Guidance on Transfer Pricing Documentation and Country-by-Country Reporting, published in 2014, as modified, supplemented or replaced from time to time.

• (2) In Schedule 16 (transitional provision), in paragraph 3, for sub-paragraphs (7) and (8) substitute—

(7) For the purposes of this Part of this Schedule, a country-by-country report in relation to a territory is “qualifying” if the information relating to the territory is prepared on the basis of qualified financial statements of the multinational group (see paragraph 4). (8) Where there is no requirement under the law of any territory for a country-by-country report to be prepared and filed in respect of a multinational group, the filling member may include, in the information return in which the election is made, the information that would have been in such a report— (a) prepared in accordance with legislation implementing the OECD’s guidance on country-by-country reporting under the law of the territory of the ultimate parent, or (b) where there is no such legislation, prepared in accordance with that guidance. (9) Where such information has been included in that information return, that information is to be treated as if it were a country-by-country report in relation to the territory for the purposes of this Chapter (and where that information complies with sub-paragraph (7), the condition in sub-paragraph (2)(b) is to be treated as met).

• (3) In section 276(b)(i) (application of transitional provision for domestic top-up tax purposes), for “and (8)” substitute “to (9)”.

Joint ventures

30

In section 227 (application of Part to joint venture groups), in subsection (2) for “the multinational group” substitute “each multinational group”.

Insurance investment entities

31

• (1) Section 236 (investment funds and investment entities) is amended as follows.

• (2) In subsection (2)—

• (a) omit paragraph (b),

• (b) for paragraph (c) substitute—

(c) the income or gains the entity is designed to generate are intended to offset liabilities under insurance or annuity contracts;

, and

• (c) for paragraph (e) substitute—

(e) regulated entities hold 100% of the ownership interests in it (see section 244 for how to calculate this).

• (3) After that subsection insert—

(2A) An entity is a regulated entity if— (a) the entity is subject to a regulatory regime in the territory in which it is established or managed, and (b) that regime is specific to persons engaged in the business of entering into insurance or annuity contracts or of performing activities ancillary to such business.

Location of entities

32

• (1) In section 239(6)—

• (a) in paragraph (c), omit “(3) or”, and

• (b) in the words after paragraph (d), for “and 126” substitute “, 128 and 129”.

• (2) In section 240 (location of flow-through entities), for subsection (1) substitute—

(1) Where a flow-through entity would be a responsible member of a multinational group if the entity were located in the territory in which it is created, it is located in that territory.

Currency

33

• (1) For section 254 (use of currency) substitute—

(254) (1) Calculations under this Part in relation to a multinational group, or any member of such a group, are to be carried out in the currency of the consolidated financial statements of the ultimate parent (“the CFS currency”). (2) Where it is necessary to convert an amount into the CFS currency, that conversion is to be made in accordance with the authorised accounting standard— (a) that was used in preparing the consolidated financial statements of the ultimate parent, or (b) where no such statements were prepared, that is used as the basis for the statements that would have been prepared. (3) For the purpose of comparing an amount to a figure expressed in this Part in euros, the amount is to be converted to euros for that purpose (from the CFS currency) by reference to the average exchange rate for the month of December that preceded the beginning of the accounting period to which the amount relates. (4) Where the European Central Bank publishes exchange rates for the CFS currency, use those rates for the purposes of the conversion under subsection (3) and any conversion under step 4 in section 123 (amount charged by reference to top-up amounts). (5) Otherwise— (a) where the Bank of England publishes exchange rates for the CFS currency, use those rates for the purposes of that conversion, or (b) where the Bank of England does not publish exchange rates for that currency, use such a rate as appears, on a just and reasonable basis, to reflect the average exchange rate for the period in question.

• (2) In section 123 (amount charged by reference to “top-up amounts”), for Step 4 substitute—

• Step 4 Convert the result of Step 3 (which in accordance with section 254 will be expressed in the CFS currency) to sterling using the average exchange rate for the accounting period (if the CFS currency is not sterling).

Application of Pillar Two rules to members of a group

34

• (1) In section 255 (meaning of Pillar Two rules)—

• (a) after subsection (2) insert—

(2A) Pillar Two rules apply to a member of a multinational group (“the relevant member”) in an accounting period if conditions A, B and C are met.

,

• (b) in subsection (3)—

• (i) for the words before paragraph (a) substitute “Condition A is met if—”,

• (ii) in paragraph (a), after “multinational group” insert “for the accounting period”, and

• (iii) in paragraph (b), after “multinational group” insert “for the accounting period”, and

• (c) after that subsection insert—

(4) Condition B is that— (a) the ultimate parent is subject to Pillar Two IIR tax for the accounting period and is not located in the same territory as the relevant member, (b) an intermediate parent member of the group is subject to Pillar Two IIR tax for the accounting period, is not located in the same territory as the relevant member and has an ownership interest in— (i) the relevant member, or (ii) a member of the group located in the same territory as the relevant member, or (c) any member of the group is located in a territory in which a qualifying undertaxed profits tax is in force for the accounting period. (5) Condition C is that no transitional safe harbour election applies to the relevant member for that period. (6) For the purposes of this Part “transitional safe harbour election” means— (a) an election under paragraph 3(1) (transitional safe harbour), or (b) an election corresponding to that election for the purposes of a tax imposed by a Pillar Two territory that is equivalent to multinational top-up tax so far as it relates to top-up tax under the IIR (within the meaning of the Pillar Two rules).

• (2) In paragraph 2 of Schedule 16 (intra-group transfers before entry into regime)—

• (a) in sub-paragraph (1), for paragraph (b) substitute—

(b) the Pillar Two rules do not apply to the transferor for the accounting period in which the transfer takes place (but in determining this, section 255(4) has effect as if sub-paragraph (ii) of paragraph (b) were omitted), (ba) a qualifying domestic top-up tax does not apply in relation to the transferor for that period, and

,

• (b) in sub-paragraph (4)(b)—

• (i) in the words before sub-paragraph (i), after “which” insert “the Pillar Two rules apply to the transferee.”, and

• (ii) omit sub-paragraphs (i) and (ii),

• (c) in sub-paragraph (6), in paragraph (a) of Step 2, for paragraph (a) substitute—

(a) the ultimate parent had been located in the United Kingdom and the accounting period commenced on or after 31 December 2023, and

, and

• (d) in sub-paragraph (11)—

• (i) the words from ““a transfer” to the end become paragraph (a), and

• (ii) after that paragraph insert—

(b) a qualifying domestic top-up tax is not to be taken as applying to a member of a multinational group if provision for a QDMTT Safe Harbour (within the meaning of the Pillar Two rules) applies to it.

• (3) In paragraph 3 of that Schedule—

• (a) in sub-paragraph (2)(c)(ii), for “applied to members” substitute “would, ignoring any transitional safe harbour election, have applied to any member”, and

• (b) omit sub-paragraph (4).

Qualifying domestic top-up tax not treated as accruing

35

• (1) After section 256 insert—

(256A) (1) Subsection (2) applies for the purposes of sections 194(2) to (7), 203(3) to (7) and 206(4) to (8) (application of QDT credits in determination of top-up amounts). (2) An amount of qualifying domestic tax accruing to a member of a multinational group is to be treated as not accruing to the member where the enforceability of the amount is in question. (3) For the purposes of this section, the enforceability of an amount of qualifying domestic top-up tax accruing to a member of a multinational group is in question if— (a) the member disputes its enforceability on any of the grounds set out in subsection (4), or (b) the tax authority of the territory in which the qualifying domestic top-up tax is imposed considers the amount unenforceable on the basis of any of those grounds. (4) Those grounds are that— (a) the amount is unenforceable on constitutional grounds or as a result of other superior law applying in the territory in which the qualifying domestic top-up tax is imposed, or (b) the amount is unenforceable as a result of a specific agreement with the government of that territory as to the tax liability of the member or the group. (5) Subsection (2) ceases to apply where the enforceability of an amount of qualifying domestic top-up tax ceases to be in question. (6) Where the enforceability of an amount of qualifying domestic top-up tax was in question, it ceases to be in question where— (a) the amount has been paid, and (b) the enforceability of the amount may no longer be disputed as a result of— (i) a settlement, (ii) the time for any appeal having passed and there being no reasonable prospect of the time being extended, or (iii) the exhaustion of any rights to appeal.

• (2) In section 194 (total top-up amount for a territory), in subsection (3), for “section 256” substitute “sections 256 and 256A”.

Consistency with Pillar Two rules

36

In section 262 (power to amend to ensure consistency with Pillar Two) after subsection (1) insert—

(1A) The provision that may be made by regulations under subsection (1) includes provision designed to secure the effective implementation of the Pillar Two rules including— (a) provision to ensure consistency with commentaries or guidance published by the OECD that has effect from a time before the commentary or guidance was published; (b) provision that the Treasury consider necessary to secure the effective operation of multinational top-up tax or domestic top-up tax (see Part 4) where— (i) the provision does not, at the time of making it, reflect the Pillar Two rules, but (ii) it is reasonable for the Treasury to believe that changes will be made to the rules that are consistent with, or are similar to, the provision. (1B) Provision made by regulations under subsection (1) may not have effect— (a) in the case of provision falling within subsection (1A)(a), in relation to accounting periods ending before the commentary or guidance was published, or (b) in the case of any other provision, in relation to accounting periods ending before the regulations are made. (1C) Provision that has effect in relation to accounting periods that begin before the regulations are made may only be made if the Treasury consider that the provision is generally beneficial to— (a) persons affected by the implementation of the Pillar Two rules, or (b) persons affected by the provision. (1D) The reference in subsection (1C) to provision being generally beneficial includes the provision being beneficial by reference to it— (a) simplifying, or reducing the costs of, compliance with— (i) multinational top-up tax or domestic top-up tax, or (ii) taxes imposed under the law of a territory outside the United Kingdom that correspond to multinational top-up tax or domestic top-up tax; (b) generally (but not necessarily in every case) resulting in a reduction or elimination of a liability to— (i) multinational top-up tax or domestic top-up tax, or (ii) taxes imposed under the law of a territory outside the United Kingdom that correspond to multinational top-up tax or domestic top-up tax.

Overpaid tax

37

• (1) Schedule 14 is amended as follows.

• (2) In paragraph 51 (claims in relation to overpaid tax)—

• (a) in sub-paragraph (5)—

• (i) omit the words from “otherwise” to “paragraph,”, and

• (ii) after “due” insert “otherwise than—

(a) pursuant to a claim under this paragraph, or (b) in accordance with another provision of this Schedule.

, and

• (b) omit sub-paragraphs (6) and (7).

• (3) After paragraph 33 insert—

(33A) (1) Where a person has paid an amount that has been paid by way of multinational top-up tax but the amount is not due, the amount incurs interest at the rate provided for in regulations made under section 178 of FA 1989 from the later of— (a) the day after the latest day (under paragraph 32) by which the amount paid would have been required to be paid as multinational top-up tax if it were due, and (b) the day on which the amount was paid. (2) See paragraph 51 for provision about making claims for the repayment of an amount that is not tax that was due (but see also paragraph 52 which, for example, prevents such a claim being made where an amendment to an assessment can be, or could have been, made).

Intragroup transfers before entry into regime

38

• (1) Paragraph 2 of Schedule 16 (intra-group transfers before entry into regime) is amended as follows.

• (2) In sub-paragraph (3)(b), after “limited to” insert “the lesser of the cap amount and the sum of—

(i) the value of deferred tax assets that arose in relation to the assets before their transfer, and (ii)

.

• (3) After that sub-paragraph insert—

(3A) For the purposes of determining the value of a deferred tax asset under sub-paragraph (3)(b)(i)— (a) if the rate of tax in relation to that asset is greater than 15%, the value is to be adjusted so that it reflects the value it would be if the rate had been 15%, and (b) exclude the impact of any valuation adjustments or accounting recognition adjustments.

• (4) In sub-paragraph (5)(b), for “is” substitute “, and the value of deferred tax assets that arose in relation to the assets before their transfer, are”.

• (5) For sub-paragraph (7) substitute—

(7) In determining the tax expense of the transferor in relation to the transfer of the assets— (a) where any loss arising in the accounting period in which the transfer took place is offset against any taxable gain arising on the transfer, ignore that offsetting, and (b) exclude the impact of any valuation adjustments or accounting recognition adjustments.

• (6) In sub-paragraph (9)—

• (a) for “, ignoring sub-paragraph (7),” substitute “the sum of”,

• (b) for “in relation to the transfer of assets would exceed” substitute “and the value of deferred tax assets that arose in relation to the assets before their transfer is greater than”, and

• (c) omit “in relation to it”.

• (7) In sub-paragraph (11), for “substantially the same economic effect as” substitute “a similar effect for accounting purposes to”.

• (8) After sub-paragraph (11) insert—

(12) Where assets are transferred from one member of a multinational group to another member of that group as a result of a series of transfers that— (a) fall within sub-paragraph (1), but (b) do not fall within sub-paragraph (2), that series is to be treated as a single transfer of assets that falls within sub-paragraph (1). (13) This paragraph applies to that single transfer as if— (a) the reference to the transferor in sub-paragraph (3)(a) were to the transferor in relation to the first transfer in the series, (b) the references in sub-paragraph (3)(b) to the cap amount, the value of deferred tax assets that arose in relation to the assets before their transfer and the tax paid amount were to the aggregate of each such amount or value as determined for the purpose of each transfer that makes up the series, (c) the reference to the date of the transfer in sub-paragraph (4)(a) were to the date of the last transfer in the series, and (d) the references to the transferee in sub-paragraph (4)(b) were to the transferee in relation to the last transfer in the series.

Transitional safe harbour

39

• (1) Part 2 of Schedule 16 (transitional safe harbour) is amended as follows.

• (2) In paragraph 3, for sub-paragraph (1) substitute—

(1) The filing member of a multinational group may make a transitional safe harbour election for an accounting period in respect of a territory. (1A) The effect of the election is that all of the standard members of the group located in the territory are to be treated as not having top-up amounts or additional top-up amounts for the purpose of determining the liability of any member of the group to multinational top-up tax.

• (3) In paragraph 4—

• (a) in sub-paragraph (3)—

• (i) omit the “and” after paragraph (b), and

• (ii) after paragraph (c) insert

, and (d) qualified substance based income amount (see paragraph 9(2)).

, and

• (b) in sub-paragraph (5), in the words before paragraph (a), for “(c)” substitute “(d)”.

• (4) In paragraph 6(6), for “if” substitute “unless”.

Transitional reporting election

40

• (1) In Schedule 16 (transitional provision), at the end insert—

(13) (1) HMRC may publish a notice that provides for alternative requirements for the information that must be contained in an information return in respect of members of a multinational group to which an election under sub-paragraph (3) applies. (2) Where— (a) HMRC have published a notice under paragraph (1) containing alternative requirements, and (b) an election under sub-paragraph (3) applies to members of a multinational group for an accounting period, paragraph 10 of Schedule 14 applies to the filing member of the group for that period subject to the notice. (3) An election under this sub-paragraph— (a) is to be made in respect of all of the members of a multinational group in a territory, (b) is to be made by the filing member of the group, (c) may only have effect in relation to an accounting period that begins on or before 31 December 2028 and ends before 1 July 2030, and (d) may only be made if condition A, B or C is met. (4) Condition A is that none of the members in the territory have top-up amounts or additional top-up amounts for the accounting period to which the election is to apply. (5) Condition B is that— (a) there is only one responsible member responsible for all of the members in the territory for the accounting period to which the election is to apply, and (b) the sum of amounts attributed under Chapter 7 of Part 3 to that responsible member for that period in respect of those members’ top-up amounts and additional top-up amounts is equal to the sum of the members’ top-up amount and additional top-up amounts. (6) Condition C is that— (a) there is more than one responsible member responsible for the members of the group in the territory for the accounting period to which the election is to apply, and (b) each responsible member is responsible for every member of the group in the territory and has the same inclusion ratio for each member it is responsible for. (7) Paragraph 2 of Schedule 15 (annual elections) applies to an election under this paragraph.

• (2) In Schedule 15 (elections), in paragraph 2(1), after paragraph (j) insert—

(k) paragraph 14 of Schedule 16;

.

Qualifying domestic top-up tax safe harbour

41

• (1) After Schedule 16 insert—

Schedule 16A (1) (1) The filing member of a multinational group may make a qualifying domestic top-up tax safe harbour election for an accounting period in respect of a territory. (2) The effect of the election is that all of the standard members of the group located in the territory are to be treated as not having top-up amounts or additional top-up amounts for the purpose of determining the liability of any member of the group to multinational top-up tax. (3) An election may only be made for an accounting period if— (a) a qualifying domestic top-up tax applies in that territory for that period, (b) that tax is accredited for the purposes of the election (see paragraph 2), and (c) none of the disqualifying conditions in paragraph 3 apply for that period. (4) Paragraph 2 of Schedule 15 (annual elections) applies to an election under this paragraph. (2) A qualifying domestic top-up tax is accredited for the purposes of an election under paragraph 1 if that tax is specified as such in regulations made by the Treasury. (3) (1) Conditions A to D are disqualifying conditions for the purposes of paragraph 1(3)(c) in relation to a multinational group and a territory. (2) Condition A is that— (a) the ultimate parent is located in the territory, (b) the ultimate parent is a flow-through entity, and (c) the qualifying domestic top-up tax applying in the territory— (i) does not generally impose a charge on the ultimate parent as a result of it being a flow-through entity, and (ii) does not include provision for a charge to be imposed on the ultimate parent in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (3) Condition B is that— (a) a responsible member of the group is located in the territory, (b) the member is not the ultimate parent of the group, (c) the member is a flow-through entity, and (d) the qualifying domestic top-up tax applying in the territory— (i) does not generally impose a charge on the member as a result of it being a flow-through entity, and (ii) does not include provision for a charge to be imposed on the member in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (4) Condition C is that— (a) the qualifying domestic top-up tax applying in the territory provides that it does not apply to a multinational group in the initial phase of the group’s international expansion, (b) that provision is not limited in application to circumstances where the members of a multinational group in the territory are not subject to Pillar Two rules, and (c) that provision applies to the group. (5) Condition D is that the enforceability of an amount of qualifying domestic top-up tax accruing to a standard member of the group is in question. (6) Subsections (3), (4) and (6) of section 256A (qualifying domestic top-up tax treated as not accruing where contested) apply for the purpose of determining whether the enforceability of an amount of qualifying domestic top-up tax is in question. (4) (1) For the purpose of applying Chapter 1 of this Part of this Schedule to a joint venture group (see section 227 which applies this Schedule generally, with modifications, to joint venture groups), that Chapter has effect as if in paragraph 3— (a) in sub-paragraph (1), for “Conditions A to D” there were substituted “Conditions A to E”, (b) after sub-paragraph (6), there were inserted— (7) Condition E is that the qualifying domestic top-up tax applying in the territory— (a) does not generally impose a charge on members of the group that are members of a joint venture group, and (b) does not include provision for a charge to be imposed on such members in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (2) For that purpose ignore section 227(1)(a) (reference to ultimate parent treated as reference to joint venture parent). (3) Accordingly, the filing member of a multinational group may make a separate qualifying domestic top-up tax safe harbour election in respect of joint venture members of a joint venture group in a territory. (5) (1) Chapter 1 of this Part of this Schedule to applies to investment entities and has effect for that purpose as if— (a) references to standard members of a multinational group were to members of the group that are investment entities, and (b) in paragraph 3— (i) in sub-paragraph (1), for “Conditions A to D” there were substituted “Conditions A to E”, (ii) after sub-paragraph (6), there were inserted— (7) Condition E is that the qualifying domestic top-up tax applying in the territory— (a) does not generally impose a charge on members of the group that are investment entities, and (b) does not include provision for a charge to be imposed on such members in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (2) Accordingly, the filing member of a multinational group may make a separate qualifying domestic top-up tax safe harbour election in respect of members of the group that are investment entities. (6) (1) Chapter 1 of this Part of this Schedule to applies to minority owned members of a multinational group and has effect for that purpose as if references to standard members of a multinational group were to members of the group that are minority owned members. (2) Accordingly, the filing member of a multinational group may make a separate qualifying domestic top-up tax safe harbour election in respect of minority owned members of the group.

• (2) In section 227 (application of Part to joint venture groups), in subsection (1), in the words before paragraph (a), for “Schedule 16” substitute “Schedules 16 and 16A”.

• (3) For section 260 (transitional provision) substitute—

(260) (1) Schedule 16 contains transitional provision and provision about a general transitional safe harbour. (2) Schedule 16A contains provision about other safe harbours.

• (4) In Schedule 15 (elections), in paragraph 2(1), after paragraph (k) (as inserted by paragraph 40(2) of this Schedule) insert—

(l) paragraph 1 of Schedule 16A.

Part 3 — Domestic top-up tax

Securitisation entities

42

• (1) In section 267 (DTT excluded entities)—

• (a) after subsection (3) insert—

(3A) A securitisation company that is not a member of a group for the purposes of domestic top-up tax is a DTT excluded entity (and see section 267A).

• (b) in subsection (4)—

• (i) the words from ““qualifying” to the end become the first definition, and

• (ii) after that definition insert—

• “securitisation company” has the meaning it has in the Taxation of Securitisation Companies Regulations 2006 (see regulation 4).

• (2) After section 267 insert—

(267A) (1) Subsection (2) applies to a securitisation company that is a member of a group. (2) The company is only to be regarded as a member of the group for the purposes of applying Condition C in section 266 in relation to other members of the group (revenue threshold for group). (3) Otherwise, the company is to be treated as not being a member of any group for the purposes of domestic top-up tax.

• (3) After section 272 insert—

(272A) (1) This section applies where— (a) a covered bond vehicle that is a member of a group would, ignoring this section, have a top-up amount or an additional top-up amount for an accounting period, and (b) at least one of the other members of the group in that period— (i) is located in the United Kingdom, and (ii) is not a covered bond vehicle. (2) For domestic purposes, section 193 (calculation of top-up amounts) has effect for the purpose of determining the top-up amounts (and additional top-up amounts) of— (a) the covered bond vehicle, and (b) the other members of the group that are located in the United Kingdom, as if the adjusted profits of the covered bond vehicle were nil. (3) But subsection (4) applies if none of the members of the group that are located in the United Kingdom, and are not covered bond vehicles, have made a profit for that period (and accordingly will not, ignoring that subsection, have top-up amounts). (4) Each of those members has a top-up amount equal to the amount given by dividing— (a) the sum of the top-up amounts and additional top-up amounts that, ignoring subsection (2), each covered bond vehicle located in the United Kingdom would otherwise have, by (b) the number of those members. (5) For the purposes of this section “covered bond vehicle” has the meaning given by paragraph 53(7) of Schedule 19 to FA 2011.

Investment entities

43

• (1) In section 267—

• (a) in subsection (2), after “subsection (1)” insert “or (3B)(b)”, and

• (b) after subsection (3A) (as inserted by paragraph 42) insert—

(3B) An investment entity is a DTT excluded entity if— (a) it is not a member of a group, or (b) it is a member of group that is comprised only of members located in the United Kingdom. (3C) An investment entity that is a member of a group that is not comprised only of members located in the United Kingdom— (a) is not to be regarded as a qualifying entity, but (b) top-up amounts of that entity are to be determined under sections 220 to 224 (see also section 272(8)(e) which has the effect of attributing those amounts to standard members of the group that are qualifying entities and are located in the same territory as the investment entity). (3D) An investment entity that falls within subsection (3C) is not to be regarded as a member of any group for any purpose other than for the purposes of— (a) determining the top-up amounts of that entity under those sections, (b) applying Condition C in section 266 in relation to other members of the group (revenue threshold for group), and (c) subsections (8)(e) (9), (10) and (11) of section 272.

• (2) In consequence of the amendments made by sub-paragraph (1), in section 266(1) (qualifying entities) omit “or an investment entity”.

• (3) In section 272 (determining top-up amounts of entity that is a member of a group)—

• (a) in subsection (8), in paragraph (e)—

• (i) after “effect” insert “in relation to a qualifying entity that is a standard member of a group” and

• (ii) after “of” insert “qualifying”, and

• (b) after that subsection insert—

(9) An investment entity is a qualifying investment entity in relation to a qualifying entity if it is (a) a member of the same group as the qualifying entity, and (b) located in United Kingdom. (10) Subsection (11) applies to qualifying entities that are standard members of a group for an accounting period where— (a) the total top-up amount referred to in section 193 for that period is greater than nil as a result of the modification of that section set out in subsection (8)(e), and (b) none of those members have made a profit for that period (and accordingly will not, ignoring subsection (11), have top-up amounts). (11) Where this subsection applies, each of those members has a top-up amount (for the purposes of domestic top-up tax) equal to the total top-up amount divided by the number of qualifying entities that are standard members of the group.

Treatment of qualifying refundable tax credits

44

• (1) In section 272(8), after paragraph (d) insert—

(da) in section 182(2)(e), after “credits”, in the first place it occurs, there were inserted “other than qualifying refundable tax credits”;

.

• (2) In section 273(3) (determining top-up amounts of entity that is not a member of a group), after paragraph (b) insert—

(ba) in section 182(2)(e), after “credits”, in the first place it occurs, there were inserted “other than qualifying refundable tax credits”;

.

Effect of becoming subject to Pillar Two rules

45

• (1) After section 273 insert—

(273A) (1) The provisions mentioned in subsection (2) apply to a qualifying entity, for domestic or domestic entity purposes, as if the references to the first accounting period for which the Pillar Two rules apply were to the first accounting period for which the entity is a qualifying entity. (2) Those provisions are— (a) section 185; (b) section 187; (d) sub-paragraph (4) of paragraph 2 of Schedule 16 (but see also section 276(c)(iii) which omits that paragraph in the case of a qualifying entity that is not a member of a group). (273B) (1) This section applies where the Pillar Two rules did not apply to a qualifying entity for one or more accounting periods (each a “pre-Pillar Two period”). (2) Where— (a) the entity has a recaptured deferred tax liability arising as a result of section 184 (recaptured deferred tax liabilities), (b) the initial period, in relation to that liability, is a pre-Pillar Two period, and (c) the first accounting period in which the Pillar Two rules apply to the entity is earlier than the sixth accounting period after the initial period, section 184(2) (recalculation in initial period taking account of recaptured deferred tax liability) does not apply in relation to that recaptured deferred tax liability. (3) Where an election under section 187 (election for losses to be treated as special loss deferred tax assets) applied to the entity in a pre-Pillar Two period— (a) the election ceases to have effect for the first accounting period in which the Pillar Two rules apply, and (b) subsection (2)(b) of section 187 does not apply to prevent the making of an election under section 187 that applies to the entity and that has effect for that period, but (c) no remaining amount of special loss deferred tax assets that arose in a pre-Pillar Two period may be used in that first accounting period or any subsequent accounting period. (4) Subsection (5) or (6) (as the case may be) applies where— (a) a deferred tax asset arises to the entity in a pre-Pillar Two period, (b) section 185(7)— (i) applies to that asset for the purposes of multinational top-up tax, or (ii) would, ignoring subsection (5) below, apply to that asset for those purposes, and (c) the asset is reflected in a collective additional amount for the purposes of domestic top-up tax. (5) Where— (a) an election has been made under section 205 (election to carry forward) in relation to the collective additional amount, (b) the subtraction required by subsection (2)(a) of that section has not occurred in a pre-Pillar Two period, the amount to be subtracted as a result of that subsection is to be reduced by so much of that amount as reflects the asset. (6) Otherwise, section 185(7) does not apply to the asset for the purposes of multinational top-up tax to the extent it was reflected in a collective additional amount for the purposes domestic top-up tax.

• (2) In section 276 (application of transitional provision)—

• (a) after paragraph (a) insert—

(aa) where a qualifying member is a member of a group, for paragraph 3(2)(c) there were substituted— (c) the election has been made in respect of the territory for each preceding accounting period that commenced on or after 31 December 2023— (i) in which the Pillar Two rules would, ignoring any transitional safe harbour election, have applied to any member of the group in the territory, and (ii) in which any member of the group is a qualifying entity for the purposes of domestic top-up tax,

, and

• (b) in paragraph (c), after sub-paragraph (iii) insert—

(iiia) for paragraph 3(2)(c) there were substituted— (c) the election has been made in respect of the territory for each preceding accounting period that commenced on or after 31 December 2023 in which the member was a qualifying entity for the purposes of domestic top-up tax,

.

Dividends from protected cell companies

46

After section 273B (as inserted by paragraph 45) insert—

(273C) (1) This section applies to a dividend or other distribution made by a protected cell company that is received or accrued by— (a) a qualifying entity that is not a member of a group, or (b) a member of a group that has no members located outside of the United Kingdom. (2) A dividend or other distribution to which this section applies is to be treated as an excluded dividend (see section 141) for domestic purposes and domestic entity purposes.

Consistency with Pillar Two rules

47

• (1) In section 262(1) (power to amend to ensure consistency with Pillar Two)—

• (a) in paragraph (a), for “or of Schedule 14 to Schedule 16” substitute “, Part 4 or any of Schedules 14 to 16A and 18”, and

• (b) in paragraph (b), for “or Schedule 14 to Schedule 17” substitute “, Part 4 or any of Schedules 14 to 18”.

• (2) In consequence of the amendments made by sub-paragraph (1), omit section 274 (application of section 262).

Part 4 — Minor and technical changes

Chapter 2 of Part 3 (qualifying multinational groups and their members)

48

• (1) In section 127(12) (excluded entities) for “pensions service” substitute “pension services”.

• (2) In section 128 (responsible members)—

• (a) in subsection (2)—

• (i) for “its members” substitute “the members of the group”, and

• (ii) for “it” substitute “the ultimate parent”, and

• (b) in subsection (7)—

• (i) in the words before paragraph (a), after “tax” insert “for an accounting period”,

• (ii) in paragraph (a), at the beginning insert “the period commences on or after 31 December 2023 and”, and

• (iii) in paragraph (b), in sub-paragraph (i), after “force” insert “for the period”.

• (3) In section 130 (change in composition of multinational group), in subsection (5)—

• (a) after “in” insert “all, or substantially all, of the members of”, and

• (b) after “becoming” insert “members of”.

Chapter 3 of Part 3 (effective tax rate)

49

• (1) In section 132(2) (effective tax rate), in the words after paragraph (c) for “164” substitute “174”.

Chapter 4 of Part 3 (calculation of adjusted profits)

50

• (1) In section 138(1) (profits adjusted to be before tax), omit “its”.

• (2) In section 140 (profits adjusted to be profits before certain purchase accounting adjustments)—

• (a) in subsection (2), for “shares” substitute “ownership interests”, and

• (b) in subsection (3)—

• (i) for “shares” substitute “ownership interests”, and

• (ii) for the words from “it” to the end substitute “the members of the group do not have sufficient records to identify the adjustment made with reasonable accuracy.”

• (3) In section 142 (excluded equity gain or loss), in subsection (2)(b) omit “other than an interest to which subsection (3) applies,”.

• (4) In section 149 (arm’s length requirement for certain transactions), in subsection (6) for “the member” substitute “both that member and the other member”.

• (5) In section 150 (tax treatment of transactions between members of a multinational group)—

• (a) in subsection (6)—

• (i) in paragraph (a), for “in the territory in which the member is located” substitute “that applies to the member”, and

• (ii) in paragraph (b), for “that territory” substitute “the territory in which the member is located”, and

• (b) after that subsection insert—

(6A) But— (a) for the purposes of subsection (6)(b), ignore any accounting period in which there was no standard member of the group in that territory to which the Pillar Two rules applied, and (b) a standard member of a multinational group is always to be regarded as a high tax member for an accounting period if a transitional safe harbour election applies to it for that period.

• (6) In section 165 (election to have excluded equity gains and losses included), in subsection (2)—

• (a) after the words before paragraph (a) insert—

(a) either—

,

• (b) the existing paragraphs (a) and (b) become sub-paragraphs (i) and (ii) of the paragraph (a) inserted above, and

• (c) at the end of sub-paragraph (ii) insert

, and (b) in the case of gains or losses falling within section 142(2)(b), the gains or losses are not in respect of an interest to which section 142(3) applies.

Chapter 5 of Part 3 (covered tax balance)

51

• (1) In section 185(2)(a) (inclusion of existing deferred tax assets and liabilities on entry into regime), after “asset” insert “or liability”.

• (2) In section 186 (deferred tax assets recorded at less than minimum rate)—

• (a) for subsection (2) substitute—

(2) But this section only applies in relation to a deferred tax asset of the member falling within subsection (1) if the filing member accounts for all such assets of the member in accordance with this section in an information return submitted to HMRC or a qualifying authority (see paragraph 10(5) of Schedule 14).

, and

• (b) omit subsection (8).

• (3) In section 187 (election for losses to be treated as special loss deferred tax assets), in subsection (6)—

• (a) for paragraph (b) substitute—

(b) the result of Step 2 in section 132(1) multiplied by 15%.

, and

• (b) in the words after paragraph (b), for “where subsection (5) applies” substitute “in which the election has effect”.

Chapter 6 of Part 3 (calculation of top-up amounts)

52

• (1) In section 194 (total top-up amount for a territory), in subsection (3), for “in”, in the third place it occurs, substitute “for”.

• (2) In section 196 (eligible payroll costs), in subsection (3), for ““Employee”” substitute “In this section “employee””.

• (3) In section 197 (eligible tangible asset amount)—

• (a) for subsection (1) substitute—

(1) To determine the eligible tangible asset amount of a member of a multinational group for an accounting period— (a) add together— (i) the sum of the recorded carrying values of each eligible tangible asset held by the member at the start of the period, and (ii) the sum of the recorded carrying values of each eligible tangible asset held by the member at the end of the period, and (b) divide the result of paragraph (a) by 2.

, and

• (b) omit subsection (2).

Chapter 7 of Part 3 (allocating top-up amounts)

53

• (1) Section 201 (inclusion ratio) is amended as follows.

• (2) In subsection (1), in Step 2, after “held by” insert “individuals and”.

• (3) In subsection (2)—

• (a) after “held by” insert “individuals and”, and

• (b) after “such” insert “individuals and”.

Chapter 8 of Part 3 (further adjustments)

54

• (1) In section 205 (election to carry forward and reduce collective additional amount)—

• (a) in subsection (1), after “amount” insert “under section 203”,

• (b) in subsection (2)(a)—

• (i) after “amount”, in the second place it occurs, insert “under section 203”, and

• (ii) for “those members” substitute “the members of the group in the relevant territory”,

• (c) in subsection (2)(b), after “amount”, in the first place it occurs, insert “under section 203”, and

• (d) in subsection (3), after “amount”, in the second place it occurs, insert “under section 203”.

• (2) In section 217(8) (post filing adjustments of covered taxes), in paragraph (a), at the beginning insert “the reduction of the covered tax balance of the member for the prior period resulting from”.

Chapter 9 of Part 3 (special provision for investment entities etc)

55

• (1) In section 220(3) (top-up amount of investment entity) for “section 33(2)” substitute “that Chapter”.

• (2) In section 221(4) (substance based income exclusion for investment entity), for “Schedule 12” substitute “Schedule 14”.

• (3) In section 229(3) (multi-parent groups), for “section 127(3)” substitute “section 128(3)”.

Chapter 10 of Part 3 (definitions etc)

56

• (1) In section 231(1) (meaning of entity)—

• (a) after paragraph (a), insert “or”,

• (b) omit paragraphs (b) and (c), and

• (c) in paragraph (d)—

• (i) omit “other”, and

• (ii) after “the arrangement” insert “(such as a partnership or trust)”.

• (2) In section 232(1)(a) (permanent establishments treated as entities), for “of the main entity” substitute “in which the main entity is located”.

• (3) In section 235(1)(b) (pension funds and pension services entities), at the beginning insert “it is”.

• (4) In section 244 (calculating percentage ownership interests of a class), in subsection (2)(a), after “by” insert “an individual or by”.

• (5) In section 245 (calculating percentage ownership interests: excluded entities), in subsection (2), after “Where” insert “an individual or”.

• (6) In section 246(1)(b)(ii) (calculating percentage direct and indirect ownership interests) for “E” substitute “F”.

• (7) In section 248 (exclusion of indirect interests held through ultimate parent), after “entity” insert “or individual”.

• (8) In section 249(2) (consolidated financial statements)—

• (a) for “an” substitute “the”, and

• (b) after “standard” insert “that is used as the basis for the statements that would have been prepared”.

• (9) In section 252(3) (application to sovereign wealth funds), for “government” substitute “governmental”.

• (10) In section 253 (refundable imputation taxes)—

• (a) in subsection (1)(a)(i)—

• (b) for “in respect of a dividend made by the member and is” substitute “as a result of a dividend made by the member,”, and

• (c) in subsection (2)(b)—

• (i) in sub-paragraph (v), for the words from “, a resident pension fund” to the end substitute “or a resident pension fund”,

• (ii) omit the “or” after that sub-paragraph, and

• (iii) after that sub-paragraph insert—

(va) a resident investment entity that is not a member of the group, or

.

• (11) In section 259 (other definitions), in subsection (1)—

• (a) at the appropriate place insert—

• “deemed distribution” has the meaning given by section 215(4)(c);

, and

• (b) in the definition of “tax treaty”, for “agreement for” substitute “international agreement for, or provision of an international agreement concerned with,”.

Part 4 (domestic top-up tax)

57

• (1) In section 271 (election to make one member of a group liable for amounts charged)—

• (a) in subsection (1) for “responsible” substitute “elected”,

• (b) in subsection (2) for “responsible”, in both places it occurs, substitute “elected”, and

• (c) in subsection (3) for “responsible” substitute “elected”.

• (2) In section 272 (determining top-up amounts of entity that is a member of a group), in subsection (8)(c)(i) for “after subsection (1) there were inserted” substitute “for subsection (1A) there were substituted”.

• (3) In section 273 (determining top-up amounts of entity that is not a member of a group), in subsection (4)—

• (a) in the words before paragraph (a), after “domestic” insert “entity”,

• (b) in paragraph (e), for “subsection (2)(c)” substitute “subsection (3)(c)”,

• (c) after paragraph (p), insert—

(pa) in section 173 (covered taxes), subsection (1)(b);

.

Schedules 14 to 17

58

• (1) In Schedule 14 (administration)—

• (a) in paragraph 6 (registration), after sub-paragraph (1) insert—

(1A) The reference to a multinational group in sub-paragraph (1) does not include a group exclusively comprised of excluded entities (who are only regarded as members of the group for certain purposes in accordance with section 127(2)).

• (b) in paragraph 34 (group payment notices)—

• (i) in sub-paragraph (2), for “the time the liability to tax arose” substitute “any time in the accounting period to which the amount payable relates”,

• (ii) after that sub-paragraph insert—

(2A) The references to a member of a group in sub-paragraph (2) do not include a member of a group that is— (a) a securitisation company (within the meaning given by section 267(4)), (b) a covered bond vehicle (within the meaning given by section 272A(5)), or (c) an investment entity.

,

• (c) in paragraph 35(1), for “ring-fenced entity”, in the second place it occurs, substitute “member of a ring-fenced body sub-group that the entity is a member of”,

• (d) in paragraph 36(3), for the words from “person” to the end substitute “recipient is not a person to whom the notice can be given (see paragraphs 34(2) and (2A) and 35(1)).”, and

• (e) in paragraph 37—

• (i) in sub-paragraph (4)(b), after “for” insert “income tax or”, and

• (ii) in sub-paragraph (6), for “payer” substitute “payee”.

• (2) In Schedule 15 (elections)—

• (a) in paragraph 1(1), after paragraph (a) insert—

(aa) section 141(7);

, and

• (b) in paragraph 2(1)—

• (i) after paragraph (e) insert—

(ea) section 199;

, and

• (ii) after paragraph (f) insert—

(fa) section 216;

.

• (3) In Schedule 16 (multinational top-up tax: transitional provision), in paragraph 10—

• (a) the existing words become sub-paragraph (1),

• (b) in the words before paragraph (a) of that sub-paragraph—

• (i) for “section 226” substitute “section 227”, and

• (ii) after “groups)” insert “, that Chapter has effect as if”,

• (c) in paragraph (a) of that sub-paragraph, for “3(2)(c)” substitute “3(2)(b)”, and

• (d) after that sub-paragraph insert—

(2) For that purpose ignore section 227(1)(a) (reference to ultimate parent treated as reference to joint venture parent). (3) Accordingly, the filing member of a multinational group may make a separate transitional safe harbour election in respect of joint venture members of a joint venture group in a territory.

• (4) In Schedule 17 (index of defined expressions), in the table—

• (a) in the definition of “government entity”, for “government” substitute “governmental”,

• (b) in the definition of “pensions services entity” for “pensions” substitute “pension”, and

• (c) at the appropriate places insert—

CFS currency	section 254(1)

;

country-by-country report	section 251A

;

covered bond vehicle	section 272A(5)

;

domestic purposes (in Part 4)	section 272(1)

;

domestic entity purposes (in Part 4)	section 273(1)

;

securitisation company	section 267(4)

;

tax equity partnership arrangement	section 176D(5)

;

transitional safe harbour election	section 255(6)

.

Schedule 13

Disqualification for promoting tax avoidance

1

In CDDA 1986, after section 8ZE insert—

(8ZF) (1) The court must make a disqualification order against a person if, on an application under this section, it is satisfied— (a) that the person has at any time after the coming into force of this section been a director of a company while the company was a relevant body within the meaning of section 85(4) of the Finance Act 2022 (winding up of promoters of tax avoidance schemes), and (b) that a court has made a winding-up order in respect of the company under section 85(3) of that Act (whether while the person was a director or subsequently). (2) An officer of Revenue and Customs may make an application to the court for a disqualification order against a person under this section if it appears to the officer that it is expedient in the public interest for such an order to be made. (3) Except with the permission of the court, an application under subsection (2) may not be made after the end of the period of 3 years beginning with the day on which the winding-up order in question is made. (4) Under this section the minimum period of disqualification is 2 years, and the maximum is 15 years. (5) An officer of Revenue and Customs may accept a disqualification undertaking if it appears to the officer— (a) that the conditions mentioned in subsection (1) are satisfied in relation to the person who has offered to give the disqualification undertaking, and (b) that it is expedient in the public interest that the officer should accept the undertaking (instead of applying, or proceeding with an application, for a disqualification order). (6) In this section— - “company” includes overseas company; - “court” means— the court having jurisdiction for the purposes of the Insolvency Act 1986, or the High Court in Northern Ireland; - “director” includes a shadow director. (8ZG) (1) The court may make a disqualification order against a person if, on an application under this section, it is satisfied— (a) that the person— (i) is a director of a company that carries on business as a promoter within the meaning of Part 5 of the Finance Act 2014 (promoters of tax avoidance schemes), or (ii) after the coming into force of this section, was a director of a company at a time at which it did so, and (b) that the person’s conduct in relation to the company (either taken alone or taken together with the person’s conduct as a director of one or more other companies) makes the person unfit to be concerned in the management of a company. (2) For the purposes of subsection (1)(a)(i), Part 5 of the Finance Act 2014 has effect as if, in section 234 of that Act— (a) references to “tax” included value added tax and other indirect taxes, and (b) the definition of “tax advantage” also included a tax advantage as defined for VAT in paragraph 6, and for other indirect taxes in paragraph 7, of Schedule 17 to the Finance (No. 2) Act 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes). (3) References in subsection (1)(b) to a person’s conduct include conduct occurring before, as well as after, the coming into force of this section. (4) An officer of Revenue and Customs may make an application to the court for a disqualification order against a person under this section if it appears to the officer that it is expedient in the public interest for such an order to be made. (5) The maximum period of disqualification under this section is 15 years. (6) An officer of Revenue and Customs may accept a disqualification undertaking if it appears to the officer— (a) that the conditions mentioned in subsection (1) are satisfied in relation to the person who has offered to give the disqualification undertaking, and (b) that it is expedient in the public interest that the officer should accept the undertaking (instead of applying, or proceeding with an application, for a disqualification order). (7) In this section— - “company” includes overseas company; - “the court” means— in England and Wales, the High Court; in Scotland, the Court of Session; in Northern Ireland, the High Court in Northern Ireland; - “director” includes a shadow director; - “indirect tax” has the same meaning as in Schedule 17 to the Finance (No. 2) Act 2017 (see paragraph 2(1) of that Schedule).

Minor and consequential amendments

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• (1) CDDA 1986 is amended as follows.

• (2) In section 1 (disqualification orders: general)—

• (a) in subsection (1), after “6” insert “, 8ZF”;

• (b) in subsection (2), for “and 8ZA” substitute “, 8ZA and 8ZF”.

• (3) In section 1A (disqualification undertakings: general)—

• (a) in subsection (1)—

• (i) for “and 8ZE” substitute “, 8ZE, 8ZF and 8ZG”, and

• (ii) for “Secretary of State” substitute “appropriate authority”;

• (b) in subsection (2), for “or 8ZC” substitute “, 8ZC or 8ZF”;

• (c) in subsection (4), for “Secretary of State” substitute “appropriate authority”;

• (d) after subsection (4) insert—

(5) In this section “the appropriate authority” means— (a) in relation to an undertaking under section 8ZF or 8ZG, an officer of Revenue and Customs; (b) in any other case, the Secretary of State.

• (4) In section 8A (variation etc. of disqualification undertaking)—

• (a) after subsection (2) insert—