Section 92: Duty to Notify If Potentially Within Scope of Tax
Summary
1.This section places a duty upon a company to notify an officer of HM Revenue and Customs (HMRC) if it is potentially within the scope of the diverted profits tax. The section also sets out circumstances in which no duty to notify arises.
Details of the Section
2.Subsection (1) obliges a company meeting the requirements of subsections (3) or (4) to notify an officer of HMRC if it has profits for an accounting period that might be within the scope of the diverted profits tax. This is subject to subsections (7) and (8).
3.Subsection (2) sets out how a notification must be made and the time within which it must be made.
4.Subsection (3) requires a company to notify if section 80 or 81 applies to the company and the financial benefit of the tax reduction is significant relative to the non-tax benefits of the material provision.
5.Subsection (4) requires a company to notify if section 86 applies to the company and, where section 86 applies by reason of the mismatch condition being met, the financial benefit of the tax reduction is significant relative to the non-tax benefits of the material provision.
6.Subsection (5) makes a number of modifications to section 86 and section 110 for the purposes of subsections (3) and (4).
7.Subsection (6) defines the expression “non-tax benefits” for the purposes of subsections (3)(b) and (4)(b).
8.Subsection (7) sets out the circumstances in which there is no requirement to notify under subsection (1). These are: when it is reasonable for the company to conclude that no charge to the diverted profits tax will arise in the period (other than because a transfer pricing adjustment may in the future be made for corporation tax purposes); or an officer of HMRC has confirmed that the company does not have to notify an officer in the current period, because the company has provided information to HMRC and HMRC have examined this information in accordance with subparagraphs (b) (i) and (ii); or it is reasonable for the company to assume (absent a confirmation from an officer of HMRC) that it has provided sufficient information and HMRC have examined that information; or finally where, in the preceding period, notification was given in accordance with subsection (1), or was not required in accordance with paragraphs (b) or (c), and there have been no material changes in circumstances in regard to whether a diverted profits tax may be imposed in the current period.
9.Subsection (8) allows the Commissioners for Her Majesty’s Revenue and Customs to direct that there is no duty to notify under subsection (1) in relation to an accounting period in other circumstances.
10.Subsection (9) sets out further detail about what must be included in the notification.
Background Note
11.The diverted profits tax is a new charge on diverted profits. The main objective is to counteract contrived arrangements used by large groups (typically multinational enterprises) that result in the erosion of the UK tax base.
