Finance Act 2004

Part 3 Conditions to be satisfied by companies

General

9 In the case of an application for a company to be registered for gross payment (whether as a partner in a firm or otherwise), the following conditions must be satisfied by the company.

The business test

10 The company must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that—

(a) it is carrying on (whether or not in partnership) a business in the United Kingdom, and

(b) that business satisfies the conditions mentioned in paragraph 2(a) and (b).

The turnover test

11 (1) The company must either—

(a) satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that the carrying on of its business is likely to involve the receipt in the year following the making of the application of an aggregate amount by way of relevant payments which is not less than the amount which is the minimum turnover for the purposes of this sub-paragraph; or

(b) satisfy the Inland Revenue that the only persons with shares in the company are companies which are limited by shares and themselves are registered for gross payment;

and in this sub-paragraph “relevant payments” has the meaning given by paragraph 3(2).

(2) The minimum turnover for the purposes of sub-paragraph (1) is whichever is the smaller of—

(a) the amount obtained by multiplying the amount specified in regulations as the minimum turnover for the purposes of paragraph 3 (1) by the number of persons who are relevant persons in relation to the company; and

(b) the amount specified for the purposes of this paragraph in regulations made by the Board of Inland Revenue.

(3) For the purposes of sub-paragraph (2) a person is a relevant person in relation to the company—

(a) where the company is a close company, if he is a director of the company (within the meaning given by section 67 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1)) or a beneficial owner of shares in the company; and

(b) in any other case, if he is such a director of the company.

(4) The Board may make regulations—

(a) for determining the number of relevant persons to be taken into account for the purposes of sub-paragraph (2) (for example, where the number of such persons has fluctuated over a period);

(b) for the purpose of enabling a company which does not satisfy the condition in sub-paragraph (1) to be treated as satisfying that condition in such circumstances as may be prescribed.

The compliance test

12 (1) The company must, subject to sub-paragraphs (2) and (3), have complied with—

(a) all obligations imposed on it in the qualifying period (see paragraph 14) by or under the Tax Acts or the Taxes Management Act 1970 (c. 9); and

(b) all requests made in the qualifying period to supply to the Inland Revenue accounts of, or other information about, its business.

(2) A company that has failed to comply with such an obligation or request as—

(a) is referred to in sub-paragraph (1), and

(b) is of a kind prescribed by regulations made by the Board of Inland Revenue,

is, in such circumstances as may be prescribed by the regulations, to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request.

(3) A company that has failed to comply with such an obligation or request as is referred to in sub-paragraph (1) is to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that—

(a) the company had a reasonable excuse for the failure to comply, and

(b) if the excuse ceased, it complied with the obligation or request without unreasonable delay after the excuse had ceased.

(4) The company must, if any contribution has at any time during the qualifying period become due from the company under—

(a) Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or

(b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),

have paid the contribution when it became due.

(5) The company must have complied with any obligations imposed on it by the following provisions of the Companies Act 1985 (c. 6) in so far as those obligations fell to be complied with within the qualifying period—

(a) sections 226, 241 and 242 (contents, laying and delivery of annual accounts);

(b) section 288(2) (return of directors and secretary and notification of changes therein);

(c) sections 363 to 365 (annual returns);

(d) section 691 (registration of constitutional documents and list of directors and secretary of oversea company);

(e) section 692 (notification of changes in constitution or directors or secretary of oversea company);

(f) section 693 (oversea company to state its name and country of incorporation);

(g) section 699 (obligations of companies incorporated in Channel Islands or Isle of Man);

(h) Chapter 2 of Part 23 (accounts of oversea company).

(6) The company must have complied with any obligations imposed on it by the following provisions of the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) in so far as those obligations fell to be complied with within the qualifying period—

(a) Articles 234, 249 and 250 (contents, laying and delivery of annual accounts);

(b) Article 296(2) (return of directors and secretary and notification of changes therein);

(c) Articles 371 to 373 (annual returns);

(d) Article 641 (registration of constitutional documents and list of directors and secretary of Part XXIII company);

(e) Article 642 (notification of changes in constitution or directors or secretary of Part XXIII company);

(f) Article 643 (Part XXIII company to state its name and country of incorporation);

(g) Article 649 (accounts of Part XXIII company).

(7) There must be reason to expect that the company will, in respect of periods after the qualifying period, comply with—

(a) all such obligations as are referred to in paragraphs 10 and 11 and sub-paragraphs (1) to (6), and

(b) such requests as are referred to in sub-paragraph (1).

(8) Subject to sub-paragraphs (2) and (3), a company is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraphs (1) to (6) if there has been a contravention of a requirement as to—

(a) the time at which, or

(b) the period within which,

the obligation or request was to be complied with.