Taxation (International and Other Provisions) Act 2010

Receipt notices

249 Receipt notices

(1) An officer of Revenue and Customs may give a company a notice under this section if—

(a) the company is UK resident, and

(b) the officer considers on reasonable grounds that each of the receipt scheme conditions is or may be met in relation to the company.

(2) In this Part—

(a) a notice under this section is referred to as a “receipt notice”, and

(b) “the receipt scheme conditions” means the conditions specified in section 250.

(3) For the consequences of a receipt notice, see section 254.

250 The receipt scheme conditions

(1) This section sets out the receipt scheme conditions.

(2) Receipt scheme condition A is that a scheme makes or imposes provision as between the company and another person (“the paying party”) by means of a transaction or series of transactions.

(3) Receipt scheme condition B is that that provision includes the paying party making, by means of a transaction or series of transactions, a payment—

(a) which is a qualifying payment in relation to the company, and

(b) at least part of which is not an amount to which section 251 (amounts within corporation tax) applies.

(4) A payment is a qualifying payment in relation to a company for the purposes of this section and sections 251 to 254 if it constitutes a contribution to the capital of the company.

(5) Receipt scheme condition C is that on entering into the scheme the company and the paying party expected that a benefit would arise because at least part of the qualifying payment was not an amount to which section 251 applies.

(6) Receipt scheme condition D is that there is an amount in relation to the qualifying payment that—

(a) is a deductible amount, and

(b) is not set against any scheme income arising to the paying party for income tax purposes or corporation tax purposes.

(7) In subsection (6)—

• “deductible amount” means an amount that—

  (a)

  is available as a deduction for the purposes of the Tax Acts, or

  (b)

  may be deducted or otherwise allowed under the tax law of any territory outside the United Kingdom, and

• “scheme income” means income arising from the transaction or transactions forming part of the scheme.

(8) Section 253 (exception for dealers) specifies a case where receipt scheme condition D is treated as not met.

251 Amounts within corporation tax

(1) This section applies to an amount if it falls within subsection (2) or (4).

(2) An amount is within this subsection if for the purposes of the Corporation Tax Acts it is—

(a) income or chargeable gains arising to the company in the accounting period in which the qualifying payment was made, or

(b) income arising to any other UK resident company in a corresponding accounting period.

(3) For the purposes of this section, the accounting period of one company (“the first period”) corresponds to the accounting period of another company (“the second period”) if at least one day of the first period falls within the second period.

(4) An amount is within this subsection if it is brought into account as a result of Chapter 2A or 6A of Part 6 of CTA 2009 (relationships treated as loan relationships: disguised interest, and shares accounted for as liabilities).

252 Further provisions about receipt notices

(1) A receipt notice must inform the company to which it is given that the officer of Revenue and Customs giving it considers that each of the receipt scheme conditions is or may be met in relation to the company.

(2) A receipt notice must specify the qualifying payment by reference to which the officer of Revenue and Customs considers receipt scheme conditions B, C and D are or may be met.

(3) A receipt notice must specify the accounting period of the company in which the qualifying payment is made.

(4) A receipt notice must inform the company that, as a result of the service of the notice, section 254(2) (rule for calculation or recalculation of income etc following receipt notice) will apply in relation to the payment if each of the receipt scheme conditions is met in relation to the company.

253 Exception for dealers

(1) Receipt scheme condition D (see section 250(6)) is treated as not met if—

(a) the paying party (“P”) is a dealer,

(b) in the ordinary course of P’s business, P incurs losses in respect of the transaction or transactions forming part of the scheme to which P is party, and

(c) the amount by reference to which that condition would be met, but for this section, is an amount in respect of those losses.

(2) In subsection (1) “dealer” means a person who—

(a) is charged to corporation tax under Part 3 of CTA 2009 (trading income) in respect of distributions of companies that are received in the course of a trade not consisting of insurance business, or

(b) would be so charged if UK resident.

(3) In this section “the paying party” has the same meaning as in section 250.

254 Rule for calculation or recalculation of income etc following receipt notice

(1) This section applies in relation to a qualifying payment if—

(a) a receipt notice specifying the payment is given to the company in relation to which it is a qualifying payment, and

(b) when the notice is given, each of the receipt scheme conditions is met in relation to the company.

(2) The company must calculate (or recalculate)—

(a) its income or chargeable gains for the purposes of corporation tax for the accounting period specified in the notice, or

(b) its liability to corporation tax for that period,

as if so much of the qualifying payment as falls within subsection (3) were a receipt of the company that is chargeable for that period under the charge to corporation tax on income.

(3) The qualifying payment falls within this subsection so far as—

(a) receipt scheme condition D (see section 250(6)) is met in relation to it, and

(b) it is not an amount to which section 251 (amounts within corporation tax) applies.