Search Legislation

Finance Act 2012

Chapter 21 – Management

413.New section 371UA introduces Chapter 21. It includes the framework provisions for collection and management matters relevant to the CFC rules. It provides that the HMRC Commissioners are responsible for the management of the CFC charge, including the collection of sums charged. It also defines, for the purposes of Chapter 21 the terms “closure notice”, “discovery assessment” and “the Taxes Acts”.

414.New section 371UB sets out how the Taxes Acts are to be applied to the CFC charge.

415.New subsections (1) and (2) provide that the CFC charge is to be treated as though it were an amount of corporation tax (as set out in step 5 section 371BC(1)), all enactments which apply generally to corporation tax also apply. This rule is subject to any provisions of the Taxes Act and any necessary modifications.

416.New subsection (3) provides an inclusive list of the enactments that are within subsection (1). They are the enactments relating to:

  • returns, accounts statements and reports,

  • assessment, collection and receipt of corporation tax,

  • rights of appeal, and

  • administration, penalties, interest on unpaid tax and priority of tax in insolvency cases.

417.New subsection (4) specifies two particular respects in which new subsection (1) applies. They are that TMA 1970 is to have effect as if any references to ‘corporation tax’ and the ‘profits of a company’ in that Act include:

  • for references to corporation tax - the sum charged at step 5 in section 371BC(1) (the main CFC charging provision), and

  • for references to ‘profits of a company’ - the percentage of the CFC’s chargeable profits charged at step 5 in section 371BC(1).

418.New subsection (5) ensures that the statutory provisions on claims and elections required to be made in a company’s tax return (Paragraph 10 of Schedule 18 to FA 1998) and those that can be made outside a return (Schedule 1A, of the TMA 1970) shall not apply to an election under section 371TB(8) (election to determine the territory in which the CFC is resident).

419.New section 371UC provides for the determination of a different basis of apportionment of a CFC’s chargeable profits and creditable tax from that adopted by a company in its return or an amendment to its return.

420.New subsection (1) provides for the section to apply if two conditions are met. First, a CFC’s chargeable profits and creditable tax must be subject to apportionment in accordance with section 371QC(2), that is, they must be apportioned on a just and reasonable basis); secondly, a company tax return must be made or amended adopting a particular basis of apportionment.

421.New subsections (2) and (3) give an officer of Revenue and Customs the power to determine a basis for apportionment other than that used by the company. They also set out the grounds on which that determination can be questioned by appeal.

422.New subsection (4) makes clear that the only permissible grounds for questioning the officer’s determination is that the basis of apportionment is not just and reasonable.

423.New section 371UD deals with reliefs that may be given against a CFC charge.

424.New subsection (1) provides for the new section to apply if in relation to a CFC’s accounting period a chargeable company is entitled, or on the making of a claim would be entitled (apart from the power provided by subsection (2)), to a deduction in respect of a relevant allowance for the relevant corporation tax accounting period.

425.New subsection (2) provides that the company may make a claim under the subsection in respect of the relevant allowance.

426.New subsections (3) and (4) provide that the relief is to be given by setting off the “relevant sum” against the sum charged to the company under the main CFC charging provision (step 5 in section 371BC(1)). The “relevant sum” is defined as being the amount equal to the corporation tax at the appropriate rate on the amount of the relevant allowance specified in the claim.

427.New subsections (5) and (6) provide that the “relevant allowance” specified in the claim is to be taken for the purposes of the Tax Acts as having been allowed as a deduction. It is also made clear that no other relief is available against the sum charged on a company at step 5 in section 371BC(1).

428.New subsection (7) provides definitions for the terms used within the section. Those defined are “the appropriate rate”, “the relevant corporation tax accounting period” and “relevant allowance”. The definition of “relevant allowance” provides an exhaustive list of the amounts which shall fall within it.

429.New section 371UE is applied by new subsection (1) where a “relevant appeal” involves any question about the application of Part 9A to a particular person and the resolution of that question is likely to affect the Part 9A liability of any other person in relation to the CFC concerned.

430.New subsection (2) defines “relevant appeal” to include only an appeal made under either paragraph 34(3) (amendment of a company tax return) or paragraph 48 (discovery assessment) of Schedule 18 to FA 1998.

431.New subsections (3) to (6) set out how that relevant appeal is to be conducted. They make clear that any party whose liability is likely to be affected under Party 9A is entitled to be part to the proceedings. It is also provided that the tribunal must determine the Part 9A question separately from any other questions within the proceedings. In addition, the tribunal’s determination on the Part 9A question shall have effect as if it had been made in an appeal to which each of the persons affected was a party.

432.New section 371UF(1) introduces the rules for the recovery of the CFC charge (step 5 in section 371BC(1)) on a company (“the defaulting company”) where the amount is not fully paid by the date it is due and payable.

433.New subsection (2) provides that in relation to the amounts remaining due and payable, an officer of Revenue and Customs is permitted to give notice of liability to another UK resident company. The officer may give a notice of liability to that other UK resident company when it holds or has held (directly or indirectly) the whole or any part of the same interest in the CFC concerned as is or was held by the defaulting company.

434.New subsection (3) sets out the amounts for which the company receiving the subsection (2) notice (“the responsible company”) is liable. The amounts include:


the whole, or corresponding part, of the sum charged that is unpaid when the notice is given,


the whole, or corresponding part, of any unpaid interest on the sum at the time the notice is given, and


any interest accruing on the sum after the notice is given if it is referable to the sum payable by the responsible company under paragraph (a) above.

435.New subsection (4) provides that new subsection (5) will apply if amounts payable by the responsible company under subsection (3) remain unpaid after 3 months of the notice being given. Subsection (5) permits amounts not paid at this point to be recoverable from the defaulting company, without affecting the right of recovery from the responsible company.

Back to top


Print Options


Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.


More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources