Part 2Charge to corporation tax: basic provisions
Chapter 1The charge to corporation tax
General scheme of corporation tax
5Territorial scope of charge
1
F132
A non-UK resident company is F4within the charge to corporation tax on income only if—
a
it carries on a trade of dealing in or developing UK land (see section 5B), F6...
b
it carries on a trade in the United Kingdom (other than a trade of dealing in or developing UK land) through a permanent establishment in the United KingdomF3,
c
it carries on a UK property business, or
d
it has other UK property income.
F112A
A non-UK resident company which carries on a trade of dealing in or developing UK land is F14chargeable to corporation tax on income on all its profits wherever arising that are profits of that trade.
3
A non-UK resident company which carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom is F8chargeable to corporation tax on income on all its profits wherever arising that are chargeable profits as defined in section 19 (profits attributable to its permanent establishment in the United Kingdom).
F93A
A non-UK resident company which carries on a UK property business is chargeable to corporation tax on income on all its profits that are—
a
profits of that business, or
b
profits arising from loan relationships or derivative contracts that the company is a party to for the purposes of that business.
3B
A non-UK resident company which has other UK property income is chargeable to corporation tax on income on all its profits that—
a
consist of that income, or
b
are profits arising from loan relationships or derivative contracts that the company is a party to for the purposes of enabling it to generate that income.
4
Subsections (1) F12and (2A) to (3B) are subject to any exceptions provided for by the Corporation Tax Acts.
F105
The territorial scope of the charge to corporation tax on chargeable gains is given by section 2B of TCGA 1992.
F76
In this Part “other UK property income” means income dealt with by any of the following Chapters of Part 4—
a
Chapter 7 (rent receivable in connection with a UK section 39(4) concern);
b
Chapter 8 (rent receivable for UK electric-line wayleaves);
c
Chapter 9 (post-cessation receipts arising from a UK property business).
5AF1Arrangements for avoiding tax
1
Subsection (3) applies if a company has entered into an arrangement the main purpose or one of the main purposes of which is to obtain a relevant tax advantage for the company.
2
In subsection (1) the reference to obtaining a relevant tax advantage includes obtaining a relevant tax advantage by virtue of any provisions of double taxation arrangements, but only in a case where the relevant tax advantage is contrary to the object and purpose of the provisions of the double taxation arrangements (and subsection (3) has effect accordingly, regardless of section 6(1) of TIOPA 2010).
3
The relevant tax advantage is to be counteracted by means of adjustments.
4
For this purpose adjustments may be made (whether by an officer of Revenue and Customs or by the company) by way of an assessment, the modification of an assessment, amendment or disallowance of a claim, or otherwise.
5
In this section “relevant tax advantage” means a tax advantage in relation to corporation tax to which the company is chargeable (or would without the tax advantage be chargeable) by virtue of section 5(2A).
6
In this section—
“arrangement” (except in the phrase “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable;
“double taxation arrangements” means arrangements which have effect under section 2(1) of TIOPA 2010 (double taxation relief by agreement with territories outside the United Kingdom);
“tax advantage” has the meaning given by section 1139 of CTA 2010.
5BTrade of dealing in or developing UK land
1
A non-UK resident company's “trade of dealing in or developing UK land” consists of —
a
any activities falling within subsection (2) which it carries on, and
b
any activities from which profits, gains or losses arise which are treated under Part 8ZB of CTA 2010 as profits or losses of the company's trade of dealing in or developing UK land.
2
The activities within this subsection are—
a
dealing in UK land;
b
developing UK land for the purpose of disposing of it.
3
In this section “land” includes—
a
buildings and structures,
b
any estate, interest or right in or over land, and
c
land under the sea or otherwise covered by water.
4
In this section—
“disposal” is to be interpreted in accordance with section 356OQ of CTA 2010;
“UK land” means land in the United Kingdom.
6Profits accruing in fiduciary or representative capacity
1
A company is not chargeable to corporation tax on profits which accrue to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in the profits.
2
The exception under subsection (1) from chargeability does not apply to profits arising in the winding up of the company.
7Profits accruing under trusts
Profits that accrue for the benefit of a company under a trust are treated for the purposes of the charge to corporation tax under section 2(1) as accruing directly to the company.
8How tax is charged and assessed
1
Corporation tax for a financial year is charged on profits arising in the year.
2
Corporation tax is calculated and chargeable, and assessments to corporation tax are made, by reference to accounting periods.
3
Corporation tax which is assessed and charged for an accounting period of a company is assessed and charged on the full amount of profits arising in the accounting period.
4
Subsection (3) is subject to any contrary provision in the Corporation Tax Acts.
5
If a company's accounting period falls within more than one financial year, the amount of the profits arising in the accounting period that is chargeable to corporation tax must be apportioned between the financial years in which the accounting period falls.