CTM34490 - Residence: avoidance transactions: text of Treasury notes for guidance

HM Treasury: notes for guidance

Applications for consent under ICTA88/S765 (1)(c) & (d)

1) An application for consent to a transaction, which does not fall within the ‘General Consents’ CTM34470, should be made by letter addressed to:

Please send three copies of all letters concerning any application but only one copy of accounts or other supporting documents.

2) The Treasury obtains the advice of HMRC on all applications. If the application is urgent, two copies of the letter with all the accounts and other supporting documents may be sent direct to:

The one letter sent to the Treasury should indicate clearly whether copies have been sent to HMRC.

3) The application should give sufficient information to enable the Treasury to form a view on the transaction proposed; in doing that it is guided by the terms of reference of the Chancellor's Advisory Committee which are as follows:

'They will take into account the significance of any new factors or circumstances which are represented to require a proposed change and any compelling reason for such application based on the efficiency and development of the applicant's operations. The Committee will weigh against consideration of this kind the prospective loss of revenue or of foreign exchange to the country which the transaction, if permitted, would entail, and they will inform the Chancellor whether, on a balance of considerations, it would, in their opinion, be in the national interest that permission should be granted'.

As a result of the removal of Exchange Control, loss of foreign exchange is not a factor that is currently taken into account.

4) The commercial reasons for the proposed transactions should therefore be fully explained and relevant background information given so as to enable the transactions to be understood in their proper context.

5) The application need not be made in any particular form. The Appendix to these notes lists the information that is normally needed, according to the circumstances of the application and the nature of the transaction. In some cases, particularly where the company or group has made other applications, a brief letter may be sufficient. In other cases information additional to that suggested by the Appendix may be needed, including copies of the accounts of the non-resident company and of other group companies involved in the transaction.

6) The letter of application should authorise the Commissioners of HMRC to disclose particulars of the company's tax affairs to the Advisory Committee and, insofar as they are not disclosed by the application, to the Treasury.

Relevant information - ICTA88/S765

First applications

1) Name of applicant company and name of ultimate UK parent if applicant is a member of a group.

2) Nature of business of the applicant company (and the group) and the place where the main activities are carried on.

3) Whether the company and, if appropriate, its parent is a public or private company.

4) The extent of the shareholders by non-residents (in the company or its parent as appropriate) if these exceed 20%.

5) The Tax District and reference to which the company makes its CT returns.

6) A copy of the latest accounts of the applicant and, if appropriate, of the UK parent.

Subsequent applications

7) Name of applicant company and name of ultimate UK parent if applicant is a member of a group.

8) The date of the last application relating to the overseas company to which the current application refers or, if there is no such application, the date of the latest application by the company or other member of the same group. The Treasury reference number should be quoted.

9) Significant changes in the information previously given at 2 to 5 above, including the latest accounts.

All applications

10) A description of the proposed transactions.

11) Name, country of incorporation and of tax residence of the non-resident company.

12) Nature of the business of the non-resident company.

13) Extent of applicant's control over the non-resident company (a) at present and (b) after the proposed transactions. (See ICTA88/S767 (5) and ICTA88/S840).

14) The name(s) and country or countries of residence of the person(s) to whom the issue (other than a public issue) or transfer is to be made and full details of any direct or indirect connection by shareholdings or otherwise between such person(s) and the applicant.

15) Full details of the consideration for the issue of transfer.

16) Where an issue is of redeemable shares (as defined for the purposes of the general consents), the terms of issue and of redemption.

17) If applicable, the reasons why any sale is not at market value.

18) The reasons for the transactions - see paragraphs 3 and 4 on page 1.

19) An estimate of the effect, if any, on UK tax. This should indicate any difference in the tax payable at any time by the applicant company or any member of the same group as a direct or indirect result of the proposed transaction(s) compared with that payable under existing arrangements.

Footnotes to old general consents

Copies of the Treasury general consents may be obtained either by personal application or letter from the HMRC Public Enquiry Room, West Wing, Somerset House, Strand, London WC2R 1LB or by letter only from The Secretary, HM Treasury (AP), 1 Horse Guards Road, London SW1A 2HQ.