CTM92780 - Corporation Tax self-assessment (CTSA): quarterly instalments: anti-avoidance
Regulation 14 contains an anti-avoidance provision. It applies if, on or after 25 November 1997 and before 30 June 2002, a company:
- causes the start or end date of a 'relevant accounting period' to change,
- enters into any arrangements, the effect of which is to transfer some of its taxable profits to another company in the same group - this excludes a non resident company in whose hands the taxable profits transferred are outside the charge to UK CT,
- an amount(s) of CT for any part of an accounting period beginning after 1 July 1998 and ending before 1 July 2002 becoming payable later than it would otherwise have done.
A 'relevant accounting period' is an accounting period which, but for the action taken by the company would have:
- ended after 24 November 1997 and before 1 July 2002, and
- started immediately after another accounting period and lasted for twelve months.
The provisions do not contain a motive test.
When the provision applies, the company is liable to pay an amount that is effectively equal to interest at the rate applicable under FA89/S178 on the tax payments 'deferred', (Regulation 14 (2)).
You therefore need to be alert to companies changing their accounting periods or transferring profits in the period mentioned in all quarterly instalment cases.
Note: if you consider that a charge under this provision should be made upon a company do not make one without first receiving authority from CTIAA (Technical).
There is more about the charge and the exemptions that exist at CTM92790 onwards.