The charge to corporation tax was amended by FA03/S149 with
effect for accounting periods beginning on or after 1 January 2003.
This substituted and inserted sections 11(1) to 11(2A) and inserted
a new section 11AA and Schedule A1 into ICTA88. Details of the
changes are as follows and in
GIM10123 and
GIM10124.
Corporation tax is charged on the profits of a non-resident
attributable to its ‘permanent establishment’ in the
UK. The chargeable profits comprise
The express exclusion for distributions that was in the old
section 11(2) (see
GIM10110) is not reproduced, as
ICTA88/S208 applies to non-resident companies as it applies to
resident companies.
The permanent establishment is treated as the tax
representative of the company and is liable for the tax and to
perform all necessary administrative functions such as making
returns (FA03/S150 and ICTA88/SCHA1).
The FA 2003 legislation enacts explicitly into UK law the
effect of Article 7 of the OECD Model, so any possible argument
about the scope of Article 7 and that of section 11 is avoided. The
discussion in
GIM10115 on the implications for any
non-resident general insurer whose head office is not in a treaty
country remains valid.
For periods beginning on or after 1 January 2003, the
balance of premiums, claims, expenses and provisions (the
underwriting result) disclosed on the FSA return plainly falls
within both section 11 and Article 7. The business disclosed in
that return is therefore presumed to be business falling within
section 11. In the case of an EEA insurer these figures will have
to be obtained from whatever accounts and information are prepared
by the company and submitted with its return. If nothing else is
available, the details given by the company to its Home State
regulator as UK branch business in its Article 44.2 Third Directive
return is a starting point.
Special provision is made for the application to EEA
insurers of the rules governing equalisation provisions, where no
FSA return is made. See
GIM7290.
