INTM215410 - Controlled Foreign Companies: before CTSA

Assessment: postponement application

TMA70/S55 (1) and (6) as amended by ICTA88/SCH29/PARA8

A company assessed under Chapter IV may apply to postpone payment of some or all the tax charged. This follows the normal rules of TMA70/S55. The Special Commissioners determine a postponement application which the Inspector cannot settle by agreement.

However, there are some changes to the rules. This is because charging tax under Chapter IV is a two-stage process. It involves the direction and then the assessment.

The main change is a rule that is now in TMA70/S55 (1)(g). This allows the postponement of tax where there is an appeal against a notice of direction or against an amendment to a direction specifying a revised accounting period. It applies when

• the appellant company is assessed on chargeable profits given in the notice of direction, and
• this is done before the appeal against the direction is determined.

This rule is for the case where a company disputes its liability under Chapter IV. It appeals against a notice of direction. However, ICTA88/S754 (4) ICTA88 curbs its rights of appeal - see INTM215400. It cannot meet the normal rule of TMA70/S55 that there should be an appeal against an assessment.

There are also special rules for postponement applications where there is an appeal against an assessment and an appeal against either a notice of the making of a direction or an amended direction.

The rules are as follows:

• An application to postpone tax may relate to matters arising on both appeals.
• The Special Commissioners must consider matters arising on both appeals when they determine the amount of tax to be postponed.
• Where the Special Commissioners have determined the amount of tax to be postponed, solely by reference to one of the appeals, the Inspector can regard the making of the other appeal as a change of circumstances. This allows a further application for an increase or reduction in the amount of postponed tax. This is under TMA70/S55 (4).

TMA70/S55 refers to the determination of the appeal. It does this, for example, in TMA70/S55 (9). That sub-section gives the due date for payment of tax as payable according to the determination. In such cases the reference should be taken to mean the determination of both appeals. The Inspector may settle the appeals on different dates. If so, the Inspector determines the due and payable date by reference to the later of the dates of settlement.

The Inspector may settle one appeal before the other. In that case the Inspector should treat the settlement as a change of circumstances within TMA70/S55 (4). This allows a further application for an increase or reduction in the postponed amount.