Upper Tribunal Tax and Chancery Chamber

[2024] UKUT 00319 (TCC)

Fecha: 23-May-2024

Companies

Companies

16.

Corporation tax is charged on the taxable profits of a UK resident company arising in an accounting period (Footnote: ³). Taxable profits include chargeable gains accruing to the company in the relevant accounting period (s6 Income and Corporation Taxes Act 1988 (“ICTA”) and s8 TCGA).

17.

Section 185 TCGA addresses the situation where a company ceases to be resident in the UK. As it was in force for the 2007/08 tax year it relevantly provided as follows:

185 Deemed disposal of assets on company ceasing to be resident in UK

(1)

This section and section 187 apply to a company if, at any time (“the relevant time”), the company ceases to be resident in the United Kingdom.

(2)

The company shall be deemed for all purposes of this Act—

(a)

to have disposed of all its assets, other than assets excepted from this subsection by subsection (4) below, immediately before the relevant time; and

(b)

immediately to have reacquired them,

at their market value at that time.

[…]

18.

For the material period, Chapter 2 of Part 4, and Schedule 9, Finance Act 1996 provided for the computation of all profits and gains arising to a company from its loan relationships. Para 10A provided that, on a company ceasing to be resident in the UK, the company was treated as if, immediately before the time at which it ceased to be resident in the UK, it had assigned the assets and liabilities that represent its loan relationships for a consideration equal to their fair value at that time and immediately reacquired them for the same consideration. The relevant provisions of para 10A were as follows:

Paragraph 10A

(1)

This paragraph applies if at any time (“the relevant time”)—

(a)

a company ceases to be resident in the United Kingdom, or

[…]

(2)

In a case falling within sub-paragraph (1)(a) above, this Chapter shall have effect as if the company had—

(a)

immediately before the relevant time, assigned the assets and liabilities that represent its loan relationships for a consideration of an amount equal to their fair value at that time, and

(b)

immediately reacquired them for a consideration of the same amount.

[…]

19.

Section 130 Finance Act 1988 (“FA 88”) applied to any company intending to cease to be UK tax resident. It relevantly provided as follows:

130 Provisions for securing payment by company of outstanding tax

(1)

The requirements of subsections (2) and (3) below must be satisfied before a company ceases to be resident in the United Kingdom […].

(2)

The requirements of this subsection are satisfied if the company gives to the Board—

(a)

notice of its intention to cease to be resident in the United Kingdom, specifying the time (“the relevant time”) when it intends so to cease;

(b)

a statement of the amount which, in its opinion, is the amount of the tax which is or will be payable by it in respect of periods beginning before that time; and

(c)

particulars of the arrangements which it proposes to make for securing the payment of that tax.

(3)

The requirements of this subsection are satisfied if—

(a)

arrangements are made by the company for securing the payment of the tax which is or will be payable by it in respect of periods beginning before the relevant time; and

(b)

those arrangements as so made are approved by the Board for the purposes of this subsection.

[…]

20.

Corporation tax for an accounting period is generally due and payable nine months after the end of that period (s59D TMA).