Corporation Tax

DPT administrative process

Produced by Tolley in association with Paul Bowes
  • 22 Dec 2021 16:11

The following Corporation Tax guidance note Produced by Tolley in association with Paul Bowes provides comprehensive and up to date tax information covering:

  • DPT administrative process
  • Duty to notify HMRC
  • Exemptions from notification
  • Penalties and form of notification
  • Preliminary notices
  • Representations
  • Charging notices
  • Estimating profits for preliminary and charging notices ― FA 2015, ss 80 or 81 cases
  • Estimating profits for preliminary and charging notices ― FA 2015, s 86 cases
  • Payment and recovery of tax
  • More...

DPT administrative process

There are several administrative matters and deadlines to be aware of in connection with diverted profits tax (DPT), which is unsurprising given that DPT is an entirely new tax. The key provisions are listed below.

Two changes were announced at Autumn Budget 2021 which will be included in Finance Bill 2022. These relate to double tax treaty claims and the mutual agreement procedure, and to amendments of company tax returns during the DPT review period, see below at ‘Credit for UK or foreign tax’ and ‘HMRC review of charging notice’ for more details.

Duty to notify HMRC

If a company is potentially within the charge to DPT, it must notify HMRC within three months following the end of the accounting period. This notification period is extended to six months for the first such period (if there is more than one) ending on or before 31 March 2016.

The notification must be made by the affected UK resident or foreign company in writing and must state:

  1. whether the duty to notify arises as a result of FA 2015, ss 80 or 81 (entities or transactions lacking economic substance), or FA 2015, s 86 (avoidance of a UK permanent establishment (PE))

  2. the name of the avoided PE in FA 2015, s 86 cases

  3. in FA 2015, ss 80 or 81 cases, a description of the material provision (ie the transaction(s)) involved, together with the names of the parties concerned

  4. in FA 2015, s 86 cases, whether or not the mismatch

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