DPT administrative process

Produced by Tolley in association with Paul Bowes
  • (Updated for Budget 2021)

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.

Duty to notify HMRC

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

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

  1. whether theduty 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 theavoided PE in FA 2015, s 86 cases

  3. in FA 2015, ss 80 or 81 cases, a description of thematerial provision (ie thetransaction(s)) involved, together with thenames of theparties concerned

  4. in FA 2015, s 86 cases, whether or not themismatch condition is met, and if it is, a description of thematerial provision involved, together with names of theparties concerned

FA 2015, s 92(9)

The penalties for not notifying when a notification is subsequently found to have been required are based on ‘potential lost revenue (PLR)’ (see comments on penalties). The normal conditions applying to thediverted profit circumstances under FA 2015, ss 80, 81 and 86 are modified for thepurposes of notification. These modifications and theexemptions from notification in practice give rise to judgements to be made by companies as to whether to notify or not, which may not be straightforward.

In practice, it is likely to be thecase that those large multinational sector activities that are under close or specialist scrutiny of HMRC may lead to those groups with whom

Popular documents