HMRC has published draft legislation in relation to changes to the existing rules which apply a special corporation tax at 45% to any restitution interest payable by HMRC following a claim for a mistake, which are designed to benefit charitable and life insurance companies
The measure will amend Part 8C of The Corporation Tax Act 2010 (CTA 2010) to remove charitable companies and the income of policyholders of with-profits funds from the scope of the 45% rules. They will bring a corporate beneficiary, in receipt of restitution interest sought on its behalf, within the scope of the rules.
An anti-avoidance provision is extended to include a non-resident company which carries out a trade in the UK through a permanent establishment in the UK. New rules are introduced so that a charge to the 45% rate, which had remained with the transferor company as part of the anti-avoidance provision, is passed to a related group company if the transferor company is wound up or dissolved.
Changes are being made to clarify self-assessment obligations and to whom any appeal against the withholding of the 45% tax should be made.
In addition, there are changes impacting the calculation of tax payable. These are to have had effect from 21 October 2015.
There are also further minor amendments which will affect all companies chargeable to the special corporation tax rate of 45% on restitution interest and these have effect from the date the regulations come into force.
Policy paper on Corporation Tax: changes to Part 8C of the Corporation Tax Act 2010 tax on restitution interest payments is here.
