Guidance will be incorporated in HMRC International Manual in 2013
HMRC has invited substantive comments by the end of October on further draft guidance on the new rules for controlled foreign companies (CFCs) and foreign permanent establishments.
A new TIOPA 2010 Part 9A, inserted by FA 2012 Sch 20 with effect for accounting periods of CFCs beginning on or after 1 January 2013 (subject to transitional rules), comprises 22 chapters. The draft guidance published last week relates to chapters 6, 8, 11-19 and 22.
Last week the CIOT welcomed draft guidance published earlier this year but raised a number of concerns. The tax body asked HMRC to look again at one example, in which a non-UK business with non-UK intellectual property (IP) is acquired by a UK parented group. Certain of the IP acquired is transferred to an existing non-UK company that holds similar IP.
The CIOT said the example suggested that HMRC believed that ‘the mere involvement of UK staff in deciding to place foreign [intellectual property] IP in a foreign IP company amounts to a “main purpose” of that decision being to reduce or eliminate a UK tax liability; notwithstanding that the IP has never given rise to any UK tax liability’.
It added: ‘All the decision has done has meant that a UK tax liability has not been created where none previously existed. It surely cannot be the case that this amounts to an arrangement to “reduce or eliminate” a UK tax liability.’
Guidance will be incorporated in HMRC International Manual in 2013
HMRC has invited substantive comments by the end of October on further draft guidance on the new rules for controlled foreign companies (CFCs) and foreign permanent establishments.
A new TIOPA 2010 Part 9A, inserted by FA 2012 Sch 20 with effect for accounting periods of CFCs beginning on or after 1 January 2013 (subject to transitional rules), comprises 22 chapters. The draft guidance published last week relates to chapters 6, 8, 11-19 and 22.
Last week the CIOT welcomed draft guidance published earlier this year but raised a number of concerns. The tax body asked HMRC to look again at one example, in which a non-UK business with non-UK intellectual property (IP) is acquired by a UK parented group. Certain of the IP acquired is transferred to an existing non-UK company that holds similar IP.
The CIOT said the example suggested that HMRC believed that ‘the mere involvement of UK staff in deciding to place foreign [intellectual property] IP in a foreign IP company amounts to a “main purpose” of that decision being to reduce or eliminate a UK tax liability; notwithstanding that the IP has never given rise to any UK tax liability’.
It added: ‘All the decision has done has meant that a UK tax liability has not been created where none previously existed. It surely cannot be the case that this amounts to an arrangement to “reduce or eliminate” a UK tax liability.’
