HMRC has updated its draft guidance on how the Northern Ireland corporation tax legislation will operate once the Northern Ireland rate has been set. It takes account of comments received during consultation on the first draft published in September 2016, and incorporates changes made by Finance (No 2) Act 2017, including an extended definition of ‘Northern Ireland company’. The government will not commence the Act until a restored Northern Ireland Executive demonstrates its finances are on a sustainable footing. When finalised, this guidance will be incorporated into a new HMRC manual.
The revised version takes account of comments received during consultation and incorporates changes made to the legislation in Finance (No 2) Act 2017, including the option for SMEs which do not meet the employment test, but have a trading presence in Northern Ireland, to elect to be a ‘Northern Ireland company’ and use the rules applying to large companies. The draft guidance may be refined further prior to the devolution of the corporation tax rate-setting power to the Northern Ireland Assembly.
The regime will apply in relation to ‘Northern Ireland profits or losses’, as distinct from ‘mainstream profits or losses’. The Northern Ireland rate will apply to the qualifying profits of companies (or partnerships) falling into two categories: micro-businesses and SMEs; or large companies.
Micro-businesses and SMEs qualify where they are Northern Ireland employers whose employee time and costs fall largely in Northern Ireland. The rate will also apply to corporate partners on their share of the profits of a partnership trade if both the company and the partnership meet the SME criteria and are Northern Ireland employers and the partnership’s employee time and costs fall largely in Northern Ireland. No attribution of profits is required in these cases.
For large companies (those not in the SME definition) and those that are an SME but not a Northern Ireland employer and have elected to use the rules applying to large companies, the rate will apply to profits that are attributable to a Northern Ireland trading presence and, in the case of a corporate partner not falling within the SME rules just mentioned, to a corporate partner on its share of the profits of a partnership that are attributable to a Northern Ireland trading presence.
HMRC has updated its draft guidance on how the Northern Ireland corporation tax legislation will operate once the Northern Ireland rate has been set. It takes account of comments received during consultation on the first draft published in September 2016, and incorporates changes made by Finance (No 2) Act 2017, including an extended definition of ‘Northern Ireland company’. The government will not commence the Act until a restored Northern Ireland Executive demonstrates its finances are on a sustainable footing. When finalised, this guidance will be incorporated into a new HMRC manual.
The revised version takes account of comments received during consultation and incorporates changes made to the legislation in Finance (No 2) Act 2017, including the option for SMEs which do not meet the employment test, but have a trading presence in Northern Ireland, to elect to be a ‘Northern Ireland company’ and use the rules applying to large companies. The draft guidance may be refined further prior to the devolution of the corporation tax rate-setting power to the Northern Ireland Assembly.
The regime will apply in relation to ‘Northern Ireland profits or losses’, as distinct from ‘mainstream profits or losses’. The Northern Ireland rate will apply to the qualifying profits of companies (or partnerships) falling into two categories: micro-businesses and SMEs; or large companies.
Micro-businesses and SMEs qualify where they are Northern Ireland employers whose employee time and costs fall largely in Northern Ireland. The rate will also apply to corporate partners on their share of the profits of a partnership trade if both the company and the partnership meet the SME criteria and are Northern Ireland employers and the partnership’s employee time and costs fall largely in Northern Ireland. No attribution of profits is required in these cases.
For large companies (those not in the SME definition) and those that are an SME but not a Northern Ireland employer and have elected to use the rules applying to large companies, the rate will apply to profits that are attributable to a Northern Ireland trading presence and, in the case of a corporate partner not falling within the SME rules just mentioned, to a corporate partner on its share of the profits of a partnership that are attributable to a Northern Ireland trading presence.
