Diverted Profits Tax - interaction with Corporation Tax closure notices and amendment to relieving provisions
Published 27 October 2021
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This publication is available at https://www.gov.uk/government/publications/diverted-profits-tax-interaction-with-corporation-tax-closure-notices-and-amendment-to-relieving-provisions/diverted-profits-tax-interaction-with-corporation-tax-closure-notices-and-amendment-to-relieving-provisions
Who is likely to be affected
A limited number of large multinational enterprises with business activities in the UK who have engaged in contrived arrangement to divert profits from the UK and have therefore been subject to Diverted Profits Tax.
General description of the measure
This measure legislates to amend sections 101A and 101B of Part 3 of the Finance Act 2015 to ensure that customers can still use those relieving provisions to amend their company tax returns and bring taxable diverted profits into charge to Corporation Tax during the Diverted Profits Tax review period. This measure will also legislate to amend Part 3 of the Finance Act 2015 to ensure that the interaction between Diverted Profits Tax review periods and what happens when a Corporation Tax enquiry is closed functions as intended.
Policy objective
To ensure that the Diverted Profits Tax legislation functions as intended and that customers are still able to make use of the relieving provisions at s101A and s101B of Part 3 of the Finance Act 2015.
Background to the measure
The measure was announced at Autumn Budget 2021 to ensure that the Diverted Profits Tax regime continues to function as intended.
Detailed proposal
Operative date
The measure will have effect for any Diverted Profits Tax review periods which are open at 27 October 2021 or are opened after that date.
Current law
Companies engaging in the diversion of profits from the UK which meet the conditions for the Diverted Profits Tax to apply are subject to the legislation at:
- Part 3 of the Finance Act 2015
- Schedule 6 to the Finance Act 2019
Proposed revisions
Legislation will be introduced in Finance Bill 2021-22 to:
- amend s101A and s101B of Part 3 of the Finance Act 2015 (as amended by Schedule 6 to the Finance Act 2019) to ensure that an amendment under those sections takes effect immediately.
- amend Part 3 of the Finance Act 2015 to specify that HMRC cannot issue a Corporation Tax closure notice in respect of profits subject to a DPT charge until after the review period ends.
Summary of impacts
Exchequer impact (£m)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.
Impact on individuals, households and families
This measure is not expected to have any impact on individuals. There is expected to be no impact on family formation, stability or breakdown.
Equalities impacts
This measure will only impact larger multinational enterprises, and therefore it is not anticipated that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is not expected to have any impact on businesses who will see no change to what they currently do. There are not expected to be any costs to business. There is expected to be no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
The measure carries no operational impacts to HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through pre-existing processes for the monitoring of Diverted Profits Tax.
Further advice
If you have any questions about this change, please contact Helen Steer (Transfer Pricing Policy Team) on email: helen.steer@hmrc.gov.uk.