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HMRC internal manual

Banking Manual

Banking manual: introduction: overview of the legislation - additional features

Supplementary CFC charge

If a banking company has an overseas subsidiary with profits that are chargeable under TIOPA10/Part 9, it will be liable to a CFC charge based on the percentage of a CFC’s profits that are apportioned to the chargeable company.  The appropriate rate to apply in charging the CFC charge for that banking company is a rate equivalent to the total of the UK main rate of corporation tax and the rate for the surcharge (BKM403200).

Annual Allowance

There is an annual allowance of £25 million available to groups or, where a group has only one banking company or the banking company is not in a group, to that banking company alone.  The allowance can be used to cover some or all of the surcharge profits or CFC profits apportioned to a banking company.  Any unused allowance cannot be carried forward. BKM404100 has further details on the annual allowance.

Targeted anti-avoidance rules (TAARs)

There are anti-avoidance rules applying to arrangements (whenever entered into) that seek to avoid or reduce the surcharge. The rules negate the effect of the arrangements. BKM406100 has further details on the TAARs.

Reporting requirements

When a company makes a payment that includes, or is wholly, surcharge liability, it must notify HMRC of the amount of surcharge paid.  This requirement is the same whether or not the company pays by instalments (BKM405400).

Groups are required to nominate one banking company to make a statement to HMRC of how the allowance will be used for the period.  The statement should include details of the banking companies which will receive the allowance and the amount they will receive (up to a maximum of £25m for the group).  Where a banking company is not in a group, it does not need to make a statement (BKM404400).