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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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ACT collection: international headquarters companies (IHC): assessments

ICTA88/SCH13/PARA3B (1) - (6)

The provisions relating to payment of ACT by IHC were repealed by F2A97 with effect for accounting periods beginning on or after 6 April 1999.

 

 A company that treats itself as an IHC when it pays an FID does not account for ACT (CTM22350). This leaves the Revenue at risk from companies claiming to be IHC when they do not fulfil any of the IHC conditions (CTM21505).

As a defence against this, you can make an assessment on the company to the best of yourjudgement if, before the end of the accounting period concerned, you are not satisfied that there was a reasonable basis for the company treating itself as an IHC.

Any ACT due in respect of such an assessment is treated for interest purposes as payable fourteen days after the relevant return period.

Where such an assessment is made, then subject to any appeal:

  • the company is deemed not to have treated itself as an IHC at the time of payment of the FID,
  • the special rule in ICTA88/SCH13/PARA3A (3) (which deems the FID not to have been paid for the purposes of ICTA88/S246F (1) and (2) and ICTA88/SCH13/PARA2 (5) and 4A (CTM21220, CTM22060 and CTM22085 respectively)) is disapplied.

One of the conditions for a company to treat itself as an IHC is that it was an IHC inthe preceding period (CTM21520). If a company treating itself as an IHC was not an IHC in the preceding period an assessment should be made.

A company may treat itself as an IHC when paying an FID in a return period, but not be an IHC in the accounting period containing that return period. (The company might think that it fulfills one of the conditions to be an IHC, but later find that it was mistaken.) You can make an assessment on the company after the end of the accounting period for an amount of ACT calculated as follows.

  • Work out the ACT which would have been payable for the return period in respect of FID paid if the company had not treated itself as an IHC at any time in the accounting period, and had made a return for the return period concerned. This is X.
  • Y is the total of:
  •  -  any ACT in fact payable by the company in respect of FID paid for the return period,

plus

    • any ACT assessed on the company under paragraph 3B (1) (see above) for the return period,

plus

    • any ACT assessed on the company under paragraph 3 (CTM22170 to CTM22180) for the return period that is attributable to FID.
       
  • Raise an assessment on the amount by which X exceeds Y for any return period falling within the accounting period concerned.
     

Any ACT due on an assessment under paragraph 3B (3) is treated for interest purposes as having been payable at the time when it would have been payable if the company had not treated itself as an IHC at any time in the accounting period.