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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Case records: new company records: types of company

Different types of company need a COTAX record. Some of these are set up automatically and others need to be set up manually. Details of the different types are shown below.

Companies incorporated or registered under the Companies Act
Registered Societies, Industrial and Provident societies in Northern Ireland, Credit Unions and Unit Trust schemes
Non-resident companies trading through a permanent establishment or agency in the UK
Limited Liability Partnerships
Treaty non-resident companies
UK Real Estate Investment Trusts
Unincorporated associations
Non-resident companies carrying out construction work in the UK
Group payment records 

Companies incorporated or registered under the Companies Act

HM Revenue and Customs receives information about new companies registered under the Companies Act through a data feed from Companies House and records are automatically set up on COTAX.

Where a case needs manual intervention to complete the setting up process, it is listed on work list LNTC (List of New and Transferred Cases) showing the action that is needed. The cases requiring manual intervention are as follows.

  • The company name exceeds 56 characters.
  • The company name contains characters that are not valid in COTAX.
  • The Registered Office address is longer than the available fields in COTAX.
  • The CRN for the case is already associated with a record held on COTAX.
  • There is no post code or the post code shown is not recognised by COTAX.

Registered Societies, Industrial and Provident societies in Northern Ireland, Credit Unions and Unit Trust schemes

Records for the following entities are also normally set up automatically through the Companies House data feed.

  • Registered Societies in England, Wales and Scotland, being Co-operative Societies or Community Benefit Societies.
  • Industrial and Provident Societies in Northern Ireland.
  • Credit Unions.
  • Unit trust schemes authorised by the Department of Trade and Industry.

If you are notified of a case of this type for which there is no COTAX record, you should set one up with the correct company status. If you have not been told the reference number, find it from the Financial Conduct Authority Register. Although the reference is not strictly a Company Registration Number, you should enter it in that field on the COTAX record. COM40011 has more information.

If the reference has the prefix RS, you must set the record up with company status ‘O’ until COTAX is updated to accept the prefix of a Registered Society.

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Non-resident companies trading through a permanent establishment or agency in the UK

Where the company is registered at Companies House, it has a CRN with an FC prefix. The record is set up automatically but is put on LNTC (List of New and Transferred Cases) so you can enter the address of the UK establishment as the Registered Office address.

If you come across another type of company that falls in this category, you should set up a record manually.

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Limited Liability Partnerships

Limited Liability Partnerships (LLPs) were introduced by the Limited Liability Partnership Act 2000.

Special legislative rules mean LLPs are not taxed as companies. The income and gains of LLPs are taxed on their members as if they were partners in an ordinary partnership. They are therefore dealt with under ITSA and have a record on the CESA IT system. The only exceptions are where the LLP:

  • does not carry on a business with a view of profit, for example non profit making clubs and societies or
  • is in liquidation.

The only circumstances under which you set up a COTAX record for an LLP are as follows.

  • There is a corporate member liable to corporation tax on its share of LLP profits, but not already set up on COTAX.
  • The LLP is not carrying out a commercial business, for example clubs and societies.
  • The LLP is in liquidation.

For the period up to the date of liquidation the LLP must complete an ITSA return and for post liquidation periods they must complete a company tax return.

You must set up a COTAX record for an LLP only where it is liquidation, not in receivership, administrative receivership, administration or subject to a voluntary arrangement.

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Treaty non-resident companies

The International Manual explains at INTM120060 and INTM120040 that a company may be resident in the UK under specific rules while at the same time being resident in an overseas country for tax purposes by reason of that country’s domestic law. INTM202050 explains that there may be a residence ‘tie breaker’ to decide which country will tax the company.

Where a company is resident both in the UK and in another country, it is ‘dual resident’.

Where a company is:

  • dual resident and
  • there is a Double Taxation Agreement (DTA) between the UK and the other country containing a residence tie-breaker for companies and
  • under that tie-breaker, residence is awarded to the other country, then
  • the company is called ‘treaty non-resident’.

There is more detailed information about dual residency and treaty non-residency in the International Manual at INTM120070 onwards and the Company Taxation Manual at CTM34500 onwards.

If you receive a claim for treaty non-resident status for a company incorporated in the United Kingdom and already set up on COTAX, you should transfer the case to the Sheffield Unit at MUID 272900.

Where the claimant company is a member of a group, it should be dealt with by the office which is responsible for the group.

If you work in the Sheffield Fronting Companies Unit or the office responsible for a group that includes a fronting company, you must use:

  • function ACTP (Amend CT Payer Details) to change the company status from ‘C’ to ‘T’ on the COTAX record
  • function MAPD (Maintain AP Dates) to make all accounting periods ‘exempt’ from the date that the company became treaty non-resident. See COM1081 for further information on recording ‘exempt’ periods.

The AP status ‘exempt’ must be used only for charities, the non-taxable element of UK-REITs and treaty non-resident companies.

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UK Real Estate Investment Trusts

The UK Real Estate Investment Trusts regime (UK-REITs) was introduced by Part 4 FA2006 and applies to accounting periods starting on or after 1 January 2007. The legislation enables companies carrying on property rental business to benefit from exemptions from corporation tax on profits and gains.

Under the UK-REIT regime, the original company in effect splits into two companies for corporation tax purposes and an AP begins for each on the date of entry to the REIT regime.

The original company retains the same Unique Taxpayer Reference (UTR), Company Registration Number (CRN) and COTAX case record and the tax exempt element of the company is set up as a new COTAX case record with its own UTR and no CRN.

Groups of companies can also benefit from the exemptions in Part 4 FA2006, subject to modifications set out in Schedule 17 FA2006.

For full information about UK-REITs see the Guidance on REIT manual (GREIT).

All UK-REIT records are dealt with in Leeds LBS or Large and Complex, Euston Tower. If you are in another office, all enquiries concerning UK-REITs should be referred (This content has been withheld because of exemptions in the Freedom of Information Act 2000) to

Leeds LBS Real Estate Sector
Leeds
West Yorkshire
LS1 5RA

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

If you work in Leeds LBS or Large and Complex, Euston Tower and you receive notification of a new tax-exempt company, use function CCTP (Set Up New Company) to set the case up, making entries in the following fields on screen TXP001A:

  • date of commencement or incorporation
  • intended first accounting date, if known
  • company status ‘R’ from the drop down list
  • name with a suffix of ‘TE’ in place of ‘Ltd’ or ‘Plc’. The TE suffix helps to identify tax-exempt REIT companies and distinguish them from other unincorporated businesses
  • address
  • select ‘blank’ from the drop down list for the field ‘CT41G to be issued?’.

Returns for companies adopting the REIT regime should include an entry in the type of company box on form CT600 as follows.

  • 9 if the company is the original element of the REIT.
  • 10 if the company is the tax exempt element of the REIT.

If necessary you can use function MAPS (Maintain AP Signals) to enter or amend the company type as long as the AP has a return logged on it.

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Unincorporated associations

Unincorporated associations such as clubs, associations or property management companies are liable to company tax. They have a duty to notify chargeability to tax and a COTAX record is required for all such companies.

To set up a record for an unincorporated association:

  • use function CCTP (Set Up New Company)
  • enter the company status as type

    • ‘L’ - club, society, association, or any other body not included under any other heading or
    • ‘O’ - other.

Issue a form CT41G (Clubs) manually unless the association has already provided all the required information.

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Non-resident companies carrying out construction work in the UK

Non-resident companies that are not trading through a permanent establishment or agency in the UK but wish to carry out construction work in the UK must apply the Construction Industry Scheme (CIS).

A COTAX record used to be needed to set up a record on the CIS IT system, but that is no longer the case. If one of these companies contacts you, do not set up a COTAX record. Ask them to contact HMRC Residency on telephone number 0300 200 3200, or if calling from abroad +44 151 210 2222.

You should transfer any cases which you come across in your local office in day to day work to the CIS (NR) team in CAR Residency using MUID 290400.

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Group payment records

Only members of the Group Payment team in Accounts Office Cumbernauld set up a group payment record for a Group Payment Arrangement (GPA). For more information about GPAs, see COM96000 onwards.

See:

  • COM40021 for a list of forms relevant to this subject
  • COM40020 for a list of functions to use in particular situations.