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HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
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UK residents with foreign income or gains: dividends: Determination of rates of foreign underlying tax - UTG and CTSA

Following the changes introduced by Finance Acts 2000 and 2001, CTIAA Underlying Tax Group (UTG) has encouraged companies to contact them direct for advice and assistance, before the relevant corporation tax return is made. A set of procedures has been agreed to ensure that basic principles are not compromised by UTG work, whether they become involved before the submission of the relevant return or after.

  • The UTG will accede to requests to consider underlying tax relief computations before the relevant return is submitted.
  • If it can agree the computation without correspondence, it will notify the company and the relevant office within HMRC accordingly.
  • Otherwise, it will open correspondence

    • on the company’s undertaking that, if the computation is not agreed before it submits the return, it will notify the UTG that it is submitting the return; and
    • will notify the relevant office within HMRC that it is working the underlying tax point and ask the relevant office to let it know when the return is submitted.
  • From 6 months after the end of the accounting period concerned, the UTG will use COTAX to confirm that the return has not yet been submitted before writing any letter to the company.
  • When the computation is agreed, the UTG will notify the company and the relevant office accordingly.
  • If the computation is not agreed at the time the return is submitted, the UTG will confirm to the relevant office that this is the case, give details of the amount and significance of the open point and state whether or not it would wish to continue correspondence. It will take no further action on the computation until authorised to do so by the relevant office.
  • On examining the return as part of its risk assessment of the case, the relevant office will

    • accept without enquiry any computation or part computation that has previously been agreed by the UTG, unless it has reason to think that the company had not disclosed the full position to the UTG. In that event, it will consult the UTG before taking any further action.
    • where the computation or part computation that is not agreed has been the subject of correspondence with the UTG, take the UTG’s views into account in deciding whether or not to launch an enquiry into the return.
    • where the computation or part computation that is not agreed has not previously been the subject of correspondence with the UTG, send a copy to the UTG, state whether or not it otherwise intends to launch an enquiry into the return and ask the UTG whether it wishes to correspond on the computation as part of the enquiry.
  • If the UTG wishes to query the computation, it will notify the relevant office accordingly. Correspondence will normally be conducted by the UTG as a separate strand within the enquiry, but it may be agreed in certain cases that the relevant office will do so on the advice of the UTG. Except in such cases the UTG will open or resume correspondence once it has checked from COTAX that the enquiry has been launched.
  • Once the enquiry is under way, the onus is on

    • the relevant office as case owner to ensure that the UTG’s correspondence has been concluded before it closes the enquiry;
    • the UTG, when it concludes its correspondence, to make clear to the company that it is not closing the enquiry, which is being conducted by the case-owner, and to notify the relevant office of the results of its correspondence.
  • The UTG may in appropriate circumstances make use of the information powers in FA08/SCH36/PARA2, but should first consult the relevant office so that an overall view of the enquiry may be taken.