MTT61030 - Charging mechanisms: The charge: Responsible members
An entity can be a responsible member if it is:
- the ultimate parent,
- an intermediate parent, or
- a partially owned parent (POPE).
A group may have more than one responsible member.
A responsible member will be chargeable for:
- all of the members of the group in which it has a direct or indirect ownership interest, except for those located in its own territory, and
- every permanent establishment for which it is the main entity.
This is set out in sections 128 of Finance (No.2) Act 2023.
Domestic Top-up Tax
Guidance on this page is not applicable for Domestic Top-up Tax, which does not include the concept of a responsible member. See MTT65020 for further guidance on DTT chargeability.
Ultimate parent
The ultimate parent will be a responsible member if it is subject to MTT or another qualifying Income Inclusion Rule applied by another territory for an accounting period.
See MTT09970 for a list of qualifying rules.
Intermediate parent
A member will be an intermediate parent if it has an ownership interest in another member of the group and it is not:
- a permanent establishment,
- an investment entity,
- a partially owned parent, or
- the ultimate parent.
An intermediate parent will be a responsible member if:
- it is subject to MTT or another qualifying Income Inclusion Rule for an accounting period,
- no other group member that is subject to such a rule has a controlling interest in it, and
- at least one group member in which it has an ownership interest (or permanent establishment for which it is the main entity) has a top-up amount or additional top-up amount.
Partially owned parent
A member will be a partially-owned parent if:
- it is not a permanent establishment, investment entity, or the ultimate parent,
- it has an ownership interest in another member of a group,
- more than 20% of the ownership interest in its profits are held by persons other than members of the group, and
A partially owned parent will be a responsible member if:
- it is subject to MTT or another qualifying Income Inclusion Rule for an accounting period,
- it is not wholly-owned by another partially owned parent of that group that is subject to such a rule, and
- it has a direct or indirect ownership interest in a member of the group that has a top-up amount (including an additional top-up amount), or it is the main entity of a permanent establishment that has a top-up amount (including an additional top-up amount).
Undertaxed Profits Rule
The concept of responsible members applies in the UTPR, but with some modifications in certain circumstances, such as the definition of ‘potentially undertaxed’ (see MTT62210).