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).