Section 217K | No postponement except before assessment is finalised for tax on same profits

(1)This section applies where—

(a)a designated officer has assessed a company’s unassessed transfer pricing profits for an accounting period under section 217H or section 217J(5), and

(b)the amount of paid relevant tax is greater than nil.

(2)The company may—

(a)first apply by notice in writing to HMRC for a determination of the amount of the corporation tax charged on the unassessed transfer pricing profits the payment of which is to be postponed until the assessment is finalised (see subsection (3));

(b)where such a determination is not agreed, refer the application for a determination to the tribunal within the period of 30 days beginning with the date of the document notifying the company of HMRC’s determination.

(3)For the purposes of this section—

(a)the amount of corporation tax charged on the unassessed transfer pricing profits the payment of which is to be postponed until the assessment is finalised is an amount equal to the amount of paid relevant tax, and

(b)the assessment is finalised when—

(i)the period of 30 days mentioned in section 217M(2) ends without notice of an appeal to the tribunal against the assessment being given,

(ii)an appeal against the assessment is finally determined otherwise than by the assessment being cancelled, or

(iii)an appeal against the assessment is withdrawn.

(4)An application under subsection (2)(a)—

(a)must be made within the period of 30 days beginning with the day after—

(i)the day on which the unassessed transfer pricing profits are assessed under section 217H or section 217J(5), or

(ii)if later, any day on which the amount of paid relevant tax ceases to be nil, and

(b)must state the amount of paid relevant tax and include documentary evidence of that amount.

(5)If, after any determination of the amount of corporation tax the payment of which should be so postponed—

(a)the company or HMRC has grounds for believing that the amount so determined has become excessive or insufficient, and

(b)the parties cannot agree on a revised determination,

the party mentioned in paragraph (a) may, at any time before the assessment is finalised, apply to the tribunal for a revised determination of that amount.

(6)Any application to the tribunal under subsection (2)(b) or subsection (5) is subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of that Act).

(7)If the company and HMRC reach an agreement as to the amount of corporation tax the payment of which should be postponed until the assessment is finalised, the agreement shall not have effect unless—

(a)the agreement is in writing, or

(b)the fact that the agreement has been reached, and the terms of the agreement, are confirmed by notice in writing given—

(i)by the company to HMRC, or

(ii)by HMRC to the company.

(8)The payment of corporation tax charged on the unassessed transfer pricing profits—

(a)may not be postponed other than in accordance with this section, and

(b)accordingly, any amount of the corporation tax that is not postponed in accordance with this section or ceases to be postponed in accordance with this section is due and payable in accordance with section 59D of TMA 1970 or regulations made under section 59E of that Act.

(9)In this section—

(a)“appeal” means any appeal under the Taxes Acts;

(b)“paid relevant tax” means relevant tax within the meaning of section 217D(9)—

(i)charged (in any period) on profits that correspond to the unassessed transfer pricing profits, and

(ii)that has been paid by the other party and not refunded within the meaning of section 217D(5);

(c)“tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal;

(d)references to agreements between a company and HMRC, and to the giving of notices between the parties, include references to agreements, and the giving of notices, between a person acting on behalf of the company and HMRC.

(10)For the purposes of subsection (9)(b)—

(a)any withholding tax which has been paid on payments made to the other party is (unless it is refunded within the meaning of section 217D(5)) to be treated as tax which has been paid by the other party (and not by the person making the payment);

(b)where the other party is a transparent entity within the meaning of section 217D(7)—

(i)the reference to relevant tax that has been paid by the other party includes a reference to relevant tax that has been paid by any person as a result of profits that correspond to the unassessed transfer pricing profits being treated for the purposes of relevant tax charged under the law of any territory as the income or profits of that person;

(ii)paragraph (a) applies to any such persons as it applies to the other party.