Finance Act 2003

Taxation of non-resident companies and related mattersU.K.

F1148Meaning of “permanent establishment”U.K.

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149Non-resident companies: basis of charge to corporation taxU.K.

F2(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)After section 10A of the Taxation of Chargeable Gains Act 1992 (c. 12) insert—

“10BNon-resident company with United Kingdom permanent establishment

(1)Subject to any exceptions provided by this Act, the chargeable profits for the purposes of corporation tax of a company not resident in the United Kingdom but carrying on a trade in the United Kingdom through a permanent establishment there include chargeable gains accruing to the company on the disposal of—

(a)assets situated in the United Kingdom and used in or for the purposes of the trade at or before the time the gain accrued, or

(b)assets situated in the United Kingdom and used or held for the purposes of the permanent establishment at or before the time the gain accrued or acquired for use by or for the purposes of the permanent establishment.

(2)Subsection (1) does not apply unless the disposal is made at a time when the company is carrying on a trade in the United Kingdom through a permanent establishment there.

(3)This section does not apply to a company that, by virtue of Part 18 of the Taxes Act (double taxation relief arrangements), is exempt from corporation tax for the chargeable period in respect of the profits of the permanent establishment.

(4)In this section “trade” has the meaning given by section 6(4)(b) of the Taxes Act.”.

F3(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)This section has effect in relation to accounting periods (of the non-resident company) beginning on or after 1st January 2003, and regulations under section 11AA(5) of the Taxes Act 1988 (inserted by subsection (2) above) may be made so as to have effect from that date.

F4150Non-resident companies: assessment, collection and recovery of corporation taxU.K.

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F5151Non-resident companies: extent of charge to income taxU.K.

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F6152Non-resident companies: transactions carried out through broker, investment manager or Lloyd’s agentU.K.

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153General replacement of references to branch or agency of companyU.K.

(1)In the following provisions (which relate only to companies) for “branch or agency” or “branches or agencies”, wherever occurring, substitute “ permanent establishment ” or “ permanent establishments ”.

The provisions are—

(a)in the Taxes Act 1988, sections F7..., F8... F9... 442(1), F10... F11..., 748A(1)(c) and (2), F12...; in Schedule 15, paragraphs 17(3)(c) and 25(2)(c); F13... in Schedule 24, paragraphs 1 and 8; and in Schedule 25, paragraphs 6(2A) and (2C), 8 and 11(3);

(b)in the Taxation of Chargeable Gains Act 1992 (c. 12), sections 140(1), 140C(1)(a), 173(3)(b), 175(1A)(b), 185(4) and 213(5A);

F14(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)in the Capital Allowances Act 2001 (c. 2), sections 560(2) and 561(1)(c);

F15(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In the following provisions (which relate to companies and other persons), any reference to a branch or agency shall be read, in relation to a company, as a reference to a permanent establishment.

The provisions are—

(a)in the Taxes Act 1988, sections F16... F17... 806K(1)F18... F19...F20...;

(b)in the Taxation of Chargeable Gains Act 1992, sections 25(2), (3) and (5), 80(4)(a) and (b) and (7)(b), 199(2) and (4) and 276(7);

(c)in the Finance Act 1999 (c. 16), section 85(2)(a);

F21(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Any reference to a branch or agency—

(a)in subordinate legislation made under an enactment contained in the Tax Acts or relating to chargeable gains, or

(b)that is to be construed as having the same meaning as in any such enactment,

shall be read, in relation to a company, as a reference to a permanent establishment.

• “Subordinate legislation” here has the same meaning as in the Interpretation Act 1978 (c. 30).

(4)This section has effect in relation to accounting periods beginning on or after 1st January 2003.

F22154Double taxation relief: profits attributable to overseas permanent establishmentU.K.

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155Consequential amendmentsU.K.

(1)Schedule 27 to this Act provides for amendments consequential on the provisions of sections 148 to 153.

(2)The amendments made by that Schedule have effect in relation to accounting periods beginning on or after 1st January 2003.

F23156Overseas life insurance companiesU.K.

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