Legislation – Finance (No. 2) Act 2023

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Part 4Domestic top-up tax

Chapter 2Charge to domestic top-up tax

269Chargeable persons

(1)

A person is chargeable to domestic top-up tax for an accounting period if—

(a)

the person is a qualifying entity for that period and is a body corporate or a partnership F1…, or

(b)

the person is chargeable to tax in respect of an entity—

(i)

that is a qualifying entity for that period, and

(ii)

that is not a body corporate or a partnership F2….

(2)

A person is chargeable to tax in respect of an entity if the profits of that entity would, on the relevant assumptions, be the profits of the person for the purposes of income tax or corporation tax.

(3)

The relevant assumptions are that—

(a)

the entity has profits that are chargeable to income tax or corporation tax, and

(b)

the person is resident in the United Kingdom for the purposes of that tax.

F3(4)

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F3(5)

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F3(6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)

Where more than one person is chargeable to tax in relation to the same qualifying entity as a result of the application of subsection (2), each of those persons is jointly and severally liable to domestic top-up tax.

270Amount charged

F4A1

Where a person is chargeable to domestic top-up tax for an accounting period as, or in respect of, a qualifying entity which is a member of a group, the amount (if any) the person must pay is determined as follows—

Step 1

Determine (in accordance with section 272)—
1. (a)
  whether the entity has a top-up amount for that period, and
2. (b)
  the extent of any such amount.
Step 2

If the result of Step 1 is not expressed in sterling, convert the result of that Step to sterling.

(1)

Where a person is chargeable to domestic top-up tax for an accounting period F5as or in respect of a qualifying entity which is not a member of a group, the amount (if any) the person must pay is determined as follows—

Step 1

Determine F6(in accordance with section 273) whether the entity has any top-up amounts or additional top-up amounts for that period and the extent of those amounts.
Step 2

Determine the sum of those amounts.
Step 3

If the result of Step 3 is not expressed in sterling, convert the result of that Step to sterling.

(2)

Generally, a qualifying entity will have a top-up amount for an accounting period if it has profits for a period and its effective tax rate (or, where it is a member of a group, that of its group) is less than 15%.

(3)

Chapter 3 of this Part makes provision, principally by applying (with modifications) provisions in Part 3, for determining—

(a)

the effective tax rate of a qualifying entity by reference—

(i)

in the case of an entity that is a member of a group, to the profits of, and the taxes payable by, members of the group that are located in the United Kingdom, or

(ii)

in the case of an entity that is not a member of a group, to its profits and to the taxes payable by that entity.

(b)

those profits,

(c)

which taxes (referred to as “covered taxes”) are to be considered in the determining effective tax rates,

(d)

top-up amounts, and

(e)

additional top-up amounts.

271Election to make one member of a group liable for amounts charged

(1)

Where multiple members of a group are chargeable to domestic top-up tax in an accounting period, the filing member of the group may elect that only one member of the group specified in the election (the “F7elected member”) is to be liable to pay domestic top-up tax in that period.

(2)

Where an election under this section is made—

(a)

no member of the group other than the F8elected member is required to pay any amount by way of domestic top-up tax, and

(b)

the F8elected member must pay any amount by way of domestic top-up tax any other member of the group would have been required to pay if the election had not been made.

(3)

Subsection (2) does not apply if the F9elected member has not consented to the election.

(4)

Paragraph 2 of Schedule 15 (annual elections) applies to an election under this section, and has effect for that purpose as if references to an information return or overseas return notification were to a self-assessment return or below-threshold notification.