Deferring the payment of corporate ‘exit charges’

The Government is amending legislation to address the way in which HMRC collects corporation tax charges levied on unrealised profits or gains when a UK resident company that is registered in an EEA territory transfers its place of effective management to another EEA State (often described as “exit charges”). This follows a decision by the Court of Justice of the European Union. These amendments will offer such companies the option to defer payment of exit charges over a period of time provided that certain conditions are met. The change is intended to protect public finances, support businesses with cash-flow issues, and ensure UK law remains compatible with EU law.

The Government has announced that this change will be made through Finance Bill 2013, and will have effect to permit companies to elect to defer the payment of exit charges that fall due from 11 December 2012 onwards.

This consultation document is published alongside draft legislation and outlines the obligations of a company electing to defer the payment of exit charges. The purpose of this technical consultation is to seek views on the draft legislation and ensure that the amended legislation works as intended, and does not create unforeseen impacts or burdens.

HM Treasury would like to hear from all interested parties. Respondents should address any of the questions in the consultation document where they feel they can make a contribution, as well as offering any further comments they may have.