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NCDR change
The non-corporate distribution rate applies to distributions made on or after 1 April 2004. Revenue guidance on the application of the legislation was published on 17 September 2004, and has now been included in the Revenue's Company Taxation Manual. There has been some question as to whether the guidance at CT3002 reflects the correct interpretation of the legislation and the Revenue, having taken legal advice, now considers that part of the guidance is incorrect, although this was discovered too late to halt the publication in the manual.
The Revenue now considers that regardless of the underlying rate of corporation tax charged in the accounting period, any excess non-corporate distributions are to be carried forward to the next period and so on. The revised version of CT3002 will be published as soon as possible and will now read:
'Where a singleton company has excess non-corporate distributions, that excess is carried forward and is treated as a non-corporate distribution made in the next accounting period. This is in addition to any non-corporate distributions actually made by that company in the next accounting period.
'Example
'Using Example 2 at CT2999 the basic profits for the accounting period are £40,000. The distributions made in the accounting period are £55,000 of which £20,000 are made to a company. The excess non-corporate distributions are £9,546.
'In the next accounting period, the company pays a total of £30,000 dividends of which £10,000 are made to a company. In this accounting period:
'NCDs = (£30,000 - £10,000) + £9,546 = £29,546
'Treatment of excess non-corporate distributions carried forward to the next accounting period
'TA88, Sch A2 para 13 applies to excess non-corporate distributions carried forward whether in singleton companies or in groups. This paragraph makes it clear that the excess is treated as if it were a non-corporate distribution of the next accounting period. This means that in the next accounting period, it must be considered under s 13AB just like any other non-corporate distribution of that accounting period.
'No profits in the next accounting period or company wound up
'The non-corporate distribution rate is a rate of corporation tax. Therefore, it cannot apply where there are no profits. If the company has left a group and business activities have become negligible, then special provisions might apply, see CT3030, but otherwise, excess non-corporate distributions are carried forward to be considered in subsequent accounting periods in the normal way.
'If a company is wound up, it is treated in the normal way. Any excess non-corporate distributions brought forward are no longer relevant.'
HM Revenue and Customs Guidance Notes, 26 April 2005.
P86 problem?
A scam involving fake forms P86 which are sent to British employees working overseas in order to obtain personal information about them has been uncovered.
The Inland Revenue apparently first became aware of a possible problem in February 2005. At that time it had received one piece of correspondence. It immediately began an investigation to establish whether this was an isolated incidence. Subsequently BP contacted the Revenue, so the Revenue wrote to all members of the joint forum on expatriate tax and NICs, which it felt was the most appropriate way of alerting expatriates and people working abroad, i.e. through their employers.
To date, the Revenue says that it is not aware of any instances where any of the items offered have been used fraudulently against it, but it is on the alert. In addition, the Revenue press office has contacted certain members of the Middle East media drawing this scam to their attention.
Form P86 has to be completed when someone comes to the UK for the first time or returns after a period of absence. The Revenue uses the information provided to decide residence treatment. Information required includes the individual's tax office reference and National Insurance number; the form does not ask for bank details.
Agents' authorisation
The Revenue's new central agent authorisation team handles the processing of most new agent authorisations for individuals, trusts and partnerships. It does not handle the following:
- 64-8s for claims cases dealt with in claims offices;
- 64-8s for expatriate or complex personal return cases;
- 64-8s for companies; or
- 64-8s and CWF1s accompanied by construction industry scheme registration card applications.
These should be sent to the appropriate area office.
www.hmrc.gov.uk
Retail prices index
The all items retail prices index for March 2005 is 190.5.
