Clause 55 - Duty of company to give notice of coming within charge to corporation tax
Finance Bill (except clauses 4, 5, 20, 28, 57 to 77, 86, 111 and 282 to 289, and schedules 1, 3, 11, 12, 21 and 37 to 39)
3:30 pm
Mr Michael Jack (Fylde, Conservative)
In following the argument made by my hon. Friend the Member for Arundel and South Downs, will the Economic Secretary clarify one or two points when he replies? There is at least a verbal inconsistency between the explanatory notes on the clause and the way in which it is drafted.
The amendment would provide a longer period for a company to respond to its obligations. The clause says that the company
''must give notice to the Board of the beginning of its first accountancy period''.
It seems clear that when a company comes into existence it must identify itself to the Revenue. The explanatory notes state:
''It places a statutory obligation on companies to notify the Board within 3 months of when they first come within the scope of''
corporation tax.
If one had an enterprise and the business plan said that for the first 12 months the company was going to make a loss, it would not be unreasonable for the owners to say, ''Well, we won't incur a corporation tax liability, so there's no need for us to notify anybody of our existence.'' It becomes relevant only if the loss accumulates and carries over into a second accounting or tax period and the business moves into profit. It then becomes liable for payment of corporation tax on the normal basis, but equally to utilise its losses. The company then engages with the mechanism of corporation tax.
To avoid doubt, if someone believes that their business will not have a real world liability, does the clause means that they will have to pay corporation tax to the Revenue, because that is what the explanatory notes suggest?