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 John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
All newly incorporated UK companies will receive information about the requirement soon after they set up. They will also be able to obtain advice and support from the Revenue. We will publicise the provision very widely, and will certainly consider any need for additional publicity as the provisions bed in. To summarise the more general points, it is important that the Revenue can ensure compliance with tax obligations by all businesses, including companies, right from the start of their business lives.
These arrangements would apply only to companies with a corporation tax accounting period, not to dormant companies. They therefore apply only to new companies or to companies that have restarted in business after a period of dormancy.
The amendment would create an asymmetry in the obligation to notify between the self-employed and incorporated businesses. It would be three months for the former and six months for the latter. The need for early notification is the same for all kinds of business, irrespective of their legal form. It would be an odd result if the same business were to be subject to a three-month requirement while self-employed, but to a six-month requirement if it incorporated.
The three-month time limit is not unreasonable. The first accounting period begins when a company comes within the charge to corporation tax, by which time all the information required will almost always be available. In the rare case when a company may have some doubt about the time of the start of its first accounting period, measures of protection are built into the clause, in particular the reasonable excuse provisions. Those prevent the levy of a penalty where a company has made a genuine mistake and rectified it at the earliest possible opportunity. It is unlikely that a company faced with such uncertainty would be any better off after six months rather than three.
On that basis, I hope that the hon. Member for Arundel and South Downs will consider withdrawing the amendment, and if not I shall have to ask my hon. Friends to oppose him.