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Contact: michael.firth@taxbar.com
Procedure.Tax
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U3. Security for direct tax
Security for tax upon company ceasing to be UK resident
TMA 1970, s.109B - see B4: Other returns and notices
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Security for corporation tax necessary for the protection of the revenue
"In circumstances where an officer of Revenue and Customs considers it necessary for the protection of the revenue, that officer may require a person described in regulation 7(1) to give security(8) for the payment of tax(9) which a company (“C”) is or may become liable to pay.
(1) The persons from whom security may be required are—
(a) C,
(b) any of the following in relation to C—
(i) a director,
(ii) a company secretary,
(iii) any other similar officer, or
(iv) any person purporting to act in such a capacity.
(2) An officer of Revenue and Customs may require—
(a) a person prescribed by paragraph (1) to give security of a specified value in respect of C, or
(b) more than one person prescribed by paragraph (1) to give security of a specified value in respect of C and, where the officer of Revenue and Customs does so require, each person shall be jointly and severally liable to give that security." (SI 2019/384, rr.6 and 7 - made under FA 1998, Sch 18, para 88A)
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For further details see SI 2019/384 and the offence in s.88A(4).
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INHERITANCE TAX
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Automatic charge for payment of IHT
"(1) Except as otherwise provided, where any tax charged on the value transferred by a chargeable transfer, or any interest on it, is for the time being unpaid a charge for the amount unpaid (to be known as an Inland Revenue charge) is by virtue of this section imposed in favour of the Board on—
(a) any property to the value of which the value transferred is wholly or partly attributable, and
(b) where property becomes comprised in a settlement by virtue of the chargeable transfer or the chargeable transfer is made under Part III of this Act, any property comprised in the settlement.
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(3B) Subsection (3C) below applies to any tax charged—
(a) under section 32, 32A or 79(3A) above in respect of any property,
(b) under paragraph 8 of Schedule 4 to this Act in respect of any property, or
(c) under paragraph 1 or 3 of Schedule 5 to this Act with respect to any object or property.
(3C) Where any tax to which this subsection applies, or any interest on it, is for the time being unpaid, a charge for the amount unpaid is also by virtue of this section imposed in favour of the Board—
(a) except where the event giving rise to the charge was a disposal to a purchaser of the property or object in question, on that property or object; and
(b) in the excepted case, on any property for the time being representing that property or object." (IHTA 1984, s.237)
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- Property includes property directly or indirectly representing
"(2) References in subsection (1) above to any property include references to any property directly or indirectly representing it." (IHTA 1984, s.237)
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- Charge on interest in non-UK company by virtue of Sch A1 applies to UK residential property
"(2A) Where tax is charged by virtue of Schedule A1 on the value transferred by a chargeable transfer, the reference in subsection (1)(a) to property to the value of which the value transferred is wholly or partly attributable includes the UK residential property interest (within the meaning of that Schedule) to which the charge to tax relates." (IHTA 1984, s.237)
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- Excludes personal or movable property owned by deceased vesting in personal representative
"(3) Where the chargeable transfer is made on death, personal or movable property situated in the United Kingdom which was beneficially owned by the deceased immediately before his death and vests in his personal representatives is not subject to the Inland Revenue charge; and for this purpose “personal property” does not include leaseholds and the question whether any property was beneficially owned by the deceased shall be determined without regard to section 49(1) above." (IHTA 1984, s.237)
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- Incumbrance allowable for IHT purposes has priority over HMRC charge
"(5) The Inland Revenue charge imposed on any property shall take effect subject to any incumbrance on it which is allowable as a deduction in valuing that property for the purposes of the tax." (IHTA 1984, s.237)
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- Heritable property in Scotland not subject to charge
"(4) No heritable property situated in Scotland is subject to the Inland Revenue charge, but where such property is disposed of any other property for the time being representing it is subject to the charge to which the first-mentioned property would have been subject but for this subsection." (IHTA 1984, s.237)
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Effect of disposal
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- Disposal preventing charge coming into existence: PET property that has been disposed of to purchaser before transferor's death (but property representing it is charged)
"(3A) In the case of a potentially exempt transfer which proves to be a chargeable transfer—
(a) property concerned, or an interest in property concerned, which has been disposed of to a purchaser before the transferor's death is not subject to the Inland Revenue charge, but
(b) property concerned which has been otherwise disposed of before the death and property which at the death represents any property or interest falling within paragraph (a) above shall be subject to the charge;
and in this subsection “property concerned” means property to the value of which the value transferred by the transfer is wholly or partly attributable." (IHTA 1984, s.237(3A))
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- Disposal of property subject to charge take effect subject to charge unless otherwise provided
"(6) Except as provided by section 238 below, a disposition of property subject to an Inland Revenue charge shall take effect subject to that charge." (IHTA 1984, s.237)
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- Property sold ceases to be charged if land and charge is unregistered
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"(1) Where property subject to an Inland Revenue charge, or an interest in such property, is disposed of to a purchaser, then if at the time of the disposition—
(a) in the case of land in England and Wales, the charge was not registered as a land charge or, in the case of registered land, was not protected by notice on the register, or
(b) in the case of land in Northern Ireland the title to which is registered under the Land Registration Act (Northern Ireland) 1970, the charge was not entered as a burden on the appropriate register maintained under that Act or was not protected by a caution or inhibition under that Act or, in the case of other land in Northern Ireland, the purchaser had no notice of the facts giving rise to the charge, or
[...]
the property or interest shall then cease to be subject to the charge but the property for the time being representing it shall be subject to it." (IHTA 1984, s.238)
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- Property sold ceases to be charged if personal property in UK and no notice of facts giving rise to charge
"(1) Where property subject to an Inland Revenue charge, or an interest in such property, is disposed of to a purchaser, then if at the time of the disposition—
[...]
(c) in the case of personal property situated in the United Kingdom other than such property as is mentioned in paragraph (a) or (b) above, and of any property situated outside the United Kingdom, the purchaser had no notice of the facts giving rise to the charge, or
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the property or interest shall then cease to be subject to the charge but the property for the time being representing it shall be subject to it." (IHTA 1984, s.238)
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- Property sold ceases to be charged if non-UK situs property and no notice of facts giving rise to charge
"(1) Where property subject to an Inland Revenue charge, or an interest in such property, is disposed of to a purchaser, then if at the time of the disposition—
[...]
(c) in the case of personal property situated in the United Kingdom other than such property as is mentioned in paragraph (a) or (b) above, and of any property situated outside the United Kingdom, the purchaser had no notice of the facts giving rise to the charge, or
[...]
the property or interest shall then cease to be subject to the charge but the property for the time being representing it shall be subject to it." (IHTA 1984, s.238)
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- HMRC say notice of potential further tax liability sufficient to have notice of charge
"The term ‘notice’ in IHTA/S238(1)(c) is considered to have a wide meaning and it is not limited to cases where, for example, an actual notice was given to purchaser. It will include cases where a purchaser acquires business property where they are aware that the property was given away less than 7 years prior to their purchase. In such cases the statutory charge created by IHTA84/S237 will apply to the business property in the hands of the purchaser if the tax remains unpaid by either the transferee or personal representatives." (IHTM30125)
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- Property sold ceases to be charged if certificate of discharge given and no notice of facts invalidating certificate
"(1) Where property subject to an Inland Revenue charge, or an interest in such property, is disposed of to a purchaser, then if at the time of the disposition—
[...]
(d) in the case of any property, a certificate of discharge had been given by the Board under section 239 below and the purchaser had no notice of any fact invalidating the certificate,
the property or interest shall then cease to be subject to the charge but the property for the time being representing it shall be subject to it." (IHTA 1984, s.238)
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- Charge on property sold extinguished after 6 years from tax due/account delivered
"(2) Where property subject to an Inland Revenue charge, or an interest in such property, is disposed of to a purchaser in circumstances where it does not then cease to be subject to the charge, it shall cease to be subject to it at the end of the period of six years beginning with the later of—
(a) the date on which the tax became due, and
(b) the date on which a full and proper account of the property was first delivered to the Board in connection with the chargeable transfer concerned.
(3) In this section “the time of the disposition” means—
(a) in relation to registered land—
(i) if the disposition is required to be completed by registration, the time of registration, and
(ii) otherwise, the time of completion, and
(b) in relation to other property, the time of completion." (IHTA 1984, s.238)
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