INTM489530 - Diverted Profits Tax: introduction and overview: recent changes to the legislation

Amendments were made to the DPT legislation in Finance Act 2017 in respect of wider changes to the withholding tax regime.

The Finance Act 2019 introduced further changes to the DPT legislation:

• It established a central definition of diverted profits in cases where the diverted profits arose from arrangements or entities which lack economic substance and clarified the calculation of diverted taxable profits in certain cases.
• It also extended the deadline for when a preliminary notice can be issued in certain cases where the diverted profits arose from arrangements or entities which lack economic substance.
• It extended the review period from 12 months to 15 months.
• It clarified the position in respect of double taxation to DPT and corporation tax.
• It gave companies charged to DPT and avoided permanent establishments an additional opportunity to amend their corporation tax return during the first 12 months of the review period even if they were otherwise out of time to make an amendment.
• In Finance Act 2021, changes were made to s101 Part 3 Finance Act 2015, to make it clear how this section of the DPT legislation is intended to interact with the corporation tax legislation, with particular reference to customer amendments and use of closure notices. These changes have extended the additional opportunity for customers to amend their corporation tax returns to the first 14 months of the review period even if they are otherwise out of time to make an amendment.

These changes are explained further at the relevant sections of the guidance.