INTM620610 - Offshore Receipts in respect of Intangible Property (ORIP): Process and procedures: Overview

Overview

The normal procedures for the assessment and collection of income tax apply to any tax charged under Chapter 2A ITTOIA05. Further guidance can be found in the Self-Assessment: The Legal Framework manual here.

There are some amendments to the normal procedures in respect of appeal rights, postponement of tax pending the outcome of an appeal and further appeals. Further guidance on this can be found at INTM620530.

How to notify

Notification of liability to UK income tax arising from the application of Chapter 2A ITTOIA05 should be sent to the ORIP mailbox orip.technicalqueries@hmrc.gov.uk.

Companies with Customer Compliance Managers (CCMs) are advised to also send a copy of the notification to their CCM.

A recommended template for notification is contained in INTM620620. A chargeable person has an obligation to notify their Chapter 2A liability under S7 TMA1970 by 5 October following the year of assessment. Failure to do so will result in a tax geared penalty under Schedule 41 FA09.

When an entity first notifies this liability, a 10-digit Unique Taxpayer Reference will be allocated which will be required for the return, and should be quoted on all correspondence with HMRC. A form 64-8 must be sent to HMRC to authorise any agent to deal with HMRC on behalf of the entity. This form is available on the GOV.UK website. To authorise an agent to act in respect of the ORIP affairs of a non-resident company, please make use of the section for Individual*/Partnership*/Trust* Tax Affairs, which will ensure an agent can discuss all matters of Income Tax Self Assessment of the named entity with HMRC.

Reporting

Taxpayers (corporates and non-corporates) should use the SA700 Non-resident Company Income Tax Return form to report any tax liability under Chapter 2A ITTOIA05. This must be submitted to HMRC as a paper return and not electronically; electronic returns will not be accepted and late filing penalties could apply if the paper return is not received by HMRC by the filing deadline.

Guidance on how to fill in the SA700 form is published for each financial year on the GOV.UK website. The deadline to file an SA700 return is 31 January following the end of the year of assessment in every case. The 31 October deadline for paper filing applies in cases where there is an option to file electronically so not relevant for ORIP cases.

Late filing penalties will be applied if the paper return is not received by the due filing date, see section 93 Schedule 55 Finance Act 2009.

The postal address for SA700 returns can be found on the return for the relevant period.

If you decide to send the completed return by courier please follow this advice on GOV.UK

Paying Tax

See Section 59A TMA70. The tax due date for payments under Chapter 2A will follow normal Income Tax Self-Assessment rules, that is to say for the first year the entity is subject to Income Tax, payment is due by 31 January after the end of the year of assessment. For the second and subsequent years, payments on account are normally required from any taxpayer who is assessed to income tax for the preceding tax year. This is the case even if the assessment has not been made at the time the payments on account are due.

Whenever payments on account are required for any tax year they are payable without demand;

  • The first on or before 31 January of that tax year.
  • The second on or before 31 July next following that tax year.

Example 1

Entity A has a Self-Assessment liability in 2019/20 of £10,000,000. On 31 January 2021 payment of £10,000,000 is due. In addition, on 31 January 2021 £5,000,000 Payment on Account is due. On 31 July 2021 the second Payment on Account of £5,000,000 is due.

Entity A submits its 20/21 Self Assessment which shows a liability for the year of £11,000,000. By 31 January 2022 they must pay a balancing charge of £1,000,000 as well as the first Payment on Account for 21/22.

Example 2

Entity B has a Self-Assessment liability in 2019/20 of £10,000,000. On 31 January 2021 payment of £10,000,000 is due. Entity B makes a valid claim to reduce Payments on Account as the expected liability is expected to be £8,000,000. On 31 January 2021 £4,000,000 Payment on Account is due.

On 31 July 2021 the second Payment on Account of £4,000,000 is due.

Entity B submits its 20/21 Self-Assessment which shows a liability for the year of £8,000,000. At 31 January 2022 they is no balancing charge to pay however the first Payment on Account for 21/22 will be due.

If the 20/21 liability had exceeded £8,000,000 interest and surcharges would have been due from each Payment on Account due date on the additional tax.

Detailed guidance regarding payments on account is in the Self-Assessment; the legal framework Manual (SALF) from SALF 300.