RPDT20520 - The Charge to RPDT: allowance: process for nominating allocating member

RPDT20510 explains that a group of companies has a single annual allowance of £25m that can be allocated to its members provided that a group company has been nominated to make the allocation. The requirements for making this nomination are set out in regulation 3 of SI 2022/266. The nomination must be made by the ultimate parent of the group. Ultimate parent his defined in FA22/S48(3), see RPDT10500.

Under the regulations a nomination must be:

  • made in writing to HMRC
  • signed by the appropriate person on behalf of the ultimate parent (HMRC will accept an electronic signature), and
  • state the first accounting period for which the nomination is to have effect

The “appropriate person” is defined in regulation 2 of SI 2022/266 as either the company’s “proper officer” of the company which is normally the company secretary, TMA70/S108, or another person having authority to act for the company for the purposes of the regulations.

Where it is intended that the ultimate parent itself will make the allocation, then a nomination to that effect will be required. Otherwise, the default position is that each company within the charge to Corporation Tax will receive a fraction of the amount, FA22/S43(4)-(5), see 20510.

Where the ultimate parent intends to make its nomination at the same time as its CT return, a section of the RPDT supplementary page CT600N includes fields for this purpose.

A nomination continues to have effect until it is either changed or revoked, regulation 3(3) of SI 2022/266.

Nominations being made at a different time can be sent to rpdtadministration@hmrc.gov.uk

Change of Allocating Member

Regulation 4 explains the process for a change of allocating member, say from X Ltd to Y Ltd

Firstly, the allocation will be made by reference to the accounting period of X Ltd that is current immediately before the change in allocating member. But Y Ltd will be responsible for submitting the statement from the date of the change.

Where the accounting periods of X Ltd and Y Ltd overlap, then the amount of allowance available by reference to Y Ltd’s accounting period is reduced on a pro rata basis. This is achieved by treating the period as beginning at the end of X Ltd’s accounting period regulation 4(3) of SI 2022/266.

After which, the period will revert to the new allocating member’s accounting period.

Extended example

3 companies in group (A):

  • The first allocating member (A1) with AP 1 Jan-31 Dec
  • The new allocating member (A2) with AP 1 July-30 June
  • RP Developer company (RP) with AP 1 April-31 March

A1 is nominated by the ultimate parent to be the first allocating member so period A is 1 Jan 2023- 31 Dec 2023.

The whole of allowance is allocated in March 2023 to RP, whose period B is 1 April 2022-31 March 2023.

A1 ceases being allocating member during Period A and A2 is nominated with effect from 1 Jan 2024

The first period for which the allowance is determined by A2’s accounting period will be 1 Jan 2024 – 30 June 2024, which excludes the overlap with A1’s accounting period. The available allowance is therefore £12.5m.

After this transitional period A2 will have a Period A in line with its AP which is 1 July – 30 June and a £25m allowance.

  • RP APE 31 March 2023: Receives £25m allowance from A1’s Period A.
  • RP APE 31 March 2024: Receives £12.5m from A2’s shortened Period A.
  • RP APE 31 March 2025: Receives £25m allowance from A2’s subsequent Period A.

A2 wouldn’t be able to amend A1’s allowance statement until 1 Jan 2024.

RPDT01100 contains a general introduction to RPDT and a list of abbreviations used.