RPDT40300 - Commencement and transitional provisions: anti-forestalling

As explained at RPDT30100, RPDT is a form of Corporation Tax and therefore all the anti-avoidance rules applicable to Corporation Tax apply for the purposes of RPDT, including the General Anti-Abuse Rule (GAAR). The RPDT legislation includes a specific rule to counter arrangements that to move profits liable to RPDT to periods before the commencement of the tax on 1 April 2022, FA22/S52.

The arrangements affected are those with a main purpose of taking profits out of the scope of RPDT. Where the rule applies, the profits are treated as arising in a company’s accounting period ending after 1 April 2022.

The rule does not apply where the only arrangement is bringing forward a company’s accounting date so that the profits are correctly returned for a Corporation Tax accounting period that ends before 1 April 2022, FA22/52(3).

Where a company’s accounting period would normally straddle the commencement date then the profits should be apportioned on a time basis as explained at RPDT40100. It makes no difference that the profits arise in the part of the period before that date. For example, a company may have an accounting period ending on 30 September 2022, but its only sale may be that of a single completed residential development before 1 April 2022, before the commencement of RPDT. The profit should still be apportioned on a tine basis so that a part is liable to RPDT. However, if the company brings forward its accounting date for the purposes of the Companies Act, and this brings the end of its Corporation Tax accounting period to before 1 April 2022 then the rue will not apply.

Examples of where the rule may apply include a change of valuation methodology to bring profits into account or a disposal of property under development to a related company, where there is a purpose of booking trading profits to a period before 1 April 2022.

HMRC officers should refer any case to which they consider the rule may apply to the CT Structure team for advice.

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