Corporation Tax Act 2010 section 357YN

Migration of company with claim to restitution interest

Section 357YN is an anti-avoidance provision that ensures a company which migrated its tax residence away from the UK cannot escape the restitution interest tax charge where the migration was motivated by a desire to obtain a tax advantage.

• Where a non-UK resident company receives restitution interest and had accrued rights to that interest before it ceased to be UK resident, and a main purpose of the migration was to secure a tax advantage in relation to the restitution interest charge, the company is treated as UK resident for the purposes of that charge
• The deemed UK residence treatment applies only to the portion of restitution interest attributable to rights that had accrued before the company left the UK
• The company is treated as not having made a deemed disposal of its rights to receive restitution interest when it ceased to be UK resident, disapplying the normal capital gains exit charge on those particular assets
• Any adjustments required as a consequence of disapplying the deemed disposal rules must be made, and normal time limits for making such adjustments are overridden