Taxes Management Act 1970 section Schedule 3ZB paragraph 2

Qualifying corporation tax

Section Schedule 3ZB paragraph 2 defines what qualifying corporation tax is and how to calculate the amount payable when a company migrates its tax residence away from the UK.

• Qualifying corporation tax arises when the total corporation tax for the migration accounting period (CT1) exceeds the corporation tax that would have been due if exit charge amounts were excluded (CT2)
• The qualifying corporation tax payable is the difference between CT1 and CT2, effectively isolating the tax attributable solely to the exit charge provisions
• Exit charge provisions cover deemed disposals of assets, trading stock valuations on cessation, loan relationships, derivative contracts, and intangible fixed assets when a company ceases to be UK resident
• References to qualifying corporation tax throughout Parts 2 and 3 of this Schedule are to be interpreted in accordance with this paragraph