Taxes Management Act 1970 section Schedule 3ZB paragraph 5

Qualifying corporation tax

Section Schedule 3ZB paragraph 5 defines what qualifying corporation tax is and how to calculate the amount payable when a non-UK resident company's permanent establishment ceases to operate in the UK (the migration accounting period).

• Qualifying corporation tax arises when the total corporation tax for the migration accounting period (CT1) exceeds the corporation tax that would be due if exit charge amounts were excluded (CT2)
• The amount of qualifying corporation tax is the difference between CT1 and CT2
• Exit charge provisions are specific statutory rules that trigger deemed disposals or cessation events when assets leave the UK tax net, covering chargeable gains, trading stock, loan relationships, derivative contracts and intangible fixed assets
• CT2 is zero if no corporation tax would be due for the period once exit charge items are stripped out