Taxes Management Act 1970 section 109E

Liability of other persons for unpaid tax

Section 109E deals with who can be held liable when a company leaves the UK and leaves corporation tax unpaid.

• When a company ceases to be UK resident and fails to pay its corporation tax within six months of it becoming due, HMRC can pursue other connected persons for the unpaid amount.
• HMRC has three years from the relevant time to serve a notice on group companies, controlling directors of the migrating company, or controlling directors of companies that controlled the migrating company, requiring payment within 30 days.
• Any person who pays under such a notice has a right to recover the amount from the migrating company, but the payment cannot be deducted when calculating income, profits or losses for any tax purposes.
• The relevant persons are those who held their position either at the time of migration or at any point during the 12 months before the company left the UK, and "group" uses a wider 51 per cent subsidiary test rather than the usual 75 per cent test.