Citation, commencement and effect

1. —(1) These Regulations may be cited as the International Movement of Capital (Required Information) Regulations 2009 and shall come into force on 1st September 2009.

(2) These Regulations shall have effect in relation to events taking place and transactions carried out on or after 1st July 2009.

Interpretation

2. —(1) In these Regulations—

“group company” means any company which is resident in the United Kingdom and which would be deemed to be a member of the group of companies which includes the reporting body for the purposes of Chapter IV of Part X of the Income and Corporation Taxes Act 1988( 2 ) if in section 413(3) of that Act the words “51 per cent” were substituted for the words “75 per cent”;

“ICTA” means the Income and Corporation Taxes Act 1988;

“redeemable”, in relation to shares, means that the shares satisfy one or both of the following conditions—

and arrangements are material arrangements if the company which issued the shares or a company connected with that company is a party to the arrangements;

“Schedule 17” means Schedule 17 (international movement of capital) to the Finance Act 2009.

(2) For the purposes of these Regulations, whether a person is connected with another shall be determined as it would in accordance with the provisions of subsections (2) to (8) of section 839 (connected persons) of ICTA( 3 ) if the words “paragraph 12 of Schedule 17 to the Finance Act 2009” were substituted for the words “section 416” in the definition of “control” in subsection (8).

(3) In these Regulations, references to a reporting body include a body corporate which would be a reporting body if it had not entered into an arrangement under paragraph 6 of Schedule 17.

Information

3. —(1) Paragraphs (2) and (3) specify the information (in this regulation referred to as “the required information”) to be contained in the report which is required to be made to an officer of Revenue and Customs under paragraph 4(1) of Schedule 17.

(2) The required information as it relates to a foreign subsidiary connected with the event or transaction is—

(a) its name, and

(b) the territory from the laws of which it derives its status as a body corporate.

(3) The required information as it relates to an event or transaction is a full description of the event or transaction (and, in the case of a transaction, a full description of all the steps taken in the course of the transaction) and includes in particular—

(a) the date on which the event took place or the transaction was carried out,

(b) for a transaction, the name of each party to it,

(c) the reason for the event or transaction, and

(d) an estimate of the effect of the event or transaction on the liability to tax in the United Kingdom of the reporting body and of any group company.

Value of the event or transaction

4. —(1) The value of an event or transaction is to be determined for the purposes of paragraph 8 of Schedule 17 in accordance with this regulation.

(2) The value of an issue or transfer of shares or debentures is the market value of the shares or debentures.

(3) The value of an event or transaction which results in a foreign subsidiary becoming, or ceasing to be, a controlling partner in a partnership is the market value of the share of the subsidiary in the assets of the partnership immediately after it becomes a controlling partner or, as the case may be, immediately before it ceases to be a controlling partner.

(4) For the purposes of paragraphs (2) and (3), the value of an event or transaction that is one of a series is the aggregate of the value of all the events and transactions in the series.

Excluded transactions

5. —(1) A transaction is excluded for the purposes of Schedule 17 if—

(a) it is a transaction within paragraph 8(2)(a) to (c) of Schedule 17 that is entered into pursuant to cash pooling arrangements in respect of which the conditions specified in paragraph (2) have been met; or

(b) it is described in one of the paragraphs in the Schedule (excluded transactions) to these Regulations and meets such conditions (if any) as are specified there.

(2) The conditions mentioned in paragraph (1)(a) are that before the transaction takes place—

(a) the parties to the cash pooling arrangements notify an officer of Revenue and Customs in writing of the terms of the arrangements;

(b) an officer of Revenue and Customs gives notice in writing to the parties that transactions entered into pursuant to the cash pooling arrangements after the date of the notice will be excluded transactions for the purposes of Schedule 17.

(3) The Schedule (excluded transactions) to these Regulations has effect.

Nomination arrangements

6. —(1) This regulation contains provision about an arrangement under paragraph 6 of Schedule 17.

(2) The parties to an arrangement must give notice to an officer of Revenue and Customs within 28 days of entering into it.

(3) The notice must be in writing and signed by all the parties to the arrangement.

(4) The notice must state—

(a) the name of each party,

(b) the tax reference of each party, and

(c) which party is the nominated reporting body.

(5) The parties to an arrangement are treated as having withdrawn from it if they fail to give notice in accordance with paragraphs (2) to (4).

(6) A party to an arrangement is treated as having withdrawn from it if that party ceases to be controlled by the foreign parent.

(7) A party which withdraws from or is treated as having withdrawn from an arrangement must give notice in writing of that fact to an officer of Revenue and Customs and to any other party to the arrangement within 28 days of the date of withdrawal or, as the case may be, the date on which it ceases to be controlled by the foreign parent.

Regulation 5(1)(b) and (3)

SCHEDULE EXCLUDED TRANSACTIONS

1. The following transactions are excluded transactions mentioned in regulation 5(1)(b).

2. —(1) The first transaction is the issue of shares by the foreign subsidiary to the reporting body or to a group company.

(2) The conditions are that the issue—

(a) is of shares that are not redeemable; and

(b) is either—

(i) at market value and for consideration paid in cash to the foreign subsidiary, or

(ii) in or towards payment for any business undertaking or property acquired by the foreign subsidiary at market value.

3. —(1) The second transaction is the issue of shares by the foreign subsidiary to a person not connected with the reporting body.

(2) The conditions are—

(a) that the issue—

(i) is at market value and for consideration paid to the foreign subsidiary, and

(ii) is not to a nominee or trustee for a person who is connected with the reporting body;

(b) that no arrangements exist as a consequence of which the reporting body or a person connected with the reporting body, or a nominee or trustee for that person or the reporting body, is or may become entitled to the shares so issued or to any of them or to any interest in them or in any of them.

4. —(1) The third transaction is the issue of shares by the foreign subsidiary to all persons who are its shareholders at the time of the issue.

(2) The conditions are that the issue —

(a) is in respect of and in proportion to the shares held by the shareholders in the foreign subsidiary at the time of the issue; and

(b) either—

(i) is of shares that are not redeemable, or

(ii) where no shares are issued to a company which is resident in the United Kingdom or to a nominee or trustee for such a company, is at market value for consideration paid in cash to the foreign subsidiary.

5. —(1) The fourth transaction is the issue of debentures by the foreign subsidiary to the reporting body or to a group company.

(2) The condition is that the circumstances specified in sub-paragraph (3) are not associated with or present in connection with the issue of the debentures.

(3) The circumstances are that a loan, whether or not of the same amount as that secured by the debentures, is made by a company which is not resident in the United Kingdom to a company which is resident in the United Kingdom.

6. —(1) The fifth transaction is the issue of debentures by the foreign subsidiary to persons not connected with the reporting body.

(2) The conditions are—

(a) that the issue—

(i) is at market value and for consideration paid to the foreign subsidiary, and

(ii) is not to a nominee or trustee for a person who is connected with the reporting body;

(b) that no arrangements exist as a consequence of which the reporting body or a person connected with the reporting body, or a nominee or trustee for that person or the reporting body, is or may become entitled to the debentures so issued or to any of them or to any interest in them or in any of them.

7. —(1) The sixth transaction is the transfer by the reporting body or a company (whether or not it is resident in the United Kingdom) of shares or debentures of the foreign subsidiary to a person not connected with the reporting body.

(2) The conditions are—

(a) that the transfer—

(i) is at market value for consideration paid to the transferor company, and

(ii) is not to a nominee or trustee for a person who is connected with the reporting body;

(b) that no arrangements exist as a consequence of which—

(i) the reporting body, or

(ii) a nominee or trustee for the reporting body, or

(iii) a person connected with the reporting body, or

(iv) a nominee or trustee for a person connected with the reporting body,

is or may become entitled to the shares or debentures transferred or to any of them or to any interest in them or in any of them.

8. The seventh transaction is a transfer by the reporting body of shares or debentures of the foreign subsidiary to a group company.

9. —(1) The eighth transaction is a transfer within sub-paragraph (2) to the reporting body or a group company.

(2) A transfer is within this sub-paragraph if it—

(a) is not by the reporting body,

(b) is of shares or debentures of a foreign subsidiary in which the reporting body has an interest, and

(c) is permitted or caused by the reporting body.

10. The ninth transaction consists in the reporting body or a group company giving security over the shares of a foreign subsidiary in connection with borrowing money from a lender who is unconnected to the reporting body or the group company.