Explanatory note

Section 150 of the Finance Act 2003 (c. 14) (non-resident companies: assessment, collection and recovery of corporation tax) imposes obligations on the UK representative of a non-resident company in relation to corporation tax. For this purpose, a permanent establishment of the non-resident company through which it carries on a trade is the UK representative of the non-resident company. The meaning of the expression “permanent establishment” is explained in section 148 of the Finance Act 2003; section 148(3) provides that a company is not regarded as having a permanent establishment in a territory by reason of the fact that it carries on business there through an agent of independent status.

Paragraph 3 of Schedule 26 to the Finance Act 2003 deals with the circumstances in which an investment manager carrying out an investment transaction is regarded as an agent of independent status. The expression “investment transaction” is dealt with in paragraph 3(3) of Schedule 26; paragraph (3)(3)(c) provides that the expression includes such other transactions as the Treasury may by regulations designate. These Regulations designate transactions in Community tradeable emissions allowances and in transferable units issued pursuant to the Kyoto Protocol as investment transactions for the purposes of Schedule 26.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.