INTM489898 - Diverted Profits Tax: notification, charging and payment: how to notify

A notification must be made in writing. It must state which section of the legislation (section 80, section 81 or section 86) applies and must specify the following:

  • Where the company is potentially within the scope of DPT because it is a company resident in the UK that enters into a transaction where either the transaction or an entity which is party to the transaction lacks economic substance and that results in a tax mismatch, or it is a non-UK company which has a UK-taxable presence (a permanent establishment) and enters into a transaction where either the transaction or an entity which is party to the transaction lacks economic substance and that results in a tax mismatch
  • the nature of the material provision; and
  • the identity of the other person (“P”) that is party to the material provision.
  • Where the company is potentially within the scope of DPT because it is a non-UK company which has avoided creating a taxable presence in the UK
  • the identity of the person carrying on activity in the UK in connection with the non-UK company’s trade (“the avoided PE”).
  • whether or not the mismatch condition is met.
  • Where the company is potentially within the scope of DPT because it is a non-UK company which has avoided creating a taxable presence in the UK and the mismatch condition is met
  • the nature of the material provision.
  • the identity of the other person that is party to the material provision.

It is recommended that notification should be sent to [email protected]. Companies which prefer not to use email may instead send their notification to Diverted Profits Tax Unit, Large Business, S0791, Newcastle, NE98 1ZZ.

Companies with Customer Compliance Managers (CCMs) are advised to also send a copy to their CCM (see also INTM489860) and other companies in MSB to send a copy to the MSB Diverted Profits Technical Co-ordinators (see INTM489836).

A recommended template for notification is contained in the appendix to this guidance.

Companies notifying HMRC that they are potentially within the scope of DPT will help to resolve the issue more quickly if they provide additional information with their notification which explains why they consider that the notification obligation applies to them and includes, as appropriate:

  • a current worldwide group structure, identifying how relevant entities are treated for tax purposes in relevant jurisdictions,
  • a functional analysis of global supply chains and operations relating to the UK,
  • a value chain analysis of the complete activity undertaken by the group,
  • details of intellectual property and related payments (including royalties) that are connected, directly or indirectly, with activity in the UK,
  • a summary of financial and tax data for UK entities and other entities that should be considered in determining whether DPT applies. Specifically, information showing the profitability of all relevant entities, and especially any low tax entities, will be important.