CTM34136 - Residence: outward company or permanent establishment migration: liabilities arising: deferral of exit charges: exit charge payment plan: realisation method: tax deferral and annual reports
Source: gov.uk (2025-08-08)


Annual reports are required to be made to HMRC under the deferral method detailing the realisation of its Exit Charge Payment Plan (ECPP) assets and liabilities. Deferral periods will vary depending on the nature of the asset or liability and its tax and accounting treatment. Broadly, tax will be payable either in instalments or on disposal of the asset, depending on how the value of the asset or liability is expected to be realised, through use or subsequent disposal. This means
- in instalments over the useful economic life of an intangible fixed asset,
- in instalments over the expected term of a loan relationship or derivative contract, or
- deferral until asset disposal in any other case (CG or trading stock assets).
For all assets and liabilities, however, the maximum period over which payments may be deferred is ten years.

CG or trading stock assets: TMA70/SCH49/PARA14

A disposal of an asset includes a sale and all other chargeable events for CG purposes, including deemed disposals, whether in whole or in part.

Where appropriate, the normal capital gains part disposal rules in TCGA92/S21 (2) apply. Special rules such as those in TCGA92/PART4/CHAPTER1 for the identification of assets and computation of gains from disposals out of pooled assets will not apply. Any realisation of assets of the class on which gains were computed at the time of migration will bring deferral of the relevant proportion of the ECPP tax to an end. The amount of tax originally deferred is apportioned on a just and reasonable basis for the purposes of distinguishing between what became due as a result of the part disposal and what remains deferred. See CG12730 (http://home.active.hmrci/cgmanual/CG12730+.htm) onwards.

Loan relationships, derivative contracts and intangible assets: TMA70/SCH49/PARA15 to PARA17

PARA15 provides that for loan relationships, derivative contracts and intangible fixed assets the tax is paid in equal annual instalments over the useful economic life of an intangible or the expected term of a loan relationship or derivative contract up to a maximum of ten years - see above. But this is subject to the happening of particular events which may require payment of the balance of the tax outstanding, in whole (PARA16) or in part (PARA17).

PARA16 requires the outstanding balance to be paid in full where either the company no longer holds the ECPP asset or liability as the result of a trigger event (when it is payable on the date of the event), or one of the relevant events mentioned at CTM34133 (https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm34133) occurs (when it is payable at the next instalment date).

A trigger event means
- in the case of a loan relationship or derivative contract, ceasing to be a party to the loan relationship or derivative contract in question, and
- in the case of an intangible fixed asset, realisation.
PARA17 applies to financial and intangible assets broadly equivalent rules to the part disposal rules which apply to CG assets where an ECPP asset or liability is realised or disposed of in part. A just and reasonable proportion of the tax subject to the instalment regime is attributed to the part realised, and is to be paid at the next instalment date, along with the instalment for the unrealised part. Tax remaining unpaid in respect of the asset or liability continues to be treated in accordance with the ECPP.