Taxation (International and Other Provisions) Act 2010 section 243

Consequences of deduction notices

Section 243 explains what a company must do when it receives a deduction notice from HMRC, including how it must recalculate its tax position and the options available if it disagrees with the notice.

• When a company receives a deduction notice, it must calculate or recalculate its income, chargeable gains, or corporation tax liability accordingly.
• The calculation must follow the rule against double deduction (section 244) and, where relevant, the rule against deduction for untaxable payments (section 248).
• If the company believes the deduction scheme conditions are not met, it can file its return on the basis that the notice is invalid, leaving HMRC to open an enquiry if it disagrees.
• If the company accepts the notice is valid, it can adjust its return by incorporating the necessary relevant adjustments for the accounting period specified in the notice, and doing so is treated as full compliance.