Finance (No. 2) Act 2005
In section 18 of VATA 1994 (goods subject to warehousing regime: place and time of acquisition or supply), after subsection (1) insert—
Section 57 of VATA 1994 (determination of consideration for fuel supplied for private use) is amended as follows.
After subsection (4) (power of Treasury by order to substitute a different Table for Table A) insert—.
In subsection (5) (fuel supplied for 2 or more vehicles)—
in paragraph (a), for “Table A above, that Table” substitute “ Table A above or any Notes, that Table and those Notes ”;
in paragraph (b), after “that Table”, in both places, insert “ or those Notes ”.
In subsection (7) (cubic capacity of internal combustion engine with reciprocating pistons) after “for the purposes of Table A above” insert “ and any Notes ”.
In subsection (8) (cubic capacity in other cases) after “for the purposes of Table A above” insert “ and any Notes ”.
After subsection (8) insert—.
The amendments made by this section come into force on such day or days as the Treasury may appoint by order made by statutory instrument; and different days may be so appointed for different purposes.
Section 80 of VATA 1994 (recovery of overpaid VAT) is amended as follows.
For subsection (1) (liability of Commissioners to repay overpaid VAT) substitute—.
In subsection (2) (Commissioners only liable to repay an amount on a claim) before “repay” insert “ credit or ”.
After subsection (2) insert—.
In subsection (3) (defence of unjust enrichment) for “under this section, that repayment” substitute “ under this section by virtue of subsection (1) or (1A) above, that the crediting ”.
For subsection (3A) (cost of payment borne for practical purposes by third party) substitute—.
In subsection (3B) (loss or damage to be disregarded) in paragraph (a), for “repayment” substitute “ crediting ”.
For subsection (4) (time limit on claims) substitute—.
For subsections (4A) and (4B) (recovery of excess repayments) substitute—.
For subsection (7) (no other liability of Commissioners to repay VAT not due) substitute—.
The side-note to the section accordingly becomes “ Credit for, or repayment of, overstated or overpaid VAT ”.
Section 4 contains consequential and supplementary provision.
In consequence of the amendments made by section 3, VATA 1994 is amended as follows.
In section 78 (interest in certain cases of official error) in subsection (1)(a) (overstated output tax) for “and which they are in consequence liable to repay to him” substitute “ and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him, ”.
In section 80A (arrangements for reimbursing customers)—
in subsection (2)(a), for “repayment” substitute “ crediting ”;
in subsection (2)(b), for “the cost of the original payment of that amount to the Commissioners” substitute “ the amount brought into account as mentioned in paragraph (b) of subsection (1) or (1A) of that section ”;
in subsection (3)(a), for “repayment” substitute “ crediting of the amount ”;
for subsection (3)(b) substitute—;
in subsection (3)(c), for “repaid” substitute “ paid (or repaid) ”;
in subsection (4)(a), for “to make the repayments to the Commissioners that they are required to make” substitute “ to make the repayments, or give the notifications, to the Commissioners that they are required to make or give ”;
in subsection (7)—
for “repayment”, in the first place, substitute “ credit ”;
for “the making of any repayment” substitute “ the crediting of any amount ”.
In section 80B (assessment of amounts due under section 80A arrangements) after subsection (1) (person liable to pay an amount) insert—.
In section 83 (appeals)—
in paragraph (t) (repayment of amounts under section 80 etc) before “repayment” insert “ crediting or ”;
in paragraph (ta) (assessments under section 80B(1) etc) after “80B(1)” insert “ or (1B) ”.
The amendments made by section 3 and this section have effect in any case where a claim under section 80(2) of VATA 1994 is made on or after 26th May 2005, whenever the event occurred in respect of which the claim is made.
In paragraph 8 of Schedule 6 to VATA 1994 (valuation in case of reverse charge)—
after “8” insert “ , or any supply of goods is treated by virtue of section 9A, ”, and
after “the services” insert “ or goods ”.
This section has effect in relation to supplies made on or after 17th March 2005.
Schedule 1 (which contains amendments of Schedule 11A to VATA 1994) has effect.
Subsection (1) and Schedule 1 shall come into force on such day as the Treasury may by order made by statutory instrument appoint.
An order under subsection (2) may—
appoint different days for different purposes, and
contain transitional provisions and savings.
A charge to income tax arises where a person becomes entitled to a social security pension lump sum.
For the purposes of the Tax Acts (including subsection (5)) a social security pension lump sum—
is to be treated as income, but
is not to be taken into account in determining the total income of any person.
The person liable to a charge under this section is the person (“P”) entitled to the lump sum, whether or not P is resident ... ... in the United Kingdom.
The charge is imposed on P for the applicable year of assessment (see subsection (6)).
A charge under this section for a person who is neither a Scottish taxpayer nor a Welsh taxpayer in the applicable year of assessment is a charge in respect of the amount of the lump sum at the following rate—
if P's Step 3 income for the applicable year of assessment is nil, 0%;
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if P's Step 3 income for that year of assessment is greater than nil but does not exceed the basic rate limit for that year, the basic rate ... for that year;
if P's Step 3 income for that year of assessment exceeds the basic rate limit for that year but does not exceed the higher rate limit for that year, the higher rate ... for that year.
if P's Step 3 income for that year of assessment exceeds the higher rate limit for that year, the additional rate ... for that year.
Section 8 makes provision as to the meaning of “the applicable year of assessment” for the purposes of this section.
Where P is a Scottish taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—
if P’s Step 3 income for the applicable year of assessment is nil, 0%;
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if P’s Step 3 income for that year of assessment is greater than nil, the highest Scottish rate for that tax year that would be applicable to an amount of income that is equal to P’s Step 3 income(2) for that year if such amount were wholly chargeable to income tax at Scottish rates.
Section 9 contains further definitions and makes provision as to commencement.
Where P is a Welsh taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—
if P’s step 3 income for the applicable year of assessment is nil, 0%;
if P’s step 3 income for that year of assessment is greater than nil but does not exceed the basic rate limit for that year, the Welsh basic rate for that year;
if P’s step 3 income for that year of assessment is greater than the basic rate limit but does not exceed the higher rate limit for that year, the Welsh higher rate for that year;
if P’s step 3 income for that year of assessment is greater than the higher rate limit for that year, the Welsh additional rate for that year.
Section 10 contains consequential amendments.
For the purposes of this section P's “ Step 3 income ” means P's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).
For the purposes of section 7 “the applicable year of assessment” has the meaning given by this section.
Subject to subsections (5) to (7), the applicable year of assessment is—
the year of assessment in which the first benefit payment day falls, or
if P dies before the beginning of that year of assessment, the year of assessment in which P dies.
For the purposes of subsection (2) “the first benefit payment day” is, subject to subsections (4) , (4A) and (4B) , the day as from which P's— becomes payable following the period of deferment by virtue of which P's entitlement to the lump sum arises.
Category A or Category B retirement pension,
shared additional pension, or
graduated retirement benefit,
But where— the first benefit payment day is the day on which S died; and for this purpose “S” is the person by virtue of whose period of deferment P's entitlement to the lump sum arises.
the lump sum is a state pension lump sum to which P is entitled under paragraph 7A of Schedule 5 to SSCBA 1992 or paragraph 7A of Schedule 5 to SSCB(NI)A 1992 or a graduated retirement benefit lump sum to which P is entitled under a provision corresponding to either of those paragraphs, and
at the time of S's death, P was entitled to a Category A or Category B retirement pension or (as the case may be) graduated retirement benefit,
Subsections (6) and (7) apply where social security regulations make provision enabling the making of an election for a social security pension lump sum to be paid in the year of assessment (“the later year of assessment”) next following that given by subsection (2).
In a case where the social security pension lump sum is a lump sum under section 8 of the Pensions Act 2014 or under any corresponding provision under the law of Northern Ireland, “the first benefit payment day” for the purposes of subsection (2) is the day as from which the lump sum becomes payable.
If such an election is made by P and is not revoked, the applicable year of assessment is—
the later year of assessment, or
if P dies before the beginning of that year of assessment, the year of assessment in which P dies.
In a case where the social security pension lump sum is a lump sum under regulations under section 10 of the Pensions Act 2014 which make provision corresponding or similar to section 8 of that Act or under any corresponding provision under the law of Northern Ireland, “the first benefit payment day” for the purposes of subsection (2) is the day as from which the lump sum becomes payable.
If— the applicable year of assessment is the later year of assessment.
P dies after the beginning of the later year of assessment,
by the time of P's death, P has not notified the Secretary of State as to whether or not P wishes to make such an election,
social security regulations make provision enabling the making of such an election in such a case by the personal representatives of P, and
P's personal representatives make such an election in accordance with the regulations,
For the purposes of determining the applicable year of assessment, it does not matter when the lump sum is actually paid.
In this section—
“Category A or Category B retirement pension” means Category A or Category B retirement pension under Part 2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992;
section 35 or 36 of NIA(NI) 1966;
“prescribed” means prescribed by or determined in accordance with regulations under this section;
Schedule 11A to VATA 1994 (disclosure of avoidance schemes) is amended in accordance with this Schedule.
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Section 839 of ICTA has effect for the purposes of this Part.
Section 16 of TCGA 1992 is amended as follows. In subsection (3) (loss accruing to person in year of assessment during which he is not resident or ordinarily resident in UK not to be allowable loss unless, under section 10, he would be chargeable to tax in respect of chargeable gain if the loss had been a gain) after “section 10” insert “or 10B”.
After section 144ZA of TCGA 1992 insert—
In paragraph 15A of Schedule 17A (leases: reduction of rent or term)—
Where any consideration in money or money’s worth (other than an increase in rent) is given by the lessee for any variation of a lease, other than a variation of the amount of the rent or of the term of the lease, the variation is treated for the purposes of this Part as an acquisition of a chargeable interest by the lessee.
for the heading preceding that paragraph substitute “Reduction of rent or term or other variation of lease”.
Group relief is not available if the transaction—
Subject to sub-paragraph (2), paragraphs 18 to 20 have effect in relation to any transaction of which the effective date is on or after the day on which this Act is passed. Paragraphs 19 and 20 do not have effect— The exclusion by sub-paragraph (2)(b) of transactions effected in pursuance of contracts entered into on or before 16th March 2005 does not apply— Paragraph 21 has effect in relation to any instrument executed on or after the day on which this Act is passed. In this paragraph “assignment”, “effective date” and “substantially performed” have the same meaning as in Part 4 of FA 2003.
Paragraph 11 (amount of penalty) is amended as follows. In sub-paragraph (3)— In sub-paragraph (4), after “(3)(a)” insert “ and (c) ”. After sub-paragraph (4) insert—
Section 420 (income and exemptions relating to securities: meaning of “securities” etc.) is amended as follows. In subsection (1), after paragraph (a) insert—. In paragraph (b) of that subsection, insert at the end “ (other than contracts of insurance) ”. In paragraph (g) of that subsection, insert at the end “ (other than contracts of insurance) ”. After that subsection insert— In subsection (5)— generally accepted accounting practice Section 832(1) of ICTA This paragraph has effect on and after 2nd December 2004 and applies in relation to rights under contracts of insurance acquired before that date, as well as those acquired on or after that date; and—
Chapter 4 of Part 7 (post-acquisition benefits from securities) is amended as follows.
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A scheme satisfies the requirements of this paragraph if it includes a transaction or a series of transactions under which a person (“the transferor”)— and sub-paragraphs (3) and (4) are satisfied. A person is similarly benefited for these purposes if he receives a payment which would, but for the transaction or series of transactions, have arisen to the transferor. This sub-paragraph is satisfied if— are connected with each other. This sub-paragraph is satisfied if following the transfer of rights or the securing of the similar benefit— In sub-paragraph (4)(b) references to the value of rights to receive a payment under a relevant security are references to the market value of those rights; and references to the value of similar benefits are to be construed accordingly. In this paragraph a relevant security is—
Section 179A of TCGA 1992 is amended as follows. In subsection (12) (asset is “chargeable asset” if gain accruing to company on disposal of asset would be chargeable gain and would by virtue of section 10(3) form part of company’s chargeable profits for corporation tax) for “section 10(3)” substitute “section 10B”.
Section 288 of TCGA 1992 is amended as follows. In this subsection “employment-related securities option” means a securities option within the meaning of Chapter 5 of Part 7 of ITEPA 2003 (see section 420(8) of that Act) to which that Chapter applies or would, apart from section 474 of that Act, apply (see section 471 of that Act); and other expressions used in this subsection and that Chapter have the same meaning in this subsection as in that Chapter.
In section 768B(10) of ICTA (Part 4 of Schedule 28A to have effect for restricting the debits to be brought into account in respect of loan relationships) after “debits”, where first occurring, insert “and non-trading deficits”. In section 768C(9) of ICTA (Part 4 of Schedule 28A to have effect for restricting the debits to be brought into account in respect of loan relationships) after “debits”, where first occurring, insert “and non-trading deficits”. Schedule 28A to ICTA (change in ownership of investment company: deductions) is amended as follows. In paragraph 7(1)(b) (apportionment of excess in paragraph 6(c), or of non-trading deficit, to first part of accounting period) after “the whole amount of the excess” insert “or, as the case may be, of the deficit”. After paragraph 9 insert—. After paragraph 10 insert—. In paragraph 16(1)(b) (apportionment of excess in paragraph 13(1)(ec), or of non-trading deficit, to first part of accounting period) after “the whole amount of the excess” insert “or, as the case may be, of the deficit”. The title of Part 4 of the Schedule becomes “Disallowed debits and non-trading deficits”. The amendments made by this paragraph have effect in any case where the change in ownership is on or after 10th February 2005.
In Schedule 23A to ICTA (manufactured dividends and interest) paragraph 3 (manufactured interest on UK securities) is amended as follows. In sub-paragraph (2A) (restriction on relief under sub-paragraph (2)(c))— In sub-paragraph (2A), in the paragraph (b) so substituted, for “annual profits or gains” substitute “income”. The amendment made by sub-paragraph (3) has effect in relation to payments of manufactured interest made on or after 6th April 2005. The other amendments made by this paragraph have effect in relation to payments of manufactured interest made on or after 16th March 2005.
Section 171 of TCGA 1992 (transfers within a group: general provisions) is amended as follows. After subsection (3) insert—. The amendment made by this paragraph has effect in any case where the disposal is on or after 16th March 2005.
Section 100 of FA 1996 (money debts etc not arising from the lending of money) is amended as follows. In subsection (1)(c) (money debts to which the section applies) after sub-paragraph (iii) insert or. After subsection (1) insert—. In subsection (2), as it has effect for periods of account beginning on or after 1st January 2005, in paragraph (a), for “matters mentioned in subsection (1)(c) above” substitute “matters mentioned in subsection (1)(c)(i) to (iii) above or subsection (2ZA) below”. After subsection (2) insert—. After subsection (3) (amounts treated as interest under Schedule 28AA to ICTA) insert—. Omit subsections (4) to (6) and (8) (which relate to whether debits or credits are trading or non-trading etc and which are unnecessary, in view of the application of sections 82(2) and 103(2) of FA 1996 by virtue of section 100(2) of that Act). Omit subsection (13) (express subjection to Schedules 9 and 11 to FA 1996, which is unnecessary in view of the closing words of subsection (2) of the section). In consequence of the amendments made by this paragraph, paragraph (c) of the Case III of Schedule D substituted for the purposes of corporation tax by section 18(3A) of ICTA (tax in respect of discount arising otherwise than in respect of a loan relationship) shall not have effect in relation to any discount arising in an accounting period beginning on or after the commencement date. Subject to sub-paragraph (9), the amendments made by this paragraph have effect in relation to any money debt to which a company is party as a creditor on or after the commencement date. Where, on or after the commencement date but in a period of account beginning before 1st January 2005, a company is party to a relationship to which section 100 of FA 1996 applies, then, in the application of that section for that period of account, subsection (2) of it shall have effect as follows— None of the following shall be brought into account for the purposes of Chapter 2 of Part 4 of FA 1996 by virtue of this paragraph— In this paragraph “the commencement date” means 16th March 2005.
In Schedule 9 to FA 1996 (loan relationships) paragraph 10A is amended as follows. But this paragraph does not apply if— In sub-paragraph (2) (Schedule to have effect as if there had been an assignment and reacquisition) for “Schedule” substitute “Chapter”. The amendments made by this paragraph have effect on and after 16th March 2005.
In Schedule 9 to FA 1996 (loan relationships) after paragraph 12 insert—. The amendment made by this paragraph has effect where a company ceases to be a member of a group on or after 16th March 2005.
Schedule 13 to FA 1996 (discounted securities: income tax) is amended as follows. In paragraph 3 (meaning of “relevant discounted security”) in sub-paragraph (1), for “paragraph 14(1)” substitute “paragraphs 13B(1) and 14(1)”. In paragraph 4 (meaning of “transfer”)— In paragraph 5 (redemption to include conversion), in sub-paragraph (3), after “This paragraph does not apply to” insert —. After paragraph 13 (excluded indexed securities) insert—. “corporate strip” has the meaning given by paragraph 13A above; “interest-bearing corporate security” means any interest-bearing security other than— “interest-bearing security” includes any loan stock or similar security; In paragraph 15(1)— The amendments made by this paragraph have effect in any case where a person acquires a corporate strip on or after 2nd December 2004 otherwise than in pursuance of an agreement entered into before that date.
In Schedule 26 to FA 2002 (derivative contracts) after paragraph 30 insert—. The amendment made by this paragraph has effect where a company ceases to be a member of a group on or after 16th March 2005.
In Schedule 9 to FA 1996 (loan relationships: computational provisions), paragraph 2 (late interest) is amended as follows. In sub-paragraph (1B)— A case does not fall within sub-paragraph (1B) above if either of the following exceptions applies. The first exception applies where— The second exception applies where— “non-qualifying territory” has the meaning given by paragraph 5E of Schedule 28AA to the Taxes Act 1988; “resident” has the meaning given by paragraph 5B(6) of Schedule 28AA to the Taxes Act 1988; “small or medium-sized enterprise” has the meaning given by paragraph 5D of that Schedule.
Section 431(2) of ICTA is amended as follows. “the Integrated Prudential Sourcebook” means the Integrated Prudential Sourcebook made by the Financial Services Authority under the Financial Services and Markets Act 2000; “liabilities”, in relation to an insurance company, means— and for this purpose “deposit back arrangements” has the same meaning as in that Sourcebook; Omit the definition of “long-term liabilities”. “value”, in relation to an asset of an insurance company, means the value of the asset as determined in accordance with chapter 1.3, as read with chapter 3.2, of the Integrated Prudential Sourcebook; The amendments made by this paragraph have effect in relation to periods of account ending on or after 31st December 2004.
Section 432E of ICTA is amended as follows. In subsection (2A) (increase in amount determined under subsection (2) where amount is taken into account under subsection (2) of section 83 of FA 1989 by virtue of subsection (2B) of that section) in the opening words— RP is the amount or the aggregate of the amounts taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of any of the following provisions— The amendments made by this paragraph have effect in relation to insurance business transfer schemes (within the meaning given by section 444AC(11) of ICTA) taking place on or after 2nd December 2004.
After section 444AC of ICTA insert—. The amendment made by this paragraph has effect in relation to insurance business transfer schemes (within the meaning given by section 444AC(11) of ICTA) taking place on or after 2nd December 2004.
Section 82C of FA 1989 is amended as follows. In subsection (1) (cases where section applies) in paragraph (b), for “either condition A or condition B” substitute “condition A”. Omit subsections (4), (5), (8) and (9) (provisions relating to condition B). The amendments made by this paragraph have effect in relation to insurance business transfer schemes (within the meaning given by section 82C(9) of FA 1989) taking place on or after 2nd December 2004.
After section 83A of FA 1989 insert—. The amendment made by this paragraph has effect in relation to new periods of account (within the meaning given by section 83B(1) of FA 1989) beginning on or after 1st January 2005.
Section 156 of FA 2003 is amended as follows. For subsection (4) (regulations amending certain provisions relating to overseas life insurance companies may be made with effect from 1st January 2003) substitute—.
Section 12 of ICTA (corporation tax: basis of, and periods for, assessment) is amended as follows. In subsection (7A), after “(7ZA) above” insert “and subject to subsection (7C) below”. After subsection (7B) insert—. In section 444AB of ICTA (transfers of business: charge on transferor retaining assets) in subsection (3), for “ending with the day of the transfer” substitute “ending immediately before the transfer”. In section 444ABA of ICTA (subsequent charge in certain cases within section 444AB of ICTA) in subsection (3), for “ending with the day of the transfer” substitute “ending immediately before the transfer”. In section 213 of TCGA 1992 (spreading of gains and losses under section 212 of TCGA 1992) at the end insert—. The amendments made by sub-paragraphs (2) to (5) have effect in relation to insurance business transfer schemes taking place on or after 16th March 2005. The amendment made by sub-paragraph (6) has effect where the accounting period for which the net amount represents an excess of losses over gains is an accounting period beginning on or after 1st January 2003.
Section 447 (charge on other chargeable benefits from securities) is amended as follows. In subsection (1), for “by virtue of the ownership of employment-related securities by that person or another associated person” substitute “ in connection with employment-related securities ”. For subsection (4) substitute— Sub-paragraph (2) has effect on and after 2nd December 2004 and sub-paragraph (3) has effect where something such as is mentioned in section 447(4) of ITEPA 2003 has been done on or after that date.
Paragraph 18 of that Schedule (discounted securities of close companies) is amended as follows. In sub-paragraph (1), omit paragraphs (aa) and (c). In sub-paragraph (1)(b)— But for any such accounting period this paragraph shall not apply in relation to that debtor relationship if any of the following exceptions applies. In sub-paragraph (1A), for the words before paragraph (a) substitute “The first exception applies where—”. The second exception applies where— The third exception applies where— “CIS-based close company” and “CIS limited partnership” have the meaning given by paragraph 2(6) above; “non-qualifying territory” has the meaning given by paragraph 5E of Schedule 28AA to the Taxes Act 1988; “resident” has the meaning given by paragraph 5B(6) of Schedule 28AA to that Act; “small or medium-sized enterprise” has the meaning given by paragraph 5D of that Schedule.
In section 449 (exception from charge under section 447 for certain company shares), for subsection (1A) substitute— This paragraph has effect where something such as is mentioned in section 449(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
section 8 of the Pensions Act 2014 or under any corresponding provision under the law of Northern Ireland,
“graduated retirement benefit lump sum” means a lump sum payable under—
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Section 144ZA of TCGA 1992 is amended as follows. In subsection (1) (cases in which the section applies) at the beginning insert “Subject to section 144ZB,”. In subsection (4) (where market value rule is set aside by the section, amount or value to be taken into account is, subject to section 120, to be actual amount or value) for “(subject to section 120) the actual amount or value” substitute “(subject to section 119A) the exercise price”. After that subsection insert—. For subsection (5) substitute—.
Section 149A of TCGA 1992 is amended as follows. In subsection (1) (cases in which the section applies) for paragraph (b) (option to consist of right to acquire shares in body corporate and to be obtained by individual by reason of his office or employment) substitute—. In that subsection, in paragraph (c) (section 17(1) to apply for calculating consideration for grant of option) after “section 17(1)” insert “of this Act”. The heading of the section accordingly becomes “Employment-related securities options”.
For section 259 of ITTOIA 2005 (trading income: meaning of “statutory insolvency arrangement”) substitute—. This amendment has effect for the tax year 2005-06 and subsequent tax years in relation to periods of account beginning on or after 1st January 2005.
In determining the accounting value of an asset of the company at the end of the earlier period, no account shall be taken of a debit that in a period of account beginning before 1st January 2005 was disallowed for tax purposes— This amendment has effect for periods of account beginning on or after 1st January 2005.
In section 45 (contract and conveyance: effect of transfer of rights) at the end of subsection (3) insert “except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual)”.
In paragraph 12 (penalty assessments) for sub-paragraph (3) substitute—
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A scheme satisfies the requirements of this paragraph if it includes the issue by a company to a person connected with the company of shares other than shares falling within sub-paragraph (2). Shares issued by a company fall within this sub-paragraph if— A share in a company confers a qualifying beneficial entitlement if it confers a beneficial entitlement to the relevant proportion of— For the purposes of sub-paragraph (3) the relevant proportion, in relation to a share, is the same as the proportion of the issued share capital represented by that share. Schedule 18 to ICTA (equity holders and profits or assets available for distribution) applies for the purposes of sub-paragraph (3) as it applies for the purposes of section 403C of ICTA.
Section 76 of ICTA is amended as follows. In subsection (8) (expenses attributable to basic life assurance and general annuity business for the purposes of Step 1 are to be those so attributable under proper internal accounting practice) in the second sentence (meaning of “proper internal accounting practice”) at the end of paragraph (b) insert , or. The amendment made by this paragraph has effect in relation to periods of account ending on or after 31st December 2004.
Section 432A of ICTA is amended as follows. In subsection (9A) (meaning of “net value”) for “long-term liabilities” substitute “liabilities”. The amendment made by this paragraph has effect in relation to periods of account ending on or after 31st December 2004.
Section 444AC of ICTA is amended as follows. In subsection (2) (excess of element of the transferee’s line 15 (or 31) figure representing the transferor’s long-term insurance fund over amount specified in paragraph (b) not to be regarded as other income of transferee) in paragraph (b) (amount of liabilities to policy holders and annuitants transferred to transferee)— After that subsection insert—. After subsection (3) insert—. The heading of the section accordingly becomes “Transfers of business: excess of assets or liabilities”. The amendments made by this paragraph have effect in relation to insurance business transfer schemes (within the meaning given by section 444AC(11) of ICTA) taking place on or after 2nd December 2004. But in relation to a period of account beginning before 1st January 2005, section 444AC(2A)(b) and (5)(b) of ICTA shall have effect as if for “line 31 figure” there were substituted “line 15 figure”.
Section 82B of FA 1989 is amended as follows. In subsection (1) (section to apply where insurance company has unappropriated surplus on valuation and has not made an election in accordance with Rule 4.1(6) of the Prudential Sourcebook (Insurers) for the period of account in question) in paragraph (b), for “Rule 4.1(6)” substitute “Rule 9.10(c)”. The amendment made by this paragraph has effect in relation to periods of account ending on or after 31st December 2004.
Section 83A of FA 1989 is amended as follows. In subsection (2) (accounts which are recognised for the purposes of sections 82A to 83AB)— After subsection (3) insert—. For subsection (4) substitute—. At the end of the section insert—. The amendments made by this paragraph have effect in relation to periods of account beginning on or after 1st January 2005.
Section 88 of FA 1989 is amended as follows. In subsection (3A) (meaning of “income and gains of the company’s life assurance business” in subsection (3)) after paragraph (a) insert—. The amendment made by this paragraph has effect in relation to periods of account beginning on or after 1st January 2005.
In section 432B of ICTA (apportionment of receipts brought into account) in subsection (1), for “class” substitute “category”. In section 444A of ICTA (transfers of business) in subsection (3), for “class” substitute “category”. In Schedule 12 to FA 1997 (leasing arrangements: finance leases and loans) in paragraph 19 (companies carrying on life assurance business) in sub-paragraph (2), for “class” substitute “category”. In Schedule 29 to FA 2002 (gains and losses of a company from intangible fixed assets) in paragraph 138 (interpretation provisions relating to insurance companies) in sub-paragraph (3), for “class” substitute “category”. The amendments made by this paragraph have effect in relation to periods of account beginning on or after 1st January 2005.
Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this Part of this Schedule.
In paragraph 8 of Schedule 7 (acquisition relief)—
For this purpose companies are associated if one has control of the other or both are controlled by the same person or persons. The reference to control shall be construed in accordance with section 416 of the Taxes Act 1988.
The fourth condition is that the acquisition is effected for bona fide commercial reasons and does not form part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax. “Tax” here means stamp duty, income tax, corporation tax, capital gains tax or tax under this Part. In this paragraph “arrangements” include any scheme, agreement or understanding, whether or not legally enforceable.
“non-deductible tax”, in relation to a taxable person, has the meaning given by paragraph 2A;
The following provisions shall cease to have effect— These amendments come into force on a day to be appointed by the Treasury by order made by statutory instrument. The order may contain such transitional provision and savings as appear to the Treasury to be appropriate.
Schedule 28AA to ICTA (provision not at arm’s length) is amended as follows. In paragraph 4 (participation in the management, control or capital of a person), in sub-paragraph (2) (meaning of indirect participation) for “and only if” substitute “and (subject to paragraphs 4A and 6(4C) below) only if”. After that paragraph insert—. After the paragraph inserted by sub-paragraph (3) above insert—. A claim by the disadvantaged person for the purposes of this paragraph shall not be made where— In this sub-paragraph “security” and “guarantee” have the same meaning as in paragraph 1A above. For the purposes of sub-paragraph (4A) above, the cases where one person has a “participatory relationship” with another are those where— Paragraph 4A above applies for the purposes of sub-paragraph (4B) above as it applies for the purposes of paragraph 1(1)(b) above.
For section 431A of ICTA substitute—.
Section 444AA of ICTA is amended as follows. At the end insert—. The amendment made by this paragraph has effect in relation to insurance business transfer schemes (within the meaning given by section 444AA(6) of ICTA) taking place on or after 30th June 2005.
Section 444BA of ICTA is amended as follows. In subsection (11) (meaning of “equalisation reserves rules”) for “Chapter 6 of the Prudential Sourcebook (Insurers)” substitute “chapter 7.5 of the Integrated Prudential Sourcebook”. The amendment made by this paragraph has effect in relation to periods of account ending on or after 31st December 2004.
Section 83 of FA 1989 is amended as follows. In subsection (2A) (amounts not required to be taken into account by subsection (2)) for paragraph (a) (amounts which are entirely notional) substitute—. After that subsection insert—. For the purposes of this subsection “total expenditure”, in relation to a period of account of an insurance company, includes any expenses brought into account in line 12 of Form 40 (the revenue account) in the periodical return of the company for the period of account. The amendments made by sub-paragraphs (2) and (3) have effect in relation to periods of account ending on or after 2nd December 2004. The amendment made by sub-paragraph (4) has effect in relation to periods of account beginning on or after 1st January 2005.
Section 85 of FA 1989 is amended as follows. In subsection (2) (receipts excluded from charge under Case VI of Schedule D in respect of receipts referable to company’s basic life assurance and general annuity business) after paragraph (e) insert ; or. In subsection (2C) (rules as to whether receipt is referable to company’s basic life assurance and general annuity business for the purposes of subsection (1)) after paragraph (a) insert—. The amendments made by this paragraph have effect in relation to accounting periods ending on or after 16th March 2005.
Schedule 35 to FA 2004 is amended as follows. Paragraph 20 (life assurance: meaning of “pension business”) is amended as follows. In the section 431B of ICTA substituted by that paragraph, in subsection (2)— In that section, insert at the end—. Paragraph 22 (friendly societies: meaning of “pension business”) is amended as follows. In sub-paragraph (3), in the subsection (2B) of section 466 of ICTA inserted by that sub-paragraph— The preceding provisions of this paragraph come into force on 6th April 2006.
For paragraph 2 substitute—
In section 103 of FA 1996 (loan relationships: general interpretation), for subsection (1AA) substitute—.
After paragraph 2 insert—
The Treasury may make provision by regulations as to the manner in which— are to be calculated for the purposes of sub-paragraph (2) in a case where fair value accounting is used by the company. Any such regulations may be made so as to apply to periods of account beginning before the regulations are made, but not earlier than the beginning of the calendar year in which they are made.
This section is to be construed as one with section 7.
In sections 7 and 8 “social security pension lump sum” means—
a state pension lump sum,
a shared additional pension lump sum, or
a graduated retirement benefit lump sum.
In section 8 and this section—
“graduated retirement benefit lump sum” means a lump sum payable under—
section 55 of, and Schedule 5 to, SSCBA 1992, or
Schedule 7AC to TCGA 1992 is amended as follows. In paragraph 3(2)(c)(ii) (one of conditions for exemption that chargeable gain accruing to company on disposal would by virtue of section 10(3) form part of company’s chargeable profits for corporation tax) for “section 10(3)” substitute “section 10B”.
In section 8 and this section—
“enactment” includes a provision comprised in—
Subject to sub-paragraph (7), paragraphs 3 to 7 have effect where the effective date of the relevant transaction (within the meaning of paragraph 3 or 4A of Schedule 7 to FA 2003) is after 19th May 2005. Subject to sub-paragraph (7), paragraph 9 has effect where the effective date of the relevant transaction (within the meaning of paragraph 9 of Schedule 7 to FA 2003) is after 19th May 2005. Subject to sub-paragraph (7), paragraph 10 has effect where the effective date of the transaction transferring the chargeable interest to the partnership is after 19th May 2005. Subject to sub-paragraph (7), paragraphs 11 and 12 have effect where the effective date of the land transaction consisting of the grant of the lease is after 19th May 2005. Subject to sub-paragraph (7), the amendments made by the other provisions of this Part of this Schedule have effect in relation to any transaction of which the effective date is after 19th May 2005. In sub-paragraphs (7) and (8) “the specified date” means— The amendments made by this Part of this Schedule do not have effect— The exclusion by sub-paragraph (7)(b) of transactions effected in pursuance of contracts entered into on or before the specified date does not apply— In this paragraph “assignment”, “effective date” and “substantially performed” have the same meaning as in Part 4 of FA 2003.
regulations under section 10 of the Pensions Act 2014 which make provision corresponding or similar to section 8 of that Act or under any corresponding provision under the law of Northern Ireland, 1992, or
Sections 7 and 8 and this section have effect in relation to the year 2006-07 and subsequent years of assessment.
ITEPA 2003 is amended as follows.
In section 577 (UK social security pensions) after subsection (1) insert—.
In section 683 (PAYE income) in subsection (3) (meaning, subject to subsection (4), of “PAYE pension income”) in the opening words, for “subsection (4)” substitute “ subsections (3A) and (4) ”.
In that section, after subsection (3) insert—.
In section 686 (meaning of “payment”) in subsection (1) (rules as to when payment of, or on account of, PAYE income is to be treated as made for the purposes of PAYE regulations) at the end of the subsection insert— “ But this is subject to subsection (5) (PAYE pension income: social security pension lump sums). ”.
In that section, after subsection (4) insert—.
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For section 25(5E) to (5G) of FA 1990 (donations to charity by individuals: benefits: disregard of certain rights of admission) substitute—
This section shall have effect in relation to gifts made on or after 6th April 2006.
Schedule 2 contains amendments relating to employee securities.
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Section 508 of ICTA (tax exemption for scientific research organisations) is amended as follows.
In subsection (1) (Associations undertaking scientific research and approved by Secretary of State), for paragraph (a) substitute—.
In that subsection, for “, be allowed in the case of the Association” substitute “in relation to any accounting period, be allowed in the case of the Association for that accounting period”.
After that subsection insert—
For subsection (3) (meaning of “scientific research”) substitute—
This section has effect in relation to accounting periods beginning on or after such day as the Treasury may by order made by statutory instrument appoint.
Section 88 of ITTOIA 2005 (income tax deduction for payments to research associations etc.) is amended as follows.
In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “research” in paragraph (b) substitute—.
In subsection (4), omit paragraph (a) (meaning of “approved” in relation to scientific research association).
In subsection (5) (references to scientific research related to a class of trade), for “references in this section” substitute “ reference in subsection (1)(b) ”.
This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).
Section 82B of ICTA (corporation tax deduction for payments to research associations etc.) is amended as follows.
In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “above” in paragraph (b) substitute—.
In subsection (3) (reference to scientific research related to a class of trade), for “this section” substitute “ subsection (1)(b) above ”.
This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).
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The following provisions shall cease to have effect—
sections 468H to 468Q of ICTA (authorised unit trusts),
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section 373(4) and (6) of ITTOIA 2005 (open-ended investment company: interest distributions), and
section 376(4) and (6) of ITTOIA 2005 (authorised unit trust: interest distributions).
In this Chapter “authorised investment funds” means—
authorised unit trust schemes, and
open-ended investment companies.
The Treasury may, by regulations—
make provision about the treatment of authorised investment funds for the purposes of an enactment relating to taxation;
provide for the modification of an enactment relating to taxation in its application in relation to—
authorised investment funds,
shareholders or unit holders in authorised investment funds, or
transactions involving authorised investment funds;
impose requirements on persons responsible for the management of an authorised investment fund in relation to the provision of information, the form of accounts, the keeping of records or other administrative matters.
For the purposes of this Chapter—
“unit trust scheme” has the meaning given by section 237 of the Financial Services and Markets Act 2000 (c. 8),
a unit trust scheme is authorised in relation to an accounting period if an order under section 243 of the Financial Services and Markets Act 2000 is in force in relation to that scheme during the whole or part of that accounting period,
“unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme,
a reference to a shareholder or unit holder includes a person beneficially entitled to shares or units (and a reference to owning units or shares shall be construed accordingly),
“open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies,
“associate” has the meaning given by section 417 of ICTA,
“net asset value” means the value of the assets of the authorised investment fund, after the deduction of specified liabilities,
a reference to a distribution includes investing an amount on behalf of a unit holder or shareholder in respect of his accumulation units or accumulation shares,
“distribution accounts” means accounts showing—
the total amount available for distribution to unit holders or shareholders, and
how that amount is computed,
the “distribution date” for a distribution period in relation to an authorised investment fund means—
the date specified by or in accordance with the terms of the trust or the instrument of incorporation of the company for any distribution for that distribution period, or
if no date is specified, the last day of that distribution period,
“distribution period” in relation to an authorised investment fund means a period by reference to which the total amount available for distribution to unit holders or shareholders is ascertained,
“umbrella company” has the meaning given by section 615 of the Corporation Tax Act 2010,
“umbrella scheme” has the meaning given by section 619 of the Corporation Tax Act 2010, and
section 1122 of the Corporation Tax Act 2010 (connected persons) applies.
Regulations under section 17(3)(a) or (b) may make provision about distributions which may, in particular—
require an authorised investment fund to comply with prescribed rules for determining (whether by reference to a formula or otherwise) what proportion of an amount shown in distribution accounts as available for distribution is to be distributed by way of dividends and what proportion is to be distributed by way of yearly interest;
permit persons responsible for the management of an authorised investment fund to elect to distribute entirely by way of dividends;
require distribution accounts to show the amount available for distribution—
by way of dividends;
by way of yearly interest;
allow a distribution of yearly interest for a distribution period to be deducted, in the prescribed manner, in computing the profits of the authorised investment fund for the accounting period in which the last day of that distribution period falls;
make provision for determining the distribution date in relation to a distribution period of an authorised investment fund;
permit distributions to be made, in prescribed circumstances, to or for the benefit of a person not ... resident in the United Kingdom without deducting tax;
permit distributions to be made without deducting tax, in prescribed circumstances, to a person ... resident in the United Kingdom who is unlikely to be liable to pay an amount by way of income tax for the year of assessment in which the distribution is made;
include provision, in respect of a unit holder or shareholder who is within the charge to corporation tax, about—
the liability to corporation tax resulting from receipt of a distribution, and
the method of computing that liability.
Regulations under section 17(3)(a) or (b) may, in particular—
make special provision for loan relationships held by an authorised investment fund;
make special provision for derivative contracts held by an authorised investment fund;
modify the meaning of “ relevant holding ” for the purposes of—
sections 490 and 492 of the Corporation Tax Act 2009 (loan relationships), and
section 587 of that Act (derivative contracts).
make special provision in relation to the treatment of umbrella companies and umbrella schemes (or shareholders or unit holders in umbrella companies or umbrella schemes);
prohibit action which favours a class of unit holders or shareholders.
Regulations under section 17(3)(a) or (b) may, in particular—
make special provision in relation to a person who, alone or together with associates or connected persons, owns (otherwise than as a nominee) units or shares, in a fund designated by the Financial Conduct Authority as a Qualified Investor Scheme, which represent 10% or more (or such other percentage as the regulations may specify) of the net asset value of the fund;
include exceptions from provision made by virtue of paragraph (a) above including, in particular, an exception relating to units or shares held—
by a charity ...,
by a registered pension scheme (within the meaning of section 150 of FA 2004),
by an insurance company (within the meaning of section 65 of FA 2012) as assets for the purposes of its long-term business (within the meaning of section 63 of that Act),or
by such other persons, in such circumstances, as the regulations may specify.
Regulations under section 17(3)(c) may, in particular, require persons responsible for the management of an authorised investment fund to supply information to, and make available books, documents and other records for inspection by, the Commissioners for Her Majesty's Revenue and Customs.
Regulations under section 17(3) may, in particular—
amend a reference in an enactment to a provision repealed by section 17(1);
make different provision for different circumstances;
make incidental, consequential, supplemental or transitional provision.
Section 17(1) shall come into force on such day as the Treasury may appoint by order.
An order under subsection (1) may—
commence only a specified repeal;
commence different repeals at different times;
commence a repeal at different times for different purposes;
include savings.
Regulations under section 17(3) shall be subject to annulment by a resolution of the House of Commons.
But the first set of regulations under section 17(3) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.
Section 100 of TCGA 1992 (exemption for authorised unit trusts, etc) shall be amended as follows.
After subsection (2) insert—
This section shall have effect for the year 2005-06 and subsequent years of assessment.
In Chapter 3 of Part 3 of TCGA 1992 (collective investment schemes, etc) after section 99A insert—
This section shall have effect in relation to a disposal of units on or after 16th March 2005.
Section 349B(4) of ICTA (requirement for individual to be entitled to income tax exemption) shall be amended as follows.
In paragraph (a) after “of a plan” insert “ of a kind to which regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) apply ”.
Paragraph (b) shall cease to have effect.
This section shall have effect in relation to payments made on or after 6th April 2005.
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In section 761 of ICTA (charge on offshore income gain)—
in subsection (2)—
for “sections 2(1) and 10” substitute “sections 2(1), 10 and 10B”, and
for “section 11(2)(b)” substitute “section 11(2A)(c)”, and
in subsection (3)—
for “section 10” substitute “sections 10 and 10B”,
for “subsection (1) of that section” substitute “subsection (1) of section 10”, and
for “and subsection (3) of that section (which makes similar provision in relation to corporation tax) shall have effect with the omission of the words “situated in the United Kingdom”” substitute “and paragraphs (a) and (b) of subsection (1) of section 10B (which make similar provision in relation to corporation tax) shall have effect with the omission of the words “situated in the United Kingdom and””.
For paragraph 1(1)(d) of Schedule 27 to ICTA (distributing funds) substitute—.
For paragraph 3(1)(a) of that Schedule (distributing funds) substitute—.
In paragraph 3(1)(b) of that Schedule (distributing funds) for “sub-paragraph (i) or (ii)” substitute “paragraph (a) or (aa)”.
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If the Commissioners for Her Majesty’s Revenue and Customs consider, on reasonable grounds, that conditions A to D are or may be satisfied in relation to a transaction to which a company falling within subsection (2) is party, they may give the company a notice under this section.
A company falls within this subsection if—
it is resident in the United Kingdom, or
it is resident outside the United Kingdom but is within the charge to corporation tax.
Condition A is that the transaction to which the company is party forms part of a scheme that is a qualifying scheme.
Condition B is that the scheme is such that for the purposes of corporation tax the company is in a position to claim or has claimed an amount by way of deduction in respect of the transaction or is in a position to set off or has set off against profits in an accounting period an amount relating to the transaction.
Condition C is that the main purpose, or one of the main purposes, of the scheme is to achieve a UK tax advantage for the company.
Condition D is that the amount of the UK tax advantage in question is more than a minimal amount.
A notice under this section is a notice—
specifying the transaction in relation to which the Commissioners consider that conditions A to D are or may be satisfied,
specifying the accounting period in relation to which the Commissioners consider that condition B is or may be satisfied as regards the transaction, and
informing the company that as a consequence section 25 (rules relating to deductions) has effect in relation to the transaction.
Nothing in this section prevents the Commissioners from giving a company falling within subsection (2) a notice under this section as regards two or more transactions.
Schedule 3 makes provision about what constitutes a qualifying scheme.
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The following provisions of this section apply in relation to a transaction if—
a notice specifying the transaction is given to a company under section 24, and
when the notice is given, conditions A to D of section 24 are satisfied in relation to the transaction.
The company must compute (or recompute) for the purposes of corporation tax its income or chargeable gains, or its liability to corporation tax— in accordance with rules A and B.
for the accounting period specified in the notice under section 24, and
for any subsequent accounting period,
Rule A is that, in respect of the specified transaction, no amount is allowable as a deduction for the purposes of the Corporation Tax Acts to the extent that, in relation to the expense in question, an amount may be otherwise deducted or allowed in computing the income, profits or losses of any person for the purposes of any tax (including any foreign tax) other than—
petroleum revenue tax, or
the tax chargeable under section 501A(1) of ICTA (supplementary charge in respect of ring fence trades).
The reference in subsection (3) to an amount otherwise deducted or allowed in computing the income, profits or losses of any person for the purposes there mentioned includes a reference to an amount that would be so deducted or allowed but for any rule that has the same effect as rule A.
For the purposes of subsection (4) “rule” means—
a provision of the Tax Acts, or
a rule having effect under the tax law of any territory outside the United Kingdom.
Rule B applies if—
a transaction, or a series of transactions, forming part of the scheme by reference to which conditions A to D are satisfied makes or imposes provision as a result of which one person (“the payer”) makes a payment and another person (“the payee”) receives, or becomes entitled to receive, a payment or payments,
in respect of the payment by the payer, an amount may be deducted or otherwise allowed to the payer, or to another person who is party to, or concerned in, the scheme, in computing any profits or losses for tax purposes, and
in respect of the payment or payments that the payee receives or is entitled to receive as a result of the transaction or series of transactions, or part of such payment or payments, the payee is not liable to tax or, if liable, his liability to tax is reduced as a result of provision made or imposed by the scheme.
Without prejudice to the generality of subsection (6)(c), the payee’s liability to tax in respect of the payment or payments that he receives or is entitled to receive as a result of the transaction or series of transactions shall be treated for the purposes of subsection (6)(c) as reduced as a result of provision made or imposed by the scheme if—
an amount arising from the transaction or series of transactions forming part of the scheme, or from another transaction or series of transactions forming part of the scheme, falls to be deducted or otherwise allowed to the payee in computing for tax purposes any profits or losses arising from the payment or payments or the entitlement to receive the payment or payments, or
an amount of relief arising from the transaction or series of transactions forming part of the scheme, or from another transaction or series of transactions forming part of the scheme, may be deducted from the amount of income or gains arising from the payment or payments or the entitlement to receive the payment or payments.
The requirement in subsection (6)(c) is not satisfied if the payee is not liable to tax because he is not liable to tax on any income or gains received by him or for his benefit under the tax law of any territory.
The requirement in subsection (6)(c) is not satisfied if, or to the extent that, the payee is not subject to tax because his liability to tax is subject to an exemption falling within subsection (10).
An exemption falls within this subsection if—
it exempts a person from being liable to tax in respect of income or gains, without providing for that income or those gains to be treated as the income or gains of one or more other persons, and
it is conferred by a provision contained in or having the force of an Act or by a provision of the tax law of any territory outside the United Kingdom.
Rule B is that the aggregate of the amounts allowable as a deduction for the purposes of the Corporation Tax Acts in computing any profits to the company arising from— is to be reduced in accordance with subsections (12) and (13).
the specified transaction, and
any other transaction that forms part of the scheme and to which the company is party,
If, in respect of the payment or payments that the payee receives or is entitled to receive, the payee is not liable to tax for the purposes of the requirement in subsection (6)(c), the aggregate is to be reduced to nil.
If, in respect of the payment or payments, the payee is liable to tax as regards part or his liability to tax is reduced as described in subsection (6)(c), the aggregate is to be reduced to such proportion of the aggregate as is equal to the proportion of the payment or payments on which the payee is liable to tax; and for this purpose the amount by which the payee’s liability is reduced is to be treated as an amount on which the payee is not liable to tax.
The company may choose to incorporate in its company tax return for the specified accounting period such relevant adjustments as are necessary for counteracting those effects of the scheme that are referable to the purpose referred to in condition C.
If, as a consequence of incorporating relevant adjustments in that company tax return, the company counteracts those effects of the scheme that are referable to the purpose referred to in condition C, the company is to be treated, so far as regards the scheme, as having complied with subsection (2).
The following are relevant adjustments—
treating all or part of a deduction allowable for corporation tax purposes as not being allowable;
treating all or part of an amount that for corporation tax purposes may be set off against profits in an accounting period as not falling to be set off.
In this section, references to tax purposes include a reference to the purposes of any foreign tax; and foreign tax has the meaning given by section 403D of ICTA.
In this section, “company tax return” means the return required to be delivered pursuant to a notice under paragraph 3 of Schedule 18 to FA 1998, as read with paragraph 4 of that Schedule.
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If the Commissioners for Her Majesty’s Revenue and Customs consider, on reasonable grounds, that conditions A to E are or may be satisfied in relation to a company resident in the United Kingdom, they may give the company a notice under this section.
Condition A is that a scheme makes or imposes provision (“the actual provision”) as between the company and another person (“the paying party”) by means of a transaction or series of transactions.
Condition B is that the actual provision includes the making by the paying party, by means of a transaction or series of transactions, of a payment that is a qualifying payment in relation to the company.
Condition C is that, as regards the qualifying payment made by the paying party, there is an amount that— and does not fall to be disregarded as described in subsection (5).
is available as a deduction for the purposes of the Tax Acts, or
may be deducted or otherwise allowed in respect of the payment under the tax law of any territory outside the United Kingdom,
An amount is to be disregarded if or to the extent that it is, for tax purposes, set against any income arising to the paying party from the transaction or transactions forming part of the scheme.
Condition C is not to be treated as satisfied if—
the paying party is a dealer,
in the ordinary course of his business, he incurs losses in respect of the transaction or transactions forming part of the scheme to which he is party, and
the amount by reference to which condition C would, but for this subsection, be satisfied is an amount in respect of those losses.
In subsection (6), “dealer” means a person who is a dealer in relation to a distribution within the meaning of section 95(2) of ICTA or who would, if he were resident in the United Kingdom, be such a dealer.
Condition D is that at least part of the qualifying payment is not an amount to which subsection (9) or (10) applies.
This subsection applies to an amount that is, for the purposes of the Corporation Tax Acts—
income or gains arising to the company in the accounting period in which the qualifying payment was made in relation to the company, or
income arising to any other company resident in the United Kingdom in a corresponding accounting period.
This subsection applies to an amount that is taken into account in determining the debits and credits to be brought into account by a company for the purposes of Chapter 2 of Part 4 of FA 1996 as respects a share in another company by virtue of section 91A or 91B of FA 1996 (shares treated as loan relationships).
Condition E is that the company and the paying party expected on entering into the scheme that a benefit would arise as a result of condition D being satisfied (whether by reference to all or part of the qualifying payment).
A notice under this section is a notice—
informing the company of the Commissioners' view under subsection (1),
specifying the qualifying payment by reference to which the Commissioners consider conditions B to E are or may be satisfied,
specifying the accounting period of the company in which the payment is made, and
informing the company that as a consequence section 27 has effect in relation to the payment.
For the purposes of this section a payment is a qualifying payment in relation to a company if it constitutes a contribution to the capital of the company.
For the purposes of this section the accounting period of a company (“company A”) corresponds to the accounting period of another company (“company B”) if at least one day of company A’s accounting period falls within company B’s accounting period.
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The following provisions of this section apply in relation to a payment that is a qualifying payment in relation to a company if—
a notice specifying that payment is given to the company under section 26, and
when the notice is given, conditions A to E of section 26 are satisfied in relation to the company.
The company must compute (or recompute) for the purposes of corporation tax for the accounting period specified in the notice its income or chargeable gains, or its liability to corporation tax, as if the relevant part of the qualifying payment were an amount of income chargeable under Case VI of Schedule D arising to the company in that period.
The relevant part of the qualifying payment is the part by reference to which conditions C and D are satisfied; and, where conditions C and D are satisfied in relation to the whole of the qualifying payment, the relevant part is the whole of the qualifying payment.
In this section “qualifying payment” has the same meaning as in section 26.
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Subsection (2) applies if the Commissioners for Her Majesty’s Revenue and Customs give a notice to a company under section 24 or 26 before the company has made its company tax return for the accounting period specified in the notice.
If the company makes its return for that period before the end of the period of 90 days beginning with the day on which the notice is given, it may—
make a return that disregards the notice, and
at any time after making the return and before the end of the period of 90 days, amend the return for the purpose of complying with the provision referred to in the notice.
If a company has made a company tax return for an accounting period, the Commissioners may only give the company a notice under section 24 or 26 in relation to that period if a notice of enquiry has been given to the company in respect of its return for that period.
After any enquiries into the return for that period have been completed, the Commissioners may only give the company a notice under section 24 or 26 if the requirements in subsections (5) and (7) are satisfied.
The first requirement is that at the time the enquiries into the return were completed, the Commissioners could not have been reasonably expected, on the basis of information made available to them or to an officer of Revenue and Customs before that time, to have been aware that the circumstances were such that a notice under section 24 or 26 could have been given to the company in relation to that period.
Paragraph 44(2) and (3) of Schedule 18 to FA 1998 (information made available) applies for the purposes of subsection (5) as it applies for the purposes of paragraph 44(1).
The second requirement is that—
the company was requested to produce or provide information during an enquiry into the return for that period, and
if the company had duly complied with the request, the Commissioners could reasonably have been expected to give the company a notice under section 24 or 26 in relation to that period.
If a company is given a notice under section 24 or 26 in relation to an accounting period after having made a company tax return for that period, the company may amend the return for the purpose of complying with the provision referred to in the notice at any time before the end of the period of 90 days beginning with the day on which the notice is given.
If the notice under section 24 or 26 is given to the company after it has been given a notice of enquiry in respect of its return for the period, no closure notice may be given in relation to the company’s tax return until—
the end of the period of 90 days beginning with the day on which the notice under section 24 or 26 is given, or
the earlier amendment of the company tax return for the purpose of complying with the provision referred to in the notice.
If the notice under section 24 or 26 is given to the company after any enquiries into the return for the period are completed, no discovery assessment may be made as regards the income or chargeable gain to which the notice relates until—
the end of the period of 90 days beginning with the day on which the notice under section 24 or 26 is given, or
the earlier amendment of the company tax return for the purpose of complying with the provision referred to in the notice.
Subsections (2)(b) and (8) do not prevent a company tax return for a period becoming incorrect if—
a notice under section 24 or 26 is given to the company in relation to that period,
the return is not amended in accordance with subsection (2)(b) or (8) for the purpose of complying with the provision referred to in the notice, and
the return ought to have been so amended.
In this section—
“closure notice” means a notice under paragraph 32 of Schedule 18 to FA 1998;
section 55C of, and Schedule 5A to, SSCB(NI)A 1992;
sections 26 and 27, and
“discovery assessment” means an assessment under paragraph 41 of Schedule 18 to FA 1998;
Section 6
“relevant tax or duty” means income tax, corporation tax, capital gains tax, stamp duty or stamp duty reserve tax;
Paragraph 6 (duty to notify Commissioners) is amended as follows. In sub-paragraph (1)— After sub-paragraph (2) insert— For sub-paragraph (5) substitute—
Chapter 2 of Part 7 (restricted securities) is amended as follows.
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In Schedule 15 (partnerships) after paragraph 17 insert—
After paragraph 18 of Schedule 17A insert—
In section 66 of FA 2003 (transfers involving public bodies) after subsection (5) insert—
In Schedule 15 (stamp duty land tax: partnerships), paragraph 33 (which relates to stamp duty on transfers of partnership interests) is amended as follows. This paragraph applies where stamp duty under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) is, apart from this paragraph, chargeable on an instrument effecting a transfer of an interest in a partnership. If the relevant partnership property does not include any stock or marketable securities, no stamp duty shall (subject to sub-paragraph (8)) be chargeable on the instrument. In sub-paragraph (3)— The “relevant partnership property”, in relation to a transfer of an interest in a partnership, is the partnership property immediately after the transfer, other than any partnership property that was transferred to the partnership in connection with the transfer. Omit sub-paragraph (4). In sub-paragraph (5), for “That” substitute “The appropriate”.
In paragraph 7 (exemptions from duty to notify) in the definition of “relevant period” in sub-paragraph (9) for “6(1)(a) or (b)” substitute “ 6(1)(a), (b) or (c) ”.
Section 424 (employment-related securities which are not restricted securities or restricted interest in securities) is renumbered as subsection (1) of that section. In that subsection— After that subsection insert— This paragraph has effect on and after 2nd December 2004 and applies in relation to employment-related securities acquired before that date, as well as those acquired on or after that date; and section 422 of ITEPA 2003 (application of Chapter 2 of Part 7) applies to employment-related securities in relation to which this paragraph has effect and which were acquired before that date with the omission of the words “at the time of the acquisition”.
In section 80 (adjustment where contingency ceases or consideration is ascertained) after subsection (4) insert—
In section 428 (amount of charge under section 426), after subsection (9) insert— This paragraph has effect where something such as is mentioned in section 428(10) of ITEPA 2003 has been done on or after 2nd December 2004.
In section 429 (exception from charge under section 426 for certain company shares), for subsection (1A) substitute— This paragraph has effect where something such as is mentioned in section 429(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
After section 431A insert— This paragraph has effect in relation to employment-related securities acquired on or after 2nd December 2004.
Section 12
“enactment” includes an enactment comprised in subordinate legislation;
ITEPA 2003 is amended as follows.
Section 723 of ICTA is amended as follows. In subsection (8) (place where securities are situated to be determined under section 275 of TCGA 1992) for “section 275” substitute “sections 275(1) and (2)(b) and 275C”.
After section 275 of TCGA 1992 insert—.
Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this Part of this Schedule.
In paragraph 8 of Schedule 7 (acquisition relief)—
in sub-paragraph (1)(b) for “the first and second conditions” substitute “all the conditions”, and
The third condition is that the undertaking or part acquired by the acquiring company has as its main activity the carrying on of a trade that does not consist wholly or mainly of dealing in chargeable interests. In this sub-paragraph “trade” has the same meaning as in the Taxes Act 1988.
The amount chargeable is the tax that would have been chargeable in respect of the relevant transaction but for reconstruction or acquisition relief if the chargeable consideration for that transaction had been an amount equal to— or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
Section 24
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Section 34
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30) (see section 21 of that Act).
Section 715 of ICTA is amended as follows. In subsection (8) (place where securities are situated to be determined under section 275 of TCGA 1992) for “section 275” substitute “sections 275(1) and (2)(b) and 275C”.
Section 275 of TCGA 1992 is amended as follows. Re-number that section as subsection (1) of that section. In that subsection, in paragraph (d) (location of shares or securities issued by municipal or governmental authority etc) for “securities” substitute “debentures”. In that subsection, after that paragraph insert—. In that subsection, in paragraph (e) (location of registered shares or securities)— In that subsection, for paragraph (h) (location of patents, trade marks and registered designs) substitute—. In that subsection, for paragraph (j) (location of copyright, design right and franchises) substitute—. After that subsection insert—.
Section 730 of ICTA (transfers of income arising from securities) is amended as follows. In each place where it occurs— In subsection (1) (interest deemed to be income of owner etc)— For subsection (2) (sale etc where proceeds chargeable to tax by virtue of section 18(3B) of ICTA) substitute—. Omit subsection (2A) (loan relationships). For subsection (3) substitute—. In subsection (4), in the words following paragraph (b) after their substitution by paragraph 300(3)(b) of Schedule 1 to ITTOIA 2005, for “interest” substitute “distribution”. In subsection (4A), for “interest arising” substitute “distribution”. In subsection (4B), for “interest” substitute “distribution”. For subsection (7) (definitions) substitute—. In subsection (8) (information powers) omit from “and for the purpose” to the end of the subsection. The heading to the section becomes “Transfers of rights to receive distributions in respect of shares”. The amendments made by this paragraph have effect in relation to sales or transfers on or after 2nd December 2004.
Section 807A of ICTA is amended as follows. After subsection (2A) (exclusion of certain tax) insert—. The amendment made by this paragraph has effect in relation to shares held by a company on or after 16th March 2005.
In TCGA 1992, after section 151C (strips: manipulation of price: associated payment giving rise to loss) insert—.
Section 97 of FA 1996 (manufactured interest) is amended as follows. In subsection (2) (consequences of company having relationship to which the section applies)— After subsection (2) insert—. Omit subsections (3) and (3A) (which relate to whether debits or credits are trading or non-trading etc and which are unnecessary, in view of the application of sections 82(2) and 103(2) of FA 1996 by virtue of section 97(2) of that Act). The amendments made by this paragraph have effect in relation to related transactions on or after 16th March 2005.
Schedule 9 to FA 1996 (loan relationships: special computational provisions) is amended as follows. In paragraph 1A(1) (credits and debits relating to life policies and capital redemption policies not to be brought into account) paragraph (b) (capital redemption policies) shall cease to have effect. This paragraph has effect in relation to a capital redemption policy on and after 10th February 2005 (whenever the capital redemption policy was effected). Where a capital redemption policy— sub-paragraphs (5) and (6) apply. In any such case, Chapter 2 of Part 13 of ICTA (life policies etc: chargeable events) shall have effect as if— and Chapter 2 of Part 4 of FA 1996 shall have effect as if, immediately after 9th February 2005, the company had acquired the creditor relationship at a cost equal to that carrying value. But if— are not the same accounting period, any gain which, by virtue of the deemed assignment, would have fallen to be brought into account in accordance with section 547(1)(b) of ICTA for the assignment period shall instead be brought into account for the cessation period. In this paragraph—
In Schedule 9 to FA 1996 (loan relationships) paragraph 12 (continuity of treatment of groups etc) is amended as follows. For the purpose of determining the credits and debits to be brought into account for the purposes of this Chapter in respect of the loan relationship— For the purposes of this sub-paragraph, the notional carrying value is the amount that would have been the carrying value of the asset or liability in the accounts of the transferor company if a period of account had ended immediately before the date when the company ceased to be party to the loan relationship. In sub-paragraph (2A) (paragraph 12 not to apply where transferor uses fair value accounting) for paragraph (aa) (treatment of transferee in respect of the transaction) substitute—. In this paragraph references to a company which is a member of a group of companies shall be construed in accordance with section 170 of the Taxation of Chargeable Gains Act 1992. “carrying value” has the same meaning as it has for the purposes of paragraph 19A below; Where the period of account mentioned in the second sentence of the sub-paragraph (2) substituted by sub-paragraph (2) begins before 1st January 2005, “carrying value” shall be construed as if the period had begun on or after that date. The amendments made by this paragraph have effect in any case where the relevant transaction is on or after 16th March 2005. In this paragraph “the relevant transaction” means— by virtue of which that paragraph applies or would apply apart from sub-paragraph (2A) of it.
In Schedule 11 to FA 1996 (loan relationships: special provision for insurers) paragraph 1 (I minus E basis) is amended as follows. In applying the I minus E basis for any accounting period in respect of any life assurance business carried on by an insurance company, no credits or debits shall be brought into account in respect of any debtor relationship that represents a capital redemption policy, within the meaning of Chapter 2 of Part 13 of the Taxes Act 1988. The amendment made by this paragraph has effect in relation to a debtor relationship on and after 10th February 2005 (whenever the capital redemption policy was effected).
In Schedule 26 to FA 2002 (derivative contracts) paragraph 30 (transactions within groups: fair value accounting) is amended as follows. In sub-paragraph (1), for paragraph (b) (treatment of transferee in respect of the transaction) substitute—. The amendment made by this paragraph has effect in any case where the relevant transaction is on or after 16th March 2005. In this paragraph “the relevant transaction” has the same meaning as in paragraph 22.
Section 35
Section 37
“FA”, followed by a year, means the Finance Act of that year;
In Schedule 22 to FA 2002 (adjustment on change of accounting basis: corporation tax), in paragraph 4 (adjustment treated as arising on last day of first period for which new basis adopted), for “last day” substitute “first day”. This amendment has effect for accounting periods ending after 5th April 2005 in relation to periods of account beginning on or after 1st January 2005.
In Schedule 9 to FA 1996 (loan relationships: special computational provisions), for paragraph 4A substitute—. The amendment in sub-paragraph (1) has effect where the deemed release occurs on or after 16th March 2005.
In paragraph 1 of Schedule 7 (group relief), in sub-paragraph (7) for “paragraph 3” substitute “paragraphs 3 and 4A”.
For paragraph 3 of Schedule 16 substitute—
In section 227 of ITTOIA 2005 (adjustment on change of accounting basis: income tax), for subsection (4) (meaning of “relevant change of accounting approach”) substitute—. This amendment has effect for the tax year 2005-06 and subsequent tax years in relation to periods of account beginning on or after 1st January 2005.
In paragraph 3 of Schedule 7 (withdrawal of group relief)—
The amount chargeable is the tax that would have been chargeable in respect of the relevant transaction but for group relief if the chargeable consideration for that transaction had been an amount equal to— or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.
at the end of sub-paragraph (5) insert “and paragraph 4A (withdrawal of group relief in certain cases involving successive transactions)”.
This paragraph applies where the grant of a lease is exempt from charge by virtue of any of the provisions specified in sub-paragraph (3).
In paragraph 4 of Schedule 7 (cases in which group relief is not withdrawn)—
in sub-paragraph (3), for paragraph (b) substitute—, and
in sub-paragraph (5), for “this purpose” substitute “the purposes of sub-paragraphs (3) and (4)”.
After paragraph 4 of Schedule 7 insert—
In Schedule 17A (further provisions relating to leases) in paragraph 11(5)(a) for the words from “the purchaser” to the end substitute “the event falling within paragraph 3(1)(a) of Schedule 7 (purchaser ceasing to be a member of the same group as the vendor), as read with paragraph 4A of that Schedule”.
Section 39
Section 40
Section 42
Section 49
Section 70
Short title and chapter Extent of repeal Value Added Tax Act 1994 (c. 23) In Schedule 11A— in paragraph 6(1), the word “or” at the end of paragraph (a), and in paragraph 11(3), the word “and” at the end of paragraph (a). These repeals come into force in accordance with an order under section 6(2) of this Act.
Short title and chapter Extent of repeal Income Tax (Earnings and Pensions) Act 2003 (c. 1) Section 420(5)(d). In section 424(1), paragraph (c) and the word “or” before it. Finance Act 2004 (c. 12) Section 86(4). These repeals have effect in accordance with Schedule 2 to this Act. Short title and chapter Extent of repeal Income Tax (Trading and Other Income) Act 2005 (c. 5) Section 88(4)(a). In Schedule 1, paragraph 55(b). The repeal of section 88(4)(a) of ITTOIA 2005 has effect in accordance with section 14 of this Act. The repeal of paragraph 55(b) of Schedule 1 to that Act has effect in accordance with section 15 of this Act. Short title and chapter Extent of repeal Income and Corporation Taxes Act 1988 (c. 1) Section 349B(4)(b). Sections 468H to 468Q. Finance Act 1996 (c. 8) Paragraphs 2A and 2B of Schedule 10. Finance Act 2002 (c. 23) Paragraphs 32 and 33 of Schedule 26. Income Tax (Trading and Other Income) Act 2005 (c. 5) Section 373(4) and (6). Section 376(4) and (6). Paragraph 151(2) of Schedule 1. Paragraph 350(2) and (3) of Schedule 1. The repeal of paragraph 350(2) and (3) of Schedule 1 to ITTOIA 2005 comes into force on the day on which this Act is passed. The other repeals have effect in accordance with section 19(1) of this Act. Short title and chapter Extent of repeal Taxation of Chargeable Gains Act 1992 (c. 12) Section 10A(10). This repeal has effect in accordance with section 32(7) of this Act. Short title and chapter Extent of repeal Finance Act 1996 (c. 8) Section 111(2) and (5). These repeals have effect in accordance with paragraph 6(2) of Schedule 5 to this Act. Short title and chapter Extent of repeal Finance Act 1996 (c. 8) Section 84A. Section 85B(6). In Schedule 9— in paragraph 11A(4)(c), the words “, or would apart from section 84A(2) to (10) of this Act,”; paragraph 19(12). Finance Act 2002 (c. 23) In Schedule 23, paragraphs 3 and 26(5). In Schedule 26— paragraph 16; in paragraph 23(9), the words from “which by virtue” to the end. Finance Act 2004 (c. 12) In Schedule 10, paragraphs 2 and 48. Finance Act 2005 (c. 7) In Schedule 4, paragraphs 6, 10, 28(3) and (4) and 29. The repeal of paragraph 6 of Schedule 4 to FA 2005 has effect in accordance with paragraph 4(6) of Schedule 6 to this Act. The repeal of paragraph 10 of Schedule 4 to FA 2005 has effect in accordance with paragraph 5(2) of Schedule 6 to this Act. The repeals in FA 1996, FA 2002 and FA 2004 have effect in accordance with paragraph 9(2) and (3) of Schedule 6 to this Act. Short title and chapter Extent of repeal Income and Corporation Taxes Act 1988 (c. 1) In section 125(1), the words “and shall not be a charge on income for the purposes of corporation tax”. Section 338A(2)(a) and (4). Section 338B. In section 402(6)(b), the words “or a charge on income”. Section 434A(2)(a)(i). In section 487(3), the words “or be treated for those purposes as a charge on income”. In section 494— in subsection (1), the words “Section 338 of this Act and”; subsection (3). In section 494A— in subsection (2), paragraph (b) and the word “or” before it; in subsection (3), paragraph (b) and the word “and” before it. In Schedule 28AA— in paragraph 7A(2)(b), the words “or charges on income”; in paragraph 7C(2)(b), the words “or charges on income”. Finance Act 1989 (c. 26) In section 102(7)(b), the words “or a charge on income”. Taxation of Chargeable Gains Act 1992 (c. 12) In section 171A(5)(b), the words “or a charge on income”. In section 179A(11)(b), the words “or a charge on income”. Finance Act 2002 (c. 23) In Schedule 29, in paragraph 71(4)(b), the words “or a charge on income”. These repeals have effect in accordance with section 38 of this Act. Short title and chapter Extent of repeal Income and Corporation Taxes Act 1988 (c. 1) In section 18, paragraph (c) of the Case III of Schedule D substituted by subsection (3A). Section 43C(1). Section 43E(1)(a) and (b). In section 730— subsection (1)(c); subsection (2A); in subsection (8), the words from “and for the purpose” onwards. Finance Act 1996 (c. 8) In section 97— in subsection (2), paragraph (b) and the word “but” before it, and subsections (3) and (3A). Section 100(4) to (6), (8) and (13). In Schedule 9— in paragraph 1A(1), paragraph (b) and the word “or” before it; paragraph 11(5); in paragraph 15(4A), paragraph (b) and the word “and” before it. Finance Act 2000 (c. 17) In Schedule 29, paragraph 44(3). Finance Act 2002 (c. 23) In Schedule 25, paragraphs 13(4) and 51. Income Tax (Trading and Other Income) Act 2005 (c. 5) In section 430(6), the word “and” before the entry relating to section 443(1). In Schedule 1, paragraph 300(5). These repeals have effect in accordance with Schedule 7 to this Act. Short title and chapter Extent of repeal Finance Act 1996 (c. 8) In Schedule 9— in paragraph 2(1B), the words “, but not a CIS-based close company,”, the word “or” preceding paragraph (c) and the words after paragraph (c); in paragraph 18(1), paragraph (aa), and paragraph (c) and the word “and” preceding it; in paragraph 18(4), the word “and” preceding the definition of “participator”. Finance Act 2002 (c. 23) In Schedule 25, paragraph 34(4). Finance Act 2004 (c. 12) In Schedule 8, paragraphs 2(2) and 6(2) and (3). These repeals have effect in accordance with paragraph 4 of Schedule 8 to this Act. Short title and chapter Extent of repeal Income and Corporation Taxes Act 1988 (c. 1) In section 76(8), in the second sentence, the word “or” at the end of paragraph (a). In section 431(2), the definition of “long-term liabilities”. Finance Act 1989 (c. 26) Section 82C(4), (5), (8) and (9). In section 83A(2), the words from “Paragraph (b) above” to the end of the subsection. In section 88(3A), the word “and” at the end of paragraph (a). Finance Act 1990 (c. 29) In Schedule 6— in paragraph 1(2)(b), the definitions of “liabilities” and “value”; paragraph 2. The repeals in ICTA have effect in relation to periods of account ending on or after 31st December 2004. The repeals in section 82C of FA 1989 have effect in accordance with paragraph 11(4) of Schedule 9 to this Act. The repeal in section 83A of FA 1989 has effect in accordance with paragraph 13(6) of Schedule 9 to this Act. The repeal in section 88 of FA 1989 has effect in accordance with paragraph 16(3) of Schedule 9 to this Act. The repeals in paragraph 1(2)(b) of Schedule 6 to FA 1990 have effect in accordance with paragraph 2(6) of Schedule 9 to this Act. The repeal of paragraph 2 of Schedule 6 to FA 1990 comes into force on the day on which this Act is passed. Short title and chapter Extent of repeal Finance Act 1993 (c. 34) Section 173. In section 182(1)(a), “(so far as not provided for by Schedule 19 to this Act)”. Schedule 19. Finance Act 1994 (c. 9) Section 221. In section 229(1)(a), “(so far as not provided for by Schedule 19 to the 1993 Act as applied by section 221 above)”. In Schedule 21, paragraphs 9 and 10. Finance Act 2001 (c. 9) In Schedule 29, paragraph 36. These repeals have effect in accordance with section 45(8) and (9) of this Act. Short title and chapter Extent of repeal Income and Corporation Taxes Act 1988 (c. 1) Section 349B(3)(g) and (h). Section 512. Taxation of Chargeable Gains Act 1992 (c. 12) In section 271(7)— the words “, the United Kingdom Atomic Energy Authority”; the words “and the National Radiological Protection Board”; the words from “; and for the purposes” to the end of the subsection. Income Tax (Trading and Other Income) Act 2005 (c. 5) In Schedule 1, paragraph 199. These repeals have effect in accordance with section 46 of this Act.
Short title and chapter Extent of repeal Finance Act 2003 (c. 14) In Schedule 15, paragraph 33(4). This repeal has effect in relation to any instrument executed on or after the day on which this Act is passed. Short title and chapter Extent of repeal Finance Act 2002 (c. 23) Section 117. This repeal has effect in accordance with section 50 of this Act.
Short title and chapter Extent of repeal Taxation of Chargeable Gains Act 1992 (c. 12) In section 140A(7) the definition of “securities”. In section 140C(9) the definition of “securities”. These repeals have effect in accordance with section 59(7) of this Act.
Short title and chapter Extent of repeal Vehicle Excise and Registration Act 1994 (c. 22) Section 7A(4)(a). This repeal comes into force on the day on which this Act is passed. Short title and chapter Extent of repeal National Savings Bank Act 1971 (c. 29) Sections 10 and 11. In section 27, the definition of “the adjudicator”. National Debt Act 1972 (c. 65) Section 5. Friendly Societies Act 1992 (c. 40) Section 84. In Schedule 21, paragraphs 2 to 4. Tribunals and Inquiries Act 1992 (c. 53) In Schedule 1, in the first column, the entry relating to National Savings Bank and National Savings Stock Register, and, in the second column, paragraph 33B. These repeals have effect in accordance with section 69 of this Act.
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In Schedule 18 to FA 1998 (company tax returns, assessments, etc), in paragraph 25(1) (scope of enquiry) after “relief)” insert “or a notice under section 24 or 26 of the Finance (No. 2) Act 2005 (avoidance involving tax arbitrage)”.
In paragraph 42 of that Schedule (restrictions on power to make discovery assessment etc), in sub-paragraph (2A), after “1988” insert “or section 24 or 26 of the Finance (No. 2) Act 2005”.
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For the purposes of this Chapter—
references to a scheme are references to any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving a single transaction or two or more transactions;
it shall be immaterial in determining whether any transactions have formed or will form part of a series of transactions or scheme that the parties to any of the transactions are different from the parties to another of the transactions; and
the cases in which any two or more transactions are to be taken as forming part of a series of transactions or scheme shall include any case in which it would be reasonable to assume that one or more of them—
would not have been entered into independently of the other or others, or
if entered into independently of the other or others, would not have taken the same form or been on the same terms.
For the purposes of this Chapter, a scheme achieves a UK tax advantage for a person if in consequence of the scheme the person is in a position to obtain, or has obtained—
a relief or increased relief from income tax or corporation tax,
a repayment or increased repayment of income tax or corporation tax, or
the avoidance or reduction of a charge to income tax or corporation tax.
In subsection (2)(a) the reference to relief includes a reference to a tax credit.
For the purposes of subsection (2)(c) avoidance or reduction may in particular be effected by—
receipts accruing in such a way that the recipient does not pay or bear tax on them, or
a deduction in computing profits or gains.
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The deduction cases provisions have effect in relation to accounting periods of a company beginning on or after 16th March 2005.
Where an accounting period of a company begins before, and ends on or after 16th March 2005, it shall be assumed for the purposes of the deduction cases provisions (and subsection (1) of this section) that that accounting period (“the straddling period”) consists of two separate accounting periods— and the company’s profits and losses shall be computed accordingly for tax purposes.
the first beginning with the straddling period and ending with 15th March 2005, and
the second beginning with 16th March 2005 and ending with the straddling period,
The deduction cases provisions do not have effect so far as regards a transaction to which a company is party on 16th March 2005 and which on that date forms part of a scheme, if— Section 839 of ICTA applies for the purposes of this subsection.
the company is not on 16th March 2005 connected with a person who is on that date also party to, or concerned in, the scheme, and
the scheme ceases to exist before 31st August 2005.
The receipts cases provisions have effect in relation to any contribution to the capital of a company resident in the United Kingdom that is made on or after 16th March 2005.
In this section—
Section 10A of TCGA 1992 is amended as follows.
In subsection (3) (certain gains or losses to be excluded from being treated by virtue of subsection (2) as accruing to the taxpayer in year of return)—
in paragraph (a), for “he was neither resident nor ordinarily resident in the United Kingdom” substitute—;
in paragraph (d), after “152(1)(b)” insert “ , 153(1)(b) ”.
In subsection (8) (definitions) in the definition of “relevant disposal”, after “United Kingdom” insert “ and was not Treaty non-resident ”.
For subsection (9) substitute—.
After subsection (9B) (as inserted by subsection (4) above) insert—.
Omit subsection (10) (section to be without prejudice to right to claim relief under double taxation relief arrangements).
The amendments in subsections (2)(a), (4), (5) and (6) have effect—
in any case in which the year of departure is, or (on the assumption that the amendment in subsection (4) had always had effect) would be, the year 2005-06 or a subsequent year of assessment; and
in any case in which—
the year of departure is, or (on that assumption) would be, the year 2004-05, and
at a time in that year on or after 16th March 2005, the taxpayer was resident or ordinarily resident in the United Kingdom and was not Treaty non-resident (within the meaning given by section 10A(9A) of TCGA 1992, as inserted by subsection (4)).
The amendment in subsection (2)(b) has effect in relation to relevant disposals made on or after 16th March 2005.
The amendment in subsection (3) has effect for determining whether a disposal of an asset is a relevant disposal for the purposes of section 10A of TCGA 1992 in any case in which the person making the disposal acquired the asset on or after 16th March 2005.
After section 83 of TCGA 1992 insert—.
The amendment made by this section has effect in relation to disposals made on or after 16th March 2005.
Schedule 4 (which makes provision in relation to the situation of assets for the purposes of TCGA 1992 and which makes minor amendments in that Act in relation to non-resident companies with United Kingdom permanent establishments) has effect.
Schedule 5 (which makes provision, for the purposes of the taxation of chargeable gains, in relation to options) has effect.
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Section 171A of TCGA 1992 (notional transfers within a group) is amended as follows.
After subsection (3) insert—.
The amendment made by this section has effect in relation to disposals made on or after 16th March 2005.
Schedule 6 (accounting practice and related matters) has effect.
Section 338A of ICTA (meaning of “charges on income” for the purposes of corporation tax) is amended as follows.
In subsection (2) (what are charges on income) paragraph (a) (annuities or other annual payments that meet the conditions in section 338B) shall cease to have effect.
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In section 434A(2)(a) of ICTA (loss resulting to insurance company from computation in accordance with Case I of Schedule D: reduction by specified amounts) omit sub-paragraph (i) (which relates to charges on income).
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The amendment made by subsection (4) has effect for accounting periods beginning on or after 1st April 2004.
The other amendments made by this section have effect in relation to payments made on or after the commencement date in respect of annuities or other annual payments.
Where— subsection (9) applies.
an accounting period of a company begins before, and ends on or after, the commencement date,
a payment in respect of an annuity or other annual payment is made by the company in that period but before the commencement date, and
the payment is deductible as a charge on income for the purposes of corporation tax,
In any such case, so much of any amount as represents that payment— for that or any subsequent accounting period.
is not deductible under section 75 of ICTA (expenses of management), and
is not to be brought into account under section 76 of that Act (expenses of insurance companies) as expenses payable,
Subsection (12) applies in any case where—
a payment in respect of an annuity or other annual payment is made by a company on or after the commencement date, and
the condition in subsection (11) is satisfied.
The condition is that the payment represents an amount which (apart from subsection (12))— by reason only of section 337A(1)(b) of that Act (company's income from any source to be computed without any deduction in respect of charges on income) as it applies by virtue of section 338A(2)(a) of that Act.
would not be deductible under section 75 of ICTA, or
would not fall to be brought into account under section 76 of that Act,
In any such case, the amount represented by the payment— for the accounting period in which the payment is made.
is deductible under section 75 of ICTA, or
falls to be brought into account under section 76 of that Act as expenses payable,
In this section “the commencement date” means 16th March 2005.
Schedule 7 (which makes provision in relation to tax avoidance involving financial arrangements) has effect.
Schedule 8 (which amends Schedule 28AA to ICTA and Schedule 9 to FA 1996) has effect.
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Schedule 29 to FA 2002 (gains and losses of a company from intangible fixed assets) is amended as set out in subsections (2) to (4).
In paragraph 92 (transfer between company and related party treated as being at market value)—
in sub-paragraph (1), for “the following two exceptions” substitute “the following four exceptions”;
The third exception is where— Where the third exception applies, sub-paragraph (1) does not apply, in relation to the computation mentioned in sub-paragraph (4A)(c), for the purposes of any such provision as is mentioned there. The fourth exception is where— Where the fourth exception applies—
Case Three C is a close company and P is, or is an associate of— a participator in C, or a participator in a company that has control of, or holds a major interest in, C.
In paragraph 132 (roll-over relief: transitory interaction with relief on replacement of business asset), in sub-paragraph (5) (disapplication for certain corporation tax purposes of Classes 4 to 7 in section 155 of TCGA 1992)—
for “4 to 7” substitute “4 to 7A”;
for “(goodwill and various types of quota)” substitute “(goodwill and certain other intangible assets)”.
of— as appear to the Treasury to be appropriate.
The amendments made by subsection (2) have effect in relation to any transfer of an asset made on or after 16th March 2005.
The amendment made by subsection (3) has effect, for the purposes of paragraph 92 of Schedule 29 to FA 2002 as it applies otherwise than for determining the debits or credits to be brought into account under that Schedule, in relation to any transfer of an asset made on or after 16th March 2005.
That amendment has effect, for all other purposes of that Schedule, in relation to the debits or credits to be brought into account for accounting periods beginning on or after 16th March 2005 (and, in relation to the debits or credits to be brought into account for any such period, shall be deemed always to have had effect).
An accounting period beginning before, and ending on or after, that date is treated for the purposes of subsection (8) as if so much of that period as falls before that date, and so much of that period as falls on or after that date, were separate accounting periods.
The amendments made by subsection (4) have effect in relation to any such acquisition as is referred to in paragraph 132(5) of Schedule 29 to FA 2002 made on or after 22nd March 2005.
Schedule 9 (which makes provision about insurance companies etc) has effect.
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Section 801 of ICTA (dividends paid between related companies: relief for UK and third country taxes) is amended as follows.
After subsection (5) (meaning of one company being related to another) insert—.
The amendment made by this section has effect where the dividend mentioned in section 799(1) of ICTA is paid on or after 1st January 2005.
Section 750 of ICTA (controlled foreign companies: territories with a lower level of taxation) is amended as follows.
In subsection (1), after “if” insert “ , after giving effect to subsections (1A) and (1B) below, ”.
After subsection (1) insert—.
The amendments made by this section have effect in relation to accounting periods of companies resident outside the United Kingdom beginning on or after 2nd December 2004.
Where an accounting period of a company resident outside the United Kingdom— an accounting period of the company shall be deemed for the purposes of Chapter 4 of Part 17 of ICTA to have ended with 1st December 2004.
would, without amendment, have ended on or after 2nd December 2004, but
is amended on or after that date so as to end before that date,
In this section “accounting period” has the same meaning as in Chapter 4 of Part 17 of ICTA (see section 751).
Omit section 173 of, and Schedule 19 to, FA 1993 (Lloyd's underwriters: assessment and collection of tax).
In section 182 of that Act (regulations) in subsection (1)(a) (power of Commissioners for Her Majesty's Revenue and Customs to make regulations providing for assessment and collection of tax charged in accordance with section 171 of FA 1993, so far as not provided for by Schedule 19 to that Act) omit “(so far as not provided for by Schedule 19 to this Act)”.
In that section, at the end insert—.
Omit section 221 of FA 1994 (Lloyd's underwriters: corporations etc: assessment and collection of tax).
Renumber section 229 of that Act (regulations) as subsection (1) of that section.
In subsection (1) of that section (as amended by subsection (5) above), in paragraph (a) (power of Commissioners for Her Majesty's Revenue and Customs to make regulations providing for assessment and collection of tax charged in accordance with section 219 of FA 1994, so far as not provided for by Schedule 19 to FA 1993 as applied by section 221 of FA 1994) omit “(so far as not provided for by Schedule 19 to the 1993 Act as applied by section 221 above)”.
In that section, at the end insert—.
For the purpose of enabling the making of any regulations under— subsections (1) to (7) come into force on the day on which this Act is passed.
section 182(1)(a) of FA 1993 (as amended by subsection (2)), or
section 229(1)(a) of FA 1994 (as amended by subsection (6)),
Subject to that, those subsections come into force in accordance with provision made by the Treasury by order.
Section 828(3) of ICTA shall not apply in relation to an order under subsection (9).
The Commissioners for Her Majesty's Revenue and Customs may by regulations make such amendments, repeals or revocations in any enactment (including an enactment amended by this section) as appear to them to be appropriate in consequence of any one or more of the following—
any amendment made by this section;
the exercise by them of the power in section 182(1)(a) of FA 1993 (as amended by subsection (2));
the exercise by them of the power in section 229(1)(a) of FA 1994 (as amended by subsection (6)).
Any power conferred by this section to make an order or regulations includes power to make—
different provision for different cases or different purposes, and
incidental, supplemental or transitional provision and savings.
In this section—
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30) (see section 21 of that Act).
This section provides for certain enactments to cease to have effect which relate to—
the United Kingdom Atomic Energy Authority (“UKAEA”),
the National Radiological Protection Board (“NRPB”), or
pension schemes run by UKAEA.
In ICTA the following provisions shall cease to have effect—
section 349B(3)(g) (no deduction of tax from certain payments to UKAEA);
section 349B(3)(h) (no deduction of tax from certain payments to NRPB);
section 512(1) and (3) (certain exemptions from income tax and corporation tax for UKAEA and NRPB);
section 512(2) (treatment of certain income of pension schemes run by UKAEA).
In section 271(7) of TCGA 1992 (miscellaneous exemptions from tax in respect of chargeable gains)—
for “Memorial Fund, the” substitute “ Memorial Fund and the ”;
omit “, the United Kingdom Atomic Energy Authority”;
omit “and the National Radiological Protection Board”;
omit from “; and for the purposes” to the end of the subsection (treatment of gains accruing to pension schemes run by UKAEA).
In subsection (2)—
paragraph (a) has effect in relation to payments made on or after 1st April 2005;
paragraph (b) has effect in relation to payments made after 1st April 2005;
paragraph (c), so far as relating to UKAEA, has effect on and after 1st April 2005;
paragraph (c), so far as relating to NRPB, has effect after 1st April 2005;
paragraph (d) has effect in relation to income arising on or after 1st April 2005.
In subsection (3)—
paragraphs (a) and (c) have effect in relation to gains accruing after 1st April 2005;
paragraphs (b) and (d) have effect in relation to gains accruing on or after 1st April 2005.
The repeal of subsection (3)(g) of section 349B of ICTA does not affect the application of any other provision of that section in relation to UKAEA.
Nothing in this section affects—
any accounting period of UKAEA ending before 1st April 2005, or
any accounting period of NRPB ending on or before 1st April 2005.
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In section 79(1) of FA 2003 (registration of land transactions) after “in relation to the transaction” insert “ or such information about compliance as the Commissioners for Her Majesty's Revenue and Customs may specify in regulations. ”
In section 119(1) of FA 2003 (land transactions: effective date) for “the date of completion” substitute—
The power under sub-paragraph (1) may, in such circumstances as the Commissioners for Her Majesty's Revenue and Customs may specify in regulations, be exercised—
The Commissioners for Her Majesty's Revenue and Customs—
may make regulations conferring administrative functions on a land registrar in connection with stamp duty land tax, and
may make payments to land registrars in respect of the exercise of those functions.
In subsection (5) “land registrar” means—
in relation to England and Wales, the Chief Land Registrar,
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in relation to Northern Ireland, the Registrar of Titles or the registrar of deeds, and
in any case, such other persons with functions relating to the registration of land as regulations under subsection (5) may specify.
Regulations under subsection (5)—
shall be made by statutory instrument, and
shall be subject to annulment in pursuance of a resolution of the House of Commons.
After section 78 of FA 2003 insert—
In section 245 of FA 1994 (production of documents: supplementary) for subsection (2) substitute—
For the heading to Part 6 of FA 1994 substitute “ Stamp duty ”.
Regulation 3 of the Stamp Duty Land Tax (Consequential Amendment of Enactments) Regulations 2005 (S. I. 2005/82) is hereby revoked.
Subsections (1) to (4) come into force on such day as the Treasury may by order appoint.
Section 114(3) of FA 2003 (negative resolution procedure) does not apply to an order made under subsection (5).
Schedule 10 (which makes miscellaneous amendments of Part 4 of FA 2003) has effect.
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The Treasury may by regulations extend the application of the provisions mentioned in subsection (2) to any market (specified by name or by description) which—
is not a recognised exchange, but
is a multilateral trading facility (or, assuming compliance with the provisions of Title II of the Directive (authorisation and operating conditions), would be such a facility).
The provisions referred to in subsection (1) are—
sections 80A and 80C of FA 1986 (stamp duty: exceptions for sales to intermediaries and for repurchases and stock lending), and
sections 88A and 89AA of that Act (stamp duty reserve tax: exceptions for intermediaries and for repurchases and stock lending).
In this section—
Regulations under this section may provide for the application of the provisions mentioned in subsection (2) subject to any adaptations appearing to the Treasury to be necessary or expedient.
In subsection (1)(b) the words “(or, assuming compliance with the provisions of Title II of the Directive (authorisation and operating conditions), would be such a facility)” shall cease to have effect on such day as the Treasury may by order appoint.
Section 117 of FA 2002 (power to extend the exceptions in subsection (2) to any market prescribed by order under section 118(3) of the Financial Services and Markets Act 2000) shall cease to have effect on such day as the Treasury may by order appoint.
The power to make regulations or an order under this section is exercisable by statutory instrument.
A statutory instrument containing— shall be subject to annulment in pursuance of a resolution of the House of Commons.
regulations under this section, or
an order under subsection (5),
After section 140D of TCGA 1992 (transfer of non-UK trade) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
After paragraph 85 of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transfer of trade) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
After paragraph 87 of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transfer of non-UK trade) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
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Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
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After paragraph 30A of Schedule 26 to FA 2002 (derivative contracts: profits: groups) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
After section 561 of CAA 2001 (transfer of UK trade to company in another member State) insert—
Subsection (1) shall have effect in relation to a transfer made on or after 1st April 2005.
At the end of section 99(4) of FA 1986 (stamp duty reserve tax: interpretation: chargeable securities) add—, or
Subsection (1) shall have effect for the purposes of determining, in relation to anything occurring on or after 1st April 2005, whether securities (whenever issued or raised) are chargeable securities for the purposes of Part 4 of FA 1986.
In section 90(3C)(a) of FA 1986 (stamp duty reserve tax: bearer instruments) after “United Kingdom” insert “ (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ”.
In section 90(3E)(a) of FA 1986 (stamp duty reserve tax: bearer instruments) after “United Kingdom” insert “ (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ”.
“UK company” means—
This section shall have effect for the purposes of determining whether or not stamp duty or stamp duty reserve tax is chargeable in respect of anything done on or after 1st April 2005.
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In section 140A of TCGA 1992 (transfer of UK trade)—
in subsection (1)(b) for “securities” substitute “ shares or debentures ”, and
in subsection (7) omit the definition of “securities”.
In section 140C of TCGA 1992 (transfer of non-UK trade)—
in subsection (1)(c) for “securities” substitute “ shares or debentures ”, and
in subsection (9) omit the definition of “securities”.
In paragraph 88(1) and (5) of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transferred assets: application for clearance) after “85(5),” insert “ 85A(5), 87A(6), ”.
In paragraph 127 of that Schedule (acquired assets to be treated as existing assets) after sub-paragraph (1)(b)(ii) insert—, or .
Subsections (3) and (4) shall have effect in relation to an issue effected on or after 1st April 2005.
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After section 66 of FA 1988 (company residence) insert—
In section 249(3) of FA 1994 (certain companies to be treated as non-resident) after “resident there)” insert “, by virtue of section 66A of that Act (residence of SE)”.
Subsection (1) shall have effect in relation to the transfer of a registered office which occurs on or after 1st April 2005.
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If at any time a company ceases to be resident in the United Kingdom in the course of the formation of an SE by merger (whether or not the company continues to exist after the formation of the SE) the provision specified in subsection (3) shall apply after that time, but in relation to liabilities accruing and matters arising before that time—
as if the company were still resident in the United Kingdom, and
where the company has ceased to exist, as if the SE were the company.
If at any time an SE transfers its registered office from the United Kingdom and ceases to be resident in the United Kingdom, the provision specified in subsection (3) shall apply after that time, but in relation to liabilities accruing and matters arising before that time, as if the SE were still resident in the United Kingdom.
The provision mentioned in subsections (1) and (2) is Schedule 18 to FA 1998 (tax returns, assessments, etc).
After section 170(10) of TCGA 1992 (groups: merger, etc) insert—
Subsection (1) shall have effect in relation to the formation of an SE (including its formation by transformation) which occurs on or after 1st April 2005.
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After paragraph 51 of Schedule 29 to FA 2002 (groups: continuity) insert—
Subsection (1) shall have effect in relation to the formation of an SE (including its formation by transformation) which occurs on or after 1st April 2005.
In section 116(11) of TCGA 1992 (shares: reorganisation, etc) after “140A,” insert “ 140E, ”.
After section 140(6A) of that Act (postponement of charge on transfer of assets to foreign company) insert—
After section 154(2) of that Act (held over gains: depreciating assets) insert—
After section 179(1A) of that Act (company ceasing to be member of group) insert—
This section shall have effect in relation to the formation of an SE in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea) which occurs on or after 1st April 2005.
Schedule 7A to TCGA 1992 (restrictions on set-off of pre-entry losses) shall be amended as follows.
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In paragraph 1(6)(a) after “subsection (10)” insert “ or (10A) ”.
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This section shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
VERA 1994 is amended as follows.
Section 7A (supplement payable on late renewal of vehicle licence) is amended as follows.
In subsection (1) (cases in which regulations may provide for supplement to be payable), for the words from “in prescribed cases” to the end substitutewhere—
After that subsection insert—
In subsection (2)(c) (amount of supplement variable according to length of period between expiry of licence and payment of supplement or renewal of licence), for sub-paragraphs (i) and (ii) substitute—
In subsection (3)(b) (supplement not to cease to be payable by reason of taking out of vehicle licence), for “a vehicle licence being taken out for the vehicle” substitute “ the vehicle being again appropriately covered ”.
Omit subsection (4)(a)(definition of “expiry of a vehicle licence”).
In the heading, for “late renewal of vehicle licence” substitute “ vehicle ceasing to be appropriately covered ”.
Section 7B (late-renewal supplements: further provisions) is amended as follows.
In subsection (1) (notification of person in whose name vehicle is registered)—
for “on non-renewal of a vehicle licence for” substitute “ in relation to ”, and
for “failure to renew a vehicle licence” substitute “ the vehicle ceasing to be appropriately covered ”.
In the heading, for “Late-renewal” substitute “ Section 7A ”.
In this section “relevant transfer” means a transfer of property, rights or liabilities where—
the transfer is of property, rights or liabilities which—
are specified or described in or determined in accordance with a scheme, and
consist of or include relevant property, rights or liabilities,
the transfer is from a Northern Ireland department or persons which include a Northern Ireland department to a company or companies specified in the scheme (“transferee company”), and
the transfer is effected by or under an enactment which—
is made after the coming into force of this section, and
relates to the provision of water or sewerage services in Northern Ireland.
In this section “relevant property, rights or liabilities” means property, rights or liabilities connected with the provision of any water or sewerage services.
The Treasury may by regulations make provision for or in connection with varying the way in which a relevant tax or duty would, apart from the regulations, have effect in relation to, or in connection with, any of the following—
anything done for the purpose of, or under or in consequence of, a relevant transfer of relevant property, rights or liabilities from a Northern Ireland department to a transferee company;
any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company;
any relevant property, rights or liabilities of a transferee company.
The provision that may be made by the regulations includes provision for or in connection with any of the following—
a tax provision not to apply or to apply with modifications in prescribed cases or circumstances;
anything done to have or not to have a specified consequence for the purposes of a tax provision in prescribed cases or circumstances;
any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company to be treated in a specified way for the purposes of a tax provision in prescribed cases or circumstances;
the withdrawal of relief (whether or not granted by virtue of the regulations), and the charging of tax, in prescribed cases or circumstances;
requiring or enabling the Secretary of State, with the consent of the Treasury, to determine or to specify the method to be used for determining anything (including amounts or values, or times or periods of time) which needs to be determined for the purposes of any tax provision (whether or not modified by the regulations) as it applies in relation to, or in connection with,—
anything done for the purpose of, or under or in consequence of, a relevant transfer of relevant property, rights or liabilities from a Northern Ireland department to a transferee company, or
any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company.
A provision of regulations made by virtue only of subsection (3)(c) (“a subsection (3)(c) provision”) (whether or not also by virtue of subsection (4)) shall not have effect for an accounting period of a transferee company unless the company is wholly owned by the Crown during the whole of that accounting period.
Regulations under this section may provide that, for the purposes of a subsection (3)(c) provision, an accounting period of a transferee company shall be taken to have ended on the company ceasing to be wholly owned by the Crown.
For the purposes of this section, a company shall be regarded as wholly owned by the Crown at any time when each of the issued shares in the company is held by, or by a nominee of,—
the Treasury,
the Secretary of State,
a Northern Ireland department, or
another company which is wholly owned by the Crown.
In this section—
“CTA 2009” means the Corporation Tax Act 2009;
Section 105A of TCGA 1992 is amended as follows. In subsection (1) (cases in which subsection (2) applies) in paragraph (b) (some of the acquired shares to be approved-scheme shares) for sub-paragraphs (i) and (ii) substitute—.
“tax provision” means a provision of an enactment about a relevant tax or duty.
Any power to make regulations under this section is exercisable by statutory instrument.
A statutory instrument containing regulations under this section shall be subject to annulment in pursuance of a resolution of the House of Commons.
Any power to make regulations under this section includes power—
to make different provision for different cases or circumstances;
to make incidental, supplemental, consequential or transitional provision or savings.
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This section applies where, in accordance with Article 8a of the Mutual Assistance Directive, the competent authority of another member State (“the applicant authority”) requests the Commissioners for Her Majesty’s Revenue and Customs to notify an instrument to the person to whom the instrument is addressed.
The Commissioners must take the necessary measures to notify the instrument to that person.
The notification shall be given in accordance with the law applicable to notification of similar instruments in the part of the United Kingdom in which it is given.
The Commissioners must—
inform the applicant authority immediately of their response to the request, and
confirm to the applicant authority, as soon as is reasonably practicable, the date on which the instrument was notified to the person concerned.
The Commissioners may request additional information from the applicant authority for the purpose of giving the notification.
In this section “the Mutual Assistance Directive” means Council Directive 77/799/EEC as amended (in particular by Council Directive 2004/56/EC).
In this section references to the Commissioners for Her Majesty’s Revenue and Customs include, in relation to any time before 18th April 2005,—
the Commissioners of Customs and Excise;
the Commissioners of Inland Revenue.
In this section “instrument” means any instrument or decision which—
emanates from the administrative authorities of the member State in which the applicant authority is situated, and
concerns the application in that member State of legislation on taxes covered by the Mutual Assistance Directive.
This section has effect in relation to requests received by the Commissioners for Her Majesty’s Revenue and Customs on or after 1st January 2005.
After the coming into force of this section, no further disputes shall be referred to a person appointed under section 84 of the Friendly Societies Act 1992 (c. 40) (adjudicator for disputes under the National Savings Bank Act 1971 and the National Debt Act 1972).
This section comes into force on 1st September 2005.
The enactments mentioned in Schedule 11 (which include provisions that are spent or of no practical utility) are repealed to the extent specified.
The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.
In this Act—
“CAA 2001” means the Capital Allowances Act 2001 (c. 2);
“SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).
Chapter 3C of Part 7 (securities acquired for less than market value) is amended as follows.
Part 2 of ICTA (which, at sections 43A to 43G, includes provisions about rent factoring) is amended as follows. Section 43C(1) (section 43B not to apply where term over which financial obligation is to be reduced exceeds 15 years) shall cease to have effect. In section 43E (interposed lease: exceptions etc) in subsection (1), omit paragraphs (a) and (b) (which relate to certain periods exceeding 15 years). The amendments made by this paragraph have effect in relation to finance agreements entered into on or after 16th March 2005. But where— sub-paragraph (6) has effect. In any such case, any amount of principal in rent paid on or after 16th March 2005 which, apart from this sub-paragraph, would— shall not be so deductible or brought into account for any accounting period ending on or after 16th March 2005. If payment of an amount of principal in rent is made on or after 16th March 2005 in respect of a rental period that falls— sub-paragraph (6) has effect in relation to only so much of the payment as relates to the part of the period falling on or after 16th March 2005. In this paragraph—
After section 775 of ICTA (sale by individual of income derived from his personal activities) insert—. The amendment made by this paragraph has effect in relation to sales or transfers on or after 16th March 2005.
Section 48 of TCGA 1992 (consideration due after time of disposal) is amended as follows. At the beginning insert “(1)”. At the end add—.
After section 91 of FA 1996 insert the following heading— After that heading insert the following section—. After section 91A insert—. After section 91B insert—. After section 91E insert—. After section 91F insert—. The amendments made by this paragraph have effect in relation to shares held by a company on or after 16th March 2005.
In section 103 of FA 1996 (interpretation) after subsection (3) insert—. The amendment made by this paragraph has effect in relation to assets held on or after 16th March 2005 (whenever acquired).
In Schedule 9 to FA 1996 (loan relationships) paragraph 11 (transactions not at arm’s length) is amended as follows. Sub-paragraph (1) above does not apply if the related transaction— In consequence, omit sub-paragraph (5) (construction of references to a member of a group). The amendments made by this paragraph have effect where the related transaction is on or after 16th March 2005.
In Schedule 9 to FA 1996 (loan relationships) paragraph 15 is amended as follows. and as is, in the case of those arrangements, the disposal or acquisition effected by— In sub-paragraph (3) (meaning of “repo or stock-lending arrangements”)— but nothing in sub-paragraph (1) above prevents the person to whom those rights are transferred from being regarded for the purposes of this Chapter as being party to the loan relationship as a result of the transfer. The amendments made by this paragraph have effect in any case where the transfer mentioned in paragraph 15(3)(a) of Schedule 9 to FA 1996 is on or after 2nd December 2004, whenever the repo or stock-lending arrangements in question were entered into. In any case involving an arrangement for the sale and repurchase of securities where the arrangement— the substitution of any securities on or after 2nd December 2004 shall be treated for the purposes of sub-paragraph (5) as if it were a transfer falling within paragraph 15(3)(a) of Schedule 9 to FA 1996.
In Schedule 26 to FA 2002 (derivative contracts) paragraph 28 (transactions within groups) is amended as follows. For the purpose of determining the credits and debits to be brought into account for the purposes of this Schedule in respect of the derivative contract— For the purposes of this sub-paragraph the notional carrying value is the amount that would have been the carrying value of the derivative contract in the accounts of the transferor company if a period of account had ended immediately before the date when the company ceased to be party to the contract. “carrying value” has the same meaning as it has for the purposes of paragraph 50A; Where the period of account mentioned in the second sentence of the sub-paragraph (3) substituted by sub-paragraph (2) begins before 1st January 2005, “carrying value” shall be construed as if the period had begun on or after that date. The amendments made by this paragraph have effect in any case where the relevant transaction is on or after 16th March 2005. In this paragraph “the relevant transaction” means— by virtue of which that paragraph applies or would apply apart from paragraph 30 of that Schedule.
Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) is amended as follows. section 452A(1) (corporate strips). In section 437 (transactions which are disposals) after subsection (4) insert—. In section 438 (timing of transfers and acquisitions) for subsection (4) substitute—. In section 440 (market value disposals) for subsection (5) substitute—. In section 441 (market value acquisitions) for subsection (3) substitute—. In section 444 (meaning of “strip” in Chapter 8) after subsection (5) insert—. After section 452 insert—. conversion of an interest-bearing corporate security into corporate strips of the security (for the purposes of Chapter 8 of Part 4) sections 452C and 452D corporate strip (for the purposes of Chapter 8 of Part 4) section 452E interest-bearing corporate security (for the purposes of Chapter 8 of Part 4) section 452B ITTOIA 2005 shall have effect as if it had been originally enacted with the amendments made by this paragraph.
In section 446R (exception from Chapter for certain company shares), for subsection (1A) substitute— This paragraph has effect where something such as is mentioned in section 446R(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
In section 446U(1) (discharge of notional loan), insert at the endor This paragraph has effect where something such as is mentioned in section 443U(1)(c) of ITEPA 2003 has been done on or after 2nd December 2004.
After section 446U insert— This paragraph has effect in relation to acquisitions on or after 2nd December 2004.
Section 698 (PAYE: special charges on employment-related securities) is amended as follows. In subsection (1), after paragraph (e) insert—. In subsection (6), after paragraph (d) insert—. This paragraph has effect on and after the day on which this Act is passed.
“shared additional pension” means shared additional pension under Part 2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992;
Chapter 3 of Part 7 (convertible securities) is amended as follows.
Section 265 of TCGA 1992 is amended as follows. In subsection (3) (securities issued by designated international organisations to be taken to be situated outside UK for the purposes of capital gains tax) for “capital gains tax” substitute “this Act”.
After section 275B of TCGA 1992 (as inserted by paragraph 5) insert—.
The amendments made by Part 1 of this Schedule have effect for determining for the purposes of TCGA 1992— at any time on or after 16th March 2005 (irrespective of when the asset was acquired by the person holding it). The amendment made by paragraph 7 has effect in relation to any loss accruing to a company in an accounting period ending on or after 16th March 2005. The amendment made by paragraph 8 has effect for determining for the purposes of section 179A of TCGA 1992 whether an asset is a “chargeable asset” in relation to a company at any time on or after 16th March 2005. The amendment made by paragraph 9 has effect in relation to disposals on or after 16th March 2005.
The amendments made by paragraphs 1 to 3 have effect in relation to cases where the option in question is exercised on or after 2nd December 2004 (whenever the option was acquired). The amendments made by paragraphs 4 and 5 have effect in relation to options granted on or after 2nd December 2004.
In Schedule 4 to FA 2005, omit paragraph 6 (which amended section 109A of ICTA for corporation tax purposes when that section has no such application). In paragraph 19A of Schedule 9 to FA 1996, in sub-paragraph (4B)(g) after “2,” insert “4A,”. In paragraph 25A of Schedule 26 to FA 2002, for “section 85B(1)” substitute “paragraph 17B(1)”. In section 103(1) of FA 1996, in the definition of “exchange gain” and “exchange loss”, after “(1A)” insert “, (1AA)”. In paragraph 54(1) of Schedule 26 to FA 2002, in the definition of “exchange gain” and “exchange loss”, after “(2)” insert “, (2A)”. These amendments shall be deemed always to have had effect.
Where— the company may elect that Chapter 2 of Part 4 of FA 1996 (loan relationships) and Schedule 26 to FA 2002 (derivative contracts) shall have effect as if section 94A did apply. Any such election— An election may be made after 31st December 2005— An election under this paragraph has effect in relation to all relevant assets held by the company (including those subsequently acquired). An election under this paragraph— Where an election is made under this paragraph the provisions of paragraph 19A of Schedule 9 to FA 1996 and paragraph 50A of Schedule 26 to FA 2002 (adjustments on change of accounting policy) apply as if there were a change of accounting policy (consisting in the company treating its relevant assets as mentioned in section 94A(1) as from the date the election has effect). In this paragraph “old UK GAAP” means UK generally accepted accounting practice as it applied for periods of account beginning before 1st January 2005 and “new UK GAAP” means UK generally accepted accounting practice as it applies for periods of account beginning on or after that date. Any election made under paragraph 28(3) of Schedule 4 to FA 2005 before the passing of this Act shall have effect as if made under this paragraph.
Except where sub-paragraph (2) or (3) applies, the amendments made by this Schedule have effect in relation to accounting periods beginning on or after 4th March 2005. As regards any actual provision that constitutes, or gives rise to, a debtor relationship entered into in pursuance of a contract— the amendments made by paragraph 1(2), (3) and (5) apply only in relation to accounting periods beginning on or after 1st April 2007 or, in a case where the contract is varied before 1st April 2007, in relation to accounting periods beginning on or after the date of the variation. As regards a debtor relationship entered into in pursuance of a contract— the amendments made by paragraph 2(2)(a) and (e), (3) and (4) and paragraph 3(2) and (4) to (7) apply only in relation to accounting periods beginning on or after 1st April 2007 or, in a case where the contract is varied before 1st April 2007, in relation to accounting periods beginning on or after the date of the variation. In the case of a company’s accounting period (“the straddling period”) that begins before and ends on or after a relevant date, for the purposes of sub-paragraph (1) or (where it applies) sub-paragraph (2) or (3) the amendments made by this Schedule have effect as if the straddling period consisted of— and the company’s profits and losses are to be computed accordingly for tax purposes. A reference in sub-paragraph (2) or (3) to a variation of a contract does not include a reference to a variation that does not affect the terms of the debtor relationship in question. Sub-paragraph (3) is not to be read as allowing or requiring a debit to be brought into account under Chapter 2 of Part 4 of FA 1996 for an accounting period beginning on or after 1st April 2007, or the date of the variation, in respect of any amount of interest or discount in respect of which a debit is so brought into account for any earlier accounting period. In the application of this paragraph to a person within the charge to income tax— In this paragraph—
In section 436(a) (meaning of “convertible securities”), for “immediate or conditional entitlement” substitute “ entitlement (whether immediate or deferred and whether conditional or unconditional) ”. Section 437 (adjustment of acquisition charge) is renumbered as subsection (1) of that section. After that subsection insert— This paragraph has effect in relation to acquisitions on or after 2nd December 2004.
In section 116(8A) of TCGA 1992 (reorganisations, conversions and reconstructions: application of loan relationships regime in certain cases)— After that subsection insert—. These amendments have effect in relation to transactions occurring after 26th May 2005.
In section 440 (amount of charge under section 438), after subsection (3) insert— This paragraph has effect on and after 2nd December 2004.
In section 443 (exception from charge under section 438 for certain company shares), for subsection (1A) substitute— This paragraph has effect where something such as is mentioned in section 443(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
This Act may be cited as the Finance (No. 2) Act 2005.