Finance Act 2022

In section 867 (business entertainment and gifts: non-trades and non-property businesses), in subsection (5), omit “(but as if the reference to a basis period were to a tax year)”.

In TIOPA 2010, omit sections 22 to 24 (credit for foreign tax on overlap profit if credit for that tax already allowed).

This Part of this Schedule (after this paragraph) sets out the conditions that must be met for a company to be a qualifying asset holding company (a “QAHC”). Parts 2 and 3 of this Schedule— Part 4 makes provision about groups of companies that include QAHCs. Part 5 makes provision about the application of provisions about close companies, exchange gains and basis of accounting to QAHCs. Part 6 makes provision about the application of transfer pricing rules and corporate interest restriction rules to QAHCs. Part 7 makes provision about the treatment of certain amounts payable by a QAHC. Part 8 makes provision in relation to an overseas property business of a QAHC. Part 9 makes provision about the taxation of disposals by QAHCs of overseas land and certain shares. Part 10 provides for an exemption from stamp duty and stamp duty reserve tax on the repurchase by an QAHC of its own shares or loan capital. Part 11 amends ITA 2007 to provide for an exemption from the duty to deduct under section 874 of that Act (withholding tax). Part 12 makes supplementary provision (including provision about the meaning of terms used in this Schedule).

An interest of a person (“T”) only constitutes a relevant interest in a company, or in an enhanced class of that company, if as a result of that interest T is— But where T has an interest falling within sub-paragraph (1)(b) partly as a result of an entitlement through C, in determining the amount of that interest for the purposes of paragraph 3(2) or (3), ignore any amount attributable to the entitlement through C. For the purposes of sub-paragraph (1)(b)(i), a beneficial entitlement of T or C held solely through one or more QAHCs is to be treated as held by that person directly. For the purposes of sub-paragraph (1)(b)(ii), where— that entitlement is to be treated as an entitlement of T. In this paragraph, “connected”, in relation to two persons being connected with one another, is to be read in accordance with sections 1122 and 1123 of CTA 2010, but for the purposes of this paragraph section 1122(7) has effect as if any reference to a partnership did not include a partnership that is a qualifying fund.

References to “voting power” in paragraphs 3 to 6 are to be construed in accordance with this paragraph. The amount of voting power a person has in a company is to be determined by reference to the proportion of the voting power that person has in the case of a vote at a forum of the company’s members (for example, in the case of a company incorporated in the United Kingdom, at its annual general meeting) on a standard resolution. The reference in sub-paragraph (2) to a standard resolution is to a resolution in relation to which there are no rules specific to resolutions of that type which vary the voting power of members in relation to a resolution of that type as compared to other types of resolutions.

The following persons are relevant qualifying investors—

The activity condition is met if— The investment strategy condition is met if the company’s investment strategy does not involve— A company (“C”) may make an election under this sub-paragraph that all relevant equity securities held by C are to be treated as if they were not equity securities listed or traded on a recognised stock exchange or any other public market or exchange for the purposes of— Equity securities are “relevant” if— An election under sub-paragraph (3)— Where an election under sub-paragraph (3) has effect, any dividend or other distribution received by C in respect of relevant equity securities that would otherwise be exempt for the purposes of section 931A(1) of CTA 2009 (charge to tax on distributions received) is to be treated as not exempt for the purposes of that section. Where— any dividend or other distribution received by a person in respect of holding the acquired securities in the period (“the dispossession period”) commencing with the disposal by C of the dispossessed securities and ending with the acquisition by C of the acquired securities is to be treated as having been received by C for Corporation Tax purposes. But the amount of any dividend or other distribution treated as received by C as a result of sub-paragraph (7) is limited to the amount of the dividend or other distribution C would have received had C held the dispossessed securities throughout the dispossession period. Equity securities are not to be treated as being of the same class unless they are so treated by the practice of the recognised stock exchange, other public market or exchange they are listed or traded on.

For the purposes of section 147(1) of TIOPA 2010 (basic pre-condition), where the affected persons are— the participation condition in section 148 of that Act is treated as met. An affected person (“A”) has a sufficient connection to the QAHC if— In this paragraph, and in paragraph 41, “affected person” is to be construed in accordance with Part 4 of that Act.

Sub-paragraph (2) applies where— For the purposes of Part 10 of TIOPA 2010, paragraph 42 and this paragraph— Sub-paragraph (4) applies where— For the purposes of Part 10 of TIOPA 2010, paragraph 42 and this paragraph, N, and any consolidated subsidiary of N—

Sub-paragraph (2) applies if— The unrelieved amount is carried forward to the later period and relief for the RP developer is given in accordance with sub-paragraph (3). The relief is to be given effect in the later period in accordance with section 38 as “allowable RPDT loss relief”. But sub-paragraph (3) is subject to sub-paragraphs (5) and (6) and section 42. Sub-paragraph (6) applies in relation to any amount of the unrelieved amount that is greater than the maximum deduction for the later period permitted by section 42 (“the excess amount”). The excess amount is carried forward to the accounting period after the later period (“the further period”) instead of being given effect in the later period (see paragraph 3).

In section 31A (conditions to be met for profits to be calculated on cash basis), in subsection (5)(a), omit “the basis period for”.

Chapter 15 of Part 2 of ITTOIA 2005 (basis periods) applies as if sections 208 to 210 of that Act (rules where first accounting date shortly before end of tax year) were disregarded. Accordingly, the basis period for the tax year 2023-24, determined in accordance with section 199 of ITTOIA 2005, ends with 5 April 2024.

In calculating profits or losses for corporation tax purposes, no deduction is allowed in respect of RPDT.

Chapters 1 and 3 to 6 (read in accordance with Chapters 2 and 8) of Part 4 of TIOPA 2010 apply to provision made or imposed as between an RP developer and a relevant company by means of a transaction or series of transactions that— A company is a relevant company if it and the RP developer are under the same control at the time when the provision was made or imposed.

Sub-paragraph (2) applies in relation to a person (“A”) if the person is liable to pay— In this Schedule penalties by virtue of which sub-paragraph (2) applies in relation to a person are called “the original penalties”. A is liable to a further penalty if— Penalties are within this paragraph if they are incurred under— Penalties are within this paragraph if they are incurred under any of the following— For the purposes of this paragraph, a person is liable to pay a penalty within sub-paragraph (3) or (4) from the time at which— regardless of any outstanding appeal relating to the original penalty. In this paragraph, a “non-resident promoter” is a person who carries on a business as a promoter and is resident outside the United Kingdom.

A person may appeal against— An appeal under sub-paragraph (1) must be made within the period of 30 days beginning with the day on which notification of the penalty is given under paragraph 3(2). An appeal under sub-paragraph (1) is to be treated in the same way as an appeal against an assessment to the tax to which the facilitated proposal or arrangements relate (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal). Sub-paragraph (3) does not apply— On an appeal under sub-paragraph (1)(a) that is notified to the tribunal, the tribunal may affirm or cancel the authorised officer’s decision. On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the tribunal may—

A is liable to a further penalty under paragraph 1(2) only where the original penalties imposed on A relate only to activities carried out after this Schedule comes into force.

A person who makes an electronic sales suppression tool (including modifying a tool that is not an electronic sales suppression tool so that it becomes an electronic sales suppression tool) is liable to a penalty.

The amount of a penalty to which a person is liable under paragraph 2, 3 or 4 is such amount, not exceeding £50,000, as an authorised HMRC officer considers appropriate. In determining the amount of a penalty under paragraph 2, 3 or 4, the officer— “Authorised HMRC officer” means an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for Her Majesty’s Revenue and Customs for the purposes of this paragraph.

If HMRC think it right because of special circumstances, they may reduce an electronic sales suppression penalty. In sub-paragraph (1), “special circumstances” does not include ability to pay. In sub-paragraph (1), the reference to reducing a penalty includes a reference to—

An electronic sales suppression penalty must be paid— An electronic sales suppression penalty is recoverable as a debt due to the Crown.

In this Schedule—

For the purposes of this Part, an amount brought into account by a company or partnership for the purposes of a relevant tax is an “uncertain amount” if either or both of sub-paragraphs (2) and (3) apply in relation to the amount. This sub-paragraph applies if provision has been recognised in the accounts of the company or partnership to reflect the probability that a different tax treatment will be applied to a transaction to which the amount relates. This sub-paragraph applies if the tax treatment applied in arriving at the amount relies (wholly or in part) on an interpretation or application of the law that is not in accordance with the way in which it is known that HMRC would interpret or apply the law. For the purposes of sub-paragraph (3), HMRC’s position on a matter is taken to be “known” by a company or partnership if it is apparent from—

For the purposes of this Part, a company or partnership obtains a tax advantage in relation to VAT if— In sub-paragraph (1)(d) “non-deductible tax”, in relation to a company or partnership, means— For the purposes of sub-paragraph (2)(b), the VAT “incurred” by a company or partnership is— Terms used in this paragraph which are defined in section 96 of VATA 1994 have the meanings given by that section.

For the purposes of the threshold test in paragraph 11(2), the “relevant period” in relation to an uncertain amount included in a relevant return is— In sub-paragraph (1)(d), “prescribed accounting period” has the meaning given by section 25(1) of VATA 1994.

A company is not required by paragraph 8(2) to notify HMRC about an uncertain amount included in a relevant return if—

Section 31B (relevant maximum for purposes of section 31A) is amended as follows. In subsection (6), for “where the basis period for a tax year is less than 12 months” substitute “where the trade, profession or vocation is carried on for only part of a tax year”. In subsection (7), in the definition of “universal credit claimant”, omit “the basis period for”.

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Section 31E (calculation of profits on cash basis) is amended as follows. In subsection (2), in each of Steps 1 and 2, omit “the basis period for”. At the end insert—

In section 531 (conditions as to balance of business)— In consequence of the amendments made by sub-paragraph (1), in the Real Estate Investment Trusts (Financial Statements of Group Real Estate Investment Trusts) Regulations 2006 (S.I. 2006/2865), omit regulation 7.

Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows. In paragraph 1 (meaning of “tax”)— After paragraph 7 insert— Any amount of residential property developer tax chargeable by virtue of section 33 of the Finance Act 2022.

A person is liable to a penalty for each occasion on which the person promotes the use of a tool to suppress a relevant electronic sales record (whether or not the suppression of relevant electronic sales records is the main function, or one of the main functions, of the tool). A person promotes the use of a tool to suppress a relevant electronic sales record if the person communicates information about the tool to another person with a view to that other person, or any other person, using the tool to suppress a relevant electronic sales record.

This paragraph applies if— P is liable to a further penalty of an amount not exceeding £75 for each subsequent day on which P continues to be in possession of, or otherwise have access to, the tool. The total amount of the penalties to which a person may be liable under this paragraph may not exceed £50,000.

Chapters 3 to 3B of Part 10 of CTA 2010 (charge to tax in case of loan to participator etc) apply to a QAHC that is not a close company as if the QAHC were a close company.

Sub-paragraph (2) applies where— For the purposes of Part 10 of TIOPA 2010 (corporate interest restriction), this paragraph and paragraph 43— For the purposes of this paragraph and paragraph 43, a QAHC holds an interest in an entity as “a market value investment” if— Expressions used in this paragraph or in paragraph 43 that are defined for the purposes of Part 10 of TIOPA 2010 have the same meaning they have in that Part. In this paragraph, and in paragraph 43, “subsidiary” has the meaning given by international accounting standards (but see section 494 of TIOPA 2010 for the definition of “wholly-owned subsidiary”).

For the purposes of subsection (2) of section 259CB of TIOPA 2010 (hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), so far as the excess referred to in that subsection arises by reason of a qualified distribution, it is to be taken not to arise by reason of the terms, or any other feature, of the security in respect of which the qualified distribution is made (whether or not it would have arisen by reason of the terms, or any other feature, of the security regardless). For the purposes of subsection (7) of section 259CB of TIOPA 2010 (hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), so far as an amount of ordinary income is under taxed by reason of a qualified distribution, it is to be taken not to be under taxed by reason of the terms, or any other feature, of the security in respect of which the qualified distribution is made (even if it would have been under taxed for another reason regardless of the terms, or any other feature, of the security). That section has effect as if in subsections (4) and (8) after “(9)” there were inserted “and paragraph 45(1) and (2) of Schedule 2 to FA 2022”. Where a QAHC is obliged to make a qualified distribution as a result of a payment to it, so much of that payment as gives rise to the obligation is to be treated as ordinary income of the QAHC for the purposes of Chapter 3 of Part 6A of TIOPA 2010 (hybrid and other mismatches from financial instruments). In this paragraph—

Where a QAHC has breached the ownership condition and a cure period applies to the breach, paragraph 47(1) does not apply to payments made to a person who is not a category A investor if— Where — sub-paragraph (1) continues to apply to payments made before the QAHC met the ownership condition (despite the fact the breach is treated as not having occurred for the purposes of that Part).

Section 409(2) of CTA 2009 (postponement until redemption of debits for close companies’ deeply discounted securities) does not apply to a qualifying debit. For the purposes of this paragraph, a debit is “qualifying” if— Where a QAHC is party to a deeply discounted security partly for the purposes of its QAHC ring fence business and partly for another purpose, sub-paragraph (1) applies only to the proportion of the qualifying debit that is attributable to the QAHC ring fence business (apportioned on a just and reasonable basis). In this paragraph—

In this Schedule— References in this Schedule to “investment management services” are to be construed in accordance with the definition of that term in section 809EZE of ITA 2007 as if— In this Schedule, apart from in paragraphs 42 and 43 (worldwide groups), references to a company being a member of a group of companies are to be read in accordance with section 170 of TCGA 1992 (interpretation of sections 171 to 181 of that Act: groups).

In the Taxes (Amendments) (EU Exit) Regulations 2019, omit regulation 17(2), (3) and (4).

The Income Tax (Deposit-takers and Building Societies) (Interest Payments) Regulations 2008 (S.I. 2008/2682) are amended in accordance with sub-paragraphs (2) to (4). In regulation 2 (interpretation)— In regulation 4A (dormant accounts - postponement of obligation to deduct sum representing income tax)— In regulation 4B, in both places it occurs for “account” substitute “asset”.

This Schedule comes into force on such day as the Treasury may by regulations appoint.

Sub-paragraph (2) applies if the basis period for the tax year 2023-24 (determined in accordance with paragraph 65(1)(a)), is longer than 12 months. For the purposes of section 31B of ITTOIA 2005 (relevant maximum for purposes of cash basis election), the amounts specified in subsections (3), (4) and (5) of that section, and the VAT threshold (within the meaning given by subsection (7) of that section), are proportionately increased.

Sub-paragraph (2) applies if there is no transition part of the basis period for the tax year 2023-24 (because the standard part ends on or after 31 March 2024 and there is no election under paragraph 67(3)). In calculating the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005, make any deduction for overlap profit allowed under this Part of this Schedule (see paragraph 68).

This paragraph applies if the trader has transition profits for the tax year 2023-24 (see Step 5 of the calculation in paragraph 70(2)). The amount of the transition profits is spread over five tax years as follows. In each of the four tax years beginning with the tax year 2023-24, an amount equal to 20% of the amount of the transition profits is treated as arising and chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005. In the fifth tax year, the balance of the amount of the transition profits is treated as arising and chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005. Sub-paragraph (6) applies if, before the whole of the amount of the transition profits has been charged to income tax, the trader permanently ceases to carry on the trade. The balance of the amount of the transition profits is treated as arising, and chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005, for the tax year in which the trader permanently ceases to carry on the trade.

This paragraph applies for determining the trader’s liability to income tax for a tax year in which an amount of the transition profits for the tax year 2023-24 is chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005 (see Step 5 of the calculation in paragraph 70(2) and paragraphs 72 and 73). To find the trader’s liability to income tax for the tax year, section 23 of ITA 2007 applies as if— The amount given by this sub-paragraph is the difference between— The Steps mentioned in sub-paragraphs (2) and (3) are Steps of the calculation in section 23 of ITA 2007.

The basis period for the partner’s notional business for the tax year 2023-24 is the same as the basis period for the partner’s notional trade for that tax year given by paragraph 65(1)(a) of this Schedule.

The ownership condition is met in relation to a company if— A person has a relevant interest in a company if, as a result of a direct or indirect interest the person has in the company, the person— and the amount of that relevant interest, for the purposes of the calculation in sub-paragraph (1)(a), is the greatest of such of those proportions as arise as a result of that interest. A person has a relevant interest in an enhanced class of a company if, as a result of a direct or indirect interest the person has in the company, the person— and the amount of that relevant interest, for the purposes of the calculation in sub-paragraph (1)(b), is the greatest of such of those proportions as arise as a result of that interest. Paragraphs 4 to 7 set out how to determine the amounts of relevant interests. Those amounts are to be expressed as percentages, but there is no need to adjust any of those amounts if the application of the rules in those paragraphs has the result that the total amount of relevant interests in a company or an enhanced class of a company is more than 100% (as may sometimes be the case). See also paragraph 59, which makes provision for parties to alternative finance arrangements who are equivalent to equity holders to be treated as such. In this paragraph—

The normal rule is that transparent entities do not have relevant interests in a company or in an enhanced class of a company (in their own right). But where a beneficial entitlement to profits or assets of a company, or of an enhanced class of the company, arises as a result of a person’s participation in a transparent qualifying fund— And references to a person in this paragraph, and in paragraphs 3 to 5, are to be treated as including any such fund that is not a person. Where securities of a company held through a transparent qualifying fund confer voting power in that company, that voting power is to be treated as power of the fund. Sub-paragraphs (5) and (6) apply when making a determination in relation to the relevant interests in a company or in an enhanced class of a company of— unless the partnership or trust constitutes a transparent qualifying fund. Where— those profits or gains are to be ignored in making any determination of any person’s relevant interest in a company or in an enhanced class of a company to the extent the entitlement is related to those arrangements. Where securities of a company held through such a partnership or trust confer voting power in that company, that power is to be treated as the power of the partners, or (as the case may be) the beneficiaries, divided between them in the same proportions as they would be entitled to profits arising from those securities. In this paragraph—

In this Schedule “qualifying fund” means a fund that meets the diversity of ownership condition. The diversity of ownership condition is met if— For the purpose of applying the conditions referred to in sub-paragraph (2)(a)(i) and (ii)— Sub-paragraph (3)(b) does not apply if— To determine if a fund is close— In making a determination under sub-paragraph (5)(b), neither a manager of a fund nor a general partner in a limited partnership that is a collective investment scheme , or is an AIF that is not a collective investment scheme only by reason of it being a body corporate, is to be regarded as having control of that fund or scheme unless that manager or partner would be treated as having control of it as result of satisfying a condition in section 450(3)(b) to (d) of CTA 2010 (whether alone or with other persons). A fund is 70% controlled by category A investors if a category A investor, or more than one category A investor between them, directly or indirectly possesses— For the purposes of sub-paragraph (7)— For the purposes of sub-paragraphs (5)(a)(i) and (ii) (as they apply by virtue of sub-paragraph (5)(b)) and (8)(c), references to a creditor of a fund are to be treated, in the case of a fund that is a partnership, as not including any creditor who is a partner of that fund. In this paragraph—

A QAHC must take reasonable steps to monitor whether the ownership condition is met in relation to it.

A company becomes a QAHC at the beginning of the first day on which all of the relevant conditions are met. The “relevant conditions” are—

Paragraph 17(2) does not apply to assets held by a company that was previously resident in a territory outside the United Kingdom and became UK resident within the 30 days before it became a QAHC if those assets were held immediately before it became UK resident.

In determining the profits of a QAHC ring fence business, Part 7ZA of CTA 2010 (restrictions on obtaining certain deductions) is to be ignored.

A company that is, or has been, a QAHC must send a return to HMRC in relation to each accounting period for which it is a QAHC containing the following information (whether or not that information is included in its company tax return)— Where investment management services are provided to the QAHC by a partnership, the reference in sub-paragraph (1)(b) to a person providing investment management services is to the partnership and not to any partner who may be providing those services in the course of the partnership’s business. The Treasury may by regulations amend sub-paragraph (1) so as to add to, vary or omit items in the list of information to be contained in a return under this paragraph. A return under this paragraph must be provided before the end of the filing date for the company tax return for the accounting period to which the return relates. Where a QAHC fails to provide a return under this paragraph by that time, the QAHC is liable to a penalty of £300. Paragraphs 18 to 23 of Schedule 55 to FA 2009 (penalty for failure to make returns etc) apply to a penalty under sub-paragraph (5) as they apply to a penalty under a paragraph of that Schedule as if—

A relevant distribution out of assets of a QAHC in respect of a security of the QAHC is not to be treated as a distribution for the purposes of the Corporation Tax Acts if the QAHC is party to the security for the purposes of its QAHC ring fence business. Accordingly, among other things, section 465 of CTA 2009 (exclusion of distributions from being taken into account for the purposes of Part 5 of that Act) does not apply to a relevant distribution. A “relevant distribution” is any interest or distribution in respect of a security of a QAHC if it would, ignoring this paragraph, be a distribution for the purposes of the Corporation Tax Acts only as a result of the security being a relevant security. In sub-paragraph (3) “relevant security” means a security that— Where a QAHC is party to a security partly for the purposes of its QAHC ring fence business and partly for another purpose, only the proportion of a relevant distribution in respect of that security that is attributable to the QAHC ring fence business (apportioned on a just and reasonable basis) is not to be treated as a distribution for the purposes of the Corporation Tax Acts.

A payment made by a QAHC on the redemption, repayment or purchase of its own shares is not a distribution for the purposes of the Corporation Tax Acts. But sub-paragraph (1) does not apply to payments in relation to qualifying employment-related securities. “Qualifying employment-related securities” means employment-related securities acquired by a person, other than a fund manager in relation to the QAHC, where the right or opportunity to acquire the securities or interest is available by reason of an employment of that person or any other person by— To determine for the purposes of sub-paragraph (3)(b) whether a QAHC has at least a 25% interest in a company, apply the rules for determining whether a company is a 75% subsidiary of another company for the purposes of Part 5 of CTA 2010 (see section 151 and Chapter 3 of Part 24 of that Act) as if references to “75%” were to “25%”. In this paragraph—

Section 373(1) of CTA 2009 (late interest treated as not accruing until paid in some cases) does not apply to a qualifying debit. For the purpose of this paragraph, a debit is “qualifying” if— Where a QAHC is party to a debtor relationship partly for the purposes of its QAHC ring fence business and partly for another purpose, sub-paragraph (1) applies only to the proportion of the qualifying debit that is attributable to the QAHC ring fence business (apportioned on a just and reasonable basis). In this paragraph “debit” and “debtor relationship” are to be construed in accordance with Part 5 of CTA 2009.

For the purposes of this Schedule, a business is a “public interest business” if it is— Regulations may only specify a description of business if a special administration regime exists for persons carrying on businesses of that description. For the purposes of this Schedule a business is subject to special measures if— In this paragraph—

This paragraph applies to a person (“R”) and any person connected to R if— This paragraph also applies to a person (“S”) and any person connected to S if— This paragraph does not apply to a person if the person is liable to tax as a result of paragraph 4 in relation to the same asset. A person to whom this paragraph applies is, together with the principal taxpayer, jointly and severally liable to public interest business protection tax. But the liability of a person liable to tax as a result of this paragraph is limited to— References in this paragraph to the receipt of the proceeds of consideration do not include the receipt of any amount pursuant to a loan if—

A notice under paragraph 9(1) may not be given after the end of the period of 3 years beginning with the latest date provided for by whichever of sub-paragraphs (2), (3) and (4) apply. Where the liability of the principal taxpayer is determined under paragraph 12(1) (HMRC to determine tax where no return made in time), the date provided for by this sub-paragraph is the date on which the determination was made. Where a return has been made by the principal taxpayer, including where the return supersedes a determination under paragraph 12(1), the date provided for by this sub-paragraph is the latest of— Where a discovery assessment (see paragraph 18) is made in relation to the liability of the principal taxpayer, the date provided for by this sub-paragraph is— A self-assessment may not be made and delivered under paragraph 9 after the later of the end of the period of—

An officer of Revenue and Customs may enquire into a return under paragraph 8 or 9 if the officer gives notice that the officer intends to do so (a “notice of enquiry”) to the person whose return it is (“the taxpayer”). The normal rule is that a notice of enquiry may only be given up to the end of the period of twelve months after the day on which the return was delivered. But if the taxpayer has amended the return under paragraph 11(1), a notice of enquiry may be given up to the end of the period of twelve months after the amendment was made. A return which has been the subject of one notice of enquiry may not be the subject of another. An enquiry extends to anything contained in the return, or required to be contained in the return, subject to the following limitations. Where a notice of enquiry is given as a result of an amendment of the return under paragraph 11(1) and that notice is given— the enquiry into the return is limited to matters to which the amendment relates or which are affected by the amendment.

This paragraph applies where an enquiry into a return is in progress in relation to any matter. If the officer forms the opinion— the officer may by notice to the taxpayer amend the self-assessment to make good the deficiency so far as it relates to the matter. In the case of an enquiry which, as a result of paragraph 13(6), is limited to matters arising from an amendment of the return, sub-paragraph (2) only applies so far as the deficiency is attributable to the amendment.

Notice of an assessment to tax on a person must be served on the person stating— After that notice has been served on the person, the assessment may not be altered except in accordance with any express provision of this Schedule or of any provision of the Taxes Acts that applies to public interest business protection tax.

A person liable to tax must— The records must be preserved until the end of the relevant day. In this paragraph “relevant day” means– The Commissioners for Her Majesty’s Revenue and Customs may by regulations— Regulations under this paragraph may— The duty under this paragraph to preserve records may be discharged— subject to any conditions or exceptions specified in writing by the Commissioners for Her Majesty’s Revenue and Customs. A person who fails to comply with this paragraph is liable to a penalty not exceeding £3,000. But no penalty is incurred if the records which the person fails to keep or preserve are records which might have been needed only for the purposes of a claim under this Schedule. Sections 100 to 103 of TMA 1970 apply to a penalty under this paragraph as they apply to a penalty under a provision of the Taxes Acts to which those sections apply.

A claim under paragraph 7 or 24 (for relief from, or repayment or discharge of, tax) must be for an amount which is quantified at the time when the claim is made. A claim must be made within 4 years from the day on which the person whose claim it is became liable to the tax to which the claim relates. A person who has made a claim under this Schedule and subsequently discovers that a mistake has been made in it may make a supplementary claim within the time allowed for making the original claim. Paragraphs 2 and 2A of Schedule 1A to TMA 1970 (making of claims and keeping and preserving of records) apply to a claim under paragraph 7 of this Schedule but as if in paragraph 2A of that Schedule— Schedule 1A to TMA 1970 (claims etc not included in returns) applies to a claim under paragraph 24 of this Schedule but as if in paragraph 2A(1) of that Schedule “in relation to a year of assessment or other period” were omitted.

1B Public interest business protection tax Amount payable under paragraph 8(6) of Schedule 10 to FA 2022 The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid 1C Public interest business protection tax Amount payable under paragraph 9(7) of Schedule 10 to FA 2022 The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid 1D Public interest business protection tax Amount payable under paragraph 12(8) of Schedule 10 to FA 2022 The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid

Section 115 of TMA 1970 applies to documents to be given, sent, served or delivered under provision made by or under this Schedule as it applies to documents to be given, sent, served or delivered under the Taxes Acts. The Income and Corporation Taxes (Electronic Communications) Regulations 2003 (S.I. 2003/282) have effect as if, in regulation 2(1)(a)—

A person is chargeable to public interest business protection tax (whether under paragraph 1, 4 or 5) whether or not the person is resident in the United Kingdom.

In calculating profits, losses or gains for income tax, capitals gains tax or corporation tax purposes, no deduction is allowed in respect of public interest business protection tax.

For purposes in connection with the administration of public interest business protection tax, the Treasury may by regulations make provision about the application of relevant tax legislation to public interest business protection tax (including provision disapplying or modifying such legislation or applying legislation that would not otherwise apply). Relevant tax legislation means any provision made by or under—

This Schedule has effect in relation to the taking of disqualifying steps (whenever taken) in disqualifying circumstances where the public interest business in question becomes subject to special measures— The Treasury may, for the date for the time being specified in sub-paragraph (1)(b), by regulations substitute such later date before 29 January 2025 as may be specified in the regulations. The power in sub-paragraph (2)—

In section 50 (time of importation)— In section 84 (regulations), in subsection (5), after paragraph (b) insert—.

Section 71 (groups of companies) is amended in accordance with sub-paragraphs (2) to (4). In subsection (1), in the words after paragraph (b), after “is” insert “treated as”. In subsection (2)— after subsection (3) insert— In Schedule 13 (groups of companies)—

This paragraph defines “electronic sales suppression tool” and related terms for the purposes of this Schedule. An “electronic sales suppression tool” is a tool which meets both of the following conditions— A “relevant electronic sales record” is a record which— An “electronic point of sale system” is any tool or combination of tools used to record information in electronic form about transactions involving the sale of goods or services. A relevant electronic sales record is suppressed if any information it comprises or includes is dealt with in such a way (whether by being falsified, manipulated, hidden, obfuscated, destroyed or prevented from being created) as to fail to record a matter accurately. References in this Schedule to a “tool” include a physical device, software, computer code or other data in digital form (wherever held), or any other thing. An “electronic sales suppression penalty” is a penalty under this Schedule.

TMA 1970 is amended as follows.

In section 8 (personal return), in subsection (1C), omit “or its basis period”.

In Schedule A1 (as inserted by section 60(3) of F(No.2)A 2017), in paragraph 8 (end of period statement)—

Section 17 (effect of becoming or ceasing to be a UK resident) is amended as follows. In subsection (1), for “otherwise than in partnership” substitute “(alone or in partnership)”. Omit subsection (5).

Section 786 (meaning of “rent-a-room receipts”) is amended as follows. In subsection (1)(b), for “subsections (3) and (4)” substitute “subsection (4)”. Omit subsection (3). In subsection (4), in the words before paragraph (a), omit “Otherwise”.

Part 2 of Schedule 4 (index of defined expressions) is amended as follows—

This Part of this Schedule applies in relation to a person (“the trader”) who— This Part of this Schedule applies to professions and vocations as it applies to trades.

This paragraph applies if— ends with 31 March or 1, 2, 3 or 4 April 2024 (“the late accounting date”). For the purposes of Chapter 2 of Part 2 of ITTOIA 2005— The trader may, on or before the first anniversary of the normal self-assessment filing date for the tax year 2023-24, elect for sub-paragraph (2) not to apply. If an election under sub-paragraph (3) has effect—

Sub-paragraph (2) applies if there is a transition part of the basis period for the tax year 2023-24 (see paragraphs 65(3) and 67(4)(a)). In calculating the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005, take the following Steps. Step 1 Determine the amount of the profits of the tax year 2023-24 attributable to the standard part of the basis period for that tax year. To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the standard part of the basis period for that tax year. Step 2 Determine the amount of the profits of the tax year 2023-24 attributable to the transition part of the basis period for that tax year. To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the transition part of the basis period for that tax year. Step 3 Deduct from the amount given by Step 2 the amount of any deduction for overlap profit allowed under this Part of this Schedule (see paragraph 68). Step 4 Calculate the sum of the amounts given by Steps 1 and 3. If the amount given by either or both of— Step 3, and this Step, is nil, or less than nil, the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is the amount given by this Step (and see paragraph 71 for the treatment of a loss, or an increased loss, for the tax year 2023-24 arising from this Step). Otherwise, proceed to Steps 5 and 6. Step 5 For the purposes of Step 6, and paragraphs 72 to 75, the amount of the trader’s “transition profits” for the tax year 2023-24 is the lesser of— the amount given by Step 3, and the amount given by Step 4. Step 6 The amount of the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is— if the amount given by Step 1 is nil, or less than nil, such amount of the transition profits for the tax year 2023-24 as is treated (in accordance with paragraphs 72 and 73) as arising in that tax year; if the amount given by Step 1 is more than nil, the sum of that amount and such amount of the transition profits for the tax year 2023-24 as is treated (in accordance with paragraphs 72 and 73) as arising in that tax year.

If the trader is liable to a charge to income tax for a tax year on an amount of the transition profits for the tax year 2023-24 (see Step 5 of the calculation in paragraph 70(2) and paragraph 72), the trader may elect for an additional amount of those profits to be treated as arising in the tax year. The election must be made on or before the first anniversary of the normal self-assessment filing date for the tax year to which it relates. The election must specify the amount of the transition profits to be treated as arising in the tax year (which may be any amount of those profits not previously charged to tax). If an election is made, paragraph 72 applies in relation to any subsequent tax year as if the amount of the transition profits (as reduced by any previous application of this paragraph) were reduced by the amount given by the following formula— where— A is the additional amount of the transition profits treated as arising in the tax year for which the election is made; T is the number of tax years remaining after that tax year in the period of five tax years referred to in paragraph 72.

For the purposes of this Part of this Schedule, the following provisions apply subject to the following modifications. Section 24A of ITA 2007 (limit on deductions at Step 2 of the calculation in section 23) applies as if, in subsection (7)(c), the reference to a deduction allowed under section 205 or 220 of ITTOIA 2005 includes a deduction made under paragraph 69(2), or Step 3 of the calculation in paragraph 70(2), of this Schedule. Section 24 of TIOPA 2010 (claw-back of relief under section 22(2)) applies as if, in subsections (1)(b) and (3), references to an amount deducted under section 205 or 220 of ITTOIA 2005 included an amount deducted under paragraph 69(2), or Step 3 of the calculation in paragraph 70(2), of this Schedule.

“Partnership” means a partnership (wherever formed) or a limited liability partnership incorporated in the United Kingdom that is carrying on a trade, business or profession with a view to profit. A partnership is not a partnership for the purposes of this Schedule if it is— A partnership is a “qualifying partnership” in any financial year if, in the previous financial year, the partnership had either or both of the following— The Treasury may by regulations provide that a partnership of a description specified in the regulations is not a qualifying partnership for the purposes of this Schedule (or any such purpose specified in the regulations).

“Turnover”— “UK turnover”— “Balance sheet total”, in relation to a company or partnership and a financial year, means the aggregate of the amounts shown as assets in its balance sheet at the end of the financial year. “UK balance sheet total”— In this paragraph— For the purposes of this paragraph—

A company or partnership that is required by paragraph 8(2)(a) to give a notification to HMRC is liable to a penalty if it fails to give the notification in accordance with that paragraph. The amount of the penalty under sub-paragraph (1) is— A company or partnership that is required by paragraph 8(2)(b) to give a notification to HMRC is liable to a penalty if it fails to give the notification in accordance with that paragraph. The amount of the penalty under sub-paragraph (3) is £5,000.

Where a person becomes liable to a penalty under paragraph 20— An assessment of a penalty under paragraph 20 may not be made—

If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations substitute for the sum for the time being specified in any of the following provisions such other sum as appears to them to be justified by the change— In sub-paragraph (1) “relevant date” means— Regulations under this paragraph do not apply to a failure that occurs in respect of a relevant return that is required to be made before the date on which the regulations come into force.

Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Schedule as they apply for the purposes of the Taxes Acts—

In section 47 (business gifts: exceptions), in subsection (3)(b), for “basis period” substitute “tax year”.

Section 805 (meaning of “qualifying care receipts”) is amended as follows. In subsection (1)(b), for “subsections (2) and (3)” substitute “subsection (3)”. Omit subsection (2). In subsection (3), omit “Otherwise”.

In section 133 (meaning of “relevant period” for purposes of Chapter 9), in paragraph (b) omit “the basis period for”.

Omit section 828 (overlap profit).

Section 154A (certain non-UK residents with interest on 3.5% War Loan 1952 Or After) is amended as follows. In subsection (3)— In subsection (4)— In subsection (5), for “basis period” substitute “tax year”.

Section 225ZD (compensation for compulsory slaughter of animals: effect of claim for spreading profits) is amended as follows. In subsection (1), in each of Steps 2 and 3, for “whose basis period”, in each place those words occur, substitute “which”. Omit subsection (2).

In section 240B (“entering the cash basis”), in paragraph (b), omit “the basis period for”.

In section 240C (unrelieved qualifying expenditure: Parts 2, 7 and 8 of CAA 2001), in subsection (1)(b)—

In section 240D (assets not fully paid for), in subsection (1)(b), omit “the basis period for”.

In section 240E (effect of election where predecessor and successor are connected persons), in subsection (1)(c), omit “the basis period for”.

In section 246 (basic meaning of “post-cessation receipt”), in subsection (3)—

CAA 2001 is amended as follows.

This paragraph makes provision about the making of a notification to HMRC by a company that intends to be a QAHC (an “entry notification”). An entry notification must— The date specified may be no earlier than the later of— Where an entry notification is made by a company that, at the time of making it, is resident in a territory outside the United Kingdom, the notification must also— Where a company makes the declaration mentioned in sub-paragraph (2)(c)(ii) in an entry notification, the notification must also include a declaration that the company reasonably expects the ownership condition to be met within 2 years of becoming a QAHC. An entry notification comes into force in relation to the company at the beginning of the date specified in accordance with sub-paragraph (2)(b) and continues in force until an exit notification under paragraph 25 comes into force. Where a company has ceased to be a QAHC, a new entry notification must be made for it to become a QAHC again, other than as a result of paragraph 27(2) (retrospective curing of non-deliberate breach of the activity condition).

For the purposes of corporation tax, when a company becomes a QAHC— The following are to be treated, for the purposes of corporation tax, as sold by a company immediately before becoming a QAHC and reacquired immediately after so becoming— The sale and reacquisition deemed under sub-paragraph (2) is to be treated as being for a consideration equal to the market value of the assets. Where— any gain accruing to C on the deemed sale of the shares is not a chargeable gain. But for the purposes of sub-paragraph (4)(f), Schedule 7AC to TCGA 1992 has effect as if— Paragraph 11 of Schedule 7AC to TCGA 1992 (effect of deemed disposal and reacquisition) has effect as if any reference to a “deemed disposal and reacquisition” did not include a deemed sale and reacquisition under sub-paragraph (2) of this paragraph.

For the purposes of this Schedule “QAHC ring fence business” in relation to a QAHC means the business of carrying out its main activity (see paragraph 13(1)(a)) in relation to— A QAHC ring fence business of a QAHC is to be treated for corporation tax purposes as separate and distinct from— For the purposes of calculating the amount of corporation tax payable by a QAHC, the QAHC’s ring fence business is to be treated as a separate company distinct from the QAHC carrying on any other activity (including any activity carried on before or after it is a QAHC). Accordingly— But despite sub-paragraph (3) a QAHC is to provide a single company tax return relating to its QAHC ring fence business and any other activities carried on while it is a QAHC. Where any asset, receipt (including any credit), loss or gain relates to both the QAHC ring fence business and to the other activities of the QAHC (whether they are carried on while it is a QAHC or not) that asset, receipt, loss or gain is to be apportioned (on a just and reasonable basis) between the QAHC ring fence business and the other activities of the QAHC. In sub-paragraphs (4) and (6) references to a loss include references to a deficit, expense, charge or allowance. Losses or other amounts surrendered under Part 5 or 5A of CTA 10 (group relief)— Where a company and a QAHC have, in accordance with section 171A(4) of TCGA 1992, elected to transfer a chargeable gain or an allowable loss to the QAHC, that gain or loss arises outside its QAHC ring fence business. A distribution received by a QAHC that, as a result of Chapter 6 of Part 12 of CTA 2010 (Real Estate Investment Trusts), is treated as profits of a UK property business is received outside its QAHC ring fence business. In this paragraph “creditor relationship” has the meaning it has in Part 5 of CTA 2009 (see section 302 of that Act).

Where— the relevant gain is to be reduced (on a just and reasonable basis and not to below nil) by an amount reflecting the amount of the taxed gain.

A QAHC must notify HMRC if a relevant condition ceases to be met in relation to it as soon as reasonably practicable after becoming aware of the breach of the condition. In sub-paragraph (1) “relevant condition” means any of the conditions in paragraph 2(1), other than the condition in paragraph 2(1)(g) (requirement for entry notification to be in force). A notification under sub-paragraph (1) must set out—

A QAHC ceases to be a QAHC as a result of ceasing to meet any of the conditions mentioned in paragraph 2. The general rule is that a breach of a condition will cause a QAHC to cease to be a QAHC immediately after the condition ceases to be met. But sub-paragraphs (3) to (7) contain different rules in relation to certain types of breach. A breach of the activity condition causes a QAHC to cease to be a QAHC immediately after the time at which the QAHC becomes aware of the breach (but see paragraph 27(1) and (2) which may allow a breach to be retrospectively cured). A breach of the ownership condition to which a cure period applies will cause a QAHC to cease to be a QAHC at the end of the last day of that period (if the breach was not cured during the period). But where a breach of the ownership condition was subject to a cure period and the cure period ceases to apply as a result of paragraph (a) of paragraph 27(3) (sum of relevant interests held by persons other than category A investors exceeds 50%) no longer being satisfied, the QAHC ceases to be a QAHC immediately after the time at which that paragraph ceases to be satisfied. A breach of the ownership condition to which a wind-down period applies will cause a QAHC to cease to be a QAHC at the end of the last day of that period. But where a wind-down period ceases to apply to a breach of the ownership condition as a result of paragraph 28(4) (no acquisition of assets or raising of capital during wind-down), the QAHC ceases to be a QAHC immediately after the time at which the wind-down period ceases to apply.

Where— any payment of that interest made on the same day as the company ceased to be a QAHC after it ceased being a QAHC is to be treated as a payment of interest by a QAHC.

No liability to corporation tax arises in respect of QAHC overseas property profits to the extent those profits are taxable in a foreign jurisdiction. “QAHC overseas property profits” means any profits that would, ignoring this paragraph, be chargeable to tax under Chapter 3 of Part 4 of CTA 2009 (profits of property businesses) as profits of an overseas property business of a QAHC. Profits are taxable in a foreign jurisdiction if they are chargeable to tax (and are neither subject to any exemption or relief from tax nor chargeable at a nil rate) under the law of a territory outside the United Kingdom so far as that tax— No liability to corporation tax arises in respect of profits that arise from loan relationships and derivative contracts that a QAHC is party to for the purposes of an overseas property business of that QAHC to the extent (apportioned on a just and reasonable basis) those profits relate to profits that are exempt from corporation tax as a result of sub-paragraph (1). Where a QAHC is party to a loan relationship or a derivative contract partly for the purposes of an overseas property business and partly for another purpose, sub-paragraph (4) only applies to the proportion of profits arising from that relationship or contract that are attributable to the overseas property business (apportioned on a just and reasonable basis).

In section 212 of TCGA 1992 (annual deemed disposal of certain holdings of insurance companies), in subsection (1), at the end of paragraph (c) insert or,. In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”) omit the “and” before paragraph (i) and after that paragraph insert , and In section 465(3) of CTA 2009 (exclusion of distributions except in tax avoidance cases) omit the “and” before paragraph (d) and after that paragraph insert , and

In section 527 (being a UK REIT in relation to an accounting period)— In section 528 (conditions for company)— After section 528 insert—

other than a person to whom a payment of a distribution must be made without deduction of income tax in accordance with regulation 7 of the Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006 (S.I. 2006/2867) (gross payment of distributions).

CTA 2010 is amended as follows. Omit section 129(3). Omit sections 135 and 136 together with the heading before section 135. In section 137(1) (deduction from total profits), omit “or 135”. In section 142 (meaning of “the overlapping period”)— In section 168 (meaning of “the relevant accounting period”), omit subsections (2) and (3). In section 179(3) (cases in which surrendering or claimant company is non-UK resident), omit the words from “But” to the end. In section 188(1) (other definitions)— In section 269DB (meaning of “non-banking group relief”)— In Schedule 4 (index of defined expressions) omit the following entries—

This Part of this Schedule— The relief mentioned in sub-paragraph (1) is called “RPDT group relief for carried-forward losses”.

If a claimant company makes a claim under paragraph 16, the relief is to be given effect in accordance with section 38 as “allowable RPDT group relief for carried-forward losses”. The amount of the relief is— But this is subject to section 42 and paragraph 18. The deduction of the relief under section 38 is to be made after the deduction of any relief under Part 1 or 2 of this Schedule.

Part 14 of CTA 2010 (change in company ownership) applies, with any necessary modifications, in relation to RPDT group relief under Part 2 of this Schedule, and RPDT group relief for carried-forward losses under Part 3 of this Schedule, as it applies in relation to loss relief under Parts 5 and 5A to that Act (group reliefs).

Section 59 (unrelieved qualifying expenditure) is amended as follows. In subsection (4), for “with the basis period for the previous tax year” substitute “in the previous tax year (or, if there is more than one such period, the latest of them)”. In subsection (8)(b)—

In this Part of this Schedule, in relation to losses that a company has carried forward to an accounting period—

In section 419A (unrelieved qualifying expenditure: entry to cash basis), in subsection (1), for “with the basis period for the tax year”, in both places, substitute “in the tax year (or, if there is more than one such period, the latest of them)”.

In this Part of this Schedule, “company” means any body corporate.

In section 461A (unrelieved qualifying expenditure: entry to cash basis), in subsection (1), for “with the basis period for the previous tax year” substitute “in the previous tax year (or, if there is more than one such period, the latest of them)”.

In section 475A (unrelieved qualifying expenditure: entry to cash basis), in subsection (1), for “with the basis period for the previous tax year” substitute “in the previous tax year (or, if there is more than one such period, the latest of them)”.