Most Gracious Sovereign WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Most Gracious Sovereign
Direct taxes
Income tax: employment and pensions
Part 3 of ITEPA 2003 (employment income: earnings and benefits etc treated as earnings) is amended as follows.
In section 87 (cash equivalent of benefit of non-cash voucher)—
in subsection (2)(b), for “to the person incurring it” substitute “ , to the person incurring it, on or before 6 July following the relevant tax year ”, and
after subsection (2) insert—
In section 88(3) (time at which cheque voucher treated as handed over), at the beginning insert “ For the purposes of subsection (2) and sections 87(2B) and 87A(6), ”.
In section 94(2) (cash equivalent of benefit of credit-token), in paragraph (b), for the words from “employee” to the end substitute
In section 105(2) (cash equivalent of benefit of living accommodation costing £75,000 or less), in paragraph (b), after “made good” insert “ , on or before 6 July following the tax year which contains the taxable period, ”.
In section 106(3) (cash equivalent of benefit of living accommodation costing over £75,000), in paragraph (a), for the words from “paid” to “exceeds” substitute.
In section 144 (deduction for payments for private use of car)—
in subsection (1)(b), for “in” substitute “ on or before 6 July following ”,
in subsection (2), after “paid” insert “ as mentioned in subsection (1)(b) ”, and
in subsection (3), after “paid” insert “ as mentioned in subsection (1)(b) ”.
In section 151(2) (when cash equivalent of benefit of car fuel is nil)—
in the words before paragraph (a) omit “in the tax year in question”,
in paragraph (a), at the beginning insert “ in the tax year in question, ”, and
in paragraph (b), at the end insert “ on or before 6 July following that tax year ”.
In section 152(2) (car fuel: proportionate reduction of cash equivalent)—
in the words before paragraph (a) omit “for any part of the tax year in question”,
in paragraph (a), at the beginning insert “ for any part of the tax year in question, ”,
in paragraph (b), at the beginning insert “ for any part of the tax year in question, ”, and
in paragraph (c)—
after “employee”, in the first place it occurs, insert, and
for “and the employee does make good that expense” substitute.
In section 158 (reduction for payments for private use of van)—
in subsection (1)(b), for “in” substitute “ on or before 6 July following ”,
in subsection (2), after “paid” insert “ as mentioned in subsection (1)(b) ”, and
in subsection (3), after “paid” insert “ as mentioned in subsection (1)(b) ”.
In section 162(2) (when cash equivalent of benefit of van fuel is nil)—
in the words before paragraph (a) omit “in the tax year in question”,
in paragraph (a), at the beginning insert “ in the tax year in question, ”, and
in paragraph (b), at the end insert “ on or before 6 July following that tax year ”.
In section 163(3) (van fuel: proportionate reduction of cash equivalent)—
in the words before paragraph (a) omit “for any part of the tax year in question”,
in paragraph (a), at the beginning insert “ for any part of the tax year in question, ”,
in paragraph (b), at the beginning insert “ for any part of the tax year in question, ”, and
in paragraph (c)—
after “employee”, in the first place it occurs, insert, and
for “and the employee does make good that expense” substitute.
In section 203(2) (cash equivalent of benefit treated as earnings), for “to the persons providing the benefit” substitute “ , to the persons providing the benefit, on or before 6 July following the tax year in which it is provided ”.
The amendments made by this section have effect for the purpose of calculating income tax charged for the tax year 2017-18 or any subsequent tax year.
ITEPA 2003 is amended as follows.
In section 139 (car with a CO 2 emissions figure: the appropriate percentage), for subsections (1) to (6) substitute—
In section 140 (car without a CO 2 emissions figure: the appropriate percentage)—
in subsection (2), in the table —
for “23%” substitute “ 24% ”, and
for “34%” substitute “ 35% ”;
in subsection (3)(a), for “16%” substitute “ 2% ”.
In section 142(2) (car first registered before 1 January 1998: the appropriate percentage), in the table—
for “23%” substitute “ 24% ”, and
for “34%” substitute “ 35% ”.
Omit subsection 170(3).
The amendments made by this section have effect for the tax year 2020-21 and subsequent tax years.
In Chapter 9 of Part 4 of ITEPA 2003, after section 308B insert—
In section 228 of ITEPA 2003 (effect of exemptions on liability under provisions outside Part 2 of ITEPA 2003), in subsection (2), after paragraph (da) insert—.
Regulation 5 of the Income Tax (Exemption of Minor Benefits) Regulations 2002 (S.I. 2002/205) (exemption in respect of the provision of pensions advice) is revoked.
In regulation 2 of the Income Tax (Exemption of Minor Benefits) (Amendment) Regulations 2004 (S.I. 2004/3087) omit the inserted regulation 5.
The amendments made by this section have effect for the tax year 2017-18 and subsequent tax years.
ITEPA 2003 is amended as follows.
In section 346 (deduction for employee liabilities)—
in the heading, at the end insert “ and expenses ”,
after paragraph B (in subsection (1)) insert—,
in paragraph C(b) (in subsection (1)), after “B” insert “ , BA or BB ”,
in subsection (2) for “or B” substitute “ B, BA or BB ”,
in subsection (2A), for “paragraph A, B or C” substitute “ any of paragraphs A to C ”, and
after subsection (3) insert—
In section 349 (section 346: meaning of “qualifying insurance contract”), in subsection (2)—
after paragraph (c) insert—, and
in subsection (2)(d), after “(c)” insert “ , (ca) or (cb) ”.
In section 409 (payments and benefits on termination of employment etc: exception for payments and benefits in respect of employee liabilities and indemnity insurance)—
in the heading, for “employee liabilities” substitute “ certain legal expenses etc ”, and
in subsection (3), at the end insert “ or by the employer or former employer on behalf of the individual ”.
In section 410 (payments and benefits on termination of employment etc: exception for certain payments and benefits received by personal representatives of deceased individual)—
in the heading for “employee liabilities” substitute “ certain legal expenses etc ”, and
in subsection (3), at the end insert “ or by the former employer on behalf of the individual's personal representatives ”.
In section 558 (deductions for liabilities of former employees: meaning of “deductible payment”)—
after paragraph B (in subsection (1)) insert—, and
in paragraph C(b) (in subsection (1)), after “B” insert “ , BA or BB ”,
in subsection (2), for “or B” substitute “ B, BA or BB ”,
after subsection (3) insert—
In section 560 (section 558: meaning of “qualifying insurance contract”), in subsection (2)—
after paragraph (c) insert—, and
in paragraph (d), after “(c)” insert “ , (ca) or (cb) ”.
The amendments made by this section have effect in relation to the tax year 2017-18 and subsequent tax years.
ITEPA 2003 is amended in accordance with subsections (2) to (9).
In section 7(5) (list of provisions under which amounts are treated as earnings), before the “or” at the end of paragraph (c) insert—.
Before section 403 (charge on payments and benefits in excess of £30,000 threshold) insert—
In section 403 (charges on payments and benefits which can benefit from threshold)—
in subsection (1), for “Chapter” substitute “ section ”,
in subsection (3), after “Chapter” insert “ (but see section 402B(3)) ”,
in subsection (4), for the words from “when” to “exceeds” substitute,
in subsection (5)(a), for “Chapter” substitute “ section ”,
in subsection (6), after “employment income” insert “ or, as the case may be, in relation to whom section 402B(1) provides for an amount to be treated as an amount of earnings ”, and
in the heading, at the end insert “ where threshold applies ”.
In section 404 (how the threshold applies)—
in subsection (3)(b) (meaning of “termination or change date”), for “this Chapter” substitute “ section 403 ”, and
after subsection (5) insert—
After section 404A insert—
In section 406 (exception in cases of death, injury or disability)—
the existing text becomes subsection (1), and
after that subsection insert—
In section 414(2) (proportionate reduction for foreign service in certain cases), for “otherwise count as employment income under this Chapter” substitute.
In section 717(4) (regulations etc not subject to negative procedure), before “or section 681F(3)” insert “ , section 402D(10) (meaning of basic pay for purpose of calculating charge on termination award), section 404B(4) (reduction of tax-free threshold for employment-termination etc payments) ”.
The amendments made by this section have effect for the tax year 2018-19 and subsequent tax years.
In Chapter 5 of Part 11 of ITEPA 2003 (PAYE settlement agreements), in sections 703(a) and 704(1)(a), for “an officer of Revenue and Customs” substitute “ Her Majesty's Revenue and Customs ”.
The amendment made by this section has effect in relation to the tax year 2018-19 and subsequent tax years.
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Income tax: investments
In section 13A of ITA 2007 (income charged at the dividend nil rate), for “£5000”, in each place, substitute “ £2000 ”.
The amendments made by this section have effect for the tax year 2018-19 and subsequent tax years.
ITTOIA 2005 is amended as follows.
After section 507 (method for making periodic calculations in part surrender or assignment cases) insert—
After section 512 (available premium left for relevant transaction in certain part surrender or assignment cases) insert—
In section 538 (recovery of tax from trustees), after subsection (6) insert—
The amendments made by subsection (4) have effect in relation to amounts recovered before, as well as after, the day on which this Act is passed.
In section 520 of ITTOIA 2005 (property categories), after subsection (4) insert—
ITA 2007 is amended as follows.
In section 177 (EIS: the no pre-arranged exits requirement), for subsection (2) substitute—
In section 257CD (SEIS: the no pre-arranged exits requirement), for subsection (2) substitute—
The amendments made by this section have effect in relation to shares issued on or after 5 December 2016.
ITA 2007 is amended as follows.
In section 326 (restructuring to which sections 326A and 327 apply)—
in the heading to section 326, for “section 327 applies” substitute “ sections 326A, 327 and 327A apply ”;
in subsection (1), for “Sections 326A and 327 apply” substitute “ Sections 326A, 327 and 327A apply ”.
After section 327 insert—
The amendments made by this section have effect—
for the purposes of section 280C of ITA 2007, in relation to investments made on or after 6 April 2017;
for the purposes of section 294A of ITA 2007, in relation to relevant holdings issued on or after 6 April 2017.
Section 330 of ITA 2007 (power to facilitate company reorganisations etc involving exchange of shares) is amended as follows.
After subsection (1) insert—
In subsection (2), for “subsection (1)” substitute “ subsections (1) and (1A) ”.
In subsection (3), for “The regulations” substitute “ Regulations under subsection (1) ”.
After subsection (3) insert—
In subsection (4), for “The regulations” substitute “ Regulations under this section ”.
In subsection (6). in paragraph (c), at the beginning insert “ in the case of regulations under subsection (1) ”.
Schedule 1 makes provision about income tax relief for social investments.
Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.
In section 809VC (qualifying investments), in subsection (1)(a), after “issued to” insert “ or acquired by ”.
In section 809VD (condition relating to qualifying investments)—
in subsection (1), omit the “or” at the end of paragraph (b) and after that paragraph insert—;
in subsection (2)(b), for “2” substitute “ 5 ”;
in subsection (3)(c), for “2” substitute “ 5 ”;
after subsection (3) insert—;
in subsection (4), for “reference in subsection (3)” substitute “ references in subsections (3) and (3A) ”;
in subsection (5)(a), for “2” substitute “ 5 ”.
In section 809VE (commercial trades), after subsection (5) insert—
In section 809VH (meaning of “potentially chargeable event”)—
in subsection (1)(a), after “eligible stakeholder company” insert “ nor an eligible hybrid company ”;
in subsection (1)(d), for “2-year” substitute “ 5-year ”;
in subsection (2), for paragraph (b) substitute—;
omit subsection (4);
in subsection (5)—
for “2-year” substitute “ 5-year ”;
in paragraph (a), for “2” substitute “ 5 ”;
in subsection (6), omit the “or” at the end of paragraph (b) and after that paragraph insert—;
in subsection (10)(b), after “eligible stakeholder company” insert “ or an eligible hybrid company ”.
In section 809VJ (grace period), after subsection (2) insert—
In section 809VN (order of disposals etc), in subsections (1)(c) and (5)(a) and (b), after “eligible stakeholder company” insert “ or eligible hybrid company ”.
The amendments made by this section have effect where the relevant event as defined in section 809VA of ITA 2007 occurs on or after 6 April 2017.
Income tax: trading and property businesses
Schedule 2 contains provision about the calculation of the profits of a trade, profession or vocation or a property business, in particular the calculation of profits on the cash basis.
Schedule 3 contains provision about a trading allowance and a property allowance giving relief from income tax.
Corporation tax
Schedule 4 makes provision about corporation tax relief for losses and other amounts that are carried forward.
The Commissioners for Her Majesty's Revenue and Customs may by regulations made by statutory instrument make provision consequential on any provision made by Schedule 4.
Regulations under subsection (2)—
may make provision amending or modifying any provision of the Taxes Acts (including any provision inserted by Schedule 4),
may make incidental, supplemental, transitional, transitory or saving provision, and
may make different provision for different purposes.
A statutory instrument containing regulations under subsection (2) is subject to annulment in pursuance of a resolution of the House of Commons.
In this section “the Taxes Acts” has the same meaning as in the Taxes Management Act 1970 (see section 118(1) of that Act).
Any loss-related tax advantage that would (in the absence of this section) arise from relevant tax arrangements is to be counteracted by the making of such adjustments as are just and reasonable.
Any adjustments required to be made under this section (whether or not by an officer of Revenue and Customs) may be made by way of—or otherwise.
an assessment,
the modification of an assessment,
amendment or disallowance of a claim,
For the purposes of this section arrangements are “relevant tax arrangements” if conditions A and B are met.
Condition A is that the purpose, or one of the main purposes, of the arrangements is to obtain a loss-related tax advantage.
Condition B is that it is reasonable to regard the arrangements as circumventing the intended limits of relief under the relevant provisions or otherwise exploiting shortcomings in the relevant provisions.
In determining whether or not condition B is met all the relevant circumstances are to be taken into account, including whether the arrangements include any steps that—
are contrived or abnormal, or
lack a genuine commercial purpose.
In this section “loss-related tax advantage” means a tax advantage as a result of a deduction (or increased deduction) under a provision mentioned in subsection (8).
The provisions are—
section 2A(1) of TCGA 1992 (allowable capital losses);
sections 457, 459, 461, 462, 463B, 463G and 463H of CTA 2009 (non-trading deficits from loan relationships);
section 753 of CTA 2009 (non-trading losses on intangible fixed assets);
section 1219 of CTA 2009 (management expenses etc);
section 62(3) of CTA 2010 (losses of a UK property business);
Part 5 of CTA 2010 (group relief);
Part 5A of CTA 2010 (group relief for carried-forward losses);
sections 303B, 303C and 303D of CTA 2010 (non-decommissioning losses of ring-fence trades);
sections 124A, 124B and 124C of FA 2012 (carried-forward BLAGAB trade losses).
In this section—“arrangements” includes any agreement, understanding, scheme transaction or series of transactions (whether or not legally enforceable);“tax advantage” has the meaning given by section 1139 of CTA 2010.
This section has effect in relation to a tax advantage that relates (or would apart from this section relate) to an accounting period beginning on or after 1 April 2017 (regardless of when the arrangements in question were made).
Where a tax advantage would (apart from this subsection) relate to an accounting period beginning before 1 April 2017 and ending on or after that date (“the straddling period”)—
so much of the straddling period as falls before 1 April 2017, and so much of that period as falls on or after that date, are treated as separate accounting periods, and
the extent (if any) to which the tax advantage relates to the second of those accounting periods is to be determined by apportioning amounts—
in accordance with section 1172 of CTA 2010 (time basis), or
if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.
In the case of a tax advantage as a result of a deduction (or increased deduction) under—subsections (10) and (11) have effect as if the references to 1 April 2017 were to 13 July 2017.
section 463H of CTA 2009,
section 62(3) of CTA 2010,
section 303B, 303C or 303D of CTA 2010, or
section 124A or 124C of FA 2012,
In the case of a tax advantage as a result of a deduction (or increased deduction) under section 2A(1) of TCGA 1992, subsections (10) and (11) have effect as if the references to 1 April 2017 were to 1 April 2020.
Schedule 5 makes provision about the amounts that may be brought into account for the purposes of corporation tax in respect of interest and other financing costs.
Schedule 6 makes provision about relief in respect of the production of museum and gallery exhibitions.
CTA 2010 is amended as follows.
In section 1(2) (overview of Act)—
omit the “and” at the end of paragraph (g), and
after that paragraph insert—.
In section 99(1) (group relief: losses and other amounts which may be surrendered), after paragraph (d) insert—.
In section 105(4) (group relief: order in which amounts are treated as surrendered)—
after paragraph (a) insert—,
in paragraph (b), for “second” substitute “ third ”,
in paragraph (c), for “third” substitute “ fourth ”, and
in paragraph (d), for “fourth” substitute “ fifth ”.
After Part 6 insert—
The amendments made by this section have effect for the purpose of allowing deductions for payments made on or after 1 April 2017.
Where a company has an accounting period beginning before 1 April 2017 and ending on or after that date, the accounting period for the purposes of the new section 217A(9) is so much of the accounting period as falls on or after 1 April 2017.
Part 8A of CTA 2010 (profits from the exploitation of patents) is amended as follows.
After section 357BLE insert—
For section 357GC substitute—
In section 357BP (meaning of “new qualifying IP right”) after subsection (12) insert—
The amendments made by this section have effect in relation to accounting periods beginning on or after 1 April 2017.
Part 6A of TIOPA 2010 (hybrid and other mismatches) is amended as follows.
In section 259B(3) (local taxes), for “is not outside the scope of subsection (2) by reason only that” substitute “ is outside the scope of subsection (2) if ”.
In section 259CC(2) (hybrid and other mismatches from financial instruments: meaning of “permitted” taxable period of a payee), for paragraph (b) substitute—
In section 259DD(2) (hybrid transfer deduction/non-inclusion mismatches: meaning of “permitted” taxable period of a payee), for paragraph (b) substitute—
In section 259EB (hybrid payer deduction/non-inclusion mismatches and their extent), after subsection (1) insert—
In section 259FA (deduction/non-inclusion mismatches relating to transfers by permanent establishments), after subsection (4) insert—
In section 259GB (hybrid payee deduction/non-inclusion mismatches and their extent), after subsection (1) insert—
In section 259HB (multinational payee deduction/non-inclusion mismatches and their extent), after subsection (1) insert—
In section 259KB (imported mismatches: meaning of “excessive PE deduction” etc), after subsection (3) insert—
The amendment made by subsection (2)—
has effect, in the case of its application to Chapter 6 of Part 6A of TIOPA 2010, in relation to excessive PE deductions in relation to which the relevant PE period begins on or after 13 July 2017,
has effect, in the case of its application to Chapter 9 or 10 of that Part, in relation to accounting periods beginning on or after that date, and
has effect, in the case of its application to any other Chapter of that Part, in relation to—
payments made on or after date, or
quasi-payments in relation to which the payment period begins on or after that date.
For the purposes of subsection (10)(a), (b) and (c)(ii), where there is a straddling period—
so much of the straddling period as falls before 13 July 2017, and so much of it as falls on or after that date, are to be treated as separate accounting periods or separate taxable periods (as the case may be), and
if it is necessary to apportion an amount for the straddling period to the two separate periods, it is to be apportioned—
on a time basis according to the respective length of the separate periods, or
if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.
A “straddling period” means an accounting period or payment period (as the case may be) beginning before 13 July 2017 and ending on or after that date.
Part 6A of TIOPA 2010 has effect, and is to be deemed always to have had effect, with the amendments set out in subsections (3) to (9).
Schedule 7 contains—
amendments of Part 8B of CTA 2010 (trading profits taxable at the Northern Ireland rate), and
amendments consequential on or related to those amendments.
Chargeable gains
Section 161 of TCGA 1992 (appropriations to and from trading stock) is amended as follows.
In subsection (3)—
for “a person's appropriation of an asset for the purposes of a trade” substitute “ a case where a chargeable gain would have accrued to a person on the appropriation of an asset for the purposes of a trade as mentioned in that subsection ”, and
for “the chargeable gain or increased by the amount of the allowable loss referred to in subsection (1), and where that subsection” substitute “ that chargeable gain, and where subsection (1) ”.
In subsection (3ZB)—
in paragraph (a)—
omit “or loss”, and
omit “or an allowable loss”,
in paragraph (b)—
omit “, or increased by the amount of any loss,” and
omit “or allowable loss”, and
in paragraph (c), at the end insert “ and a loss which accrues on that disposal which is not ATED-related is also unaffected by the election ”.
The amendments made by this section have effect in relation to appropriations of assets made on or after 8 March 2017.
Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding) is amended as follows.
Omit the following (which relate to requirements to be met by investing company)—
in paragraph 1(2), “the investing company and”;
in paragraph 3—
in sub-paragraph (2)(b), “(but see sub-paragraph (3) below)”;
sub-paragraph (3);
in sub-paragraph (4), “of paragraph 18(1)(b) and”;
in the heading to Part 3, “investing company and”;
paragraph 18 and the preceding italic heading;
in paragraph 23(3), “a member of a trading group or”.
In paragraph 7 (substantial shareholding requirement), for “two” substitute “ six ”.
In paragraph 10 (effect of earlier no-gain/no-loss transfer), in sub-paragraph (2)(b), after “but for” insert “ subsection (1A) or ”.
In paragraph 19 (requirements relating to company invested in)—
in sub-paragraph (1)(b), at the beginning insert “ in a case where sub-paragraph 1A) applies, ”;
after sub-paragraph (1) insert—;
at the end insert—
The amendments made by this section have effect in relation to disposals made on or after 1 April 2017.
Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding) is amended as follows.
After paragraph 3 insert—
After paragraph 8 insert—
In paragraph 9 (aggregation), in sub-paragraph (1), for “paragraph 7” substitute “ paragraphs 7 and 8A(2) ”.
After paragraph 30 insert—
In paragraph 31 (index), at the appropriate places insert—.
The amendments made by this section have effect in relation to disposals made on or after 1 April 2017.
Domicile, overseas property etc
In Chapter 2A of Part 14 of ITA 2007 (income tax liability: domicile), after section 835B insert—
Schedule 8 contains—
provision applying section 835BA of ITA 2007, and
further provision relating to this section.
In section 267 of IHTA 1984 (persons treated as domiciled in the United Kingdom), in subsection (1)—
in paragraph (a), omit the final “or”;
after that paragraph insert—;
for paragraph (b) substitute—
In that section, omit subsection (3).
In that section, in subsection (4), for “in any year of assessment” substitute “ for any tax year ”.
In section 48 of that Act (settlements: excluded property)—
in subsection (3)(b), for “and (3D)” substitute “ to (3E) ”;
in subsection (3A)(b), for “subsection (3B)” substitute “ subsections (3B) and (3E) ”;
after subsection (3D) insert—
In section 64 of that Act (charge at ten-year anniversary), in subsection (1B), after “was made” insert “ and is not a formerly domiciled resident for the tax year in which the ten-year anniversary falls ”.
In section 65 of that Act (charge at other times), after subsection (7A) insert—
In section 82 of that Act (excluded property)—
for subsection (1) substitute—;
in subsection (2), for “the condition in subsection (3) below” substitute “ Condition A ”;
in subsection (3), for “The condition” substitute “ Condition A ”;
after subsection (3) insert—
In section 272 of that Act (interpretation)—
for the definition of “foreign-owned” substitute—;
at the appropriate place insert—.
The amendments made by this section have effect in relation to times after 5 April 2017, subject to subsections (10) to (12).
The amendment to section 267(1) of IHTA 1984 made by subsection (1)(c) does not have effect in relation to a person if—In this subsection “relevant tax year” is to be construed in accordance with section 267(1) of IHTA 1984 as amended by subsection (1).
the person is not resident in the United Kingdom for the relevant tax year, and
there is no tax year beginning after 5 April 2017 and preceding the relevant tax year in which the person was resident in the United Kingdom.
The amendment to section 267(1) of IHTA 1984 made by subsection (1)(c) also does not have effect in determining—
whether settled property which became comprised in the settlement on or before that date is excluded property for the purposes of IHTA 1984;
the settlor's domicile for the purposes of section 65(8) of that Act in relation to settled property which became comprised in the settlement on or before that date;
whether, for the purpose of section 65(8) of that Act, the condition in section 82(3) of that Act is satisfied in relation to such settled property.
Despite subsection (2), section 267(1) of IHTA 1984, as originally enacted, shall continue to be disregarded in determining—
whether settled property which became comprised in the settlement on or before 9 December 1974 is excluded property for the purposes of IHTA 1984;
the settlor's domicile for the purposes of section 65(8) of that Act in relation to settled property which became comprised in the settlement on or before that date;
whether, for the purpose of section 65(8) of that Act, the condition in section 82(3) of that Act is satisfied in relation to such settled property.
Subsections (14) and (15) apply if an amount of inheritance tax—
would not be charged but for the amendments made by this section, or
is, because of those amendments, greater than it would otherwise have been.
Section 233 of IHTA 1984 (interest on unpaid inheritance tax) applies in relation to the amount of inheritance tax as if the reference, in the closing words of subsection (1) of that section, to the end of the period mentioned in paragraph (a), (aa), (b) or (c) of that subsection were a reference to—
the end of that period, or
if later, the end of the month immediately following the month in which this Act is passed.
Subsection (1) of section 234 of IHTA 1984 (cases where inheritance tax payable by instalments carries interest only from instalment dates) applies in relation to the amount of inheritance tax as if the reference, in the closing words of that subsection, to the date at which an instalment is payable were a reference to—
the date at which the instalment is payable, or
if later, the end of the month immediately following the month in which this Act is passed.
Subsection (17) applies if—
a person is liable as mentioned in section 216(1)(c) of IHTA 1984 (trustee liable on 10-year anniversary, and other trust cases) for an amount of inheritance tax charged on an occasion, and
but for the amendments made by this section—
no inheritance tax would be charged on that occasion, or
a lesser amount of inheritance tax would be charged on that occasion.
Section 216(6)(ad) of IHTA 1984 (delivery date for accounts required by section 216(1)(c)) applies in relation to the account to be delivered in connection with the occasion as if the reference to the expiration of the period of 6 months from the end of the month in which the occasion occurs were a reference to—
the expiration of that period, or
if later, the end of the month immediately following the month in which this Act is passed.
Schedule 9 makes provision about the value of benefits received in relation to settlements and the transfer of assets abroad.
TCGA 1992 is amended as follows.
In section 13(1A) (attribution of gains to members of non-resident companies)—
omit the “or” at the end of paragraph (a), and
at the end of paragraph (b), insert
In section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements), after subsection (4ZA) insert—
In section 87 (non-UK resident settlements: attribution of gains to beneficiaries), after subsection (5A) insert—
The amendments made by this section have effect in relation to chargeable gains treated as accruing under section 103KA(2) or (3) of TCGA 1992 at any time before, as well as after, the passing of this Act.
Schedule 10 makes provision about the extent to which overseas property is excluded property for the purposes of inheritance tax, in cases where the value of the overseas property is attributable to residential property in the United Kingdom.
Disguised remuneration
In section 554XA of ITEPA 2003 (employment income provided through third parties: exclusion for payments in respect of a tax liability), in subsection (2), omit paragraphs (a) and (b).
The amendment made by subsection (1) has effect in relation to relevant steps taken on or after 21 July 2017.
Schedule 11 makes provision about the application of Part 7A of ITEPA 2003 in relation to loans and quasi-loans that are outstanding on 5 April 2019.
ITTOIA 2005 is amended as follows.
After section 23 insert—
In section 7(2) (income charged: profits of a tax year) at the end insert “(including amounts treated as profits of the tax year under section 23E(1)).
The amendments made by this section have effect in relation to relevant benefits arising on or after 6 April 2017.
Schedule 12 contains provision about the application of new sections 23A to 23H of ITTOIA 2005 in relation to loans and quasi-loans that are outstanding on 5 April 2019.
Section 38 of ITTOIA 2005 (restriction of deductions: employee benefit contributions) is amended in accordance with subsections (2) to (5).
After subsection (1) insert—
After subsection (2) insert—
After subsection (3) insert—
After subsection (3F) (inserted by subsection (4)) insert—
Section 866 of ITTOIA 2005 (employee benefit contributions: non-trades and non-property businesses) is amended in accordance with subsections (7) to (10).
After subsection (2) insert—
After subsection (3) insert—
After subsection (4) insert—
After subsection (4F) (inserted by subsection (9)) insert—
The amendments made by subsections (2) to (4) and (7) to (9) have effect in relation to employee benefit contributions made, or to be made, on or after 6 April 2017.
The amendments made by subsections (5) and (10) have effect in relation to remuneration paid on or after 6 April 2017.
Section 1290 of CTA 2009 (restriction of deductions: employee benefit contributions) is amended in accordance with subsections (2) to (5).
After subsection (1) insert—
After subsection (2) insert—
After subsection (3) insert—
After subsection (3F) (inserted by subsection (4)) insert—
The amendments made by subsections (2) to (4) have effect in relation to employee benefit contributions made, or to be made, on or after 1 April 2017.
The amendment made by subsection (5) has effect in relation to remuneration paid on or after 1 April 2017.
Capital allowances
CAA 2001 is amended as follows.
In section 39 (first-year qualifying expenditure) after the entry for section 45E insert—.
After section 45E insert—
In section 46 (general exclusions), in subsection (1) after the entry for section 45E insert— “ section 45EA (expenditure on plant or machinery for electric vehicle charging point) ”.
In section 52 (amount of first-year allowances)—
in the table in subsection (3), after the entry for expenditure qualifying under section 45E insert—
after subsection (3) insert—
Transactions in UK land
The FA 2016 amendments have effect (so far as they would not otherwise have effect) in relation to—
amounts that are recognised in GAAP accounts drawn up for any period of account beginning on or after 8 March 2017, or
in the case of a straddling period, amounts that would be recognised in GAAP accounts drawn up for a period of account beginning on 8 March 2017 and ending when the straddling period ends.
In subsection (1)—“the FA 2016 amendments” means—the amendments made by sections 76, 77 and 80 of FA 2016 (corporation tax treatment of certain profits and gains realised from disposals concerned with land in the United Kingdom), or the amendments made by sections 78 and 79 of that Act (corresponding rules for income tax purposes),“GAAP accounts” means accounts drawn up in accordance with generally accepted accounting practice,“recognised” means recognised as an item of profit or loss, and“straddling period” means a period of account beginning before 8 March 2017 and ending on or after that date.
In section 161 of TCGA 1992 (appropriations to and from stock), in subsection (5)(a), for “CTA 2010” substitute “ ITA 2007 ”.
Section 79(10) of FA 2016 (which substitutes paragraph (a) of section 161(5) of TCGA 1992) is to be regarded as always having had effect with the amendment made by subsection (3).
Co-ownership authorised contractual schemes
In Part 2 of CAA 2001 (plant and machinery), in Chapter 20 (supplementary provisions), after the Chapter heading insert—
The Treasury may by regulations impose requirements on the operator of a co-ownership authorised contractual scheme in relation to—
the provision of information to participants in the scheme;
the provision of information to Her Majesty's Revenue and Customs.
Regulations under subsection (1)(a) may be made only for the purpose of enabling participants in a co-ownership authorised contractual scheme to meet their tax obligations in the United Kingdom with respect to their interests in the scheme.
Regulations under subsection (1)(b) may in particular require the provision of information about—
who the participants in the scheme were in any accounting period of the scheme;
the number and classes of units in the scheme in any such period;
the amount of income per unit of any class in any such period;
what information has been provided to participants.
Regulations under this section may specify—
the time when information is to be provided;
the form and manner in which information is to be provided.
Regulations under this section may make provision for the imposition of penalties in respect of contravention of, or non-compliance with, the regulations, including provision—
for Her Majesty's Revenue and Customs to exercise a discretion as to the amount of a penalty, and
about appeals in relation to the imposition of a penalty.
Regulations under this section may in particular be framed by reference to an accounting period of a co-ownership authorised contractual scheme beginning on or after 1 April 2017.
Regulations under this section may contain consequential, supplementary and transitional provision.
Regulations under this section must be made by statutory instrument.
A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
In this section—“co-ownership authorised contractual scheme” means a co-ownership scheme which is authorised for the purposes of the Financial Services and Markets Act 2000 by an authorisation order in force under section 261D(1) of that Act;“co-ownership scheme” has the same meaning as in Part 17 of that Act (see section 235A(2) of that Act);“operator” and “units”, in relation to a co-ownership authorised contractual scheme, have the meanings given by section 237(2) of that Act;“participant”, in relation to such a scheme, is to be read in accordance with section 235 of that Act.
The Treasury may by regulations make provision about how participants in a co-ownership authorised contractual scheme are to be treated for income tax purposes or corporation tax purposes in relation to investments made for the purposes of the scheme in an offshore fund.
Regulations under subsection (1) may, among other things, make provision—
for the operator of a co-ownership authorised contractual scheme to allocate to participants in the scheme amounts relating to investments made for the purposes of the scheme in an offshore fund;
for those amounts to be regarded as income of the participants to whom they are allocated;
as to when that income is to be brought into account for income tax purposes or corporation tax purposes.
Regulations under this section may—
modify an enactment (whenever passed or made);
contain consequential, supplementary and transitional provision.
Regulations under this section must be made by statutory instrument.
A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
References in this section to investments made for the purposes of a co-ownership authorised contractual scheme in an offshore fund include investments so made through one or more other co-ownership authorised contractual schemes.
In this section—“co-ownership authorised contractual scheme” means a co-ownership scheme which is authorised for the purposes of the Financial Services and Markets Act 2000 by an authorisation order in force under section 261D(1) of that Act;“co-ownership scheme” has the same meaning as in Part 17 of that Act (see section 235A(2) of that Act);“offshore fund” has the meaning given by section 355 of TIOPA 2010;“operator”, in relation to a co-ownership authorised contractual scheme, has the meaning given by section 237(2) of the Financial Services and Markets Act 2000;“participant”, in relation to such a scheme, is to be read in accordance with section 235 of that Act.
Indirect taxes
In section 30 of FA 1994 (air passenger duty: rates of duty), in subsection (4A) (long haul rates of duty)—
in paragraph (a), for “£75” substitute “ £78 ”;
in paragraph (b), for “£150” substitute “ £156 ”.
The amendments made by this section have effect in relation to the carriage of passengers beginning on or after 1 April 2018.
In Schedule 20B to FA 1993, for paragraphs 2 to 12 substitute—
In OTA 1975, in section 6(1A), for “paragraph 5” substitute “ paragraph 6 ”.
In FA 1980, in paragraph 15(9A) of Schedule 17, for “paragraph 5” substitute “ paragraph 6 ”.
The amendment made by this section is to be treated as having come into force on 23 November 2016.
In section 11(2) of FA 1997 (rates of gaming duty), for the table substitute—.
The amendment made by this section has effect in relation to accounting periods beginning on or after 1 April 2017.
Part 3 of FA 2014 (general betting duty, pool betting duty and remote gaming duty) is amended in accordance with subsections (2) to (8).
In section 159 (remote gaming duty: gaming payments), for subsection (4) substitute—
After section 159 insert—
In section 160 (remote gaming duty: prizes)—
in subsection (1), in the opening words, after “account” insert “ only ”,
omit subsection (2),
in subsection (3), at the end insert “ (but where a gaming payment is returned by being credited to an account this subsection has effect subject to subsection (1)) ”, and
at the end insert—
After section 160 insert—
In section 188 (gaming), after subsection (2) insert—
In section 190 (index), in the Table, in the entry for “game of chance”, for “188(1)(b)” substitute “ 188(1)(b) and (3) ”.
In section 194(4) (regulations under Part 3 to which the procedure in section 194(5) is to apply), before paragraph (a), insert—.
The amendments made by this section have effect with respect to accounting periods beginning on or after 1 August 2017.
After section 8U of TPDA 1979 insert—
In section 9 of TPDA 1979 (regulations), in subsection (1A), for “or 8U” substitute “ , 8U or 8V ”.
Fulfilment businesses
For the purposes of this Part a person carries on an imported goods fulfilment business if the person, by way of business—at a time when the conditions in subsection (2) are met in relation to the goods.
stores imported goods which are owned by a person who is not UK-established, or
stores imported goods on behalf of a person who is not UK-established,
The conditions are that—
there has been no supply of the goods in the United Kingdom for the purposes of VATA 1994, and
the goods are being offered for sale in the United Kingdom or elsewhere.
But a person does not carry on an imported goods fulfilment business if the person's activities within subsection (1) are incidental to the carriage of the goods.
Goods are “imported goods” if they have been imported into the United Kingdom for the purposes of VATA 1994 (as to which, see section 15 and paragraph 1 of Schedule 9ZB).
But goods that are treated as imported for the purposes of VATA 1994 as a result of paragraph 3 of Schedule 9ZB are not imported goods for the purposes of this Part.
A person is “UK-established” if the person's business establishment is in the United Kingdom as determined for the purposes of section 9 of VATA 1994.
A person may not carry on an imported goods fulfilment business otherwise than in accordance with an approval given by the Commissioners under this section.
The Commissioners may approve a person to carry on an imported goods fulfilment business only if they are satisfied that the person is a fit and proper person to carry on the business.
The Commissioners may approve a person to carry on an imported goods fulfilment business for such periods and subject to such conditions or restrictions as they may think fit or as they may by regulations made by them prescribe.
The Commissioners may at any time for reasonable cause vary the terms of, or revoke, an approval under this section.
In this Part “approved person” means a person approved under this section to carry on an imported goods fulfilment business.
The Commissioners must maintain a register of approved persons.
The register is to contain such information relating to approved persons as the Commissioners consider appropriate.
The Commissioners may make publicly available such information contained in the register as they consider necessary to enable those who deal with a person who carries on an imported goods fulfilment business to determine whether the person in question is an approved person in relation to that activity.
The information may be made available by such means (including the internet) as the Commissioners consider appropriate.
The Commissioners may by regulations make provision—
regulating the approval and registration of persons under this Part,
regulating the variation or revocation of any such approval or registration, or of any condition or restriction to which such an approval or registration is subject,
about the register maintained under section 50,
regulating the carrying on of an imported goods fulfilment business, and
imposing obligations on approved persons.
The regulations may, in particular, make provision—
requiring applications, and other communications with the Commissioners, to be made electronically;
as to the procedure for the approval and registration of bodies corporate which are members of the same group;
requiring approved persons to keep and make available for inspection such records as may be prescribed by or under the regulations.
The Commissioners may disclose to an approved person information held by Her Majesty's Revenue and Customs in connection with a function of Her Majesty's Revenue and Customs, but only for the purpose mentioned in subsection (2).
The purpose is to assist the approved person in complying with obligations imposed on that person by virtue of section 51.
An approved person to whom information is disclosed under subsection (1)—
may use the information only for the purpose of complying with obligations imposed on that person by virtue of section 51, and
may not further disclose the information except with the consent of the Commissioners.
Section 19 of the Commissioners for Revenue and Customs Act 2005 (offence) applies to a disclosure in contravention of subsection (3)(b) as it applies to a disclosure, in contravention of section 20(9) of that Act, of revenue and customs information relating to a person whose identity is specified in the disclosure or can be deduced from it.
A person who—commits an offence.
carries on an imported goods fulfilment business, and
is not an approved person,
In proceedings for an offence under subsection (1) it is a defence to show that the person did not know, and had no reasonable grounds to suspect, that the person—
was carrying on an imported goods fulfilment business, or
was not an approved person.
A person is taken to have shown the fact mentioned in subsection (2) if—
sufficient evidence of that fact is adduced to raise an issue with respect to it, and
the contrary is not proved beyond reasonable doubt.
A person guilty of an offence under this section is liable on summary conviction—
in England and Wales, to imprisonment for a term not exceeding the general limit in a magistrates’ court, or a fine, or both;
in Scotland, to imprisonment for a term not exceeding 12 months, or a fine not exceeding the statutory maximum, or both;
in Northern Ireland, to imprisonment for a term not exceeding 6 months, or a fine not exceeding the statutory maximum, or both.
A person guilty of an offence under this section is liable on conviction on indictment to—
imprisonment for a period not exceeding 7 years,
a fine, or
both.
In relation to an offence committed before 2 May 2022 the reference in subsection (4)(a) to the general limit in a magistrates’ court is to be read as a reference to 6 months.
If a person—any goods within subsection (2) are liable to forfeiture under CEMA 1979.
carries on an imported goods fulfilment business, and
is not an approved person,
Goods are within this subsection if—
they are stored by the person, and
their storage by the person constitutes, or has constituted, the carrying on of an imported goods fulfilment business by the person.
Schedule 13 provides for a penalty to be payable by a person who carries on an imported goods fulfilment business and is not an approved person.
The Commissioners may make regulations (“penalty regulations”) imposing a penalty for the contravention of—
any condition or restriction imposed under this Part;
regulations under this Part.
The amount of a penalty imposed by the penalty regulations is to be specified in the regulations, but must not exceed £3,000.
The penalty regulations may make provision for the assessment and recovery of a penalty imposed by the regulations.
The Commissioners may by regulations make provision for corporate bodies which are members of the same group to be jointly and severally liable for any penalties imposed under—
Schedule 13;
penalty regulations.
FA 1994 is amended as follows.
In section 13A(2) (customs and excise reviews and appeals: relevant decisions) after paragraph (gb) insert—.
In Schedule 5 to that Act (decisions subject to review and appeal) after paragraph 9A insert—
Regulations under this Part may—
make provision which applies generally or only for specified cases or purposes;
make different provision for different cases or purposes;
include incidental, consequential, transitional or transitory provision;
confer a discretion on the Commissioners;
make provision by reference to a notice to be published by the Commissioners.
Regulations under this Part are to be made by statutory instrument.
A statutory instrument containing regulations under this Part is subject to annulment in pursuance of a resolution of the House of Commons.
This section does not apply to regulations under section 59 (commencement).
In this Part—“approved person” has the meaning given by section 49(5);“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.
For the purposes of this Part two or more bodies corporate are members of a group if—
one of them controls each of the others,
one person (whether a body corporate or an individual) controls all of them, or
two or more individuals carrying on a business in partnership control all of them.
A body corporate is to be taken to control another body corporate if—
it is empowered by or under legislation to control that body's activities, or
it is that body's holding company within the meaning of section 1159 of, and Schedule 6 to, the Companies Act 2006.
An individual or individuals are to be taken to control a body corporate if the individual or individuals (were the individual or individuals a company) would be that body's holding company within the meaning of section 1159 of, and Schedule 6 to, the Companies Act 2006.
This Part comes into force—
so far as it confers powers to make regulations, on the day on which this Act is passed, and
for all other purposes, on such day as the Commissioners may by regulations made by statutory instrument appoint.
Regulations under subsection (1)(b) may appoint different days for different purposes.
Administration, avoidance and enforcement
Reporting and record-keeping
TMA 1970 is amended as set out in subsections (2) and (3).
After section 12B insert—
Before Schedule 1AA insert—
Subsections (1) to (3) come into force on such day as the Treasury may by regulations made by statutory instrument appoint.
Regulations under subsection (4) may appoint different days for different purposes.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Commissioners for Her Majesty's Revenue and Customs may by regulations amend or modify any provision of the Taxes Acts in consequence of the provision made by section 60 ....
Regulations under subsection (2) may make transitional, transitory or saving provision.
Regulations under subsection (2) must be made by statutory instrument.
A statutory instrument containing regulations under subsection (2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
Subsections (2) to (5) ... come into force on such day as the Treasury may by regulations made by statutory instrument appoint.
Regulations under subsection (6) may appoint different days for different purposes.
Schedule 11 to VATA 1994 (administration, collection and enforcement) is amended as set out in subsections (2) to (4).
In paragraph 2 (accounting and payment)—
in sub-paragraph (1) for “and the making of returns” substitute “ , the making of returns and the submission of information ”;
after sub-paragraph (11) insert—
In paragraph 6 (duty of taxable person to keep records)—
omit sub-paragraph (4);
at the end insert—
In paragraph 6A (power to direct keeping of records), for sub-paragraph (7) substitute—
In section 83(1) of VATA 1994 (appealable decisions), for paragraph (zc) substitute—
Subsections (3)(a) and (4) of this section come into force when the first regulations under paragraph 6(5) of Schedule 11 to VATA 1994 come into force.
Regulations under paragraph 6(5) of Schedule 11 to VATA 1994 may not make provision requiring records to be kept or preserved in electronic form which has effect before 1 April 2019.
Enquiries
Avoidance etc
Schedule 24 to FA 2007 (penalties for errors) is amended as set out in subsections (2) and (3).
After paragraph 3 insert—
In paragraph 18, after sub-paragraph (5) insert—
In FA 2014, omit section 276 (which is superseded by the provision inserted by subsections (2) and (3)).
The amendments made by this section have effect in relation to any document of a kind listed in the Table in paragraph 1 of Schedule 24 to FA 2007 which—
is given to HMRC on or after the day on which this Act is passed, and
relates to a tax period that—
begins on or after 6 April 2017, and
ends on or after the day on which this Act is passed.
In subsection (5) “tax period”, and the reference to giving a document to HMRC, have the same meaning as in Schedule 24 to FA 2007 (see paragraph 28 of that Schedule).
Schedule 16 makes provision for penalties for persons who enable tax avoidance which is defeated.
Schedule 17 contains provision about the disclosure of tax avoidance schemes involving VAT or other indirect taxes.
In consequence of the provision made by Schedule 17, section 58A of, and Schedule 11A to, VATA 1994 (disclosure of VAT avoidance schemes) cease to have effect to require a person to disclose any scheme which—
is first entered into by that person on or after 1 January 2018,
constitutes notifiable arrangements under Schedule 17,
implements proposals which are notifiable proposals under Schedule 17.
No scheme or proposed scheme may be notified to the Commissioners under paragraph 9 of Schedule 11A to VATA 1994 (voluntary notification of schemes) on or after 1 January 2018.
This section and Schedule 17 come into force—
so far as is necessary for enabling the making of regulations under that Schedule, on the passing of this Act, and
for all other purposes, on 1 January 2018.
Schedule 18 makes provision for and in connection with requiring persons to correct any offshore tax non-compliance subsisting on 6 April 2017.
VATA 1994 is amended as follows.
After section 69B (penalty for breach of record-keeping requirements imposed by directions) insert—
In section 70 (mitigation of penalties)—
in the heading, for “and 67” substitute “ , 67, 69A and 69C ”,
in subsection (1) for “or 69A” substitute “ , 69A or 69C ”, and
after subsection (4) insert—
In section 76 (assessment of amounts due by way of penalty etc), in subsection (1)(b) for “to 69B” (in both places) substitute “ to 69C ”.
In section 83(1) (appeals), after paragraph (n) insert—.
After paragraph 21 of Schedule 24 to FA 2007 (penalties for errors: double jeopardy) insert—
Section 69C does not apply in relation to transactions entered into before this section comes into force.
Information
In Part 2 of Schedule 23 to FA 2011 (data-gathering powers: relevant data-holders), after paragraph 13C insert—
This section applies in relation to relevant data with a bearing on any period (whether before, on or after the day on which this Act is passed).
Final
In section 44(2) of FA 2016 (tax treatment of supplementary welfare payments: Northern Ireland) for “the Housing Benefit (Amendment) Regulations (Northern Ireland) 2016 (S.R. (N.I.) 2016 No. 258)” substitute “ the Housing Benefit (Amendment No. 2) Regulations (Northern Ireland) 2016 (S.R. (N.I.) 2016 No. 326) ”.
In this Act the following abbreviations are references to the following Acts.
This Act may be cited as the Finance (No. 2) Act 2017.
Social investment tax relief
Amendments of Part 5B of ITA 2007
Introductory
ITA 2007 is amended as follows.
Date by which investment must be made to qualify for SI relief
In section 257K(1)(a)(iii) (date by which investment must be made to qualify for SI relief) for “6 April 2019” substitute “ 6 April 2021 ”.
The existing investments requirement
After section 257LD insert—
The no disqualifying arrangements requirement
After section 257LE insert—
Section 257SH (power to require information where reason to believe SI relief may not be due because of certain kinds of arrangements, etc) is amended as follows.
In subsection (1) after “257LE,” insert “ 257LEA, ”.
In subsection (4) at the appropriate place insert—
Limits on amounts that may be invested
In the italic heading before section 257M, after “enterprise” insert “ : general ”.
Omit sections 257MA and 257MB (which are superseded by the provision inserted by sub-paragraph (3) below).
After section 257MN insert—
In section 1014 (orders and regulations), in subsection (5)(b) (orders and regulations excluded from subsection (4)) for sub-paragraph (iiia) substitute—.
Number of employees limit
In section 257MH (the number of employees requirement), in each of subsections (1) and (2) for “500” substitute “ 250 ”.
Financial health requirement
After section 257MI insert—
Purposes for which money raised can be used
Section 257MM (requirement to use money raised and to trade for minimum period) is amended as follows.
After subsection (3) insert—
In subsection (7)(c) after “(3),” insert “ (3A), ”.
Excluded activities
Section 257MQ (meaning of “excluded activity”) is amended as set out in sub-paragraphs (2) to (4).
In subsection (1)—
in paragraph (b) omit “(but see subsection (2))”;
after paragraph (b) insert—;
omit paragraph (f) (subsidised generation or export of electricity).
Omit subsection (2).
After subsection (2) insert—
After section 257MQ insert—
Omit section 257MS (subsidised generation or export of electricity).
Consequential amendments
ITA 2007 is amended as follows.
In section 178A (EIS: the no disqualifying arrangements requirement), in subsection (6), in the definition of “relevant tax relief” after paragraph (b) insert—.
In section 257CF (SEIS: the no disqualifying arrangements requirement), in subsection (6), in the definition of “relevant tax relief” after paragraph (b) insert—.
In section 299A (VCTs: the no disqualifying arrangements requirement), in subsection (6), in the definition of “relevant tax relief” after paragraph (c) insert—.
In Schedule 6 to FA 2015 (investment reliefs: excluded activities) omit paragraph 13 (which is superseded by paragraph 10 of this Schedule).
In Part 2 of Schedule 24 to FA 2016 (tax advantages about which information may be obtained from certain persons), after the entry relating to relief granted to investors in a company under the enterprise investment scheme insert—
Commencement
The amendments made by paragraphs 3 and 6 to 9 have effect in relation to investments made on or after 6 April 2017.
Nothing in sub-paragraph (1) prevents investments made before 6 April 2017 from constituting “relevant investments” for any purpose of section 257MNA, 257MNB, 257MNC or 257MND of ITA 2007.
Subject to sub-paragraph (4), the amendments made by paragraphs 4 and 5 have effect in relation to investments made on or after 6 April 2017.
Arrangements which include any transaction entered into before 6 April 2017 are not “disqualifying arrangements” for the purposes of section 257LEA of ITA 2007.
The amendments made by paragraph 10—
so far as they apply for the purposes of section 257JD of ITA 2007, come into force on 6 April 2017;
so far as they apply for the purposes of sections 257MJ and 257MP of ITA 2007, have effect in relation to investments made on or after 6 April 2017.
Subject to sub-paragraph (3), the amendments made by paragraph 11(2) and (3) have effect in relation to shares issued on or after 6 April 2017.
Subject to sub-paragraph (3), the amendment made by paragraph 11(4) has effect for the purpose of determining whether shares or securities issued on or after 6 April 2017 are to be regarded as comprised in a company's qualifying holdings.
The amendments made by paragraph 11 do not have effect for the purposes of determining any question whether particular arrangements which include any transaction entered into before 6 April 2017 are “disqualifying arrangements” for the purposes of section 178A, 257CF or 299A of ITA 2007.
Trades and property businesses: calculation of profits
Trades etc: amendments of ITTOIA 2005
ITTOIA 2005 is amended as follows.
For section 33A (cash basis: capital expenditure) substitute—
In section 95A (application of Chapter 6 of Part 2 (trade profits: receipts) to the cash basis)—
the existing text becomes subsection (1),
in that subsection, omit the entry relating to section 96A, and
after that subsection insert—
Section 96A (cash basis: capital receipts) is amended as follows.
For the heading substitute “ Capital receipts under, or after leaving, cash basis ”.
For subsections (1) to (3) substitute—
Omit subsection (7).
After section 96A insert—
In section 106D (capital receipts), for “(cash basis: capital receipts)” substitute “ (capital receipts under, or after leaving, cash basis) ”.
Section 240C (unrelieved qualifying expenditure) is amended as follows.
For the heading substitute “ Unrelieved qualifying expenditure: Parts 2, 7 and 8 of CAA 2001 ”.
In subsection (1)(b), after “unrelieved qualifying expenditure” insert “ relating to the trade ”.
In subsection (3), for “the relevant portion of the expenditure” substitute “ any cash basis deductible amount of the expenditure ”.
For subsection (4) substitute—
In subsection (5), for “The relevant portion” substitute “ Any cash basis deductible amount ”.
After subsection (5) insert—
For subsection (6) substitute—
After section 240C insert—
Section 240D (assets not fully paid for) is amended as follows.
In subsection (1)(b), for “obtained” to the end substitute “ incurred relevant expenditure, and ”.
After subsection (1) insert—
In subsection (4), for “The amount of any capital allowance obtained in respect of expenditure on the provision of any plant or machinery” substitute “ Any question as to whether or to what extent expenditure is relevant expenditure, or as to whether or to what extent any capital allowance obtained is in respect of relevant expenditure, ”.
In subsection (5), after “given” insert “ under Part 2 of CAA 2001 ”.
Omit subsection (6).
In section 786(6) (meaning of “rent-a-room receipts”), for “(capital receipts)” substitute “ (capital receipts under, or after leaving, cash basis) ”.
In section 805(5) (meaning of “qualifying care receipts”), for “(capital receipts)” substitute “ (capital receipts under, or after leaving, cash basis) ”.
Property businesses: amendments of ITTOIA 2005
ITTOIA 2005 is amended as follows.
In Chapter 3 of Part 3 (profits of property businesses: basic rules), after section 271 insert—
In the italic heading before section 272, at the end insert “ : application of trading income rules ”.
After that italic heading insert—
Section 272 (profits of a property business: application of trading income rules) is amended as follows.
For the heading substitute “ Application of trading income rules: GAAP ”.
Omit subsection (1).
In subsection (2), for the words before the table substitute “ In relation to a property business whose profits are calculated in accordance with GAAP, the provisions of Part 2 (trading income) which apply as a result of section 271E(1) are limited to the following— ”.
In the table in subsection (2), omit the entry relating to section 25 (generally accepted accounting practice).
After section 272 insert—
After section 272ZA insert— “ Calculation of profits: other general rules ”.
In section 272A (restricting deductions for finance costs related to residential property), after subsection (6) insert—
Section 274 (relationship between rules prohibiting and allowing deductions) is amended as follows.
For subsection (1)(b) substitute—
In subsection (3)—
for “section 272A” insert “ sections 272A and 307D ”.
In subsection (4), after “section 272” insert “ or 272ZA ”.
In section 276(5) (introduction: profits of property businesses: lease premiums etc), after “292” insert “ ; but see also section 276A ”.
After section 276 insert—
In Chapter 5 of Part 3 (profits of property businesses: other rules about receipts and deductions), after the Chapter heading insert—
In section 311A (replacement domestic items relief), in subsection (15)—
for the definition of “the capital expenditure rule” substitute—;
in the definition of “the wholly and exclusively rule”—
omit “the rule in”, and
after “section 272” insert “ or 272ZA ”.
In section 315 (deduction for expenditure on sea walls), after subsection (6) insert—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After section 329 insert—
In section 331 (income charged)—
the existing text becomes subsection (1), and
after that subsection insert—
After section 334 insert—
In section 351 (income charged), after subsection (2) insert—
In section 353 (basic meaning of “post-cessation receipt”), after subsection (1) insert—
In section 356 (application to businesses within the charge to corporation tax), in subsection (1), for “section 355” substitute “ sections 353(1A) and 355, and in the modification of section 254 in section 351(3) ”.
In section 786 (meaning of “rent-a-room receipts”), after subsection (6) insert—
In section 860 (adjustment income), in subsection (5), after “Chapter 17 of Part 2” insert “ , or under section 239B as applied to property businesses by section 334A, ”.
In section 866 (employee benefit contributions: non-trades and non-property businesses), in subsection (7)(b), for “section 272” substitute “ sections 272 and 272ZA ”.
In section 867 (business entertainment and gifts: non-trades and non-property businesses), in subsection (7)(b), for “section 272” substitute “ sections 272 and 272ZA ”.
In section 868 (social security contributions: non-trades etc), in subsection (6)(b), for “section 272” insert “ sections 272 and 272ZA ”.
In section 869 (penalties, interest and VAT surcharges: non-trades etc), in subsection (6)(b), for “section 272” substitute “ sections 272 and 272ZA ”.
In section 870 (crime-related payments: non-trades and non-property businesses), in subsection (4)(b), for “section 272” substitute “ sections 272 and 272ZA ”.
In section 872 (losses calculated on same basis as miscellaneous income), in subsection (4)(b), for “section 272” substitute “ sections 272 and 272ZA ”.
In Part 2 of Schedule 4 (index of defined expressions), at the appropriate place insert—.
Trades etc: amendments of other Acts
TMA 1970
In section 42 of TMA 1970 (procedure for making claims etc), in subsection (7)(e), after “194” insert “ , 271A(10) ”.
TCGA 1992
TCGA 1992 is amended as follows.
In section 37 (consideration chargeable to tax on income), after subsection (1) insert—
Section 41 (restriction of losses by reference to capital allowances etc) is amended as follows.
In subsection (4), after paragraph (a) insert—.
After subsection (6) insert—
In subsection (7), after “Capital Allowances Act,” insert “ and subsection (6A) does not apply, ”.
After subsection (8) insert—
Section 47A (exemption for disposals by persons using cash basis) is amended as follows.
For the heading substitute “ Exemption for certain disposals under, or after leaving, cash basis ”.
In subsection (1), for “A to D” substitute “ A, B and D ”.
For subsection (2) substitute—
In subsection (3), for “or vocation” substitute “ , vocation or property business ”.
Omit subsection (4).
For subsection (5) substitute—
For subsection (6) substitute—
In subsection (7)—
in paragraph (a), for “was, or (as the case may be)” to the end substitute “ qualified for capital allowances ”, and
in paragraph (c), at the end insert “, or to the expenditure qualifying for capital allowances.
After subsection (7) insert—
Section 47B (disposals made by persons after leaving cash basis) is omitted.
CAA 2001
CAA 2001 is amended as follows.
In section 1 (capital allowances), omit subsections (4) and (5).
After section 1 insert—
Section 4 (capital expenditure) is amended as follows.
In subsection (2)—
omit “or” at the end of paragraph (a), and
after paragraph (a) insert—.
After subsection (2) insert—
Section 59 (unrelieved qualifying expenditure) is amended as follows.
In subsection (4), for “no amount may be carried forward as unrelieved qualifying expenditure” substitute “ any cash basis deductible amount may not be carried forward as unrelieved qualifying expenditure in a pool for the trade, profession or vocation ”.
After subsection (4) insert—
Omit subsection (5).
After subsection (5) insert—
In subsection (6), for “the amount of unrelieved qualifying expenditure incurred on the provision of a car” substitute “ any cash basis deductible amount ”.
For subsection (7) substitute—
Section 66A (persons leaving cash basis) is amended as follows.
For subsection (1) substitute—
In subsection (2)(a)—
for “amount of that expenditure for which” substitute “ higher of the following ”,
in sub-paragraphs (i) and (ii), at the beginning insert “ the amount of that expenditure for which ”, and
in both places, for “or vocation” substitute “ , vocation or property business ”.
After subsection (6) insert—
After section 419 insert—
After section 431C insert—
After section 461 insert—
After section 462 insert—
After section 475 insert—
After section 477 insert—
ITA 2007
ITA 2007 is amended as follows.
In Part 4 (loss relief), in section 59 (overview of Part), in subsection (3)(b)—
for “section 272” substitute “ sections 272 and 272ZA ”, and
for “applies” substitute “ apply ”.
Chapter 4 of Part 4 (losses from property businesses) is amended as follows.
In section 120 (deduction of property losses from general income), in subsection (7), at the end insert “ and section 127BA (restriction of relief: cash basis) ”.
After section 127B insert—
In Chapter 1 of Part 8 (relief for interest payments), in section 384B(1) (restriction on relief for interest payments where cash basis applies), after “for the tax year” insert “or if the profits of a UK property business or overseas property business carried on by the partnership are calculated on the cash basis for the tax year (see section 271D of ITTOIA 2005).
Commencement and transitional provision
The amendments made by this Schedule have effect for the tax year 2017-18 and subsequent tax years.
If—that deduction is to be allowed in calculating the profits of that trade, profession or vocation on that basis for that tax year.
disregarding this sub-paragraph, under section 33A of ITTOIA 2005, as inserted by paragraph 2 of Part 1, a deduction would not be allowed in calculating the profits of a trade, profession or vocation on the cash basis for the tax year 2017-18, but
if the amendment made by paragraph 2 were not to have effect for that tax year, that deduction would be allowed in calculating the profits of that trade, profession or vocation on that basis for that tax year,
Sub-paragraph (2) is to be disregarded in determining any question as to whether or to what extent an amount of expenditure would, on the assumption that it was paid in the tax year 2017-18, be brought into account in calculating the profits of a trade, profession or vocation for the tax year 2017-18 for the purposes of—
the following provisions of CAA 2001—
section 1A (capital allowances and charges: cash basis),
section 59 (unrelieved qualifying expenditure),
section 419A (unrelieved qualifying expenditure: entry to cash basis),
section 461A (unrelieved qualifying expenditure: entry to cash basis), and
section 475A (unrelieved qualifying expenditure: entry to cash basis); and
the following provisions of ITTOIA 2005—
section 96A (capital receipts under, or after leaving, cash basis),
section 240C (unrelieved qualifying expenditure: Parts 2, 7 and 8 of CAA 2001),
section 240CA (unrelieved qualifying expenditure: Part 5 of CAA 2001), and
section 240D (assets not fully paid for).
But sub-paragraph (2) is not to be disregarded in determining any question as to whether or to what extent an amount of expenditure is actually brought into account in calculating the profits of a trade, profession or vocation for the tax year 2017-18 for the purposes of the provisions mentioned in paragraphs (a) and (b) of sub-paragraph (3).
Trading and property allowances
Main provisions
In ITTOIA 2005, after section 783 insert—
Consequential amendments
ITTOIA 2005
ITTOIA 2005 is amended in accordance with paragraphs 3 to 11.
In section 1 (overview of Act), before paragraph (a) of subsection (5) insert—.
In Chapter 2 of Part 2 (trading income: income taxed as trade profits), after section 22 insert—
In Chapter 15 of Part 2 (basis periods), after section 204 insert—
In section 227A (application of Chapter where cash basis used), after subsection (2) insert—
After section 227A insert—
After section 307F (inserted by Schedule 2 to this Act) insert—
In section 688 (income charged under Chapter 8 of Part 5), before paragraph (a) of subsection (2) insert—.
In section 828 (overlap profit), in subsection (3), for “section 204” substitute “ sections 204 and 204A ”.
In Part 2 of Schedule 4 (defined expressions)—
at the appropriate places insert—,
in the entry for “overlap profit”, for “section 204” substitute “ sections 204 and 204A ”.
TIOPA 2010
In TIOPA 2010—
in section 22(8) (credit for foreign tax on overlap profit if credit for that tax already allowed), in the definition of “overlap profit”, for “section 204” substitute “ sections 204 and 204A ”, and
Commencement
The amendments made by this Schedule have effect for the tax year 2017-18 and subsequent tax years.
Relief for carried-forward losses
Amendment of general rules about carrying forward losses
Non-trading deficits from loan relationships
Part 5 of CTA 2009 (loan relationships) is amended as follows.
In the heading of Chapter 16 (non-trading deficits) at the end insert “ : pre-1 April 2017 deficits and charities ”.
In section 456 (introduction to Chapter 16) in subsection (1)—
after “if” insert, and
at the end insert.
After section 463 insert—
Non-trading losses on intangible fixed assets
Section 753 of CTA 2009 (treatment of non-trading loss) is amended as follows.
In subsection (3) (carry forward of non-trading loss)—
in the words before paragraph (a), after “not” insert “ , in any period (“the reference period”) ”;
in the words after paragraph (b) for “debit of” substitute “ loss on intangible fixed assets for ”.
After subsection (3) insert—
Expenses of management of investment business etc
Section 1223 of CTA 2009 (carrying forward expenses of management and other amounts) is amended as follows.
In subsection (1)(b)—
for “amounts” substitute “ an amount ”, and
after “(2)(c),” insert.
After subsection (3) insert—
Trading losses
Chapter 2 of Part 4 of CTA 2010 (trade losses) is amended as follows.
In section 36 (introduction to Chapter) for subsection (1) substitute—.
For the italic heading before section 37 substitute— “ Relief in loss-making period and carry back relief ”.
Section 45 (carry forward of trade loss against subsequent trade profits) is amended as follows.
In the heading, after “of” insert “ pre-1 April 2017 ”.
In subsection (1) after “accounting period” insert “ beginning before 1 April 2017 ”.
In subsection (4)(b) for “cannot be” substitute “ is not ”.
After subsection (4) insert—
In subsection (5) for “section” (in the second place it occurs) substitute “ , sections 45B, 45F and ”.
After section 45 insert—
UK property business losses
Chapter 4 of Part 4 of CTA 2010 (property losses) is amended as follows.
Section 62 (relief for losses made in UK property business) is amended as follows.
In subsection (4)—
in the words before paragraph (a), for “Subsection (5) applies” substitute “ Subsections (5) to (5C) apply ”, and
for paragraph (a) substitute—.
In subsection (5), for the words before paragraph (a) substitute “ The amount ”.
After subsection (5) insert—
Section 63 (company with investment business ceasing to carry on UK property business) is amended as follows.
For subsection (2) substitute—
In subsection (3)(b) for “that” substitute “ the next accounting ”.
After subsection (3) insert—
Restriction on deductions in respect of carried-forward losses
CTA 2010 is amended as follows.
After section 269 insert—.
Section 269C (overview of Chapter 3 of Part 7A: restriction on banking company obtaining certain deductions) is amended as follows.
After subsection (1) insert—
In subsection (2) for “269CD” substitute “ 269CC ”
Section 269CA (restriction on deductions for pre-1 April 2015 trading losses) is amended as follows.
In subsection (2), in the second sentence—
for “269CD” substitute “ 269ZF ”, and
omit “step 5 in”.
In subsection (3), for the words from “where” to the end substitute “ in relation to a banking company for an accounting period where, in determining the company's relevant trading profits for the period, the amount given by step 1 in section 269ZF(3) is not greater than nil ”.
Section 269CB (restriction on deductions for pre-1 April 2015 non-trading deficits from loan relationships) is amended as follows.
In subsection (2), in the second sentence—
for “269CD” substitute “ 269ZF ”, and
for “step 6 in subsection (1)” substitute “ subsection (2) ”.
In subsection (3), for the words from “where” to the end substitute “ in relation to a banking company for an accounting period where, in determining the company's relevant non-trading profits for the period, the amount given by step 1 in section 269ZF(3) is not greater than nil ”
Section 269CC (restriction on deductions for pre-1 April 2015 management expenses etc) is amended as follows.
In subsection (3) for the words from “does not apply” to the end substitute “ is subject to subsection (8) ”.
In subsection (7)—
in the second sentence of step 1, for “269CD” substitute “ 269ZD(5) ”,
in step 2 for the words from “which are” to the end substitute
After subsection (7) insert—
Section 269CD (relevant profits) is omitted.
Section 269CN (definitions for the purposes of Part 7A) is amended as follows.
In the definition of “relevant non-trading profits” for the words from “means” to the end substitute “ has the meaning given by section 269ZF(2) ”.
In the definition of “relevant profits” for the words from “means” to the end substitute “ has the meaning given by section 269ZD(5) ”.
In the definition of “relevant trading profits” for the words from “means” to the end substitute “ has the meaning given by section 269ZF(1) ”.
Group relief for carried-forward losses
After section 188 of CTA 2010 insert—
Insurance companies: carrying forward BLAGAB trade losses
Chapter 9 of Part 2 of FA 2012 (relief for BLAGAB trade losses) is amended as follows.
Section 124 (carry forward of BLAGAB trade losses against subsequent profits) is amended as follows.
In the heading, after “of” insert “ pre-1 April 2017 ”.
In subsection (1), after “accounting period” insert “ beginning before 1 April 2017 ”.
In subsection (5), at the end insert “ (but see also section 124D) ”.
After section 124 insert—
Carrying forward trade losses in certain creative industries
Losses of film trade
Chapter 4 of Part 15 of CTA 2009 (losses of separate film trade) is amended as follows.
Section 1209 (restriction on use of losses while film in production) is amended as follows.
In subsection (2)—
after “45” insert “ or 45B ”, and
for “set against” substitute “ deducted from ”.
After subsection (2) insert—
Section 1210 (use of losses in later periods) is amended as follows.
In subsection (2) after “45” insert “ or 45B ”.
In subsection (3) for “loss relief” substitute “ section 37 and Part 5 of CTA 2010 ”.
In subsection (4) for “Subsection (5) applies” substitute “ Subsections (5) and (5A) apply ”.
In subsection (5) after paragraph (a) insert—
After subsection (5) insert—
Section 1211 (terminal losses) is amended as follows.
In subsection (1)(c)—
after “45” insert “ , 45A or 45B ”, and
omit “trade X in”.
In subsection (3) for the words after “treated” to the end substitute
In subsection (6) for the words after “treated” to the end substitute
After subsection (7) insert—
Losses of television programme trade
Chapter 4 of Part 15A of CTA 2009 (losses of separate television programme trade) is amended as follows.
Section 1216DA (restriction on use of losses while programme in production) is amended as follows.
In subsection (2)—
after “45” insert “ or 45B ”, and
for “set against” substitute “ deducted from ”.
After subsection (2) insert—
Section 1216DB (use of losses in later periods) is amended as follows.
In subsection (2) after “45” insert “ or 45B ”.
In subsection (3) for “loss relief” substitute “ section 37 and Part 5 of CTA 2010 ”.
In subsection (4) for “Subsection (5) applies” substitute “ Subsections (5) and (5A) apply ”.
In subsection (5) after paragraph (a) insert—
After subsection (5) insert—
Section 1216DC (terminal losses) is amended as follows.
In subsection (1)(c)—
after “45” insert “ , 45A or 45B ”, and
omit “trade X in”.
In subsection (3) for the words after “treated” to the end substitute
In subsection (6) for the words after “treated” to the end substitute
After subsection (7) insert—
Losses of video game trade
Chapter 4 of Part 15B of CTA 2009 (losses of separate video game trade) is amended as follows.
Section 1217DA (restriction on use of losses while video game in development) is amended as follows.
In subsection (2)—
after “45” insert “ or 45B ”, and
for “set against” substitute “ deducted from ”.
After subsection (2) insert—
Section 1217DB (use of losses in later periods) is amended as follows.
In subsection (2) after “45” insert “ or 45B ”.
In subsection (3) for “loss relief” substitute “ section 37 and Part 5 of CTA 2010 ”.
In subsection (4) for “Subsection (5) applies” substitute “ Subsections (5) and (5A) apply ”.
In subsection (5) after paragraph (a) insert—
After subsection (5) insert—
Section 1217DC (terminal losses) is amended as follows.
In subsection (1)(c)—
after “45” insert “ , 45A or 45B ”, and
omit “trade X in”.
In subsection (3) for the words after “treated” to the end substitute
In subsection (6) for the words after “treated” to the end substitute
After subsection (7) insert—
Losses of theatrical trade
Part 15C of CTA 2009 (theatrical productions) is amended as follows.
Section 1217MA (restriction on use of losses before completion period) is amended as follows.
In subsection (1) for “Subsection (2)” substitute “ This section ”.
In subsection (2)—
after “45” insert “ or 45B ”, and
for “set against” substitute “ deducted from ”.
After subsection (2) insert—
Section 1217MB (use of losses in the completion period) is amended as follows.
In subsection (1) after “45” insert “ or 45B ”.
In subsection (2) for “loss relief” substitute “ section 37 and Part 5 of CTA 2010 ”.
Section 1217MC (terminal losses) is amended as follows.
In subsection (1)(b) after “45” insert “ or 45B ”.
In subsection (3) for the words after “treated” to the end substitute
In subsection (6) for the words after “treated” to the end substitute
After subsection (8) insert—
Losses of orchestral trade
Chapter 4 of Part 15D of CTA 2009 (losses of separate orchestral trade) is amended as follows.
Section 1217SA (restriction on use of losses before completion period) is amended as follows.
In subsection (1) for “Subsection (2)” substitute “ This section ”.
In subsection (2)—
after “45” insert “ or 45B ”, and
for “set against” substitute “ deducted from ”.
After subsection (2) insert—
Section 1217SB (use of losses in the completion period) is amended as follows.
In subsection (1) after “45” insert “ or 45B ”.
In subsection (2) for “loss relief” substitute “ section 37 and Part 5 of CTA 2010 ”.
Section 1217SC (terminal losses) is amended as follows.
In subsection (1)(b) after “45” insert “ or 45B ”.
In subsection (3) for the words after “treated” to the end substitute
In subsection (6) for the words after “treated” to the end substitute
After subsection (8) insert—
Oil activities
Part 8 of CTA 2010 (oil activities) is amended as follows.
After section 303 insert—
Section 304 (losses) is amended as follows.
After subsection (1) insert—
In subsection (5), after “45” insert “ 45B, 303B(4) or 303D(5) ”.
After subsection (6) insert—
Section 305 (group relief) is amended as follows.
In the heading, at the end insert “ and group relief for carried-forward losses ”.
After subsection (1) insert—
For subsection (4) substitute—
In section 307 (overview of Chapter 5 of Part 8: ring fence expenditure supplement) in subsection (6) for paragraph (c) substitute—.
Section 321 (supplement in respect of a post-commencement period) is amended as follows.
In subsection (2) (treatment of supplement as loss etc)—
in the words before paragraph (a) after “period” insert “ beginning before 1 April 2017 ”, and
in paragraph (b) after “forward of” insert “ pre-1 April 2017 ”.
After subsection (2) insert—
Section 323 (meaning of “ring fence losses”) is amended as follows.
In subsection (1)—
for paragraph (b) substitute—, and
in the words after paragraph (b) for “used” substitute “ carried forward ”.
In subsection (2) for “used” substitute “ carried forward ”.
For section 327 substitute—
In section 328A (adjustment of pool to remove pre-2013 losses after the initial 6 periods) in subsection (11)—
in paragraph (a) for the words from the beginning to “a loss” substitute “ no account is to be taken of a loss in determining under section 327(4) the relevant amount for a post-commencement period ”, and
in paragraph (b) for the words from “ring fence losses” to the end substitute “ any such profits are reduced by the use under section 45, 45B, 303B, 303C and 303D of ring fence losses that are not represented by the reduction ”.
Oil contractors
Part 8ZA of CTA 2010 (oil contractors) is amended as follows.
Section 356NE (losses) is amended as follows.
The existing text becomes subsection (1) of that section.
In subsection (1)—
after “the contractor” insert “ (or an amount of such a loss) ”;
after “profits)” insert “ or section 45A (carry forward of post-1 April 2017 trade loss against total profits) ”;
after “the loss” insert “ (or amount) ”.
After subsection (1) insert—
Section 356NF (group relief) is amended as follows.
In the heading, at the end insert “ and group relief for carried-forward losses ”.
After subsection (3) insert—
For subsection (4) substitute—
After section 356NG insert—
Transferred trades
Chapter 1 of Part 22 of CTA 2010 (transfers of trade without a change of ownership) is amended as follows.
In section 940A (overview of Chapter) in subsection (4) for “944” substitute “ 943A ”.
Before section 944 (but after the italic heading preceding that section) insert—
Section 944 (modified application of Chapter 2 of Part 4) is amended as follows.
In the heading for “Chapter 2 of Part 4” substitute “ section 45 ”.
Omit subsections (1) and (2).
In subsection (3)—
for “Relief” substitute “ If this Chapter applies to a transfer of a trade, relief ”, and
after “carry forward of” insert “ pre-1 April 2017 ”.
In subsection (4) after paragraph (a) insert—.
After section 944 insert—
In section 945 (cases in which predecessor retains more liabilities than assets) in subsection (4), for “section 944(3)” (in both places where those words occur) substitute “ sections 944 to 944E ”.
Section 951 (part of trade treated as separate trade) is amended as follows.
After subsection (6) insert—
In section 952 (apportionment if part of trade treated as separate trade) in subsection (1) for “or (4)” substitute “ , (4) or (8) ”.
Tax avoidance
Restriction on refreshing losses
Section 730F of CTA 2010 (meaning of “relevant carried-forward loss”) is amended as follows.
In subsection (1)—
after paragraph (a) insert—;
after paragraph (b) insert—.
In subsection (2)—
after “45” insert “ , 45A or 45B ”;
omit “against subsequent trade profits”.
In subsection (3), after “457” insert “ , 463G or 463H ”.
After subsection (2) insert—
After subsection (3) insert—
At the end insert—
Change in company ownership
Part 14 of CTA 2010 (change in company ownership) is amended as follows.
In section 672 (overview of Part) after subsection (1) insert—
Section 673 (introduction to Chapter 2: disallowance of trading losses) is amended as follows.
In subsection (2), for “of 3 years in which the change in ownership” substitute “ beginning no more than 3 years before the change in ownership occurs which is a period of 5 years in which that change ”.
In subsection (4), in the words after paragraph (b), for “3” substitute “ 5 ”.
The amendments made by this paragraph do not have effect unless both the change in ownership referred to in section 673(1) and the major change in the nature or conduct of a trade referred to in section 673(2) occur on or after 1 April 2017.
Section 674 (disallowance of trading losses) is amended as follows.
In subsection (2), after “45” insert “ , 45B, 303B or 303D ”.
After subsection (2) insert—
After section 674 insert—
After Chapter 2 insert—
After Chapter 2A insert—
After Chapter 2B insert—
After Chapter 2C insert—
After Chapter 2D insert—
Section 677 (introduction to Chapter 3) is amended as follows.
In subsection (3), for “6” substitute “ 8 ”.
In subsection (5), for “6” substitute “ 8 ”.
The amendments made by this paragraph do not have effect unless both the change in ownership referred in section 677(1) and the major change in the nature or conduct of a business referred to in section 677(3) occur on or after 1 April 2017.
Section 681 (restriction on relief for non-trading loss on intangible fixed assets) is amended as follows.
In subsection (3)(b), for “debit of” substitute “ loss on intangible fixed assets for ”.
Section 685 (apportionment of amounts) is amended as follows.
In subsection (2), in column 1 of row 4 in the table, for the words from “of CTA 2009” to the end substitute “, 463G(6) or 463H(4) of CTA 2009.
In subsection (2), in column 1 of row 6 of the table, for “debit of” substitute “ loss on intangible fixed assets for ”.
Where the change in ownership referred to in section 677(1) occurs before 13 July 2017 this paragraph has effect as if sub-paragraph (2) provided as follows—
In section 690 (meaning of “significant increase in the amount of a company's capital: amount B), in subsection (3) for “3” substitute “ 5 ”.
The amendment made by this paragraph does not have effect unless the change in ownership referred in section 677(1) occurs on or after 1 April 2017.
Section 692 (introduction to Chapter 4) is amended as follows.
In subsection (1), for paragraph (b) substitute—
In subsection (4)(a), for “3” substitute “ 5 ”.
After subsection (4) insert—
In subsection (7), in the definition of “the relevant gain”, for “within subsection (4)(a) or (b)” substitute “ (or amount of a gain) within subsection (4)(a) or (b) or (4A) ”.
The amendments made by this paragraph do not have effect unless the change in ownership referred to in section 692(1) occurs on or after 1 April 2017.
In section 696 (restriction of debits to be brought into account), in subsection (4)(b), after “461” insert “ or 463B(1)(a) ”.
Section 702 (apportionment of amounts) is amended as follows.
In subsection (2), in column 1 of row 5 of the table, for the words from “of CTA 2009” to the end substitute “, 463G(6) or 463H(4) of CTA 2009.
In subsection (2), in column 1 of row 7 of the table, for “debit of” substitute “ loss on intangible fixed assets for ”.
Where the change in ownership referred to in section 692(1) occurs before 13 July 2017 this paragraph has effect as if sub-paragraph (2) provided as follows—
Section 704 (company carrying on UK property business) is amended as follows.
In subsection (2), for “3” substitute “ 5 ”.
In subsection (10), in the words after paragraph (b), for “3” substitute “ 5 ”.
The amendments made this paragraph do not have effect unless both the change in ownership referred in section 704(1) and the major change in the nature or conduct of a trade or business referred to in section 704(2) occur on or after 1 April 2017.
Section 705 (company carrying on overseas property business) is amended as follows.
In subsection (2), for “3” substitute “ 5 ”.
In subsection (9), in the words after paragraph (b), for “3” substitute “ 5 ”.
The amendments made by this paragraph do not have effect unless both the change in ownership referred in section 705(1) and the major change in the nature or conduct of a trade or business referred to in section 705(2) occur on or after 1 April 2017.
In section 719 (meaning of “change of ownership of a company”), after subsection (4) insert—
In section 721 (when things other than ordinary share capital may be taken into account), in subsection (4), in the words before paragraph (a), after “2,” insert “ 2A, 2B, 2C, 2D, ”.
In section 727 (extended time limit for assessment) for “3” substitute “ 5 ”.
Deduction buying
Section 730C of CTA 2010 is amended as follows.
In subsection (2)—
omit “or” at the end of paragraph (a),
after paragraph (b) insert
In subsection (3), for “A deductible amount that meets conditions A and B” substitute “ In the case of a relevant claim within subsection (2)(a) or (b), a deductible amount that meets conditions A and B (a “restricted deductible amount”) ”.
After subsection (3) insert—
In subsection (4)—
for “subsection (3) does” substitute “ subsections (3) and (3A) do ”, and
for “the claim” substitute “ or as a result of, the claim concerned ”.
After subsection (7) insert—
The amendments made by this paragraph do not have effect if the relevant day (as defined in section 730B(1) of CTA 2010) is before 1 April 2017.
Northern Ireland trading losses etc
Part 8B of CTA 2010 (trading profits taxable at the Northern Ireland rate) is amended as follows.
In the italic heading before section 357JB for “section 37” substitute “ Chapter 2 of Part 4 ”.
For sections 357JB to 357JE substitute—
After section 357JH insert—
In section 357JJ (restricted deduction: Northern Ireland rate lower than main rate)—
in subsection (1) for “357JC(2), 357JE(2) or 357JG(2)” substitute “ 357JC(2) or (4), 357JG(2) or 357JHB(2) ”, and
in subsection (6) for “section 357JC(1), 357JE(1) or 357JG(1)” substitute “ 357JC(1) or (3), 357JG(1) or 357JHB(1) ”.
In section 357RF (losses of film trade: restriction on use of losses while film is in production) in subsection (2) for “subsection (2)” substitute “ subsections (2) and (3) ”.
In section 357RG (losses of film trade: use of losses in later periods) in subsection (3) after “subsections (5)” insert “ , (5A) ”.
In section 357SF (losses of television programme trade: restriction on use of losses while programme in production) in subsection (2) for “subsection (2)” substitute “ subsections (2) and (3) ”.
In section 357SG (losses of television programme trade: use of losses in later periods) in subsection (3) after “subsections (5)” insert “ , (5A) ”.
In section 357TF (losses of video game trade: restriction on use of losses while video game in development) in subsection (2) for “subsection (2)” substitute “ subsections (2) and (3) ”.
In section 357TG (losses of video game trade: use of losses in later periods) in subsection (3) after “subsections (5)” insert “ , (5A) ”.
In section 357UF (losses of theatrical trade: restriction on use of losses before completion period) in subsection (2) for “subsection (2)” substitute “ subsections (2) and (3) ”.
In section 357UO (losses of orchestral trade: restriction on use of losses before completion period) in subsection (2) for “subsection (2)” substitute “ subsections (2) and (3) ”.
Minor and consequential amendments
ICTA
Section 826 of ICTA (interest on tax overpaid) is amended as follows.
After subsection (7A) insert—
In subsection (7D) (meaning of references to the date on which corporation tax became payable) after “(7A),” insert “ (7AA), ”.
In subsection (7E) (power conferred by section 59E of TMA 1970 not to include power to change the meaning of references to the date on which corporation tax became payable) after “(7A),” insert “ (7AA) ”.
FA 1998
Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended in accordance with paragraphs 108 to 122.
In paragraph 61(1)(c) (consequential claims etc arising out of certain Revenue amendments or assessments), in the words in brackets, after “relief” insert “ or group relief for carried-forward losses ”.
In the heading of Part 8 (claims for group relief) at the end insert “ and group relief for carried-forward losses ”.
For paragraph 66 (introduction to Part 8) substitute—
In paragraph 67 (claim to be included in company tax return) omit “for group relief”.
Paragraph 68 (content of claims) is amended as follows.
In sub-paragraph (1), in the words before paragraph (a), omit “for group relief”.
After sub-paragraph (4) insert—
Paragraph 69 (claims for more or less than the amount available for surrender) is amended as follows.
In subsection (1) omit “for group relief”.
In subsection (3), in the first step, after “Part 5” insert “ or (as the case may be) Part 5A ”.
Paragraph 70 (consent to surrender) is amended as follows.
For sub-paragraph (1) substitute—
In sub-paragraph (4) omit “for group relief”.
In sub-paragraph (6)—
after “means” insert,
at the end insert—
In Paragraph 71 (notice of consent) after sub-paragraph (1) insert—
After paragraph 71 insert—
Paragraph 72 (notice of consent requiring amendment of return) is amended as follows.
For sub-paragraph (1) substitute—
Omit sub-paragraph (2).
In sub-paragraph (3) omit “or (2)”.
In sub-paragraph (4) omit “or (2)”.
Paragraph 73 (withdrawal or amendment of claim) is amended as follows.
In sub-paragraph (1) omit “for group relief”.
In sub-paragraph (2) omit “for group relief”.
Paragraph 74 (time limit for claims) is amended as follows.
In sub-paragraph (1), in the words before paragraph (a), omit “for group relief”.
In sub-paragraph (2) omit “for group relief”.
In sub-paragraph (3) omit “for group relief”.
In sub-paragraph (4) omit “for group relief” in both places those words occur.
Paragraph 75A (assessment on other claimant companies) is amended as follows.
In sub-paragraph (2) omit “group”.
In sub-paragraph (6) omit “for group relief”.
Paragraph 76 (assessment to recover excessive relief) is amended as follows.
In the italic heading omit “group”.
In sub-paragraph (1) omit “group”.
Paragraph 77 (joint amended returns) is amended as follows.
In sub-paragraph (1)—
in paragraph (a) omit “for group relief”, and
in paragraph (b) omit “group” in the second and third places that word occurs.
In sub-paragraph (3), in paragraph (a), omit “for group relief”.
CAA 2001
CAA 2001 is amended as follows.
Section 212Q (restrictions on capital allowance buying when there are postponed allowances) is amended as follows.
In subsection (4) after “37,” insert “ 45A, ”.
In subsection (6)—
after “may not be set off” insert “ by a company (“the claimant company”) ”,
after “CTA 2010” insert “ or group relief for carried forward losses in accordance with Part 5A of CTA 2010 ”, and
omit “by a company (“the claimant company”)”.
In section 138 (deferment of balancing charge arising when there is a disposal event in respect of a ship: limit on amount of deferral) in subsection (2)(b) after “45” insert “ , 45A or 45B ”.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy Act 2004
In section 27 of the Energy Act 2004 (tax exemption for NDA activities) in subsection (1)(b) for the words from “relieved” to the end substitute
CTA 2009
CTA 2009 is amended as follows.
In section 39(3) (losses of mines, quarries and other concerns)—
omit “and”, and
after “(group relief)” insert “ and Part 5A of that Act (group relief for carried forward losses) ”.
Section 364 (group relief claims involving impaired or released consortium debts) is amended as follows.
In subsection (4) at the end insert
In subsection (5) for “or 144” substitute “ , 144 or 188DH ”.
In section 371 (group relief claims involving impaired or released consortium debts: interpretation) for the definition of “group relief” substitute—.
In section 387 (treatment of deficit on basic life assurance and general annuity business: introduction) in subsection (1) for “Chapter 16” substitute “ Chapters 16 and 16A ”.
Section 1048 (treatment of deemed trading loss under section 1045) is amended as follows.
In subsection (1) at the end insert “ (“the deemed loss-making period”) ”.
In subsection (3)—
before paragraph (a) insert—,
in paragraph (a) for “the accounting period” substitute “ the deemed loss-making period ”.
After subsection (4) insert—
In subsection (5) for “Subsection (4) is” substitute “ Subsections (4) and (4B) are ”.
In section 1056 (amount of trading loss which is “unrelieved”)—
in subsection (2)(c) after “Part 5” insert “ or Part 5A ”, and
in subsection (3)(a) after “45” insert “ , 45A or 45B ”.
In section 1062(2) (restriction on losses carried forward where R&D tax credit claimed)—
for “section 45” substitute “ sections 45, 45A and 45B ”, and
omit “trading” in the second place that word occurs.
In section 1116 (meaning of “the actual reduction in tax liability”) in subsection (4) after “Part 5” insert “ or Part 5A ”.
In section 1153 (amount of loss which is “unrelieved”)—
in subsection (1)(c) after “Part 5” insert “ or Part 5A ”, and
in subsection (2)(a) after “45” insert “ , 45A, 45B ”.
In section 1158(2) (restriction on losses carried forward where land remediation tax credit claimed)—
for “section 45” substitute “ sections 45, 45A and 45B ”, and
omit “trading” in the second place that word occurs.
In section 1201 (film tax credit claimable if company has surrenderable loss) in subsection (2B)(b) after “45” insert “ or 45B ”.
In section 1216CH (television tax credit claimable if company has surrenderable loss) in subsection (4)(b) after “45” insert “ or 45B ”.
In section 1217CH (video game tax credit claimable if company has surrenderable loss) in subsection (4)(b) after “45” insert “ or 45B ”.
In section 1217KA (theatre tax credits: amount of surrenderable loss) in subsection (3)(b) after “45” insert “ or 45B ”.
In section 1217RH (orchestra tax credits: amount of surrenderable loss) in subsection (3)(b) after “45” insert “ or 45B ”.
In section 1223 (carry forward expenses of management and other amounts), in subsection (1)(b), after sub-paragraph (i) (as inserted by paragraph 6(2)(b)) insert—.
CTA 2010
CTA 2010 is amended as follows.
Section 1 (overview of Act) is amended as follows.
In subsection (2) (list of reliefs provided by Parts 4 to 7) after paragraph (f) insert—
After subsection (2) insert—
Section 17 (interpretation of Chapter 4 of Part 2) is amended as follows.
In subsection (2) (meaning of “carried-back amount”)—
after paragraph (a) insert—, and
in paragraph (c) after “459(1)(b)” insert “ or 463B(1)(b) ”.
In subsection (3) (meaning of “carried-forward amount”)—
in paragraph (a) after “forward of” insert “ pre-1 April 2017 ”,
after paragraph (a) insert—, and
in paragraph (i) after “457(3)” insert “ , 463G(6) or 463H(4) ”.
Section 46 (use of trade-related interest and dividends if insufficient trade profits) is amended as follows.
For subsection (1) substitute—
In subsection (2) at the beginning insert “ For the purposes of section 45 and 45B, ”.
In section 53 (leasing contracts and company reconstructions), in subsection (1)(e), for “or 45” substitute “ , 45, 45A or 45B ”.
In section 54 (non-UK resident company: receipts of interest, dividends or royalties), in subsection (2), for “or 45” substitute “ , 45, 45A or 45B ”.
Section 56 (restriction on reliefs for limited partners) is amended as follows.
In subsection (2)—
in paragraph (a) after “37” insert “ or 45A ”,
omit “or” at the end of paragraph (a), and
after paragraph (b) insert.
In subsection (4)—
after “37” insert “ or 45A ”, and
after “5” insert “ or 5A ”.
Section 59 (restriction on relief for members of LLPs) is amended as follows.
In subsection (2)—
in paragraph (a) after “37” insert “ or 45A ”,
omit “or” at the end of paragraph (a), and
after paragraph (b) insert.
In subsection (4)—
after “37” insert “ or 45A ”, and
after “5” insert “ or 5A ”.
Section 61 (unrelieved losses of member of LLP brought forward) is amended as follows.
In subsection (1), in the words before paragraph (a), for “This section” substitute “ Subsection (2) ”.
After subsection (2) insert—
In subsection (3)—
after “37” insert “ or 45A ”, and
after “Part 5” insert “ or Part 5A ”.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 95 (write-off of government investment: meaning of “carry forward losses”) is amended as follows.
In subsection (1), in Type 1, after “45,” insert “ 45A, 45B, ”.
In subsection (2) after “(group relief)” insert “ or Part 5A (group relief for carried forward losses) ”.
In section 99 (surrendering of losses and other amounts) in subsection (1)(c) after “16” insert “ or 16A ”.
In section 104 (meaning of “non-trading loss on intangible fixed assets” for purposes of section 99(1)(g)), for subsection (2) substitute—
In section 137 (giving of group relief: deduction from total profits) in subsection (5) (list of deductions to be made after group relief is given)—
omit “and” at the end of paragraph (b),
in paragraph (c) for “or 459” substitute “ , 459 or 463B ”, and
after paragraph (c) insert.
In section 189(2) (relief for qualifying charitable donations) at the end insert “ and group relief for carried-forward losses ”.
In section 269DA (surcharge on banking companies) in subsection (2) (calculation of “surcharge profits”)—
in the formula, after “NBGR+” insert “ NBGRCF+ ”, and
after the definition of “NBGR” insert—.
After section 269DB insert—
Section 269DC (surcharge on banking companies: meaning of “non-banking or pre-2016 loss relief) is amended as follows.
In subsection (3)(b)—
after “45” insert “ , 45A or 45B ”, and
omit “trade” in the second place that word occurs.
In subsection (4)(b)—
after “457” insert “ , 463G or 463H ”, and
omit “non-trading”.
Omit subsection (5).
In section 385 (sales of lessors: no carry back of loss against the income) in subsection (2) after “periods)” insert “ or section 45F (relief for terminal trade losses) ”.
In section 398D (sales of lessors: restrictions on use of losses etc) after subsection (2) insert—
In section 427 (sales of lessors: no carry back of loss against the income) in subsection (2) after “periods)” insert “ or section 45F (relief for terminal trade losses) ”.
Chapter 5 of Part 9 (sales of lessors: anti-avoidance provisions) is amended as follows.
In section 432 (introduction to section 433)—
in subsection (1), in the words before paragraph (a), for “Section 433 applies” substitute “ Sections 433 and 433A apply ”, and
in subsection (2) after “that section” insert “ and section 433A ”.
In section 433 (restrictions on relief for expenses treated as incurred under Chapter 3 or 4)—
in subsection (3)—
in paragraph (a) after “of” insert “ pre-1 April 2017 ”,
after that paragraph insert—
in subsection (5) after “profits)” insert “ or section 45A (carry forward of trade loss against total profits) ”, and
in subsection (6)—
after “set off” insert, and
at the end insert.
After section 433 insert—
In section 599 (real estate investment trusts: calculation of profits) after subsection (8) insert—
In section 601 (availability of group reliefs to a group UK REIT) in subsection (2)—
omit “and” at the end of paragraph (f), and
after paragraph (g) insert.
In section 705E (shell companies: restriction on relief for non-trading loss on intangible fixed assets), in subsection (3)(b), for “debit of” substitute “ loss on intangible fixed assets for ”.
In section 705F(2) (shell companies: apportionment of amounts), in column 1 of the table—
in row 4, after “457(1)” insert “ , 463G or 463H ”,
in row 4, omit “basic rule for deficits:”,
in row 5, omit from “, but excluding” to the end, and
in row 6, omit from “and treated” to the end.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 888 (restrictions on leasing partnership losses) is amended as follows.
In subsection (3) after “37” insert “ or 45A ”.
In subsection (4)—
after “set off” insert, and
at the end insert.
In subsection (6) in the definition of “relevant loss relief provision”—
in paragraph (a) after “of” insert “ pre-1 April 2017 ”, and
after that paragraph insert—.
Schedule 4 (index of defined expressions) is amended as follows.
At the appropriate places insert—
In the entry for “75% subsidiary (except in Part 5)” after “Part 5” insert “ and Part 5A ”.
TIOPA 2010
TIOPA 2010 is amended as follows.
In section 54 (double taxation relief by way of credit: non-trading debits on loan relationships) in subsection (7)—
in paragraph (b) of the definition of “carry-back claim”, after “459(1)(b)” insert “ or 463B(1)(b) ”,
in paragraph (b) of the definition of “carry-forward provision”, after “457(1)” insert “ , 463G(5) or 463H(4) ”, and
in paragraph (b) of the definition of “current-year provision or claim”, after “459(1)(a)” insert “ or 463B(1)(a) ”.
In section 55 (double taxation relief by way of credit: current year's non-trading deficits on loan relationships)—
in subsection (4)(b), after “459(1)(a)” insert “ or 463B(1)(a) ”, and
in subsection (5), for “or 459(1)(a)” substitute “ , 459(1)(a) or 463B(1)(a) ”.
In section 156(1) (meaning of “losses” in Part 4)—
in paragraph (e) after “Chapter 16” insert “ or Chapter 16A ”,
omit “or” at the end of paragraph (f), and
after paragraph (g) insert
In section 371IF (determining the profits of a CFC's qualifying loan relationship), in paragraph (b) of step 5, after “16” insert “ or Chapter 16A ”.
After section 371SK insert—
In subsection (2)(a) of section 371SL (group relief etc)—
after “(group relief)” insert “ or Part 5A of that Act (group relief for carried-forward losses) ”, and
after “by way of group relief” insert “ or group relief for carried-forward losses ”.
F (No. 3) A 2010
In paragraph 10 of Schedule 9 to F(No.3)A 2010 (interest), the new Part A1 to be inserted into Schedule 54 to FA 2009 is amended as follows.
In paragraph A1 (interest on tax repaid as a result of carrying back a non-trading deficit on company's loan relationships)—
in sub-paragraph (1)(c) for “or 459(1)(b)” substitute “ , 459(1)(b) or 463B(1)(b) ”, and
in sub-paragraph (2) for “or 459(1)(b)” substitute “ , 459(1)(b) or 463B(1)(b) ”.
After paragraph A2 insert—
In paragraph A3 (interest on tax repaid as a result of a claim under section 77 of TIOPA 2010) in sub-paragraph (4) after “A4” insert “ or A5 ”.
After paragraph A4 insert—
FA 2012
FA 2012 is amended as follows.
In section 78 (meaning of expressions used in section 76), in subsection (5), for the words from “means” to the end substitute
In section 93 (minimum profits test), in subsection (2), in the words after paragraph (b), for “and 124” substitute “ , 124, 124A and 124C ”.
In section 104 (meaning of “the adjusted amount”)—
in subsection (3), after “124” insert “ , 124A or 124C ”;
in subsection (4), for “that section” substitute “ any of those sections ”;
in subsection (5)(a), for “or no relief is available under that section,” substitute “ , 124A or 124C or no relief is available under those sections, ”.
In section 125 (group relief), at the end insert—
Section 126 (restrictions in respect of non-trading deficit) is amended as follows.
After subsection (1) insert—
In subsection (2)—
for “The reference” substitute “ In this section references ”;
for “is a reference” substitute “ are ”.
In section 127 (no relief against policyholders' share of I-E profit), in subsection (3)—
before paragraph (a) insert—;
after paragraph (c) insert—.
Commencement etc
Parts 1 to 9 and 11
The amendments made by Parts 1 to 9 and 11 of this Schedule have effect in relation to accounting periods beginning on or after 1 April 2017.
For the purposes of those amendments, where a company has an accounting period beginning before 1 April 2017 and ending on or after that date (“the straddling period”)—
so much of the straddling period as falls before 1 April 2017, and so much of that period as falls on or after that date, are treated as separate accounting periods, and
where it is necessary to apportion an amount for the straddling period to the two separate accounting periods, it is to be apportioned—
in accordance with section 1172 of CTA 2010 (time basis), or
if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.
But sub-paragraph (2)(b) is to be ignored if paragraph 191 or 192 applies.
This paragraph applies if—
an accounting period of a company (“the straddling period”) is treated as two separate accounting periods under paragraph 190(2)(a),
it is necessary to apportion an amount (“the amount concerned”) for the straddling period to the two separate accounting periods, and
the amount concerned is either—
an amount chargeable to corporation tax which would have been less but for Part 10 of TIOPA 2010 (corporate interest restriction), or
an amount in respect of which corporation tax relief is available which would have been greater but for Part 10 of TIOPA 2010.
The amount concerned is to be apportioned as follows—Step 1 Determine what the amount concerned would have been but for Part 10 of TIOPA 2010 (“the notional amount”). Step 2 Determine what amount of the notional amount would have been apportioned to the first separate accounting period had paragraph 190(2)(b) applied (“the notional apportioned amount”). If the notional apportioned amount is less than the amount concerned, proceed with steps 3 and 4. If the notional apportioned amount is equal to or greater than the amount concerned, the whole of the amount concerned is to be apportioned to the first separate accounting period. Step 3 Take so much of the amount concerned as is equal to the notional apportioned amount and apportion it to the first accounting period. Step 4 Take the remainder of the amount concerned and apportion it to the second separate accounting period.
This paragraph applies if—
an accounting period of a company (“the straddling period”) is treated as two separate accounting periods under paragraph 190(2)(a),
it is necessary to apportion an amount (“the amount concerned”) for the straddling period to the two separate accounting period,
the amount concerned is an amount chargeable to corporation tax, and
the amount concerned would not have arisen but for Part 10 of TIOPA 2010 (whether or not an amount in respect of which corporation tax relief would have been available would have arisen instead).
The whole of the amount concerned is apportioned to the second separate accounting period.
Part 10
Transitional provision
An amount of a non-trading deficit from a company's loan relationships which is carried forward under section 463H of CTA 2009 is to be disregarded for the purposes of section 730F of CTA 2010 (as amended by paragraph 69(4)), unless it is a post-13 July 2017 amount.
An amount of a non-trading deficit from a company's loan relationships which is deducted under section 463H(5) of CTA 2009 is to be disregarded for the purposes sections 188DD and 188ED of CTA 2010, unless it is a post-13 July 2017 amount.
For the purposes of this paragraph an amount of a non-trading deficit from a company's loan relationships (“the deficit amount”) is a post-13 July 2017 amount—
if the deficit period begins on or after 13 July 2017 or,
(where the deficit period is one that begins before, and ends on or after 13 July 2017 (a “straddling deficit period”)), so far as the deficit is apportioned under sub-paragraphs (4) and (5) to the part of the deficit period that begins with 13 July 2017.
For the purposes of sub-paragraph (3)(b)—
a straddling deficit period is to be treated as consisting of two parts, namely the part that precedes, and the part that begins with, 13 July 2017,
the deficit amount is to be apportioned to those parts (see sub-paragraph (5)).
The apportionment is to be made—
in accordance with section 1172 of CTA 2010 (time basis), or
if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.
In this paragraph “deficit period” is to be interpreted in accordance with section 463A(2) of CTA 2009.
Corporate interest restriction
New Part 10 of TIOPA 2010
In TIOPA 2010, after Part 9A insert—
New Schedule 7A to TIOPA 2010
In TIOPA 2010, after Schedule 7 insert—
Consequential amendments
TMA 1970
In section 98 of TMA 1970 (special returns, etc), in the table in subsection (5), in the first column, the entry relating to regulations under section 283, 284, 285, 295 or 297 of TIOPA 2010 is repealed.
In consequence of sub-paragraph (1), paragraph 157(3) of Schedule 8 to TIOPA 2010 is repealed.
FA 1998
In paragraph 88 of Schedule 18 to FA 1998 (conclusiveness of amounts stated in company tax returns), at the end insert—
CTA 2009
In section A1 of CTA 2009 (overview of the Corporation Tax Acts), in subsection (2)—
omit paragraph (i), and
after paragraph (ja) insert—.
CTA 2010
CTA 2010 is amended as follows.
After section 937N (risk transfer schemes) insert—
In section 938N (group mismatch schemes: priority), for paragraph (e) substitute—
In section 938V (tax mismatch schemes: priority), for paragraph (d) substitute—
TIOPA 2010: consequential renumbering
In consequence of the insertion of a new Part 10 of TIOPA 2010 by Part 1 of this Schedule, the existing Part 10 of that Act becomes a new Part 11.
The following provisions of TIOPA 2010 are repealed—but the repeals made by this sub-paragraph do not affect any orders made under section 375 or 376 before the passing of this Act.
the existing sections 375 and 376 (which contain powers that are no longer exercisable), and
the existing section 381(2)(e) and (f) (which refer to those sections);
As a result of the provision made by sub-paragraphs (1) and (2), the following provisions of TIOPA 2010 are renumbered as follows—
the existing section 372 becomes section 499;
the existing section 373 becomes section 500;
the existing section 374 becomes section 501;
the existing section 377 becomes section 502;
the existing section 378 becomes section 503;
the existing section 379 becomes section 504;
the existing section 380 becomes section 505;
the existing section 381 becomes section 506;
the existing section 382 becomes section 507.
Consequently—
in section 287(2A) of TCGA 1992, for “372” substitute “ 499 ”;
in section 1014(2)(fa) of ITA 2007, for “372” substitute “ 499 ”;
in section 1171(2)(f) of CTA 2010, for “372” substitute “ 499 ”;
in section 1 of TIOPA 2010—
in subsection (4), for “10” substitute “ 11 ”;
in subsection (5), for “373” substitute “ 500 ”;
in section 381(2) of TIOPA 2010—
in paragraph (a), for “372” substitute “ 499 ”;
in paragraph (b), for “373” substitute “ 500 ”;
in paragraph (d), for “374” substitute “ 501 ”;
in paragraph (g), for “377(2) and (3)” substitute “ 502(2) and (3) ”;
in paragraph (h), for “380” substitute “ 505 ”;
in paragraph (i), for “382” substitute “ 507 ”.
In section 379(1) and (2) of TIOPA 2010 (index of defined expressions), for “8” substitute “ 10 ”.
TIOPA 2010: repeal of Part 7
Part 7 of TIOPA 2010 (tax treatment of financing costs and income) is repealed; and accordingly the following provisions of that Act are also repealed—
section 1(1)(d) (overview);
in Schedule 9, Part 7 (transitional provision);
in Schedule 11, Part 5 (index of defined expressions).
In consequence of sub-paragraph (1), the following enactments (which amend provisions repealed by that sub-paragraph) are repealed—
in F(No.3)A 2010, section 11 and Schedule 5;
in FA 2011, in Schedule 13, paragraphs 29 and 30;
in FA 2012—
section 31 and Schedule 5;
in Schedule 16, paragraphs 242 and 243(a);
in Schedule 20, paragraphs 43 to 45;
in FA 2013, section 44;
in FA 2014, section 39.
The following regulations were made under powers contained in Part 7 of TIOPA 2010 and are therefore revoked by virtue of sub-paragraph (1)—
the Corporation Tax (Financing Costs and Income) Regulations 2009 (S.I. 2009/3173);
the Corporation Tax (Tax Treatment of Financing Costs and Income) (Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217);
the Corporation Tax (Exclusion from Short-Term Loan Relationships) Regulations 2009 (S.I. 2009/3313);
the Tax Treatment of Financing Costs and Income (Available Amount) Regulations 2010 (S.I. 2010/2929);
the Tax Treatment of Financing Costs and Income (Correction of Mismatches) Regulations 2010 (S.I. 2010/3025);
the Taxation (International and Other Provisions) Act 2010 (Part 7) (Amendment) Regulations 2012 (S.I. 2012/3045);
the Tax Treatment of Financing Costs and Income (Correction of Mismatches: Partnerships and Pensions) Regulations 2012 (S.I. 2012/3111);
the Tax Treatment of Financing Costs and Income (Excluded Schemes) Regulations 2013 (S.I. 2013/2892);
the Tax Treatment of Financing Costs and Income (Change of Accounting Standards: Investment Entities) Regulations 2015 (S.I. 2015/662).
TIOPA 2010: other amendments
TIOPA 2010 is amended as follows.
In section 1 (overview of Act), in subsection (1)—
omit the “and” at the end of paragraph (d), and
after paragraph (e) insert—
In section 155 (transfer pricing: “potential advantage” in relation to United Kingdom taxation), in subsection (6), for paragraph (a) substitute—.
In section 157 (direct participation), in subsection (1)—
omit the “and” at the end of paragraph (c), and
after paragraph (d) insert
In section 159 (indirect participation: potential direct participant), in subsection (1)—
omit the “and” at the end of paragraph (c), and
after paragraph (d) insert
In section 160 (indirect participation: one of several major participants), in subsection (1)—
omit the “and” at the end of paragraph (c), and
after paragraph (d) insert
In section 259CB (financial instruments: hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), in subsection (6), for paragraph (e) substitute—
In section 259DC (hybrid transfer deduction/non-inclusion mismatches and their extent), in subsection (5), for paragraph (d) substitute—
After section 259NE (treatment of a person who is a member of a partnership) insert—
Chapter 3 of Part 9A (CFCs: the CFC charge gateway) is amended as follows.
In section 371CE (which makes provision for determining whether Chapter 6 of Part 9A applies)—
in subsection (2)(a), after “period” insert “ (see section 371CEA) ”, and
omit subsections (4) and (5).
After section 371CE insert—
In consequence of the amendments made by this paragraph, in Schedule 47 to FA 2013, omit paragraph 17.
Chapter 9 of Part 9A (CFCs: exemption for profits from qualifying loan relationships) is amended as follows.
For section 371IE substitute—
In section 371IJ (claims), in subsection (6), for “the tested income amount or the tested expense amount mentioned in section 371IE(2)” substitute “ the aggregate net tax-interest expense that is mentioned in section 371IE ”.
Chapter 19 of Part 9A (CFCs: assumed taxable total profits, assumed total profits and the corporation tax assumptions) is amended as follows.
In section 371SL (group relief etc), at the end insert—
After section 371SL insert—
In Schedule 11, at the end insert—
Commencement and transitional provision
Commencement: new Part 10 of TIOPA
The corporate interest restriction amendments have effect in relation to periods of account of worldwide groups that begin on or after 1 April 2017.
In this paragraph “the corporate interest restriction amendments” means the amendments made by Parts 1 to 3 of this Schedule, apart from those made by paragraph 11 (repeal of Part 7 of TIOPA 2010).
Any regulations made by the Treasury or Commissioners under Part 10 of TIOPA 2010 before 1 April 2018 may have effect in relation to periods of account of worldwide groups that begin on or after 1 April 2017.
Sub-paragraphs (6) to (11) apply if—
financial statements of a worldwide group are drawn up by or on behalf of the ultimate parent in respect of a period that begins before, and ends on or after, 1 April 2017,
the period in respect of which the financial statements are drawn up is 18 months or less, and
the financial statements are drawn up before the end of the period of 30 months beginning with the beginning of the period in respect of which they are drawn up.
In sub-paragraphs (6) to (11)—
“the group's actual financial statements” means the financial statements mentioned in sub-paragraph (4);
“the straddling period of account” means the period in respect of which those financial statements are drawn up.
For the purposes of Part 10 of TIOPA 2010, the group's actual financial statements are treated as not having been drawn up.
Instead, financial statements of the worldwide group are treated for those purposes as having been drawn up in respect of each of the following periods—
the period beginning at the time the straddling period of account begins and ending with 31 March 2017, and
the period beginning with 1 April 2017 and ending at the time the straddling period of account ends.
Where condition C or D in section 481 of TIOPA 2010 is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (7) are treated as drawn up in accordance with the generally accepted accounting principles and practice with which the group's actual financial statements were drawn up.
Where neither of those conditions is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (7) are IAS financial statements.
Where, for the purpose of determining amounts recognised in the financial statements treated as drawn up by sub-paragraph (7), it is expedient to apportion any amount that is recognised in the group's actual financial statements, the apportionment is to be made in accordance with section 1172 of CTA 2010 (apportionment on a time basis).
But if it appears that apportionment in accordance with that section would work unjustly or unreasonably, the apportionment is to be made on a just and reasonable basis.
Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.
Commencement: repeal of Part 7 of TIOPA 2010
The repeals and revocations made by paragraph 11 of this Schedule have effect in relation to periods of account of the worldwide group that begin on or after 1 April 2017.
Sub-paragraphs (4) to (10) apply if financial statements of the worldwide group are drawn up in respect of a period that begins before, and ends on or after, 1 April 2017.
In sub-paragraphs (4) to (10)—
“the group's actual financial statements” means the financial statements mentioned in sub-paragraph (2);
“the straddling period of account” means the period in respect of which those financial statements are drawn up.
For the purposes of Part 7 of TIOPA 2010, the group's actual financial statements are treated as not having been drawn up.
Instead, financial statements of the worldwide group are treated for those purposes as having been drawn up in respect of each of the following periods—
the period beginning at the time the straddling period of account begins and ending with 31 March 2017, and
the period beginning with 1 April 2017 and ending at the time the straddling period of account ends.
Where condition B, C or D in regulation 2 of the Acceptable Financial Statements Regulations is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (5) are treated as drawn up in accordance with the generally accepted accounting principles and practice with which the group's actual financial statements were drawn up.
Where none of those conditions is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (5) are IAS financial statements.
Where, for the purpose of determining amounts recognised in the financial statements treated as drawn up by sub-paragraph (5), it is expedient to apportion any amount that is recognised in the group's actual financial statements, the apportionment is to be made in accordance with section 1172 of CTA 2010 (apportionment on a time basis).
But if it appears that apportionment in accordance with that section would work unjustly or unreasonably, the apportionment is to be made on a just and reasonable basis.
In sub-paragraph (6), “the Acceptable Financial Statements Regulations” means the Corporation Tax (Tax Treatment of Financing Costs and Income) (Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217).
Expressions used in this paragraph and in Part 7 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.
Time limits for elections relating to financial statements of a worldwide group
In section 484 of TIOPA 2010, subsection (5) (which requires the date specified in an election under subsection (3) of that section to be on or after the day on which the election is made) does not apply in relation to an election made on or before 31 March 2018.
In section 486 of that Act, subsection (5)(a) (which requires an election under that section to be made before the end-day of the new period of account) does not apply in relation to an election made on or before 31 March 2018.
Time limit relating to appointment of reporting company or filing interest restriction return
Paragraph 1(4)(a) of Schedule 7A to TIOPA 2010 (notice of the appointment of reporting company ineffective if given outside the period specified in that provision) does not apply to a notice that—
is given on or before 31 March 2018, and
would otherwise be of no effect by reason only of the expiry of the period specified in that provision.
Paragraph 2(4)(a) of that Schedule (notice of the revocation of the appointment of reporting company ineffective if given outside the period specified in that provision) does not apply to a notice that—
is given on or before 31 March 2018, and
would otherwise be of no effect by reason only of the expiry of the period specified in that provision.
Where the date determined under paragraph 7(5) of that Schedule as the filing date in relation to a period of account of a worldwide group would (apart from this sub-paragraph) be a date before 30 June 2018, that provision has effect as if it provided for the filing date in relation to the period to be 30 June 2018.
Change of accounting policy
For the purposes of Part 10 of TIOPA 2010 a debit or credit to which this paragraph applies is to be ignored.
This paragraph applies to a debit or credit if—
it is brought into account under the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271), and
the later period, in relation to the change of accounting policy to which the debit or credit relates, begins before 1 April 2017.
In sub-paragraph (2) “the later period” has the same meaning as in the regulations mentioned in that sub-paragraph.
Adjustments under Schedule 7 to F(No.2)A 2015
For the purposes of Part 10 of TIOPA 2010 a debit or credit to which this paragraph applies is to be ignored.
This paragraph applies to a debit or credit if—
it is brought into account for the purposes of Part 5 of CTA 2009 by virtue of paragraphs 115 and 116 of Schedule 7 to F(No.2)A 2015 (transitional adjustments relating to loan relationships), or
it is brought into account for the purposes of Part 7 of CTA 2009 by virtue of paragraphs 120 and 121 of that Schedule (transitional adjustments relating to derivative contracts).
Power to make elections under Disregard Regulations for pre-1 April 2020 derivative contracts
A company which is a UK group company of a worldwide group on 1 April 2017 may elect for the Disregard Regulations to have effect as if—
the company had made an election (“the disregard election”) under regulation 6A of those Regulations for the purposes of regulation 6(1)(a) of those Regulations,
the disregard election applied to regulations 7, 8 and 9 of those Regulations, and
the disregard election had effect in relation to derivative contracts entered into by the company before 1 April 2020.
The election has effect for the calculation under Part 10 of TIOPA 2010 of—
the tax-interest expense amounts and tax-interest income amounts of the company and any relevant transferee company, and
the adjusted corporation tax earnings under section 406 of that Act of the company and any relevant transferee company.
A company is a “relevant transferee company” if regulation 6B or 6C of the Disregard Regulations applies in relation to the company as the transferee mentioned in the regulation (on the assumption that an election has been made before the transfer under this paragraph).
An election under this paragraph has effect only if every company which was a UK group company of the worldwide group on 1 April 2017 (other than one which was dormant on that date or at the time the election is made) also makes an election under this paragraph.
An election under this paragraph—
must be made before 1 April 2018, and
is irrevocable.
Section 457 of TIOPA 2010 is to apply in relation to debits resulting from an election under this paragraph.
In this paragraph “the Disregard Regulations” means the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256).
Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.
Qualifying infrastructure companies
In the case of an accounting period of a company beginning before 1 April 2018, the company may make an election under section 433 or 444 of TIOPA 2010 before that date.
Companies making an election under section 435 of TIOPA 2010 before 1 April 2018 may specify a date in the election from which it has effect which is before the date on which the election is made.
This paragraph applies in the case of an accounting period of a company beginning before 1 April 2018 (“the transitional accounting period”) if—
the company does not meet the public infrastructure assets test, or the public infrastructure income test, for the transitional accounting period, but
in the case of each test that it does not meet as mentioned in paragraph (a), the company would meet the test for an accounting period that includes that date and is at least 3 months long.
For the purposes of section 433 of TIOPA 2010 the company is treated as meeting the test (or tests) for the transitional accounting period.
For the purposes of sections 438 and 440 to 442 of TIOPA 2010 such adjustments to the relevant amounts are to be made as are just and reasonable, having regard to the extent to which, but for this paragraph, the company would not have met the public infrastructure assets test, or the public infrastructure income test, for the transitional accounting period.
For this purpose “the relevant amounts” means—
amounts that would otherwise have qualified as exempt amounts under section 438,
amounts that would otherwise have been treated as mentioned in section 440,
the tax-EBITDA of the company, and
the amounts that would otherwise have been left of account as a result of section 442.
Expressions used in this paragraph and in section 433 of TIOPA 2010 have the same meaning in this paragraph as they have in that section.
Counteracting effect of avoidance arrangements
This paragraph applies in relation to section 461 of TIOPA 2010.
Section 461 applies in relation to arrangements whenever entered into.
Arrangements are not “relevant avoidance arrangements” for the purposes of section 461 so far as—
they secure that an amount paid before 1 April 2017 is brought into account in an accounting period ending before that date, and
directly in consequence of the amount being brought into account as mentioned in paragraph (a), there is a reduction in the tax-interest expense amounts that could otherwise have been left out of account under Part 10 of TIOPA 2010.
If an accounting period begins before 1 April 2017 and ends on or after that date, sub-paragraph (3) is to have effect as if so much of the accounting period as falls before that date, and so much of that period as falls on or after that date, were treated as separate accounting periods.
Arrangements are not “relevant avoidance arrangements” for the purposes of section 461 if the obtaining of any tax advantages that would otherwise arise from them can reasonably be regarded as arising wholly from commercial restructuring arrangements entered into in connection with the commencement of Part 10 of TIOPA 2010.
For this purpose “commercial restructuring arrangements” means—
arrangements that, but for that Part, would have resulted in significantly more corporation tax becoming payable as a result of one or more loan relationships being brought within the charge to corporation tax, or
arrangements that—
are designed to secure, in a way that is wholly consistent with its policy objectives, the benefit of a relief expressly conferred by a provision of that Part, and
are effected by taking only ordinary commercial steps in accordance with a generally prevailing commercial practice.
This paragraph is to be read as if it formed part of section 461.
Commencement of orders or regulations containing consequential provision
This paragraph applies in relation to any order or regulations made before 1 April 2018 by the Treasury or Commissioners containing provision that is consequential on provision made by this Schedule.
Any order or regulations to which this paragraph applies may contain provision (however expressed) for securing that the consequential provision made by the order or regulations has effect in accordance with paragraph 25 (commencement) as if the consequential provision were included in the corporate interest restriction amendments mentioned in that paragraph.
Interpretation
References in this Part of this Schedule to Part 10 of TIOPA 2010 are to Part 10 of that Act as inserted by Parts 1 and 2 of this Schedule.
Relief for production of museum and gallery exhibitions
Amendment of CTA 2009
After Part 15D of CTA 2009 insert—
Consequential amendments
ICTA
Section 826 of ICTA (interest on tax overpaid) is amended as follows.
In subsection (1), after paragraph (fd) insert—.
In subsection (3C), for “or orchestra tax credit” substitute “ , orchestra tax credit or museums and galleries exhibition tax credit ”.
In subsection (8A)—
in paragraph (a), for “or (fd)” substitute “ , (fd) or (fe) ”, and
in paragraph (b)(ii), after “orchestra tax credit” insert “ or museums and galleries exhibition tax credit ”.
In subsection (8BA), after “orchestra tax credit” (in both places) insert “ or museums and galleries exhibition tax credit ”.
FA 1998
Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended in accordance with paragraphs 4 to 6.
In paragraph 10 (other claims and elections to be included in return), in sub-paragraph (4), for “or 15D” substitute “ , 15D or 15E ”.
Paragraph 52 (recovery of excessive repayments etc) is amended as follows.
In sub-paragraph (2), after paragraph (bh) insert—.
In sub-paragraph (5)—
after paragraph (aj) insert—, and
in the words after paragraph (b), after “(aj)” insert “ , (ak) ”.
In Part 9D (certain claims for tax relief)—
in the heading, for “or 15D” substitute “ , 15D or 15E ”, and
in paragraph 83S (introduction), after sub-paragraph (f) insert—
CAA 2001
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FA 2007
In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (meaning of “corporation tax credit”), omit the “or” at the end of paragraph (ivd) and after that paragraph insert—.
CTA 2009
CTA 2009 is amended in accordance with paragraphs 10 to 14.
In section 104BA (restriction on claiming other tax reliefs), after subsection (4) insert—
In Part 8 (intangible fixed assets), in Chapter 10 (excluded assets), after section 808D insert—
In section 1040ZA (restriction on claiming other tax reliefs), after subsection (4) insert—
In section 1310 (orders and regulations), in subsection (4), after paragraph (eo) insert—.
In Schedule 4 (index of defined expressions), insert at the appropriate places—.
FA 2009
In Schedule 54A to FA 2009 (which is prospectively inserted by F(No. 3)A 2010 and contains provision about the recovery of certain amounts of interest paid by HMRC), in paragraph 2—
in sub-paragraph (2), omit the “or” at the end of paragraph (h) and after paragraph (i) insert;
in sub-paragraph (4), for “(i)” substitute “ (j) ”.
CTA 2010
In Part 8B of CTA 2010 (trading profits taxable at Northern Ireland rate), in section 357H(7) (introduction), after “Chapter 14A for provision about orchestra tax relief;” insert “ Chapter 14B for provision about museums and galleries exhibition tax relief; ”.
In Part 8B of CTA 2010, after section 357UQ insert—
Schedule 4 to CTA 2010 (index of defined expressions) is amended as follows.
In the entry for “Northern Ireland expenditure”—
for “14A” substitute “ 14B ”, and
for “and 357UJ(2)” substitute “ , 357UJ(2) and 357UR(2) ”.
Insert at the appropriate places—
FA 2016
In Schedule 24 to FA 2016 (tax advantages constituting the grant of state aid), in Part 1, in the table headed “Creative tax reliefs”, after the entry for “Orchestra tax relief” insert—
Commencement
Any power to make regulations conferred on the Treasury by virtue of this Schedule comes into force on the day on which this Act is passed.
The amendments made by the following provisions of this Schedule have effect in relation to accounting periods beginning on or after 1 April 2017—
Part 1, and
in Part 2, paragraphs 2 to 15 and 19.
Sub-paragraph (3) applies where a company has an accounting period beginning before 1 April 2017 and ending on or after that date (“the straddling period”).
For the purposes of Part 15E of CTA 2009—
so much of the straddling period as falls before 1 April 2017, and so much of that period as falls on or after that date, are separate accounting periods, and
any amounts brought into account for the purposes of calculating for corporation tax purposes the profits of a trade for the straddling period are apportioned to the two separate accounting periods on such basis as is just and reasonable.
Section 4 of CT(NI)A 2015 (power to make consequential amendments) has effect as if paragraphs 16 to 18 of this Schedule were contained in that Act.
references to Part 8B of CTA 2010 were to that Part as amended by paragraphs 16 and 17 of this Schedule, and
references to the amendments made by Schedules 1 and 2 to CT(NI)A 2015 included the amendments made by paragraph 18 of this Schedule.
Trading profits taxable at the Northern Ireland rate
Amendments relating to SMEs
Amendments of CTA 2010
CTA 2010 is amended as follows.
Section 357H (introduction) is amended as follows.
In subsection (5)—
after “that is an SME” insert “ and is a Northern Ireland employer ”;
for “that is not an SME” substitute
Section 357KA (meaning of “Northern Ireland company”) is amended as follows.
In subsection (1)(b), for “the SME condition” substitute “ the SME (Northern Ireland employer) condition, the SME (election) condition ”.
In subsection (2), for “SME condition” substitute “ SME (Northern Ireland employer) condition ”.
After subsection (2) insert—
In subsection (4), after the definition of “Northern Ireland employer” insert—.
After subsection (3) insert—
Section 357KE (Northern Ireland workforce conditions) is amended as follows.
In subsection (2)—
omit the “and” at the end of paragraph (b), and
at the end of paragraph (c) insert
After subsection (7) insert—
After section 357KE insert—
In the heading of Chapter 6 of Part 8B, at the end insert “ that are Northern Ireland employers ”.
In section 357M (Chapter 6: introductory), in subsection (1), for “SME condition” substitute “ SME (Northern Ireland employer) condition ”.
In the heading of Chapter 7 of Part 8B, after “losses etc:” insert “ SMEs that are not Northern Ireland employers and ”.
In section 357N (Chapter 7: introductory), in subsection (1), after “by virtue of” insert “ the SME (election) condition or ”.
Section 357OB (Northern Ireland intangibles credits and debits: SMEs) is amended as follows.
In the heading, at the end, insert “ that are Northern Ireland employers ”.
In subsection (1)(a), for “SME condition” substitute “ SME (Northern Ireland employer) condition ”.
Section 357OC (Northern Ireland intangibles credits and debits: large companies) is amended as follows.
In the heading, after “debits:” insert “ SMEs that are not Northern Ireland employers and ”.
In subsection (1), after “by virtue of” insert “ the SME (election) condition or ”.
Section 357VB (relevant Northern Ireland IP profits: SMEs) is amended as follows.
In the heading, at the end, insert “ that are Northern Ireland employers ”.
In subsection (1)(a), for “SME condition” substitute “ SME (Northern Ireland employer) condition ”.
Section 357VC (relevant Northern Ireland IP profits: large companies) is amended as follows.
In the heading, after “profits:” insert “ SMEs that are not Northern Ireland employers and ”.
In subsection (1)(a), after “by virtue of” insert “ the SME (election) condition or ”.
Section 357WA (meaning of “Northern Ireland firm”) is amended as follows.
In subsection (1)(b), for “SME partnership condition” substitute “ SME (Northern Ireland employer) partnership condition, the SME (election) partnership condition ”.
In subsection (2), for “SME partnership condition” substitute “ SME (Northern Ireland employer) partnership condition ”.
After subsection (2) insert—
After subsection (3) insert—
In subsection (4)—
in the opening words, for “to subsections (2) and (3)” substitute “ in relation to a firm ”;
for paragraph (b) substitute—
In subsection (5) omit paragraph (c).
After section 357WB, insert—
In section 357WC (Northern Ireland profits etc of firm determined under Chapter 6), in subsection (2), for “SME partnership condition” substitute “ SME (Northern Ireland employer) partnership condition ”.
Section 357WD (Northern Ireland profits etc of firm determined under Chapter 7) is amended as follows.
For subsections (1) to (3) substitute—
In subsection (4), after “losses etc:” insert “ SMEs that are not Northern Ireland employers and ”.
In section 357WE (sections 357WC and 357WD: interpretation), omit subsection (2).
Section 357WF (application of section 747 of CTA 2009 to Northern Ireland firm) is amended as follows.
In paragraph (e)—
for “SME condition” substitute “ SME (Northern Ireland employer) condition ”;
for “SME partnership condition” substitute “ SME (Northern Ireland employer) partnership condition ”.
After paragraph (e) insert—.
Section 357WG (application of Part 8A to Northern Ireland firm) is amended as follows.
In paragraph (g)—
for “SME condition” (in the first place it appears) substitute “ SME (Northern Ireland employer) condition ”;
for “SME condition” (in the second place it appears) substitute “ SME (Northern Ireland employer) partnership condition ”.
For paragraph (h) substitute—
In Schedule 4 (index of defined expressions)—
omit the entry for “SME condition (in Part 8B)”;
at the appropriate places, insert—
Amendments relating to capital allowances
CAA 2001 is amended in accordance with paragraphs 23 and 24.
Section 6A (“NIRE company” and “Northern Ireland SME company”) is amended as follows.
In the heading, for “Northern Ireland SME company” substitute “ SME (Northern Ireland employer) company ”.
In the definition of “NIRE company”, after “by virtue of” insert “ the SME (election) condition or ”.
For “Northern Ireland SME company” substitute “ SME (Northern Ireland employer) company ”.
For “SME condition” substitute “ SME (Northern Ireland employer) condition ”.
In the following provisions, for “a Northern Ireland SME company” substitute “ an SME (Northern Ireland employer) company ”
section 6C(1)(a) and (c);
section 6D(1);
section 6E(1);
section 61(4B)(a);
section 66B(1)(a), (b) and (c);
section 66C(b);
section 66D(1)(a) and (b);
section 66E(b);
section 212ZE(b);
Schedule 1.
In CT(NI)A 2015, in Schedule 1, in Part 6 (capital allowances: transitional provision), in paragraphs 20(1)(a) and 21(1)(a), for “a Northern Ireland SME company” substitute “ an SME (Northern Ireland employer) company ”.
Minor amendments
In section 357IA of CTA 2010 (power of Northern Ireland Assembly to set Northern Ireland rate), for “Minister of Finance and Personnel” substitute “ Minister of Finance ”.
In section 357QB(5)(b) of that Act (tax credit: entitlement), for “Chapter 2” substitute “ land remediation ”.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In consequence of paragraph 28, in the Corporation Tax (Northern Ireland) Act 2015, in Schedule 1, omit paragraph 10.
Commencement etc
Any power to make regulations under Part 8B of CTA 2010 by virtue of Part 1 or 2 of this Schedule may be exercised on or after the day on which this Act is passed.
Section 4 of CT(NI)A 2015 (power to make consequential amendments) has effect as if Parts 1 and 2 of this Schedule were contained in that Act.
references to Part 8B of CTA 2010 were to that Part as amended by Parts 1 and 2 of this Schedule, and
references to the amendments made by Schedules 1 and 2 to CT(NI)A 2015 included the amendments made by paragraphs 21 to 24 of this Schedule.
Deemed domicile: income tax and capital gains tax
Application of deemed domicile rule
ICTA
In section 266A of ICTA (life assurance premiums paid by employer), after subsection (8) insert—
The amendment made by this paragraph has effect in relation to the tax year 2017-18 and subsequent tax years.
TCGA 1992
TCGA 1992 is amended as follows.
Section 16ZA (losses: non-UK domiciled individuals) is amended as follows.
For subsections (1) to (3) substitute—
After subsection (6) insert—
The amendments made by this paragraph have effect in relation to the tax year 2017-18 and subsequent tax years.
Where—sections 16ZB and 16ZC of that Act do not have effect in relation to the individual by virtue of that election for that tax year or any subsequent tax year.
an individual makes an election under section 16ZA of TCGA 1992 as originally enacted for a tax year before the tax year 2017-18, but
after making the election the individual becomes domiciled in the United Kingdom at any time in a tax year,
Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of sub-paragraph (5).
In section 16ZB (election under section 16ZA: foreign chargeable gains remitted in the tax year after that in which they accrue), in subsection (1), for paragraphs (a) and (b) substitute—.
The amendment made by this paragraph has effect in relation to the tax year 2017-18 and subsequent tax years.
In section 16ZC (election under section 16ZA by individual to whom remittance basis applies), in subsection (1), for paragraphs (a) to (c) substitute—
The amendment made by this paragraph has effect in relation to the tax year 2017-18 and subsequent tax years.
In section 69 (trustees of settlements), after subsection (2E) insert—
The amendment made by this paragraph has effect in relation to a settlement—
in a case where the settlement arose on the settlor's death (whether by will, intestacy or otherwise), where the settlor died on or after 6 April 2017;
in any other case, where the settlor made the settlement (or was treated for the purposes of TCGA 1992 as making the settlement) on or after 6 April 2017.
In section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements), after subsection (3) insert—
The amendment made by this paragraph has effect in relation to the tax year 2017-18 and subsequent tax years.
In section 275 (location of assets), after subsection (3) insert—
The amendment made by this paragraph has effect for the purposes of determining for the purposes of TCGA 1992 the situation of any asset, or whether the situation of any asset is in the United Kingdom, at any time on or after 6 April 2017 (irrespective of when the asset was acquired by the person holding it).
In Schedule 5A (settlements with foreign element: information), in paragraph 3, after sub-paragraph (3) insert—
The amendment made by this paragraph has effect in relation to settlements created on or after 6 April 2017.
ITEPA 2003
ITEPA 2003 is amended as follows.
In section 355 (deductions for corresponding payments by non-domiciled employees with foreign employers), in subsection (2), at the end insert “ (and section 835BA of ITA 2007 (deemed domicile) applies for the purposes of this subsection) ”.
In section 373 (non-domiciled employee's travel costs and expenses where duties performed in UK), at the end insert—
In section 374 (non-domiciled employee's spouse's etc travel costs and expenses where duties performed in UK), at the end insert —
In section 376 (foreign accommodation and subsistence costs and expenses (overseas employment)), at the end insert —
The amendments made by this paragraph have effect in relation to the tax year 2017-18 and subsequent tax years.
ITA 2007
ITA 2007 is amended as follows.
In section 476 (how to work out whether settlor meets condition C in section 475), after subsection (3) insert—
The amendment made by this paragraph has effect—
so far as relating to section 476(2)(b) of ITA 2007, in relation to a settlor who dies on or after 6 April 2017;
so far as relating to section 476(3)(b) of ITA 2007, in relation to a settlement made on or after 6 April 2017.
In section 718 (meaning of “person abroad” etc), after subsection (2) insert—
The amendment made by this paragraph has effect in relation to the tax year 2017-18 and subsequent tax years.
Chapter A1 of Part 14 (remittance basis) is amended as follows.
In section 809B (claim for remittance basis to apply), after subsection (1) insert—
In section 809C (claim for remittance basis by long-term UK resident: nomination) omit the following—
in subsection (1)(b), “the 17-year residence test,”;
subsection (1ZA);
subsection (1A)(a);
in subsection (1B)(a), “the 17-year residence test or”;
subsection (4)(za).
In section 809E (application of remittance basis without claim: other cases), after subsection (1) insert—
In section 809H (claim for remittance basis by long-term UK resident: charge) omit the following—
in subsection (1)(c), “the 17-year residence test,”;
in subsection (1A)—
“(1ZA)”;
“the 17-year residence test,”;
subsection (5B)(za).
The amendments made by this paragraph have effect in relation to the tax year 2017-18 and subsequent tax years. This is subject to paragraphs 15 and 16.
This paragraph applies in a case where—
section 10A of TCGA 1992 (temporary non-residents) as originally enacted applies in relation to an individual, and
the year of return is 2017-18.
For the purposes of capital gains tax in respect of foreign chargeable gains accruing to the individual during an intervening year, the amendment made by paragraph 14(2) does not have effect in relation to the year of return.
Where by virtue of sub-paragraph (2) an individual makes a claim under section 809B of ITA 2007 for the tax year 2017-18, sections 809C, 809G and 809H of ITA 2007 do not apply to the individual for that tax year.
In this paragraph—“intervening year” and “year of return” have the same meanings as in section 10A of TCGA 1992 as originally enacted;“foreign chargeable gain” has the meaning given by section 12(4) of TCGA 1992.
This paragraph applies in a case where section 10A of TCGA 1992 as substituted by paragraph 119 of Schedule 45 to FA 2013 applies in relation to an individual.
For the purposes of capital gains tax in respect of foreign chargeable gains accruing to the individual during a temporary period of non-residence beginning before 8 July 2015, the amendment made by paragraph 14(2) does not have effect in relation to the tax year which consists of or includes the period of return.
Where by virtue of sub-paragraph (2) an individual makes a claim under section 809B of ITA 2007 for any of the tax years 2017-18 to 2020-21 inclusive, sections 809C, 809G and 809H of ITA 2007 do not apply to the individual for that tax year.
In this paragraph, “foreign chargeable gain” has the meaning given by section 12(4) of TCGA 1992.
Part 4 of Schedule 45 to FA 2013 explains what “temporary period of non-residence” and “period of return” mean.
In section 834 (residence of personal representatives), at the end insert—
The amendment made by this paragraph has effect in relation to the tax year 2017-18 and subsequent tax years.
Protection of overseas trusts
TCGA 1992
In Schedule 5 to TCGA 1992 (provisions supplementing section 86 of TCGA 1992), after paragraph 5 insert—
FA 2004
In paragraph 8 of Schedule 15 to FA 2004 (income tax on benefits received by former owner of property: intangible property comprised in settlement where settlor retains an interest), after sub-paragraph (3) insert—
ITTOIA 2005
Chapter 5 of Part 5 of ITTOIA 2005 (settlements) is amended as follows.
In section 624 (income under a settlement where settlor retains an interest), in subsection (3) (which lists provisions containing exceptions)—
omit the “and” at the end of the entry for section 627, and
after the entry for section 628 insert
After section 628 insert—
In section 629(5) (list of exceptions), at the end insert “or section 630A (exception for protected foreign-source income).
After section 630 insert—
Section 635 (capital sums treated under section 633 as income: meaning of “available income”) is amended as follows.
In subsection (2), before “income” insert “ unprotected ”.
After subsection (4) insert—
In section 636(1) (meaning in section 635 of “undistributed”), before “income”, in both places it occurs, insert “ unprotected ”.
In section 645(1) (meaning of property originating from the settlor), for “section” substitute “ sections 628A and ”.
ITA 2007
Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) is amended as follows.
In section 721 (income of a person abroad that is treated as arising to a UK resident individual), for subsection (3B) (amount treated as arising) substitute—
After section 721 insert—
In section 726 (individuals to whom remittance basis applies), after subsection (5) insert—
In section 728 (income of a person abroad that is treated as arising to a UK resident individual), for subsection (1A) (amount treated as arising) substitute—
After section 729 insert—
In section 730 (individuals to whom remittance basis applies), after subsection (5) insert—
Section 731 (charge to tax on income treated as arising under section 732) is amended as follows.
In subsection (1), for “non-transferors” substitute “ individuals ”.
After subsection (1) insert—
In subsection (3) (person liable for tax is person to whom income is treated as arising), at the end insert “, but this is subject to section 733A.
Section 732 (when income is treated as arising for the purposes of the charge under section 731) is amended in accordance with sub-paragraphs (2) to (4).
In subsection (1) (cases in which tax can be charged under section 731)—
in paragraph (b), for “who is UK resident for a tax year receives a benefit in that tax year” substitute “ receives a benefit in a tax year ”, and
for paragraph (d) substitute—.
After subsection (3) insert—
In the heading, for “Non-transferors” substitute “ Individuals ”.
In section 733(1) (income charged under section 731), in the first sentence of Step 2, at the end insert “except that, where any of that income is matched deemed income for the purposes of section 731(1A), that matched deemed income is to be deducted only so far as it is matched deemed income on which tax has been charged under section 731 for an earlier tax year.
After section 733 insert—
In section 735A(6) (matching of income on which individual charged under section 731), after “individual” insert “ , or as a result of section 733A another person, ”.
After section 735A insert—
Commencement of amendments in FA 2004, ITTOIA 2005 and ITA 2007
The amendments made by paragraphs 19 to 38 have effect for the tax year 2017-18 and subsequent tax years.
FA 2008
In Part 2 of Schedule 7 to FA 2008 (remittance basis: trusts etc), after paragraph 171 insert—
Capital gains tax rebasing
This paragraph applies to the disposal of an asset by an individual (“P”) where—
the asset was held by P on 5 April 2017,
the disposal is made on or after 6 April 2017,
the asset was not situated in the United Kingdom at any time in the relevant period, and
P is a qualifying individual.
The relevant period is the period which—
begins with 16 March 2016 or, if later, the date on which P acquired the asset, and
ends with 5 April 2017.
P is a qualifying individual if—
section 809H of ITA 2007 (claim for remittance basis by long-term UK resident: charge) applied in relation to P for any tax year before the tax year 2017-18,
P is not an individual—
who was born in the United Kingdom, and
whose domicile of origin was in the United Kingdom,
P was not domiciled in the United Kingdom at any time in a relevant tax year, and
P met condition B in section 835BA of ITA 2007 in relation to each relevant tax year.
The relevant tax years are—
the tax year 2017-18, and
if the disposal was made after that tax year, all subsequent tax years up to and including the tax year 2024-25.
In computing, for the purpose of TCGA 1992, the gain or loss accruing on the disposal, it is to be assumed that P acquired the asset on 5 April 2017 for a consideration equal to its market value on that date.
Sub-paragraph (5) applies notwithstanding section 58(1) of TCGA 1992 (disposals between spouses).
Where under section 127 of TCGA 1992 (including that section as applied by sections 132, 135 and 136 of that Act) an original and a new holding of shares or other securities are treated as the same asset, the condition in sub-paragraph (1)(c) applies to both the original and the new holding.
This Part of this Schedule has effect as if it were included in TCGA 1992.
This paragraph applies for the purposes of paragraph 41(1)(c) in the case of an asset which, having been situated outside the United Kingdom, becomes situated in the United Kingdom before the end of the relevant period.
The asset is to be regarded as not situated in the United Kingdom at a time in the relevant period when—
it meets the condition in section 809Z(3)(a), (b) or (c) of ITA 2007 (public access),
it meets the condition in section 809Z3(3)(a), (b) or (c) of ITA 2007 (repairs),
the sole or principal purpose of its being situated in the United Kingdom is to sell it or put it up for sale, or
in the case of clothing, footwear, jewellery or a watch, it is for the personal use of—
P or a husband, wife or civil partner of P, or
a child or grandchild of a person within sub-paragraph (i), if the child or grandchild has not reached the age of 18.
The asset is to be regarded as not situated in the United Kingdom at any time in the relevant period if it is brought to, or received or used in, the United Kingdom in circumstances in which section 809L(2)(a) of ITA 2007 applies but—
by virtue of section 809X(5)(c) of ITA 2007 (notional remitted amount less than £1000) it is treated as not remitted to the United Kingdom, or
by the end of the relevant period it has not failed to meet the temporary importation rule in section 809Z4 of ITA 2007.
Section 809M(3)(a) and (b) of ITA 2007 (persons living together) apply for the purposes of sub-paragraph (2)(d)(i).
An individual may make an election for paragraph 41 not to apply to a disposal made by the individual.
An election under this paragraph is irrevocable.
All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under this paragraph.
Cleansing of mixed funds
This paragraph applies for the purposes of the application of section 809Q(3) of ITA 2007 in relation to an individual (“P”).
Section 809R(4) of ITA 2007 does not apply to an offshore transfer from a mixed fund where—
the transfer is made in the tax year 2017-18 or the tax year 2018-19,
the transfer is a transfer of money,
the mixed fund from which the transfer is made is an account (account A) and the transfer is made to another account (account B),
the transfer is nominated by P for the purposes of this sub-paragraph,
at the time of the nomination no other transfer from account A to account B has been so nominated, and
P is a qualifying individual.
P is a qualifying individual if—
section 809B, 809D or 809E of ITA 2007 (remittance basis) applied in relation to P for any tax year before the tax year 2017-18, and
P is not an individual—
who was born in the United Kingdom, and
whose domicile of origin was in the United Kingdom.
An offshore transfer to which sub-paragraph (2) applies is to be treated as containing such amount of such kind or kinds of income and capital in the mixed fund immediately before the transfer as may be specified in the nomination under sub-paragraph (2)(d).
An amount of a kind of income or capital specified under sub-paragraph (4) may not exceed the amount of that kind which is in the mixed fund immediately before the transfer.
In this paragraph “mixed fund” and “offshore transfer” have the same meanings as in section 809R(4) of ITA 2007.
This paragraph applies to a transfer made by a person (“P”) from a mixed fund where—
the transfer is made in the tax year 2017-18 or the tax year 2018-19,
the transfer is a transfer of money,
the mixed fund from which the transfer is made is an overseas account (account A) containing pre-6 April 2008 income or chargeable gains,
the transfer is made to another overseas account (account B),
the transfer is nominated by the person for the purposes of this sub-paragraph,
at the time of the nomination no other transfer from account A to account B has been so nominated, and
P is a qualifying individual.
P is a qualifying individual if—
section 809B, 809D or 809E of ITA 2007 (remittance basis) applied in relation to P for any tax year before the tax year 2017-18, and
P is not an individual—
who was born in the United Kingdom, and
whose domicile of origin was in the United Kingdom.
A transfer to which this paragraph applies is to be treated as containing such amount of such kind or kinds of income or capital in the mixed fund immediately before the transfer (for example, income or chargeable gains for a particular tax year) as may be specified in the nomination under sub-paragraph (1)(e).
An amount of a kind of income or capital specified under sub-paragraph (3) may not exceed the amount of that kind which is in the mixed fund immediately before the transfer.
In this paragraph and paragraph 46—“mixed fund” has the same meaning as in section 809R(4) of ITA 2007;“overseas account” means an account situated outside the United Kingdom;“pre-6 April 2008 income or chargeable gains” means income or chargeable gains for the tax year 2007-8 or any earlier tax year.
This paragraph applies to determine, for the purposes of paragraph 45, the composition of the mixed fund referred to in paragraph 45(1).
Sub-paragraphs (3) to (5) apply where a transfer of money is made before 6 April 2008 from the mixed fund to another overseas account.
Take the following Steps—Step 1. Calculate the total amount of income and chargeable gains in the mixed fund immediately before the transfer (“the total income and gains”). Step 2. Calculate what proportion of the total income and gains is income and what proportion is chargeable gains.
If the amount transferred does not exceed the total income and gains, the transfer is to be treated as if it consisted of income and chargeable gains in the proportions found under Step 2 in sub-paragraph (3).
If the amount transferred exceeds the total income and gains, the transfer is to be treated as if it consisted of—
all the income and chargeable gains that were in the mixed fund immediately before the transfer, and
in respect of the balance, other capital from the mixed fund.
Sub-paragraphs (7) and (8) apply where—
a transfer of money is made before 6 April 2008 from another overseas account to the mixed fund, and
there is insufficient evidence to determine the composition of the transfer.
Take the following Steps—Step 1. Calculate the total amount of income and chargeable gains in the other overseas account immediately before the transfer (“the total income and gains”). Step 2. Calculate what proportion of the total income and gains is income and what proportion is chargeable gains.
The transfer is to be presumed to consist of income and chargeable gains in the proportions found under Step 2 in sub-paragraph (7).
For the purposes of Steps 1 and 2 in sub-paragraph (7), if there is insufficient evidence to say that an amount is income or that it is chargeable gains, treat it as income.
Settlements and transfer of assets abroad: value of benefits
Capital gains tax: settlements: value of benefit conferred by certain capital payments
In section 97(4) of TCGA 1992 (supplementary provisions in relation to settlements), at the end insert “ (see sections 97A to 97C for the value of benefits conferred by a capital payment made by way of loan or by way of making movable property or land available) ”.
After section 97 of TCGA 1992 insert—
Income tax: transfer of assets abroad: value of certain benefits
After section 742A of ITA 2007 insert—
Commencement
The amendments made by this Schedule have effect in relation to capital payments or benefits received in the tax year 2017-18 and subsequent tax years.
Inheritance tax on overseas property representing UK residential property
Non-excluded overseas property
In IHTA 1984, before Schedule 1 insert—
Consequential and supplementary amendments
IHTA 1984 is amended as follows.
In section 6 (excluded property), at the end insert—
In section 48 (excluded property)—
in subsections (3) and (3A), at the end insert “ and to Schedule A1 ”;
in subsection (4), at the end (but on a new line) insert “This subsection is subject to Schedule A1.
In section 157 (non-residents' bank accounts), after subsection (3) insert—
In section 237 (imposition of charge), after subsection (2) insert—
In section 272 (general interpretation), in the definition of “excluded property”, after “above” insert “ and Schedule A1 ”.
Commencement
The amendments made by this Schedule have effect in relation to times on or after 6 April 2017.
But for the purposes of paragraph 5(1) of Schedule A1 to IHTA 1984 as inserted by this Schedule—
paragraph (a) of that paragraph does not apply in relation to a disposal of property occurring before 6 April 2017, and
paragraph (b) of that paragraph does not apply in relation to a payment of money or money's worth occurring before 6 April 2017.
Transitional provision
Sub-paragraphs (2) and (3) apply if an amount of inheritance tax—
would not be charged but for the amendments made by this Schedule, or
is, because of those amendments, greater than it would otherwise have been.
Section 233 of IHTA 1984 (interest on unpaid inheritance tax) applies in relation to the amount of inheritance tax as if the reference, in the closing words of subsection (1) of that section, to the end of the period mentioned in paragraph (a), (aa), (b) or (c) of that subsection were a reference to—
the end of that period, or
if later, the end of the month immediately following the month in which this Act is passed.
Subsection (1) of section 234 of IHTA 1984 (cases where inheritance tax payable by instalments carries interest only from instalment dates) applies in relation to the amount of inheritance tax as if the reference, in the closing words of that subsection, to the date at which an instalment is payable were a reference to—
the date at which the instalment is payable, or
if later, the end of the month immediately following the month in which this Act is passed.
Sub-paragraph (2) applies if—
a person is liable as mentioned in section 216(1)(c) of IHTA 1984 (trustee liable on 10-year anniversary, and other trust cases) for an amount of inheritance tax charged on an occasion, and
but for the amendments made by this Schedule—
no inheritance tax would be charged on that occasion, or
a lesser amount of inheritance tax would be charged on that occasion.
Section 216(6)(ad) of IHTA 1984 (delivery date for accounts required by section 216(1)(c)) applies in relation to the account to be delivered in connection with the occasion as if the reference to the expiration of the period of 6 months from the end of the month in which the occasion occurs were a reference to—
the expiration of that period, or
if later, the end of the month immediately following the month in which this Act is passed.
Employment income provided through third parties: loans etc outstanding on 5 April 2019
Application of Part 7A of ITEPA 2003
Relevant step
A person (“P”) is treated as taking a relevant step for the purposes of Part 7A of ITEPA 2003 if—
P has made a loan, or a quasi-loan, to a relevant person,
the loan or quasi-loan was made on or after 9 December 2010, and
an amount of the loan or quasi-loan is outstanding immediately before the end of 5 April 2019.
P is treated as taking the step immediately before the end of 5 April 2019.
Where P is treated by this paragraph as taking a relevant step, references to “the relevant step” in sections 554A(1)(e)(i) and (ii) and 554AA(1)(h)(i) and (ii) of ITEPA 2003 have effect as if they were references to the step of making the loan or, as the case may be, quasi-loan.
For the purposes of section 554Z3(1) of ITEPA 2003 (value of relevant step), the step is to be treated as involving a sum of money equal to the amount of the loan or quasi-loan that is outstanding at the time P is treated as taking the step.
Subsections (2) and (3) of section 554C of ITEPA 2003 (“relevant person”) apply for the purposes of this Schedule as they apply for the purposes of that section.
Sub-paragraphs (1) and (2) are subject to paragraphs 23 and 24 (accelerated payments) and paragraph 36A (double taxation: close companies).
Sub-paragraph (4) is subject to paragraph 1A(5).
For the purposes of this paragraph and paragraph 1A, whether an amount of a loan or quasi-loan is outstanding at a particular time—
is to be determined in accordance with paragraphs 3 to 18, and
does not depend on the loan or quasi-loan subsisting at that time.
References in this Schedule and in Part 7A of ITEPA 2003 to a relevant step within paragraph 1 of this Schedule are to be read as references to a relevant step which a person is treated by this paragraph as taking.
This paragraph applies where—
a person (“P”) is treated as taking a relevant step within paragraph 1 (“the initial step”) by reason of making a loan or quasi-loan, and
an election has been made by A for the purposes of this paragraph.
P is treated as taking two further relevant steps for the purposes of Part 7A of ITEPA 2003.
P is treated as taking one of the further steps on the first anniversary of the date on which P is treated as taking the initial step.
P is treated as taking one of the further steps on the second anniversary of the date on which P is treated as taking the initial step.
For the purposes of section 554Z3(1) of ITEPA 2003 (value of relevant step), the initial step and each of the further steps is to be treated as involving a sum of money equal to one third of the amount of the loan or quasi-loan that is outstanding at the time P is treated as taking the initial step.
References in this Schedule and in Part 7A of ITEPA 2003 to a relevant step within paragraph 1A of this Schedule are to be read as references to a relevant step which a person is treated by this paragraph as taking.
An election for the purposes of this paragraph—
may be made at any time before 1 October 2020, and
may be made at a later time if an officer of Revenue and Customs allows it.
But a person who is under a duty imposed by paragraph 35C of this Schedule or paragraph 22 of Schedule 12 may not make an election for the purposes of this paragraph until that duty has been complied with.
An election for the purposes of this paragraph may not be revoked.
A person who has made an election for the purposes of paragraph 1(3A) of Schedule 12 is to be treated as having made an election for the purposes of this paragraph.
The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that sub-paragraph (7)(a) applies to a specified class of persons as if the reference to 1 October 2020 were to such later date as is specified.
In sub-paragraph(11)“specified” means specified in the regulations.
This paragraph applies where—
a person is treated as taking a relevant step within paragraph 1 by reason of making a loan or quasi-loan,
a reasonable case could have been made that for a qualifying tax year (“the relevant year”) A was chargeable to income tax on an amount that was referable to the loan or quasi-loan,
at a time when an officer of Revenue and Customs had power to recover (from A or any other person) income tax for the relevant year in respect of that amount, a qualifying tax return or two or more qualifying tax returns of the same type taken together contained a reasonable disclosure of the loan or quasi-loan, and
as at 6 April 2019 an officer of Revenue and Customs had not taken steps to recover (from A or any other person) income tax for the relevant year in respect of that amount.
But this paragraph does not apply if—
a reasonable case could have been made that for a tax year other than the relevant year (“the alternative year”) A was chargeable to income tax on an amount within sub-paragraph(3), and
it is the case that—
on or before 5 April 2019 an officer of Revenue and Customs took steps to recover (from A or any other person) income tax for the alternative year in respect of that amount, or
the alternative year is not a qualifying tax year.
An amount is within this sub-paragraph if —
it is the same amount as is mentioned in sub-paragraph(1),
it is part of the amount mentioned in sub-paragraph(1), or
it is derived from or represents the whole or part of the amount mentioned in sub-paragraph(1).
Where this paragraph applies, then for the purposes of paragraphs 1(4) and 1A(5) the amount of the loan or quasi-loan that is outstanding is to be taken to be reduced (but not below nil) by the amount mentioned in sub-paragraph(1).
For the purposes of sub-paragraph(1)(c) a qualifying tax return, or two or more qualifying tax returns taken together, contained a reasonable disclosure of the loan or quasi-loan if the return or returns taken together—
identified the loan or quasi-loan,
identified the person to whom the loan or quasi-loan was made in a case where the loan or quasi-loan was made to a person other than A,
identified the relevant arrangements in pursuance of which or in connection with which the loan or quasi-loan was made, and
provided such other information as was sufficient for it to be apparent that a reasonable case could be made that for the relevant year A was chargeable to income tax on an amount that was referable to the loan or quasi-loan.
A reference in sub-paragraph(1)(b),(2) or(5)(d) to A being chargeable to income tax does not include A being chargeable to income tax by reason of section 175 of ITEPA 2003 (benefit of taxable cheap loan treated as earnings).
In this paragraph—“qualifying tax year” means the tax year 2015-16 and any earlier tax year, and“qualifying tax return” means —a return made by A or B under section 8 of TMA 1970 for a qualifying tax year, and any accompanying accounts, statements or documents, or a return made by B under paragraph 3 of Schedule 18 to FA 1998 for an accounting period that commenced before 6 April 2016, and a qualifying tax return is of the same type as another if both fall within the same paragraph of this definition.
Meaning of “loan” and “quasi loan”
In this Part of this Schedule “loan” includes—
any form of credit;
a payment that is purported to be made by way of a loan.
For the purposes of paragraphs 1 and 1A, P makes a “quasi-loan” to a relevant person if (and when) P acquires a right (the “acquired debt”)—
which is a right to a payment or a transfer of assets, and
in respect of which the condition in sub-paragraph (3) is met.
The condition is met in relation to a right if there is a connection (direct or indirect) between the acquisition of the right and—
a payment made, by way of a loan or otherwise, to the relevant person, or
a transfer of assets to the relevant person.
Where a quasi-loan or a loan made by P to a relevant person is replaced, directly or indirectly, by a loan or another loan (the “replacement loan”), references in paragraphs 1 and 1A to the loan are references to the replacement loan.
Where a loan or a quasi-loan made by P to a relevant person is replaced, directly or indirectly, by a quasi-loan or another quasi-loan (the “replacement quasi-loan”), references in paragraphs 1 and 1A to the quasi-loan are references to the replacement quasi-loan.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meaning of “outstanding”: loans
An amount of a loan is “outstanding” for the purposes of paragraphs 1 and 1A if the relevant principal amount exceeds the repayment amount.
In sub-paragraph (1) “relevant principal amount”, in relation to a loan, means the total of—
the initial principal amount lent, and
any sums that have become principal under the loan, otherwise than by capitalisation of interest.
In sub-paragraph (1) “repayment amount”, in relation to a loan, means the total of—
the amount of principal under the loan that has been repaid before 17 March 2016, and
payments in money made by the relevant person on or after 17 March 2016 by way of repayment of principal under the loan.
A payment is to be disregarded for the purposes of paragraph 3(3)(b) if—
there is any connection (direct or indirect) between the payment and a tax avoidance arrangement (other than the arrangement under which the loan was made), or
the payment, or a sum or asset directly or indirectly representing the payment, is the subject of a relevant step (as defined in section 554A(2) of ITEPA 2003) that is taken—
after the payment is made, but
before the end of 5 April 2019.
But a payment is not to be disregarded under sub-paragraph (1)(b) if, by the end of 5 April 2019, each relevant tax liability has been paid in full.
For the purposes of this paragraph, each of the following is a “relevant tax liability”—
any liability for income tax arising by virtue of the application of Chapter 2 by reason of the relevant step mentioned in sub-paragraph (1)(b), and
where section 554Z6 of ITEPA 2003 (overlap with certain earnings) applies because that relevant step gives rise to relevant earnings for the purposes of that section, any liability for income tax in respect of those relevant earnings.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-paragraph (6) applies if a payment is disregarded under sub-paragraph (1)(b).
The value of a relevant step treated as taken by paragraph 1 or 1A is not reduced under section 554Z5(3) of ITEPA 2003 (overlap with money or asset subject to earlier tax liability) by the amount of the sum, or the value of the asset, which is the subject of the relevant step mentioned in sub-paragraph (1)(b) unless the payment condition is met by reason of section 554Z5(4)(a) and (b)(ii) being met.
This paragraph applies where—
a person (“P”) has made a loan to a relevant person,
the loan was made on or after 9 December 2010, and
before the end of 5 April 2019, A or B acquires (whether or not for consideration) a right to payment of the whole or part of the loan.
The amount of the loan in respect of which A or B acquires a right to payment is to be treated—
for the purposes of paragraph 1(1) as an amount, of the loan made by P to the relevant person, that is outstanding immediately before the end of 5 April 2019;
for the purposes of paragraphs 1(4) and 1A(5) and section 554Z3(1) of ITEPA 2003, as an amount of the loan that is outstanding at the time P is treated as taking the relevant step under paragraph 1(1).
Where a quasi-loan or a loan made by P to a relevant person is replaced, directly or indirectly, by a loan or another loan (the “replacement loan”), references in sub-paragraphs (1) and (2) to the loan are references to the replacement loan.
Meaning of “outstanding”: loans in currencies other than sterling
In paragraphs 7 to 10 “the loan currency”, in relation to a loan, means the currency in which the initial principal amount of the loan is denominated (whether or not that amount is paid in that currency).
For the purposes of paragraphs 7 to 10, the value of an amount in a particular currency is to be determined by reference to an appropriate spot rate of exchange.
This paragraph applies in relation to a loan where the loan currency is a currency other than sterling.
But this paragraph does not apply if paragraph 10 applies in relation to the loan.
The amount of the loan that is outstanding, at the time P is treated as taking the relevant step within paragraph 1, is to be calculated in sterling as follows—Step 1 Calculate, in the loan currency, the amount that is outstanding at that time. Step 2 Take the value in sterling, at that time, of that amount.
See paragraph 8 for provision about repayments made in a currency other than the loan currency.
Repayments in currencies other than the loan currency
This paragraph applies in relation to a loan where—
payments in money are made by way of repayment of principal under the loan, and
some or all of the payments are made in a currency other than the loan currency.
But this paragraph does not apply if paragraph 10 applies in relation to the loan.
For the purposes of calculating the repayment amount in relation to the loan, the amount of each of the payments referred to in sub-paragraph (1)(b) is an amount equal to its value in the loan currency on the date it is made.
Loans made in a depreciating currency
Paragraph 10 applies in relation to a loan where—
the loan currency is a currency other than sterling, and
it is reasonable to suppose that the main reason, or one of the main reasons, for the loan being made in that currency is that the loan currency is expected to depreciate as against sterling during the loan period.
The “loan period”, in relation to a loan, is the period—
beginning at the time the loan is made, and
ending with the time by which, under the terms of the loan, the whole of the loan is to be repaid.
Where this paragraph applies in relation to a loan—
paragraphs 7 and 8 do not apply in relation to the loan, and
sub-paragraphs (2) to (5) apply for the purposes of calculating the amount of the loan that is outstanding at the time P is treated as taking the relevant step within paragraph 1.
The relevant principal amount, in relation to the loan, is an amount equal to the total of—
the value in sterling, at the reference date, of the initial principal amount lent, and
the value in sterling, at the reference date, of any sums that become principal under the loan, otherwise than by capitalisation of interest.
The “reference date”—
in relation to an amount within sub-paragraph (2)(a), means the date on which the loan is made, and
in relation to a sum within sub-paragraph (2)(b), means the date on which the sum becomes principal.
The repayment amount, in relation to the loan, is an amount equal to the total of—
the amount of principal under the loan that has been repaid in sterling, and
where payments are made, in a currency other than sterling, by way of repayment of principal under the loan, the amount equal to the sterling value of the payments.
The “sterling value” of a payment is its value in sterling on the date it is made.
Meaning of “outstanding”: quasi-loans
An amount of a quasi-loan is outstanding for the purposes of paragraphs 1 and 1A if the initial debt amount exceeds the repayment amount.
In sub-paragraph (1) “initial debt amount”, in relation to a quasi-loan, means the total of—
an amount equal to the value of the acquired debt (see paragraph 2(2)), and
where P subsequently acquires a further right (an “additional debt”) to a payment, or transfer of assets, in connection with the payment mentioned in paragraph 2(3)(a) or (as the case may be) the transfer mentioned in paragraph 2(3)(b), an amount equal to the value of the additional debt.
For the purposes of sub-paragraph (2)—
where the acquired debt is a right to payment of an amount, the “value” of the debt is that amount,
where the additional debt is a right to payment of an amount, the “value” of the debt is that amount, but is nil if the additional debt accrued to P by the capitalisation of interest on the acquired debt or another additional debt, and
where the acquired debt or additional debt is a right to a transfer of assets, the “value” of the debt is an amount equal to—
the market value of the assets at the time the right is acquired (or the value of the right at that time if the assets are non-fungible and not in existence at that time), or
if higher, the cost of the assets at that time.
In sub-paragraph (1) “repayment amount”, in relation to a quasi-loan, means the total of—
the amount (if any) by which the initial debt amount has been reduced (by way of repayment) before 17 March 2016,
payments in money (if any) made by the relevant person on or after 17 March 2016 by way of repayment of the initial debt amount, and
if the acquired debt or an additional debt is a right to a transfer of assets, and the assets have been transferred, an amount equal to the market value of the assets at the time of the transfer.
A payment or transfer is to be disregarded for the purposes of paragraph 11(4)(b) or (c) if—
there is any connection (direct or indirect) between the payment or transfer and a tax avoidance arrangement (other than the arrangement under which the quasi-loan was made), or
the payment or the asset transferred, or a sum or asset directly or indirectly representing the payment or asset, is the subject of a relevant step (as defined in section 554A(2) of ITEPA 2003) that is taken—
after the payment is made or the asset transferred, but
before the end of 5 April 2019.
But a payment or transfer is not to be disregarded under sub-paragraph (1)(b) if, by the end of 5 April 2019, each relevant tax liability has been paid in full.
For the purposes of this paragraph, each of the following is a “relevant tax liability”—
any liability for income tax arising by virtue of the application of Chapter 2 by reason of the relevant step mentioned in sub-paragraph (1)(b), and
where section 554Z6 of ITEPA 2003 (overlap with certain earnings) applies because that relevant step gives rise to relevant earnings for the purposes of that section, any liability for income tax in respect of those relevant earnings.
Sub-paragraph (5) applies if a payment is disregarded under sub-paragraph (1)(b).
The value of a relevant step treated as taken by paragraph 1 or 1A is not reduced under section 554Z5(3) of ITEPA 2003 (overlap with money or asset subject to earlier tax liability) by the amount of the sum, or the value of the asset, which is the subject of the relevant step mentioned in sub-paragraph (1)(b) unless the payment condition is met by reason of section 554Z5(4)(a) and (b)(ii) being met.
This paragraph applies where—
a person (“P”) has made a quasi-loan to a relevant person,
the quasi-loan was made on or after 9 December 2010, and
before the end of 5 April 2019, A or B acquires (whether or not for consideration) a right to the payment or transfer of assets mentioned in paragraph 2(2)(a).
The amount equal to the value of the right acquired by A or B is to be treated—
for the purposes of paragraph 1(1) as an amount, of the quasi-loan made by P to the relevant person, that is outstanding immediately before the end of 5 April 2019;
for the purposes of paragraphs 1(4) and 1A(5) and section 554Z3(1) of ITEPA 2003, as an amount of the quasi-loan that is outstanding at the time P is treated as taking the relevant step under paragraph 1(1).
For the purposes of sub-paragraph (2)—
where the right acquired by A or B is a right to payment of an amount, the “value” of the right is that amount;
where the right acquired by A or B is a right to a transfer of assets, the “value” of the right is an amount equal to—
the market value of the assets at the time the right is acquired (or the value of the right at that time if the assets are non-fungible and not in existence at that time), or
if higher, the cost of the assets at that time.
Where a loan or a quasi-loan made by P to a relevant person is replaced, directly or indirectly, by a quasi-loan or another quasi-loan (the “replacement quasi-loan”), references in sub-paragraphs (1) and (2) to the quasi-loan are references to the replacement quasi-loan.
Meaning of “outstanding”: quasi-loans in currencies other than sterling
Paragraphs 15 to 18 apply where P makes a quasi-loan to a relevant person by reason of acquiring a right to a payment in a particular currency (the “quasi-loan currency”).
For the purposes of paragraphs 15 to 18, the value of an amount in a particular currency is to be determined by reference to an appropriate spot rate of exchange.
This paragraph applies in relation to the quasi-loan if the quasi-loan currency is a currency other than sterling.
But this paragraph does not apply if paragraph 18 applies in relation to the quasi-loan.
The amount of the quasi-loan that is outstanding, at the time P is treated as taking the relevant step within paragraph 1, is to be calculated in sterling as follows—Step 1 Calculate, in the quasi-loan currency, the amount that is outstanding at that time. Step 2 Take the value in sterling, at that time, of that amount.
See paragraph 16 for provision about repayments made in a currency other than the quasi-loan currency.
Repayments in currencies other than the quasi-loan currency
This paragraph applies in relation to the quasi-loan if—
payments in money are made by way of repayment of the initial debt amount, and
some or all of the payments are made in a currency other than the quasi-loan currency.
But this paragraph does not apply if paragraph 18 applies in relation to the quasi-loan.
For the purposes of calculating the repayment amount in relation to the quasi-loan, the amount of each of the payments referred to in sub-paragraph (1)(b) is an amount equal to its value in the quasi-loan currency on the date it is made.
Quasi-loans made in a depreciating currency
Paragraph 18 applies in relation to the quasi-loan if—
the quasi-loan currency is a currency other than sterling, and
it is reasonable to suppose that the main reason, or one of the main reasons, for the quasi-loan being made in that currency is that the quasi-loan currency is expected to depreciate during the quasi-loan period.
The “quasi-loan period”, in relation to a quasi-loan, is the period—
beginning at the time the quasi-loan is made, and
ending with the time by which, under the terms of the quasi-loan, the whole of the quasi-loan is to be repaid.
Where this paragraph applies in relation to the quasi-loan—
paragraphs 15 and 16 do not apply in relation to the quasi-loan, and
sub-paragraphs (2) to (5) apply for the purposes of calculating the amount of the quasi-loan that is outstanding at the time P is treated as taking the relevant step within paragraph 1.
The initial debt amount, in relation to the quasi-loan, is an amount equal to the total of—
the value in sterling, at the reference date, of the acquired debt, and
the value in sterling, at the reference date, of any additional debt.
The “reference date”—
in relation to a right within sub-paragraph (2)(a), means the date on which P acquires it, and
in relation to a right within sub-paragraph (2)(b), means the date on which P acquires it.
The repayment amount, in relation to the quasi-loan, is an amount equal to the total of—
the amount of the initial debt amount that has been repaid in sterling, and
where payments are made, in a currency other than sterling, by way of repayment of the initial debt amount, the amount equal to the sterling value of the payments.
The “sterling value” of a payment is its value in sterling on the date it is made.
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Accelerated payments
Application to HMRC
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Qualifying payments condition
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Commercial terms condition
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Paragraph 24(1) applies where—
a person (“P”) would (ignoring paragraph 24) be treated as taking a relevant step within paragraph 1 by reason of making a loan, or a quasi-loan, to a relevant person,
an accelerated payment notice, or a partner payment notice, relating to a relevant charge (the “accelerated payment notice”) has been given under Chapter 3 of Part 4 of FA 2014,
the relevant person makes a payment (the “accelerated payment”) in respect of the understated or disputed tax to which the notice relates,
the accelerated payment is made on or before 5 April 2019, and
the amount of the loan or quasi-loan that, at the end of 5 April 2019, is outstanding for the purposes of paragraph 1 (see paragraphs 3 to 18) is equal to or less than the amount of the accelerated payment.
In sub-paragraph (1)(b), “relevant charge” means a charge to tax arising by reason of a step taken pursuant to the relevant arrangement concerned.
The reference in sub-paragraph (2) to the relevant arrangement concerned is a reference to the relevant arrangement in pursuance of which, or in connection with which, the loan or quasi-loan mentioned in sub-paragraph (1)(a) is made.
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In sub-paragraphs (1)(c) and (2)—and for those purposes “relevant contributions” has the same meaning as in Schedule 2 to the National Insurance Contributions Act 2015 (application of Part 4 of FA 2014 to national insurance contributions).
the reference to tax includes a reference to relevant contributions, and
the reference to a charge to tax includes a reference to a liability to pay relevant contributions;
If more than one notice relating to a particular relevant charge has been given—
the reference in sub-paragraph (1)(e) to the amount of the accelerated payment is to be treated as a reference to the aggregate of the amounts of each accelerated payment in respect of which the conditions in sub-paragraph (1)(c) and (d) are met, and
the reference in paragraph 24(2) to the accelerated payment notice is to be treated as a reference to the accelerated payment notices or any of them.
The relevant person may make an application to the Commissioners for Her Majesty's Revenue and Customs for P to be treated—
as taking the relevant step only if the condition in sub-paragraph (2) is met, and
as doing so not at the time given by paragraph 1(2) but immediately before—
the end of the 30 days beginning with the date on which the condition in sub-paragraph (2) becomes met, or
if later, the end of 5 April 2019.
The condition is that, on the withdrawal of the accelerated payment notice or on the determination of an appeal, any part of the accelerated payment is repaid.
Subject to sub-paragraph (4), an application under sub-paragraph (1) may be made in 2018.
An application may be made after 2018 if an officer of Revenue and Customs considers it is reasonable in all the circumstances for the relevant person to make a late application.
An application must be made in such form and manner, and contain such information, as may be specified by, or on behalf of, the Commissioners for Her Majesty's Revenue and Customs.
An officer of Revenue and Customs must notify the applicant of the decision on an application under this paragraph.
A favourable decision on an application under this paragraph may be revoked by an officer of Revenue and Customs if the officer considers that—
information provided in making the application contained an inaccuracy, and
the inaccuracy was deliberate on the applicant's part.
Where the decision on an application is revoked under sub-paragraph (7), the application is to be treated as having been refused at the outset.
Exclusions
Commercial transactions
Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person (“P”) if—
P is treated as taking a relevant step by that paragraph by reason of the payment of a sum of money by way of a loan,
the loan is (at the time it is made) a loan on ordinary commercial terms within the meaning of section 176 of ITEPA 2003, ignoring conditions B and C in that section, and
there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.
In section 554F of ITEPA 2003 (exclusions: commercial transactions), at the end insert—
Transfer of employment-related loans
Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person (“P”) if—
P is treated as taking a relevant step within that paragraph by reason of making a quasi-loan by acquiring a right to payment of an amount equal to the whole or part of a payment made by way of a loan to a relevant person (the “borrower”),
the loan, at the time it was made, was an employment-related loan,
at the time the right is acquired, the section 180 threshold is not exceeded in relation to the loan,
at the time the right is acquired, the borrower is an employee, or a prospective employee, of P, and
there is no connection (direct or indirect) between the acquisition of the right and a tax avoidance arrangement.
Subsections (2) to (5) of section 554OA of ITEPA 2003 (section 180 threshold) apply for the purposes of this paragraph as they apply for the purposes of that section.
In this paragraph, “employment-related loan” has the same meaning as it has for the purposes of Chapter 7 of Part 3.
In section 554OA of ITEPA 2003 (exclusions: transfer of employment-related loans), at the end insert—
Transactions under employee benefit packages
Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person (“P”) if—
P is treated as taking a relevant step by that paragraph by reason of the payment of a sum of money by way of a loan,
the step is not taken under a pension scheme,
the loan was made for the sole purpose of a transaction of P's with A and which P entered into in the ordinary course of P's business,
at the time the loan was made (the “relevant time”)—
a substantial proportion of P's business involved making similar loans to members of the public,
the transaction with A was part of a package of benefits which was available to a substantial proportion of B's employees, and
sub-paragraph (3) does not apply,
the terms on which similar transactions were offered by P under the package of benefits mentioned in paragraph (d)(ii) were generous enough to enable substantially all of the employees of B to whom the package was available at or around the relevant time to take advantage of what was offered (if they wanted to),
the terms on which P entered into the transaction with A were substantially the same as the terms on which at or around the relevant time P normally entered into similar transactions with employees of B under the package of benefits,
if B is a company, a majority of B's employees to whom the package of benefits was available at the relevant time did not have a material interest (as defined in section 68 of ITEPA 2003) in B, and
there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.
For the purposes of sub-paragraph (1)(d)(i)—
a loan is “similar” if it is made for the same or similar purposes as the loan which is the subject of the relevant step, and
“members of the public” means members of the public at large with whom P deals at arm‘s length.
This sub-paragraph applies if any feature of the package of benefits mentioned in sub-paragraph (1)(d)(ii) had or would have been likely to have had the effect that, of the employees of B to whom the package was available, it is employees within sub-paragraph (4) on whom benefits under the package will be wholly or mainly conferred.
The employees within this sub-paragraph are—
directors,
senior employees,
employees who at the relevant time received, or as a result of the package of benefits would have been likely to have received, the higher or highest levels of remuneration, and
if, at the relevant time, B was a company and was a member of a group of companies, any employees not within paragraph (b) or (c) who—
were senior employees in the group, or
received, or as a result of the package of benefits would have been likely to have received, the higher or highest levels of remuneration in the group.
For the purposes of sub-paragraph (1)(d) and (e) a transaction is “similar” if it is of the same or a similar type to the transaction which P has or had with A.
In this paragraph references to A include references to any person linked with A.
In this paragraph “pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(1) of that Act).
In section 554G of ITEPA 2003 (exclusions: transactions under employee benefit packages), at the end insert—
Cases involving employment-related securities
Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person (“P”) if—
P is treated as taking a relevant step by that paragraph by reason of the payment of a sum of money by way of a loan (the “relevant loan”),
the relevant loan is made and used solely for the purpose of enabling A to exercise an employment-related securities option (within the meaning of Chapter 5 of Part 7 of ITEPA 2003),
the exercise of the option by A gives rise to employment income of A in respect of A's employment with B—
which is chargeable to income tax or would be chargeable apart from Chapter 5B of Part 2 of ITEPA 2003, or
which is exempt income, and
there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.
In section 554N of ITEPA 2003 (exclusions: other cases involving employment-related securities etc.), at the end insert—
Employee car ownership schemes
This paragraph applies if—
there is an arrangement (“the car ownership arrangement”) which—
provides for A to purchase a new car from another person (“S”) using a loan (“the car loan”) to be made to A by an authorised lender,
specifies the date (“the repayment date”) by which the car loan must be fully repaid which must be no later than four years after the date on which the car loan is made, and
permits A, in order to obtain funds to repay the car loan, to sell the car back to S on a specified date at a specified price based on an estimate (made at the time the car ownership arrangement is made) of the likely outstanding amount of the car loan on the specified date, and
as provided for by the car ownership arrangement, A purchases the car using the car loan.
Chapter 2 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person if—
the person is treated as taking a relevant step by that paragraph by reason of making the car loan, and
the car ownership arrangement is not a tax avoidance arrangement and there is no other connection (direct or indirect) between the relevant step and a tax avoidance arrangement.
In this paragraph—“car” has the meaning given by section 235(2) of ITEPA 2003, and“authorised lender” means a person who—has permission under Part 4A of the Financial Services and Markets Act 2000 to enter into, or to exercise or have the right to exercise rights and duties under, a contract of the kind mentioned in paragraph 23 of Schedule 2 to that Act, and is not acting as a trustee.
The definition of “authorised lender” must be read with—
section 22 of the Financial Services and Markets Act 2000,
any relevant order under that section, and
Schedule 2 to that Act.
In section 554O of ITEPA 2003 (exclusions: employee car ownership schemes), at the end insert—
Acquisition of unlisted employer shares
Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person (“P”) if the conditions in sub-paragraph (2) are met.
The conditions are that—
the loan or quasi-loan concerned was made before 9 December 2010,
if P is treated as taking a relevant step by paragraph 1 by reason of the payment of a sum of money by way of loan, the sum is used by A solely to acquire employer shares,
if P is treated as taking a relevant step by paragraph 1 by reason of making a quasi-loan, the transfer of assets mentioned in paragraph 2(3)(b) is the transfer of employer shares to A,
the employer shares are acquired, or transferred, before the end of the period of one year beginning with the day on which the loan, or quasi-loan, is made, and
the employer shares are not listed on a recognised stock exchange at any time during the period beginning with the day on which the loan, or quasi-loan, is made and ending with the earlier of—
the day on which A ceases to hold the shares, or
the day on which the loan, or quasi-loan, is repaid.
In this paragraph “employer shares” means shares that form part of the ordinary share capital of—
B, or
if B is a company and is a member of a group of companies at the time the shares are acquired, any other company which is a member of that group at that time.
Sub-paragraph (6) applies if—
apart from sub-paragraph (1), Chapter 2 of Part 7A would apply by reason of the relevant step mentioned in sub-paragraph (1), and
at the end of the relevant period, an amount of the loan, or quasi-loan, is outstanding.
In this paragraph “the relevant period” means the period of 12 months beginning with the day on which A ceases to hold the shares.
Part 7A of ITEPA 2003 has effect as if—
a relevant step within paragraph 1 were taken by reason of making a loan, or quasi-loan, of an amount equal to the amount of the loan, or quasi-loan, outstanding at the end of the relevant period, and
the relevant step were taken on the day after the end of the relevant period.
Exclusion for relevant step within paragraph 1A where initial step excluded
Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1A if that Chapter does not apply by reason of the initial step (within the meaning given by sub-paragraph (1)(a) of paragraph 1A).
Duty to provide loan charge information to HMRC
Paragraphs 35B and 35C apply if one of the following conditions is met.
The first condition is that—
a person (“P”) is treated as taking a relevant step within paragraph 1 immediately before the end of 5 April 2019, and
Chapter 2 of Part 7A of ITEPA 2003 applies by reason of that relevant step.
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The second condition is that—
paragraph 24(1) applies by reference to a loan, or a quasi-loan, made by a person (“S”) to a relevant person (“R”),
R makes an application under paragraph 24(1) for S to be treated as mentioned in paragraph 24(1) in relation to the relevant step concerned,
a favourable decision is made on the application before 6 April 2019,
that decision is not revoked before 6 April 2019,
the first condition is not met, and
A is living immediately before—
the end of 30 September 2019, or
if earlier, the time given by sub-paragraphs (i) and (ii) of paragraph 24(1)(b).
The third condition is that—
neither the first nor the second condition is met, and
if the date specified in paragraph 1(1)(c) and (2) were 16 March 2016...—
a person (“T”) would be treated as taking a relevant step within paragraph 1 immediately before the end of 16 March 2016, and
Chapter 2 of Part 7A of ITEPA 2003 would apply by reason of that relevant step (using, for this purpose, the law that would be used to test whether that Chapter applies to a relevant step taken on 5 April 2019), and
A is living immediately before the end of 5 April 2019.
Paragraph 35C does not apply in a case where one of the first to third conditions is met if—
a person agrees, with an officer of Revenue and Customs, terms for the discharge of liability for income tax,
the terms cover all liability (if any) under Chapter 2 of Part 7A of ITEPA 2003 by reason of any loan-charge relevant step or result in there being no such liability, and
the terms are agreed before 1 October 2019.
In sub-paragraph (6)(b) “loan-charge relevant step” means (as the case may be)—
the relevant step that P is treated as taking,
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any relevant step within paragraph 1 that S is, or has yet to be, treated as taking by reference to the loan or quasi-loan mentioned in sub-paragraph (4), or
any relevant step within paragraph 1 that T is, or has yet to be, treated as taking by reference to the loan or quasi-loan by reference to which T would be treated as taking the relevant step mentioned in sub-paragraph (5)(b)(i).
In this paragraph “the appropriate third party” means P,... S or T (as the case may be: see paragraph 35A).
Sub-paragraph(3) applies if the appropriate third party receives a request from A or A’s personal representatives for information specified in the request that is reasonably required for the purpose of complying with paragraph 35C in the case concerned.
The appropriate third party must provide A or A’s personal representatives—
with such of the information as is available to the appropriate third party, and
if any of the information is not available to the appropriate third party, with a statement confirming that so much of the information as is not provided is information that is not available to the appropriate third party.
The information, and any such statement, must be provided promptly and, in any event, before the end of 30 days beginning with date of receipt of the request.
A, or A’s personal representatives, must provide the loan charge information (see paragraph 35D(1)) to the Commissioners for Her Majesty’s Revenue and Customs.
The loan charge information must be provided—
after 5 April 2019, and
before 1 October 2020.
The loan charge information must be provided in such form and manner as may be specified by, or on behalf of, the Commissioners for Her Majesty’s Revenue and Customs.
For the purposes of paragraphs 35C and 36, the “loan charge information” consists of—
A’s name and, if A’s personal representatives are providing the information, their names,
the address and telephone number, and e-mail address (if any), of each person providing the information,
A’s national insurance number (if any),
the unique taxpayer reference number (if any) allocated to A by HMRC,
if the loan or quasi-loan that is or would be the subject of the relevant step mentioned in paragraph 35A(2)(a) or (4)(b) or (5)(b)(i)... is made to someone other than A, the name of the person to whom it is made,
B’s name,
the name of the relevant arrangement,
the reference number (if any) allocated to the relevant arrangement by HMRC under section 311 of FA 2004(disclosure of tax avoidance schemes: arrangements to be given reference number),
any other reference number allocated by HMRC in connection with the relevant arrangement or the relevant step,
if a person has agreed terms with an officer of Revenue and Customs for the partial discharge of the liability for income tax arising because of the application of Chapter 2 of Part 7A of ITEPA 2003 by reason of the relevant step that P... or S is treated as taking, the date of that agreement and the amount of the liability to which it relates,
if a loan is or would be the subject of the relevant step mentioned in paragraph 35A(2)(a) or (4)(b) or (5)(b)(i)... the loan payment information (see sub-paragraph (2)), and
if a quasi-loan is or would be the subject of the relevant step mentioned in paragraph 35A(2)(a) or (4)(b) or (5)(b)(i), the quasi-loan payment information (see sub-paragraph (3)).
The “loan payment information”, in relation to a loan, consists of statements of the following—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the initial principal amount of the loan,
the amount that has become principal under the loan, otherwise than by capitalisation of interest, in each relevant tax year,
the amount of principal under the loan repaid in each relevant tax year, ignoring any repayments not in money made on or after 17 March 2016,
the details of any repayment that is to be disregarded under paragraph 4,
the amount of principal under the loan that has been released or written off in each relevant tax year, and
whether the liability for income tax arising because of the application of Chapter 2 of Part 7A of ITEPA 2003, or section 188 of that Act, by reason of the release or writing-off has been paid.
The “quasi-loan payment information”, in relation to a quasi-loan, consists of statements of the following—
the amount equal to the value of the acquired debt,
the amount equal to the value of the additional debts acquired in each relevant tax year,
the amount by which the initial debt amount has been reduced by way of repayment in each relevant tax year, ignoring any repayments not in money made on or after 17 March 2016,
where the acquired debt or an additional debt is a right to a transfer of assets, and the assets have been transferred, the amount of the market value of the assets at the time of the transfer,
the details of any repayment that is to be disregarded under paragraph 12,
the amount by which the initial debt amount has been reduced by release or writing off in each relevant tax year, and
whether the liability for income tax arising because of the application of Chapter 2 of Part 7A of ITEPA 2003, or section 188 of that Act, by reason of the release or writing-off has been paid.
In this paragraph “relevant tax year” in relation to a loan, or a quasi-loan, means—
the tax year in which the loan or quasi-loan was made, and
each subsequent tax year.
In sub-paragraph(3), “acquired debt”, “additional debt” and “initial debt amount” have the same meaning as in paragraph 11.
In this paragraph and in paragraphs 35G to 35J, “HMRC” means Her Majesty’s Revenue and Customs.
The Commissioners for Her Majesty’s Revenue and Customs may by regulations amend paragraph 35D so as to—
add, remove or amend an entry in a list of information, and
make incidental provision.
A person who fails to comply with paragraph 35C is liable to a penalty of £300.
Sub-paragraph(3) applies if the failure continues after the date on which a penalty is imposed under sub-paragraph(1) in respect of the failure.
The person is liable to a further penalty or penalties not exceeding £60 for each subsequent day, up to a maximum of 90 days, on which the failure continues.
This paragraph applies if—
in complying with the duty under paragraph 35C, a person provides inaccurate information, and
condition A, B or C is met.
Condition A is that the inaccuracy is careless or deliberate.
An inaccuracy is careless if it is due to a failure by the person to take reasonable care.
Condition B is that the person knows of the inaccuracy at the time the information is provided but does not inform HMRC at that time.
Condition C is that the person—
discovers the inaccuracy some time later, and
fails to take reasonable steps to inform HMRC.
The person is liable to a penalty not exceeding £3000.
Where the information contains more than one inaccuracy, a penalty is payable for each inaccuracy.
Liability to a penalty under paragraph 35F does not arise if the person satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure.
For the purposes of this paragraph—
an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person’s control,
where the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and
where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Where a person becomes liable for a penalty under paragraph 35F or 35G—
HMRC may assess the penalty, and
if they do so, they must notify the person.
An assessment of a penalty under paragraph 35F must be made before 1 October 2021.
An assessment of a penalty under paragraph 35G must be made before 1 October 2023.
A person may appeal against any of the following decisions of an officer of Revenue and Customs—
a decision that a penalty is payable by that person under paragraph 35F or 35G, or
a decision as to the amount of such a penalty.
Notice of an appeal under this paragraph must be given—
in writing,
before the end of the period of 30 days beginning with the date on which the notification under paragraph 35I was issued, and
to HMRC.
Notice of an appeal under this paragraph must state the grounds of appeal.
On an appeal under sub-paragraph(1)(a) that is notified to the tribunal, the tribunal may confirm or cancel the decision.
On an appeal under sub-paragraph(1)(b) that is notified to the tribunal, the tribunal may—
confirm the decision, or
substitute for the decision another decision that the officer of Revenue and Customs had power to make.
A penalty under paragraph 35F or 35G must be paid—
before the end of the period of 30 days beginning with the date on which the notification under paragraph 35I was issued, or
if a notice of an appeal against the penalty is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn.
A penalty under paragraph 35F or 35G may be enforced as if it were income tax charged in an assessment and due and payable.
Supplementary provision
Duty to provide loan charge information to B
This paragraph applies where—
a person (“P”) has made a loan, or a quasi-loan, to a relevant person,
the loan or quasi-loan was made on or after 9 December 2010, and
an amount of the loan or quasi-loan is outstanding at any time—
on or after 17 March 2016, and
before the end of 5 April 2019.
Each of A and P must ensure that the loan charge information (see paragraph 35D) in relation to the loan or quasi-loan is provided to B before the end of 15 April 2019.
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“Loan”, “quasi-loan” and “outstanding” have the same meaning for the purposes of this paragraph as they have for the purposes of paragraph 1.
Double taxation
Sub-paragraphs(2) to(8) apply if—
a person (“P”) would, apart from this paragraph, be treated as taking a relevant step by paragraph 1 by reason of a loan made to a relevant person, and
the loan gives rise to a charge to tax under section 455 of CTA 2010 by virtue of section 459 of that Act (loans treated as made to participators).
In this paragraph “the key date” means the later of—
5 April 2019, and
the day on which the tax referred to in sub-paragraph(1)(b) is due and payable (see section 455(3) of CTA 2010).
Paragraph 1(2) has effect as if it treated P as taking the relevant step immediately before the end of the key date, but this is subject to sub-paragraphs(4) and(5).
Paragraph 1(1) does not apply in the case of the loan if the payment condition is met.
Paragraph 1(1) does not apply in the case of the loan if—
the payment condition is not met,
the charge to tax mentioned in sub-paragraph(1)(b) is reported, in a company tax return of B’s, as required under Schedule 18 to FA 1998(company tax returns etc), and
an officer of Revenue and Customs considers that paragraph 1(1) should not apply in the case of the loan.
The payment condition is met if—
the net section 455 charge is paid in full on or before the key date, or
the net section 455 charge is nil.
The “net section 455 charge” is the amount of the tax referred to sub-paragraph(1)(b) less the amount of section 458 relief from that tax.
In sub-paragraph(7)“section 458 relief” means relief given under section 458 of CTA 2010—
in respect of a repayment made, or a release or writing-off occurring, on or before the key date, and
on a claim made on or before the key date.
Sub-paragraph (2) applies where—
P is treated as taking a relevant step by paragraph 1 by reason of a loan made to a relevant person, and
the loan is an employment-related loan (within the meaning of Chapter 7 of Part 3 of ITEPA 2003).
The effect of section 554Z2(2)(a) of ITEPA 2003 (value of relevant step to count as employment income: application of Part 7A instead of the benefits code) is that the loan is not be treated as a taxable cheap loan for the purposes of Chapter 7 of Part 3 of that Act for—
the tax year in which the relevant step is treated as being taken, and
any subsequent tax year.
In section 554Z2 of ITEPA 2003, at the end insert—
Remittance basis
Part 7A of ITEPA 2003 is amended as follows.
Section 554Z9 (remittance basis: A does not meet section 26A requirement) is amended in accordance with this paragraph.
In subsection (1), for “Subsection (2) applies” substitute “ Subsections (2) and (2A) apply ”.
In subsection (1A), for “subsection (2) does not apply” substitute “ subsections (2) and (2A) do not apply ”.
At the beginning of subsection (2) insert “ Except in a case within subsection (2A), ”.
After subsection (2) insert—
In subsection (3) for “this purpose” substitute “ the purposes of subsections (2) and (2A) ”.
In subsection (5)—
in the words before paragraph (a), for “subsection (2)” substitute “ subsection (2) or (2A) ”;
in the words after paragraph (d)—
for “subsection (2)” substitute “ subsection (2) or (2A) ”;
for “that subsection” substitute “ subsection (2) or (2A) (as the case may be) ”.
Section 554Z10 (remittance basis: A meets section 26A requirement) is amended in accordance with this paragraph.
In subsection (1) for “Subsection (2) applies” substitute “ Subsections (2) and (2A) apply ”.
At the beginning of subsection (2) insert “ Except in a case within subsection (2AA), ”.
After subsection (2) insert—
Section 554Z11 (remittance basis: supplementary) is amended in accordance with this paragraph.
In subsection (4), for “554Z9(2) or 554Z10(2)” substitute “ 554Z9(2) or (2A) or 554Z10(2) or (2AA) ”.
In subsection (5), for “554Z9(2) or 554Z10(2)” substitute “ 554Z9(2) or (2A) or 554Z10(2) or (2AA) ”.
In subsection (6), for “554Z9(2) or 554Z10(2)” substitute “ 554Z9(2) or (2A) or 554Z10(2) or (2AA) ”.
Section 554Z11A (temporary non-residents) is amended in accordance with this paragraph.
In subsection (2)—
after “554Z9(2)” insert “ or (2A) ”;
after “554Z10(2)” insert “ or (2AA) ”.
In subsection (3)(d)(i), for “554Z9(2) or 554Z10(2)” substitute “ 554Z9(2) or (2A) or 554Z10(2) or (2AA) ”.
Interpretation
In this Schedule, “tax avoidance arrangement” has the same meaning as it has for the purposes of Part 7A of ITEPA 2003 (see section 554Z(13) to (15) of that Act).
Section 554Z(16) (determining whether a step is connected with a tax avoidance arrangement) applies for the purposes of this Schedule as it applies for the purposes of Part 7A of ITEPA 2003.
See section 554A(1)(a) and 554AA(1)(a) of ITEPA 2003 for the meaning of “A” and “B”.
Consequential amendments
ITEPA 2003
ITEPA 2003 is amended in accordance with this paragraph.
In section 554A(2) (meaning of “relevant step”), after “or 554D” insert “ , or paragraph 1 of Schedule 11 to F(No. 2)A 2017 ”.
In section 554A(4) (relevant step taken on or after A's death), in paragraph (a) after “section 554B taken” insert “ , or a relevant step within paragraph 1 of Schedule 11 to F(No.2)A 2017 which is treated as being taken, ”.
In section 554Z(9) (interpretation: reference to definition of “relevant step”), at the end insert “ , but see also Schedule 11 to F(No. 2)A 2017 ”.
In section 554Z(10) (interpretation: relevant step which involves a sum of money) omit “or” at the end of paragraph (b) and after paragraph (c) insert
In section 554Z5 of ITEPA 2003 (overlap with money or asset subject to earlier tax liability), at the end insert—
FA 2011
In paragraph 59 of Schedule 2 to FA 2011 (transitional provision relating to Part 7A of ITEPA 2003), in sub-paragraph (1)(a), after “ITEPA 2003” insert “ or paragraph 1 of Schedule 11 to F(No. 2)A 2017 ”.
Trading income provided through third parties: loans etc outstanding on 5 April 2019
Application of sections 23A to 23H of ITTOIA 2005 in relation to loans etc. outstanding on 5 April 2019
A loan or quasi-loan in relation to which sub-paragraph (2) applies is to be treated for the purposes of sections 23A to 23H of ITTOIA 2005 as a relevant benefit that arises immediately before the end of 5 April 2019.
This sub-paragraph applies in relation to a loan or a quasi-loan if—
the loan or quasi-loan was made—
on or after 9 December 2010, and
before 6 April 2017, and
an amount of the loan or quasi-loan is outstanding immediately before the end of 5 April 2019.
Where section 23E of ITTOIA 2005 applies and T has not made an election for the purposes of sub-paragraph (3A) in relation to a relevant benefit which is a loan or quasi-loan in relation to which sub-paragraph (2) applies, section 23E has effect—
as if the “relevant benefit amount” were the amount of the loan or quasi-loan that is outstanding at the time the relevant benefit is treated as arising, and
where T ceases to carry on the relevant trade before the tax year in which the relevant benefit is treated as arising, as if section 23E(1)(b) were omitted and as if section 23E(1) provided that the relevant benefit amount is treated for income tax purposes as a post-cessation receipt of the trade received in that tax year.
Where section 23E of ITTOIA 2005 applies in relation to a relevant benefit which is a loan or quasi-loan in relation to which sub-paragraph (2) applies and T has made an election for the purposes of this sub-paragraph, section 23E has effect—
as if the “relevant benefit amount” were one third of the amount of the loan or quasi-loan that is outstanding at the time the relevant benefit is treated as arising,
as if section 23E(1)(a) specified the tax year in which the relevant benefit is treated as arising and each of the two subsequent tax years, and
where T ceases to carry on the relevant trade before any tax year so specified in section 23E(1)(a), as if section 23E(1)(b) were omitted and as if section 23E(1) provided that the relevant benefit amount is to be treated for income tax purposes as a post-cessation receipt of the trade received in that tax year.
An election for the purposes of sub-paragraph (3A)—
may be made at any time before 1 October 2020, and
may be made at a later time if an officer of Revenue and Customs allows it.
But a person who is under a duty imposed by paragraph 22 of this Schedule or paragraph 35C of Schedule 11 may not make an election for the purposes of sub-paragraph (3A) until that duty has been complied with.
An election for the purposes of sub-paragraph (3A) may not be revoked.
A person who has made an election for the purposes of paragraph 1A of Schedule 11 is to be treated as having made an election for the purposes of sub-paragraph (3A) of this paragraph.
The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that sub-paragraph (3B)(a) applies to a specified class of persons as if the reference to 1 October 2020 were to such later date as is specified.
In sub-paragraph (3F) “specified” means specified in the regulations.
This paragraph is subject to paragraphs 19 and 20 (accelerated payments).
For the purposes of this paragraph, whether an amount of a loan or quasi-loan is outstanding at a particular time—
is to be determined in accordance with the following provisions of this Schedule, and
does not depend on the loan or quasi-loan subsisting at that time.
This paragraph applies where—
a loan or quasi-loan is to be treated for the purposes of sections 23A to 23H of ITTOIA 2005 as a relevant benefit by reason of paragraph 1,
a reasonable case could have been made that for a qualifying tax year (“the relevant year”) T was chargeable to income tax on an amount that was referable to the loan or quasi-loan,
at a time when an officer of Revenue and Customs had power to recover (from T or any other person) income tax for the relevant year in respect of that amount, a qualifying tax return or two or more qualifying tax returns taken together contained a reasonable disclosure of the loan or quasi-loan, and
as at 6 April 2019 an officer of Revenue and Customs had not taken steps to recover (from T or any other person) income tax for the relevant year in respect of that amount.
But this paragraph does not apply if—
a reasonable case could have been made that for a tax year other than the relevant year (“the alternative year”) T was chargeable to income tax on an amount within sub-paragraph(3), and
it is the case that—
on or before 5 April 2019 an officer of Revenue and Customs took steps to recover (from T or any other person) income tax for the alternative year in respect of that amount, or
the alternative year is not a qualifying tax year.
An amount is within this sub-paragraph if—
it is the same amount as is mentioned in sub-paragraph(1),
it is part of the amount mentioned in sub-paragraph(1), or
it is derived from or represents the whole or part of the amount mentioned in sub-paragraph(1).
Where this paragraph applies, then for the purposes of paragraph 1(3)(a) and (3A)(a) the amount of the loan or quasi-loan that is outstanding is to be taken to be reduced (but not below nil) by the amount mentioned in sub-paragraph(1).
For the purposes of sub-paragraph(1)(c) a qualifying tax return, or two or more qualifying tax returns taken together, contained a reasonable disclosure of the loan or quasi-loan if the return or returns taken together—
identified the loan or quasi-loan,
identified the person to whom the loan or quasi-loan was made in a case where the loan or quasi-loan was made to a person other than T,
identified the relevant arrangements in pursuance of which or in connection with which the loan or quasi-loan was made, and
provided such other information as was sufficient for it to be apparent that a reasonable case could be made that for the relevant year T was chargeable to income tax on an amount that was referable to the loan or quasi-loan.
In this paragraph—“qualifying tax year” means the tax year 2015-16 and any earlier tax year, and“qualifying tax return” means a return made by T under section 8 of TMA 1970 for a qualifying tax year, and any accompanying accounts, statements or documents.
Meaning of “loan” and “quasi loan”
In this Schedule “loan” includes—
any form of credit;
a payment that is purported to be made by way of a loan.
For the purposes of paragraph 1, a person (“P”) makes a “quasi-loan” to T if (and when) P acquires a right (the “acquired debt”)—
which is a right to a payment or a transfer of assets, and
in respect of which the condition in sub-paragraph (3) is met.
The condition is met in relation to a right if there is a connection (direct or indirect) between the acquisition of the right and—
a payment made, by way of a loan or otherwise, to T, or
a transfer of assets to T.
Where a loan or a quasi-loan made to T is replaced, directly or indirectly, by another loan (the “replacement loan”), references in paragraph 1 to the loan are references to the replacement loan.
Where a loan or a quasi-loan made to T is replaced, directly or indirectly, by another quasi-loan (the “replacement quasi-loan”), references in paragraph 1 to the quasi-loan are references to the replacement quasi-loan.
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In this paragraph and in paragraphs 3, 9, 10, 19 and 20—
“T” is the person mentioned in section 23A(2) of ITTOIA 2005,
references to T include references to a person who is or has been connected with T, and
for that purpose, section 993 of ITA 2007 (meaning of “connected”) applies for the purposes of this Schedule but as if subsection (4) of that section were omitted.
Meaning of “outstanding”: loans
An amount of a loan is “outstanding” for the purposes of paragraph 1 if the relevant principal amount exceeds the repayment amount.
In sub-paragraph (1) “relevant principal amount”, in relation to a loan, means the total of—
the initial principal amount lent, and
any sums that have become principal under the loan, otherwise than by capitalisation of interest.
In sub-paragraph (1) “repayment amount”, in relation to a loan, means the total of—
the amount of principal under the loan that has been repaid before 5 December 2016, and
payments in money made by T on or after 5 December 2016 by way of repayment of principal under the loan.
A payment is to be disregarded for the purposes of sub-paragraph (3)(b) if there is any connection (direct or indirect) between the payment and a tax avoidance arrangement (other than the arrangement in pursuance of which the loan was made).
In this paragraph and in paragraph 9, “tax avoidance arrangement” means an arrangement which has a tax avoidance purpose.
For the purposes of sub-paragraph (5), an arrangement has a tax avoidance purpose if sub-paragraph (7) applies to a person who is a party to the arrangement.
This sub-paragraph applies to a person if the main purpose, or one of the main purposes, of the person entering into the arrangement is the avoidance of tax.
The following paragraphs apply for the purpose of determining whether any payment is connected with a tax avoidance arrangement—
a payment is connected with a tax avoidance arrangement if (for example) the payment is made (wholly or partly) in pursuance of—
the tax avoidance arrangement, or
an arrangement at one end of a series of arrangements with the tax avoidance arrangement being at the other end, and
it does not matter whether the person making the payment is unaware of the tax avoidance arrangement.
Meaning of “outstanding”: loans in currencies other than sterling
In paragraphs 5 to 8 “the loan currency”, in relation to a loan, means the currency in which the initial principal amount of the loan is denominated (whether or not that amount is paid in that currency).
For the purposes of paragraphs 5 to 8, the value of an amount in a particular currency is to be determined by reference to an appropriate spot rate of exchange.
This paragraph applies in relation to a loan where the loan currency is a currency other than sterling.
But this paragraph does not apply if paragraph 8 applies in relation to the loan.
The amount of the loan that is outstanding, at the relevant time, is to be calculated in sterling as follows—Step 1 Calculate, in the loan currency, the amount that is outstanding at that time. Step 2 Take the value in sterling, at that time, of that amount.
For the purposes of this paragraph and paragraph 8, the “relevant time” in relation to a loan is the time immediately before—
the end of the approved repayment date, if the loan is an approved fixed term loan on 5 April 2019, or
the end of 5 April 2019 in any other case.
See paragraph 6 for provision about repayments made in a currency other than the loan currency.
Repayments in currencies other than the loan currency
This paragraph applies in relation to a loan where—
payments in money are made by way of repayment of principal under the loan, and
some or all of the payments are made in a currency other than the loan currency.
But this paragraph does not apply if paragraph 8 applies in relation to the loan.
For the purposes of calculating the repayment amount in relation to the loan, the amount of each of the payments referred to in sub-paragraph (1)(b) is an amount equal to its value in the loan currency on the date it is made.
Loans made in a depreciating currency
Paragraph 8 applies in relation to a loan where—
the loan currency is a currency other than sterling, and
it is reasonable to suppose that the main reason, or one of the main reasons, for the loan being made in that currency is that the loan currency is expected to depreciate as against sterling during the loan period.
The “loan period”, in relation to a loan, is the period—
beginning at the time the loan is made, and
ending with the time by which, under the terms of the loan, the whole of the loan is to be repaid.
Where this paragraph applies in relation to a loan—
paragraphs 5 and 6 do not apply in relation to the loan, and
sub-paragraphs (2) to (5) apply for the purposes of calculating the amount of the loan that is outstanding at the relevant time (as defined in paragraph 5(4)).
The relevant principal amount, in relation to the loan, is an amount equal to the total of—
the value in sterling, at the reference date, of the initial principal amount lent, and
the value in sterling, at the reference date, of any sums that become principal under the loan, otherwise than by capitalisation of interest.
The “reference date”—
in relation to an amount within sub-paragraph (2)(a), means the date on which the loan is made, and
in relation to a sum within sub-paragraph (2)(b), means the date on which the sum becomes principal.
The repayment amount, in relation to the loan, is an amount equal to the total of—
the amount of principal under the loan that has been repaid in sterling, and
where payments are made, in a currency other than sterling, by way of repayment of principal under the loan, the amount equal to the sterling value of the payments.
The “sterling value” of a payment is its value in sterling on the date it is made.
Meaning of outstanding: “quasi-loans”
An amount of a quasi-loan is outstanding for the purposes of paragraph 1 if the initial debt amount exceeds the repayment amount.
In sub-paragraph (1), “initial debt amount” means the total of—
an amount equal to the value of the acquired debt (see paragraph 2(2)), and
where P subsequently acquires a further right (the “additional debt”) to a payment, or transfer of assets, in connection with the payment mentioned in paragraph 2(3)(a) or (as the case may be) the transfer mentioned in paragraph 2(3)(b), an amount equal to the value of the additional debt.
For the purposes of sub-paragraph (2)—
where the acquired debt is a right to payment of an amount, the “value” of the debt is that amount,
where the additional debt is a right to payment of an amount, the “value” of the debt is that amount, but is nil if the additional debt accrued to P by the capitalisation of interest on the acquired debt or another additional debt, and
where the acquired debt or additional debt is a right to a transfer of assets, the “value” of the debt is an amount equal to—
the market value of the assets at the time the right is acquired (or the value of the right at that time if the assets are non-fungible and not in existence at that time), or
if higher, the cost of the assets at that time.
In sub-paragraph (1), “repayment amount”, in relation to a quasi-loan, means the total of—
the amount (if any) by which the initial debt amount has been reduced (by way of repayment) before 5 December 2016,
payments in money (if any) made by T on or after 5 December 2016 by way of repayment of the initial debt amount, and
if the acquired debt or additional debt is a right to a transfer of assets, and the assets have been transferred, an amount equal to the market value of the assets at the time of the transfer.
A payment or transfer is to be disregarded for the purposes of sub-paragraph (4)(b) or (c) if there is any connection (direct or indirect) between the payment or transfer and a tax avoidance arrangement (other than the arrangement under which the quasi-loan was made).
In this paragraph, “market value” has the same meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that Act.
Meaning of “outstanding”: quasi-loans in currencies other than sterling
Paragraphs 11 to 14 apply where P makes a quasi-loan to T by reason of acquiring a right to a payment in a particular currency (the “quasi-loan currency”).
For the purposes of paragraphs 11 to 14, the value of an amount in a particular currency is to be determined by reference to an appropriate spot rate of exchange.
This paragraph applies in relation to the quasi-loan if the quasi-loan currency is a currency other than sterling.
But this paragraph does not apply if paragraph 14 applies in relation to the quasi-loan.
The amount of the quasi-loan that is outstanding, at the relevant time, is to be calculated in sterling as follows—Step 1 Calculate, in the quasi-loan currency, the amount that is outstanding at that time. Step 2 Take the value in sterling, at that time, of that amount.
For the purposes of this paragraph and paragraph 14, the “relevant time” in relation to a quasi-loan is the time immediately before the end of 5 April 2019.
See paragraph 12 for provision about repayments made in a currency other than the quasi-loan currency.
Repayments in currencies other than the quasi-loan currency
This paragraph applies in relation to the quasi-loan if—
payments in money are made by way of repayment of the initial debt amount, and
some or all of the payments are made in a currency other than the quasi-loan currency.
But this paragraph does not apply if paragraph 14 applies in relation to the quasi-loan.
For the purposes of calculating the repayment amount in relation to the quasi-loan, the amount of each of the payments referred to in sub-paragraph (1)(b) is an amount equal to its value in the quasi-loan currency on the date it is made.
Quasi-loans made in a depreciating currency
Paragraph 14 applies in relation to the quasi-loan if—
the quasi-loan currency is a currency other than sterling, and
it is reasonable to suppose that the main reason, or one of the main reasons, for the quasi-loan being made in that currency is that the quasi-loan currency is expected to depreciate as against sterling during the quasi-loan period.
The “quasi-loan period”, in relation to a quasi-loan, is the period—
beginning at the time the quasi-loan is made, and
ending with the time by which, under the terms of the quasi-loan, the whole of the quasi-loan is to be repaid.
Where this paragraph applies in relation to the quasi-loan—
paragraphs 11 and 12 do not apply in relation to the quasi-loan, and
sub-paragraphs (2) to (5) apply for the purposes of calculating the amount of the quasi-loan that is outstanding at the relevant time (as defined in paragraph 11(4)).
The initial debt amount, in relation to the quasi-loan, is an amount equal to the total of—
the value in sterling, at the reference date, of the acquired debt, and
the value in sterling, at the reference date, of any additional debt.
The “reference date”, in relation to a right within sub-paragraph (2)(a) or (2)(b), means the date on which P acquires it.
The repayment amount, in relation to the quasi-loan, is an amount equal to the total of—
the amount of the initial debt amount that has been repaid in sterling, and
where payments are made, in a currency other than sterling, by way of repayment of the initial debt amount, the amount equal to the sterling value of the payments.
The “sterling value” of a payment is its value in sterling on the date it is made.
Meaning of “approved fixed term loan”
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Approval: application to HMRC
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Approval: qualifying payments condition
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Approval: commercial terms condition
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Accelerated payments
Paragraph 20(1) applies where—
section 23E of ITTOIA 2005 would (ignoring paragraph 20) apply in relation to a relevant benefit arising to T,
the relevant benefit is a loan or quasi-loan in relation to which paragraph 1(2) applies,
an accelerated payment notice, or a partner payment notice, relating to a relevant charge (the “accelerated payment notice”) has been given under Chapter 3 of Part 4 of FA 2014,
T makes a payment (the “accelerated payment”) in respect of the understated or disputed tax to which the notice relates,
the accelerated payment is made on or before 5 April 2019, and
the amount of the loan or quasi-loan that, at the end of 5 April 2019, is outstanding for the purposes of paragraph 1 (see paragraphs 3 to 14) is equal to or less than the amount of the accelerated payment.
In sub-paragraph (1)(c), “relevant charge” means a charge to tax under section 23E of ITTOIA 2005 arising by reason of a relevant benefit which arises to T in pursuance of the relevant arrangement in pursuance of which the relevant benefit mentioned in sub-paragraph (1)(a) and (b) arises.
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T may make an application to the Commissioners for Her Majesty's Revenue and Customs to be treated—
as if the relevant benefit mentioned in paragraph 19(1)(a) and (b) arises only if the condition in sub-paragraph (2) is met, and
as if it arises immediately before the end of the 30 days beginning with the date on which the condition in sub-paragraph (2) becomes met.
The condition is that, on the withdrawal of the accelerated payment notice or on the determination of an appeal, any part of the accelerated payment is repaid.
Subject to sub-paragraph (4), an application under sub-paragraph (1) may be made in 2018.
An application may be made after 2018 if an officer of Revenue and Customs considers it reasonable in all the circumstances for a late application to be made.
An application must be made in such form and manner, and contain such information, as may be specified by, or on behalf of, the Commissioners for Her Majesty's Revenue and Customs.
An officer of Revenue and Customs must notify the applicant of the decision on an application under this paragraph.
Duty to provide loan charge information to HMRC
Paragraph 22 applies if one of the following conditions is met.
The first condition is that—
a loan or quasi-loan in relation to which paragraph 1(2) applies is treated as a “relevant benefit” for the purposes of sections 23A to 23H of ITTOIA 2005, and
section 23E of ITTOIA 2005 applies in relation to the relevant benefit (see section 23A of that Act).
The second condition is that—
an application is made under paragraph 20(1) by reference to a loan or quasi-loan in relation to which paragraph 1(2) applies,
a favourable decision is made on the application before 6 April 2019, and
the first condition is not met in relation to the loan or quasi-loan.
Paragraph 22 does not apply in a case if—
a person agrees, with an officer of Revenue and Customs, terms for the discharge of liability for income tax arising because of the application of section 23E of ITTOIA 2005,
the terms cover all liability (if any) arising because of the application of that section by reference to a loan or quasi-loan in relation to which paragraph 1(2) applies, and
the terms are agreed before 1 October 2019.
T, or T’s personal representatives, must provide the loan charge information (see paragraph 23(1)) to the Commissioners for Her Majesty’s Revenue and Customs.
The loan charge information must be provided—
after 5 April 2019, and
before 1 October 2020.
The loan charge information must be provided in such form and manner as may be specified by, or on behalf of, the Commissioners for Her Majesty’s Revenue and Customs.
In this paragraph and in paragraph 23, “T” is the person mentioned in section 23A(2) of ITTOIA 2005.
“Loan charge information”
For the purposes of paragraph 22, the “loan charge information” consists of —
T’s name and, if T’s personal representatives are providing the information, their names,
the address and telephone number, and e-mail address (if any), of each person providing the information,
T’s national insurance number (if any),
the unique taxpayer reference number (if any) allocated to T by HMRC,
the name of the arrangement mentioned in section 23A(3)(a) of ITTOIA 2005,
the reference number (if any) allocated to the arrangement by HMRC under section 311 of FA 2004(disclosure of tax avoidance schemes: arrangements to be given reference number),
any other reference number allocated by HMRC in connection with the arrangement or with the loan or quasi-loan mentioned in paragraph 21(2) or(3),
if the loan or quasi-loan mentioned in paragraph 21(2) or(3) is made to someone other than T, the name of the person to whom it is made,
if a person has agreed terms with an officer of Revenue and Customs for the partial discharge of the liability for income tax arising because of the application of section 23E of ITTOIA 2005 in relation to the loan or quasi-loan mentioned in paragraph 21(2) or(3), the date of that agreement and the amount of the liability to which it relates,
if the condition in paragraph 21(2) or(3) is met by reference to a loan, the loan payment information (see sub-paragraph(2)), and
if the condition in paragraph 21(2) or(3) is met by reference to a quasi-loan, the quasi-loan payment information (see sub-paragraph(3)).
The “loan payment information”, in relation to a loan, consists of statements of the following—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the initial principal amount of the loan,
the amount that has become principal under the loan, otherwise than by capitalisation of interest, in each relevant tax year,
the amount of principal under the loan repaid in each relevant tax year, ignoring any repayments not in money made on or after 5 December 2016,
the details of any repayment that is to be disregarded under paragraph 3(4),
the amount of principal under the loan that has been released or written off in each relevant tax year,
whether any liability for income tax arising because of the application of section 23E of ITTOIA 2005 by reason of the release or writing-off has been paid, and
any amount released that has, in accordance with section 97 of ITTOIA 2005, been brought into account as a receipt in calculating the profits of the relevant trade.
The “quasi-loan payment information”, in relation to a quasi-loan, consists of statements of the following—
the amount equal to the value of the acquired debt,
the amount equal to the value of the additional debts acquired in each relevant tax year,
the amount by which the initial debt amount has been reduced by way of repayment in each relevant tax year, ignoring any repayments not in money made on or after 5 December 2016,
where the acquired debt or an additional debt is a right to a transfer of assets, and the assets have been transferred, the amount of the market value of the assets at the time of the transfer,
the details of any repayment that is to be disregarded under paragraph 9(5),
the amount by which the initial debt amount has been reduced by release or writing off in each relevant tax year,
whether any liability for income tax arising because of the application of section 23E of ITTOIA 2005 by reason of the release or writing-off has been paid, and
any amount released that has, in accordance with section 97 of ITTOIA 2005, been brought into account as a receipt in calculating the profits of the relevant trade.
In this paragraph “relevant tax year” in relation to a loan, or a quasi-loan, means—
the tax year in which the loan or quasi-loan was made, and
each subsequent tax year.
In sub-paragraph(3), “acquired debt”, “additional debt” and “initial debt amount” have the same meaning as in paragraph 9.
In this paragraph and in paragraphs 26 to 29, “HMRC” means Her Majesty’s Revenue and Customs.
The Commissioners for Her Majesty’s Revenue and Customs may by regulations amend paragraph 23 so as to—
add, remove or amend an entry in a list of information, and
make incidental provision.
Duty to provide loan charge information: penalties
A person who fails to comply with paragraph 22 is liable to a penalty of £300.
Sub-paragraph(3) applies if the failure continues after the date on which a penalty is imposed under sub-paragraph(1) in respect of the failure.
The person is liable to a further penalty or penalties not exceeding £60 for each subsequent day, up to a maximum of 90 days, on which the failure continues.
This paragraph applies if—
in complying with the duty under paragraph 22, a person provides inaccurate information, and
condition A, B or C is met.
Condition A is that the inaccuracy is careless or deliberate.
An inaccuracy is careless if it is due to a failure by the person to take reasonable care.
Condition B is that the person knows of the inaccuracy at the time the information is provided but does not inform HMRC at that time.
Condition C is that the person—
discovers the inaccuracy some time later, and
fails to take reasonable steps to inform HMRC.
The person is liable to a penalty not exceeding £3000.
Where the information contains more than one inaccuracy, a penalty is payable for each inaccuracy.
Penalties under paragraph 25: reasonable excuse
Liability to a penalty under paragraph 25 does not arise if the person satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure.
For the purposes of this paragraph—
an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person’s control,
where the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and
where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Penalties under paragraphs 25 and 26: assessment, appeals and enforcement
Where a person becomes liable for a penalty under paragraph 25 or 26—
HMRC may assess the penalty, and
if they do so, they must notify the person.
An assessment of a penalty under paragraph 25 must be made before 1 October 2021.
An assessment of a penalty under paragraph 26 must be made before 1 October 2023.
A person may appeal against any of the following decisions of an officer of Revenue and Customs—
a decision that a penalty is payable by that person under paragraph 25 or 26, or
a decision as to the amount of such a penalty.
Notice of an appeal under this paragraph must be given—
in writing,
before the end of the period of 30 days beginning with the date on which the notification under paragraph 28 was issued, and
to HMRC.
Notice of an appeal under this paragraph must state the grounds of appeal.
On an appeal under sub-paragraph(1)(a) that is notified to the tribunal, the tribunal may confirm or cancel the decision.
On an appeal under sub-paragraph(1)(b) that is notified to the tribunal, the tribunal may—
confirm the decision, or
substitute for the decision another decision that the officer of Revenue and Customs had power to make.
A penalty under paragraph 25 or 26 must be paid—
before the end of the period of 30 days beginning with the date on which the notification under paragraph 28 was issued, or
if a notice of an appeal against the penalty is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn.
A penalty under paragraph 25 or 26 may be enforced as if it were income tax charged in an assessment and due and payable.
Imported goods fulfilment businesses: penalty
Liability to penalty
A penalty is payable by a person (“P”) who—
carries on an imported goods fulfilment business, and
is not an approved person.
In this Schedule references to a “contravention” are to acting as mentioned in sub-paragraph (1).
Amount of penalty
If the contravention is deliberate and concealed, the amount of the penalty is the maximum amount (see paragraph 10).
If the contravention is deliberate but not concealed, the amount of the penalty is 70% of the maximum amount.
In any other case, the amount of the penalty is 30% of the maximum amount.
The contravention is—
“deliberate and concealed” if the contravention is deliberate and P makes arrangements to conceal the contravention, and
“deliberate but not concealed” if the contravention is deliberate but P does not make arrangements to conceal the contravention.
Reductions for disclosure
Paragraph 4 provides for reductions in penalties under this Schedule where P discloses a contravention.
P discloses a contravention by—
telling the Commissioners about it,
giving the Commissioners reasonable help in identifying any other contraventions of which P is aware, and
allowing the Commissioners access to records for the purpose of identifying such contraventions.
Disclosure of a contravention—
is “unprompted” if made at a time when P has no reason to believe that the Commissioners have discovered or are about to discover the contravention, and
otherwise, is “prompted”.
In relation to disclosure, “quality” includes timing, nature and extent.
Where P discloses a contravention, the Commissioners must reduce the penalty to one that reflects the quality of the disclosure.
If the disclosure is prompted, the penalty may not be reduced below—
in the case of a contravention that is deliberate and concealed, the maximum amount,
in the case of a contravention that is deliberate but not concealed, 35% of the maximum amount, and
in any other case, 20% of the maximum amount.
If the disclosure is unprompted, the penalty may not be reduced below—
in the case of a contravention that is deliberate and concealed, 30% of the maximum amount,
in the case of a contravention that is deliberate but not concealed, 20% of the maximum amount, and
in any other case, 10% of the maximum amount.
Special reduction
If the Commissioners think it right because of special circumstances, they may reduce a penalty under this Schedule.
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—
staying a penalty, and
agreeing a compromise in relation to proceedings for a penalty.
Assessment
Where P becomes liable for a penalty under this Schedule, the Commissioners must—
assess the penalty,
notify P, and
state in the notice the contravention in respect of which the penalty is assessed.
A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
A penalty under this Schedule is recoverable as a debt due to the Crown.
An assessment of a penalty under this Schedule may not be made later than one year after evidence of facts sufficient in the opinion of the Commissioners to indicate the contravention comes to their knowledge.
Two or more contraventions may be treated by the Commissioners as a single contravention for the purposes of assessing a penalty under this Schedule.
Reasonable excuse
Liability to a penalty does not arise under this Schedule in respect of a contravention which is not deliberate if P satisfies the Commissioners or (on an appeal made to the appeal tribunal) the tribunal that there is a reasonable excuse for the contravention.
For the purposes of sub-paragraph (1), where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the contravention.
Companies: officer's liability
Where a penalty under this Schedule is payable by a company in respect of a contravention which was attributable to an officer of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as the Commissioners may specify by written notice to the officer.
Sub-paragraph (1) does not allow the Commissioners to recover more than 100% of a penalty.
In the application of sub-paragraph (1) to a body corporate other than a limited liability partnership, “officer” means—
a director (including a shadow director within the meaning of section 251 of the Companies Act 2006),
a manager, and
a secretary.
In the application of sub-paragraph (1) to a limited liability partnership, “officer” means a member.
In the application of sub-paragraph (1) in any other case, “officer” means—
a director,
a manager,
a secretary, and
any other person managing or purporting to manage any of the company's affairs.
Where the Commissioners have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)—
paragraph 5 applies to the specified portion as to a penalty,
the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given,
sub-paragraphs (3) to (5) of paragraph 6 apply as if the notice were an assessment of a penalty, and
paragraph 9 applies as if the officer were liable to a penalty.
In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership.
Double jeopardy
P is not liable to a penalty under this Schedule in respect of a contravention in respect of which P has been convicted of an offence.
The maximum amount
In this Schedule “the maximum amount” means £10,000.
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 sub-paragraph (1) such other sum as appears to them to be justified by the change.
In sub-paragraph (2), “relevant date” means—
the date on which this Act is passed, and
each date on which the power conferred by that sub-paragraph has been exercised.
Regulations under this paragraph do not apply to any contravention which occurs wholly before the date on which they come into force.
Appeal tribunal
In this Schedule “appeal tribunal” has the same meaning as in Chapter 2 of Part 1 of the Finance Act 1994.
Digital reporting and record-keeping for income tax etc: further amendments
Amendments of TMA 1970
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Amendments of other Acts
TCGA 1992
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FA 1998
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CAA 2001
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Tax Credits Act 2002
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ITTOIA 2005
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ITA 2007
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Crossrail Act 2008
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FA 2008
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TIOPA 2010
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FA 2014
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FA 2016
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FA 2022
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Partial closure notices
TMA 1970
TMA 1970 is amended as follows.
In section 9A (notice of enquiry), in subsection (5)—
in paragraph (a), omit the final “or”;
for paragraph (b) substitute—.
Section 9B (amendment of return by taxpayer during enquiry) is amended as follows.
In subsection (1), for “is in progress into the return” substitute “ into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment ”.
In subsection (3)—
after “in progress” insert “ in relation to any matter to which the amendment relates or which is affected by the amendment ”;
in paragraph (a), for “the closure notice” substitute “ a partial or final closure notice ”;
in paragraph (b), for “the closure notice is issued” substitute “ a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued ”.
In subsection (4)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
Section 9C (amendment of self-assessment during enquiry to prevent loss of tax) is amended as follows.
In subsection (1), for “is in progress into a return” substitute “ into a return is in progress in relation to any matter ”.
In subsection (2), after “deficiency” insert “ so far as it relates to the matter ”.
In subsection (4)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
In section 12ZM (NRCGT returns: notice of enquiry), in subsection (4)—
in paragraph (a), omit the final “or”;
for paragraph (b) substitute—.
Section 12ZN (NRCGT returns: amendment of return by taxpayer during enquiry) is amended as follows.
In subsection (1), for “is in progress into the return” substitute “ into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment ”.
In subsection (3)—
after “in progress” insert “ in relation to any matter to which the amendment relates or which is affected by the amendment ”;
in paragraph (a), for “the closure notice” substitute “ a partial or final closure notice ”;
in paragraph (b), for “the closure notice is issued” substitute “ a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued ”.
In subsection (4)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
In section 12AC (partnership return: notice of enquiry), in subsection (5)—
in paragraph (a), omit the final “or”;
for paragraph (b) substitute—.
Section 12AD (amendment of partnership return by taxpayer during enquiry) is amended as follows.
In subsection (1), for “is in progress into the return” substitute “ into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment ”.
In subsection (3)—
after “in progress” insert “ in relation to any matter to which the amendment relates or which is affected by the amendment ”;
in paragraph (a), for “the closure notice” substitute “ a partial or final closure notice ”;
in paragraph (b), for “the closure notice is issued” substitute “ a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued ”.
In subsection (4)(a), after “in progress” insert “ in relation to any matter to which the amendment relates or which is affected by the amendment ”.
In subsection (5)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
In section 12B (records), in subsection (1)(b)(i), for “28A(1) or 28B(1)” substitute “ 28A(1B) or 28B(1B) ”.
Section 28ZA (referral of questions during enquiry) is amended as follows.
In subsection (1), after “of this Act” insert “ in relation to any matter ”.
In subsection (5)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
In section 28ZD (effect of referral on enquiry), in subsection (1)—
for paragraph (a) substitute—;
in paragraph (b), for “such a notice” substitute “ a notice referred to in paragraph (a) or (aa) ”.
Section 28A (completion of enquiry into personal, trustee or NRCGT return) is amended as follows.
For subsection (1) substitute—
In subsection (2)—
for “closure notice” substitute “ partial or final closure notice ”;
for “either” substitute “ state the officer's conclusions and ”.
In subsections (3) and (4), for “closure notice” substitute “ partial or final closure notice ”.
In subsection (6), for “a closure notice” substitute “ the partial or final closure notice ”.
After subsection (6) insert—
Section 28B (completion of enquiry into partnership return) is amended as follows.
For subsection (1) substitute—
In subsection (2)—
for “closure notice” substitute “ partial or final closure notice ”;
for “either” substitute “ state the officer's conclusions and ”.
In subsections (3) and (5), for “closure notice” substitute “ partial or final closure notice ”.
In subsection (7), for “a closure notice” substitute “ the partial or final closure notice ”.
After subsection (7) insert—
In section 29 (assessment where loss of tax discovered), in subsection (5), for paragraph (b) substitute—.
In section 29A (NRCGT disposals: determination of amount which should have been assessed), in subsection (5), for paragraph (b) substitute—.
In section 30 (recovery of overpayment of tax etc), in subsection (5)(b), for “28A(1)” substitute “ 28A(1B) ”.
In section 30B (amendment of partnership statement where loss of tax discovered), in subsection (6), for paragraph (b) substitute—.
In section 31 (appeals: right of appeal), in subsection (2)—
after “in progress” insert “ in relation to any matter to which the amendment relates or which is affected by the amendment ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
In section 59AA (NRCGT disposals: payments on account of CGT), in subsection (8)(a), for “28A(1)” substitute “ 28A(1B) ”.
In section 59B (payment of income tax and capital gains tax), in subsection (4A)(a), for “28A(1)” substitute “ 28A(1B) ”.
In Schedule 3ZA (date by which payment to be made after amendment etc of self-assessment), paragraph 2 is amended as follows.
In sub-paragraph (3)(b)—
for the first “the closure notice” substitute “ a partial or final closure notice ”;
for “the day on which the closure notice was given” substitute “ the relevant day ”.
After sub-paragraph (3) insert—
TCGA 1992
Section 184I of TCGA 1992 (notices under sections 184G and 184H) is amended as follows.
In subsection (4)—
after “completed” insert “ in relation to any matters ”;
after “relevant notice” insert “ relating to those matters ”.
In subsection (5), for “into the return” substitute “ referred to in subsection (4) ”.
In subsection (7)(a), after “period” insert “ (so far as relating to the matters in question) ”.
After subsection (9) insert—
In subsection (10), after “completed,” insert “ so far as relating to the matters to which the relevant notice relates, ”.
FA 1998
Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.
Paragraph 30 (amendment of self-assessment during enquiry to prevent loss of tax) is amended as follows.
In sub-paragraph (1)—
for “before the enquiry is completed” substitute “ while the enquiry is in progress in relation to a matter ”;
after “deficiency” insert “ so far as it relates to the matter ”.
After sub-paragraph (5) insert—
Paragraph 31 (amendment of return by company during enquiry) is amended as follows.
In sub-paragraph (1), for “is in progress into the return” substitute “ into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment ”.
In sub-paragraph (3) for “until after the enquiry is completed” substitute “ while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment ”.
In sub-paragraph (4)(a)—
for “the closure notice” substitute “ a partial or final closure notice ”;
for “on the completion of the enquiry” substitute “ when a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued ”.
In sub-paragraph (5)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
Paragraph 31A (referral of questions to the tribunal during enquiry) is amended as follows.
In sub-paragraph (1), for “into” substitute “ in relation to any matter relating to ”.
In sub-paragraph (5)—
after “in progress” insert “ in relation to any matter ”;
for “the enquiry is completed” substitute “ a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued ”.
In paragraph 31C (effect of referral on enquiry), in sub-paragraph (1)—
for paragraph (a) substitute—;
in paragraph (b), for “such a notice” substitute “ a notice referred to in paragraph (a) or (aa) ”.
Paragraph 32 (completion of enquiry) is amended as follows.
For sub-paragraph (1) substitute—
In subsection (2), after “concludes” insert “ in a partial or final closure notice ”.
After sub-paragraph (3) insert—
In paragraph 33 (direction to complete enquiry), in sub-paragraphs (1) and (3), for “closure notice” substitute “ partial or final closure notice ”.
Paragraph 34 (amendment of return after enquiry) is amended as follows.
In sub-paragraph (1), for “closure notice” substitute “ partial or final closure notice ”.
In sub-paragraph (2)—
for “closure notice” substitute “ partial or final closure notice ”;
after “must” insert “ state the officer's conclusions and ”.
In sub-paragraphs (2A), (4)(c) and (5), for “closure notice” substitute “ partial or final closure notice ”.
In paragraph 42 (restriction on power to make discovery assessment or determination), in sub-paragraph (2A), for the words from “after any” to the end substitute “ a notice within sub-paragraph (4) after any enquiries have been completed into the return (so far as relating to the matters to which the notice relates) ”.
In paragraph 44 (situation not disclosed by return or related document etc), in sub-paragraph (1), for paragraph (b) substitute—.
In paragraph 61 (consequential claims etc), in sub-paragraphs (1)(a) and (3)(a), for “closure notice” substitute “ partial or final closure notice ”.
Paragraph 88 (conclusiveness) is amended as follows.
In sub-paragraph (3)(b), at the end insert “ (or is completed so far as relating to the matters to which the amount relates by the issue of a partial closure notice) ”.
In sub-paragraph (4)(b), at the end insert “ (or the completion of the enquiry so far as relating to the matters to which the amount relates by the issue of a partial closure notice) ”.
Tax Credits Act 2002
Section 20 of the Tax Credits Act 2002 (decisions on discovery) is amended as follows.
In subsection (2)(f), for “a closure notice” substitute “ a partial or final closure notice ”.
In subsection (3)(b), at the end insert “ as specified in subsection (1) ”.
FA 2008
In Schedule 36 to FA 2008 (information and inspection powers), in paragraphs 21(4) and 21ZA(3), at the end insert “ so far as relating to the matters to which the taxpayer notice relates ”.
TIOPA 2010
TIOPA 2010 is amended as follows.
Section 92 (counteraction notices given after tax return made) is amended as follows.
In subsection (3)—
after “completed” insert “ in relation to any matters ”;
after “counteraction notice” insert “ relating to those matters ”.
In subsection (4), after “enquiries” insert “ referred to in subsection (3) ”.
In subsection (5)(a), after “return” insert “ (so far as relating to the matters in question) ”.
Section 93 (amendment, closure notices and discovery assessments in section 92 cases) is amended as follows.
After subsection (3) insert—
In subsection (4), after “completed,” insert “ so far as relating to the matters to which the counteraction notice relates, ”.
In section 171 (tax returns where transfer pricing notice given), after subsection (2) insert—
Section 256 (notices given after tax return made), so far as continuing to have effect, is amended as follows.
In subsection (2)—
after “completed” insert “ in relation to any matters ”;
after “receipt notice” insert “ relating to those matters ”.
In subsection (6)(a), after “return” insert “ (so far as relating to the matters in question) ”.
Section 257 (amendments, closure notices etc), so far as continuing to have effect, is amended as follows.
After subsection (4) insert—
In subsection (5), after “completed,” insert “ so far as relating to the matters to which the Part 6 notice relates, ”.
In section 371IJ (claims), in subsection (4)(b), after “completed” insert “ so far as relating to the matters to which the claim relates ”.
Commencement
The amendments made by this Schedule have effect in relation to an enquiry under section 9A, 12ZM or 12AC of TMA 1970 or Schedule 18 to FA 1998 where—
notice of the enquiry is given on or after the day on which this Act is passed, or
the enquiry is in progress immediately before that day.
Penalties for enablers of defeated tax avoidance
Liability to penalty
Where—a penalty is payable by each person who enabled the arrangements.
a person (“T”) has entered into abusive tax arrangements, and
T incurs a defeat in respect of the arrangements,
Parts 2 to 4 of this Schedule define—“abusive tax arrangements”; a “defeat in respect of the arrangements”; a “person who enabled the arrangements”.
The other Parts of this Schedule make provision supplementing paragraph 1 as follows—
Part 5 makes provision about the amount of a penalty;
Parts 6 to 8 provide for the assessment of penalties, referrals to the GAAR Advisory Panel and appeals against assessments;
Part 9 applies information and inspection powers, and makes provision about declarations relating to legally privileged communications;
Part 10 confers power to publish details of persons who have incurred penalties;
Parts 11 and 12 contain miscellaneous and general provisions.
“Abusive” and “tax arrangements”: meaning
Arrangements are “tax arrangements” for the purposes of this Schedule if, having regard to all the circumstances, it would be reasonable to conclude that the obtaining of a tax advantage was the main purpose, or one of the main purposes, of the arrangements.
Tax arrangements are “abusive” for the purposes of this Schedule if they are arrangements the entering into or carrying out of which cannot reasonably be regarded as a reasonable course of action in relation to the relevant tax provisions, having regard to all the circumstances.
The circumstances to which regard must be had under sub-paragraph (2) include—
whether the substantive results, or the intended substantive results, of the arrangements are consistent with any principles on which the relevant tax provisions are based (whether express or implied) and the policy objectives of those provisions,
whether the means of achieving those results involves one or more contrived or abnormal steps, and
whether the arrangements are intended to exploit any shortcomings in those provisions.
Where the tax arrangements form part of any other arrangements regard must also be had to those other arrangements.
Each of the following is an example of something which might indicate that tax arrangements are abusive—but a result mentioned in paragraph (a), (b) or (c) is to be taken to be such an example only if it is reasonable to assume that such a result was not the anticipated result when the relevant tax provisions were enacted.
the arrangements result in an amount of income, profits or gains for tax purposes that is significantly less than the amount for economic purposes;
the arrangements result in deductions or losses of an amount for tax purposes that is significantly greater than the amount for economic purposes;
the arrangements result in a claim for the repayment or crediting of tax (including foreign tax) that has not been, and is unlikely to be, paid;
The fact that tax arrangements accord with established practice, and HMRC had, at the time the arrangements were entered into, indicated their acceptance of that practice, is an example of something which might indicate that the arrangements are not abusive.
The examples given in sub-paragraphs (5) and (6) are not exhaustive.
In sub-paragraph (5) the reference to income includes earnings, within the meaning of Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
“Defeat” in respect of abusive tax arrangements
“Defeat” in respect of abusive tax arrangements
T (within the meaning of paragraph 1) incurs a “defeat” in respect of abusive tax arrangements entered into by T (“the arrangements concerned”) if—
Condition A (in paragraph 5) is met, or
Condition B (in paragraph 6) is met.
Condition A
Condition A is that—
T, or a person on behalf of T, has given HMRC a document of a kind listed in the Table in paragraph 1 of Schedule 24 to FA 2007 (returns etc),
the document was submitted on the basis that a tax advantage (“the relevant tax advantage”) arose from the arrangements concerned,
the relevant tax advantage has been counteracted, and
the counteraction is final.
For the purposes of this paragraph the relevant tax advantage has been “counteracted” if adjustments have been made in respect of T's tax position on the basis that the whole or part of the relevant tax advantage does not arise.
For the purposes of this paragraph a counteraction is “final” when the adjustments in question, and any amounts arising from the adjustments, can no longer be varied, on appeal or otherwise.
In this paragraph “adjustments” means any adjustments, whether by way of an assessment, the modification of an assessment or return, the amendment or disallowance of a claim, a payment, the entering into of a contract settlement or otherwise. Accordingly, references to “making” adjustments include securing that adjustments are made by entering into a contract settlement.
Any reference in this paragraph to giving HMRC a document includes—
communicating information to HMRC in any form and by any method;
making a statement or declaration in a document.
Any reference in this paragraph to a document of a kind listed in the Table in paragraph 1 of Schedule 24 to FA 2007 includes—
a document amending a document of a kind so listed, and
a document which—
relates to national insurance contributions, and
is a document in relation to which that Schedule applies.
Condition B
Condition B is that (in a case not falling within Condition A)—
HMRC have made an assessment in relation to tax,
the assessment counteracts a tax advantage that it is reasonable to assume T expected to obtain from the arrangements concerned (“the expected tax advantage”), and
the counteraction is final.
For the purposes of this paragraph an assessment “counteracts” the expected tax advantage if the assessment is on a basis which prevents T from obtaining (or obtaining the whole of) the expected tax advantage.
For the purposes of this paragraph a counteraction is “final”—
when a relevant contract settlement is made, or
if no contract settlement has been made, when the assessment in question and any amounts arising from the assessment can no longer be varied, on appeal or otherwise.
In sub-paragraph (3) a “relevant contract settlement” means a contract settlement on a basis which prevents T from obtaining (or obtaining the whole of) the expected tax advantage.
Persons who “enabled” the arrangements
Persons who “enabled” the arrangements
A person is a person who “enabled” the arrangements mentioned in paragraph 1 if that person is—
a designer of the arrangements (see paragraph 8),
a manager of the arrangements (see paragraph 9),
a person who marketed the arrangements to T (see paragraph 10),
an enabling participant in the arrangements (see paragraph 11), or
a financial enabler in relation to the arrangements (see paragraph 12).
This paragraph is subject to paragraph 13 (excluded persons).
Designers of arrangements
For the purposes of paragraph 7 a person is a “designer” of the arrangements if that person was, in the course of a business carried on by that person, to any extent responsible for the design of—but this is subject to sub-paragraph (2).
the arrangements, or
a proposal which was implemented by the arrangements;
Where a person would (in the absence of this sub-paragraph) fall within sub-paragraph (1) because of having provided advice which was used in the design of the arrangements or of a proposal, that person does not because of that advice fall within that sub-paragraph unless—
the advice is relevant advice, and
the knowledge condition is met.
Advice is “relevant advice” if—
the advice or any part of it suggests arrangements or an alteration of proposed arrangements, and
it is reasonable to assume that the suggestion was made with a view to arrangements being designed in such a way that a tax advantage (or a greater tax advantage) might be expected to arise from them.
The knowledge condition is that, when the advice was provided, the person providing it knew or could reasonably be expected to know—
that the advice would be used in the design of abusive tax arrangements or of a proposal for such arrangements, or
that it was likely that the advice would be so used.
For the purposes of sub-paragraph (3), advice is not to be taken to “suggest” anything—
which is put forward by the advice for consideration, but
which the advice can reasonably be read as recommending against.
In sub-paragraph (3)—
the reference in paragraph (a) to arrangements or an alteration of proposed arrangements includes a proposal for arrangements or an alteration of a proposal for arrangements, and
the reference in paragraph (b) to arrangements includes arrangements proposed by a proposal.
For the purposes of this paragraph—
references to advice include an opinion;
advice is “used” in a design if the advice is taken account of in that design.
Managers of arrangements
For the purposes of paragraph 7 a person is a “manager” of the arrangements if that person—
was, in the course of a business carried on by that person, to any extent responsible for the organisation or management of the arrangements, and
when carrying out any functions in relation to the organisation or management of the arrangements, knew or could reasonably be expected to know that the arrangements involved were abusive tax arrangements.
Where—that person is not because of anything done in the course of facilitating that withdrawal to be regarded as to any extent responsible for the organisation or management of the arrangements.
a person is, in the course of a business carried on by the person, to any extent responsible for facilitating T's withdrawal from the arrangements, and
it is reasonable to assume that the obtaining of a tax advantage is not T's purpose (or one of T's purposes) in withdrawing from the arrangements,
Marketers of arrangements
For the purposes of paragraph 7 a person “marketed” the arrangements to T if, in the course of a business carried on by that person—
that person made available for implementation by T a proposal which has since been implemented, in relation to T, by the arrangements, or
that person—
communicated information to T or another person about a proposal which has since been implemented, in relation to T, by the arrangements, and
did so with a view to T entering into the arrangements or transactions forming part of the arrangements.
Enabling participants
For the purposes of paragraph 7 a person is “an enabling participant” in the arrangements if—
that person is a person (other than T) who enters into the arrangements or a transaction forming part of the arrangements,
without that person's participation in the arrangements or transaction (or the participation of another person in the arrangements or transaction in the same capacity as that person), the arrangements could not be expected to result in a tax advantage for T, and
when that person entered into the arrangements or transaction, that person knew or could reasonably be expected to know that what was being entered into was abusive tax arrangements or a transaction forming part of such arrangements.
Financial enablers
For the purposes of paragraph 7 a person is a “financial enabler” in relation to the arrangements if—
in the course of a business carried on by that person, that person provided a financial product (directly or indirectly) to a relevant party,
it is reasonable to assume that the purpose (or a purpose) of the relevant party in obtaining the financial product was to participate in the arrangements, and
when the financial product was provided, the person providing it knew or could reasonably be expected to know that the purpose (or a purpose) of obtaining it was to participate in abusive tax arrangements.
In this paragraph “a relevant party” means T or an enabling participant in the arrangements within the meaning given by paragraph 11.
Any reference in this paragraph to a person's providing a financial product to a relevant party includes (but is not limited to) the person's doing any of the following—and references to obtaining a financial product are to be read accordingly.
providing a loan to a relevant party;
issuing or transferring a share to a relevant party;
entering into arrangements with a relevant party such that—
the person becomes a party to a relevant contract within the meaning of section 577 of CTA 2009 (derivative contracts);
there is a repo in respect of securities within the meaning of section 263A(A1) of TCGA 1992;
the person or the relevant party has a creditor repo, creditor quasi-repo, debtor repo or debtor quasi-repo within the meaning of sections 543, 544, 548 and 549 of CTA 2009;
entering into a stock lending arrangement, within the meaning of section 263B(1) of TCGA 1992, with a relevant party;
entering into an alternative finance arrangement, within the meaning of Chapter 6 of Part 6 of CTA 2009 or Part 10A of ITA 2007, with a relevant party;
entering into a contract with a relevant party which, whether alone or in combination with one or more other contracts—
is in accordance with generally accepted accounting practice required to be treated as a loan, deposit or other financial asset or obligation, or
would be required to be so treated by the person if the person were a company to which the Companies Act 2006 applies;
The Treasury may by regulations amend sub-paragraph (3).
Excluded persons
A person who—is not to be regarded as having enabled those arrangements.
would (in the absence of this paragraph) be regarded for the purposes of this Schedule as having enabled particular arrangements mentioned in paragraph 1, but
is a person within sub-paragraph (2),
The persons within this sub-paragraph are—
T;
where T is a company, any company in the same group as T.
Powers to add categories of enabler and to provide exceptions
The Treasury may by regulations add to the categories of persons who, in relation to arrangements mentioned in paragraph 1, are for the purposes of this Schedule persons who enabled the arrangements.
The Treasury may by regulations provide that a person who would otherwise be regarded for the purposes of this Schedule as having enabled arrangements is not to be so regarded where conditions prescribed by the regulations are met.
Regulations under this paragraph may—
amend this Part of this Schedule;
make supplementary, incidental, and consequential provision, including provision amending any other Part of this Schedule;
make transitional provision.
Amount of penalty
Amount of penalty
For each person who enabled the arrangements mentioned in paragraph 1, the penalty payable under paragraph 1 is the total amount or value of all the relevant consideration received or receivable by that person (“the person in question”).
Particular consideration is “relevant” for the purposes of this paragraph if—
it is consideration for anything done by the person in question which enabled the arrangements mentioned in paragraph 1, and
it has not previously been taken into account in calculating the amount of a penalty payable under paragraph 1.
For the purposes of this paragraph a thing done by a person “enabled” the arrangements mentioned in paragraph 1 if, by doing that thing (alone or with anything else), the person fell within the definition in Part 4 of this Schedule of a person who enabled those arrangements.
This paragraph applies for the purposes of paragraph 15.
Where consideration for anything done by a person (“A”) is, under any arrangements with A, paid or payable to a person other than A, it is to be taken to be received or receivable by A.
The “consideration” for anything done by a person does not include any amount charged by that person in respect of value added tax.
Consideration attributable to two or more transactions is to be apportioned on a just and reasonable basis.
Any consideration given for what is in substance one bargain is to be treated as attributable to all elements of the bargain, even though—
separate consideration is, or purports to be, given for different elements of the bargain, or
there are, or purport to be, separate transactions in respect of different elements of the bargain.
Reduction of penalty where other penalties incurred
The amount of a penalty for which a person is liable under paragraph 1 is to be reduced by the amount of any other penalty incurred by the person in respect of conduct for which the person is liable to the penalty under paragraph 1.
In this paragraph “any other penalty” means a penalty—
which is a penalty under a provision other than paragraph 1, and
which has been assessed.
Mitigation of penalty
HMRC may in their discretion reduce a penalty under paragraph 1.
In this paragraph the reference to reducing a penalty includes a reference to—
entirely remitting the penalty, or
staying, or agreeing a compromise in relation to, proceedings for the recovery of a penalty.
Assessment of penalty
Assessment of penalty
Where a person is liable for a penalty under paragraph 1 HMRC must—
assess the penalty, and
notify the person.
If—HMRC may assess the penalty on the basis of a reasonable estimate by HMRC of that consideration.
HMRC do not have all the information required to determine the amount or value of the relevant consideration within the meaning of paragraph 15, and
HMRC have taken all reasonable steps to obtain that information,
This paragraph is subject to—
paragraphs 21 and 22 (limits on when penalty may be assessed); and
Part 7 of this Schedule (requirement for opinion of GAAR Advisory Panel before penalty may be assessed).
A penalty under paragraph 1 must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
An assessment of a penalty under paragraph 1—
is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule), and
may be enforced as if it were an assessment to tax.
Special provision about assessment for multi-user schemes
This paragraph applies where—
a proposal for arrangements is implemented more than once, by a number of tax arrangements which are substantially the same as each other (“related arrangements”),
paragraph 1 applies in relation to particular arrangements (“the arrangements concerned”) which are one of the number of related arrangements implementing the proposal, and
at the time when the person who entered into the arrangements concerned incurs a defeat in respect of them (other than a tribunal or court defeat), neither condition 1 nor condition 2 has been met.
HMRC may not assess any penalty payable under paragraph 1 in respect of the arrangements concerned until condition 1 or condition 2 is met.
Condition 1 is that a defeat that is a tribunal or court defeat is incurred in the case of at least one of the number of related arrangements implementing the proposal.
Condition 2 is that the required number or percentage of relevant defeats is reached.
For the purposes of this paragraph, a defeat incurred in respect of arrangements is a “tribunal or court defeat” if—
condition A (in paragraph 5) is met and the adjustments mentioned in paragraph 5(2) have been confirmed by a tribunal or court, or
condition B (in paragraph 6) is met and the assessment mentioned in paragraph 6(2) has been confirmed by a tribunal or court.
An adjustment or assessment (as the case may be) has been confirmed by a tribunal or court if the First-tier Tribunal, the Upper Tribunal or a court has determined in proceedings before it that the adjustment or assessment in question should not be varied.
For the purposes of sub-paragraph (2D), disregard variations that do not substantively alter the basis of the adjustment or assessment in question.
For the purposes of this paragraph the “required number or percentage of relevant defeats” is reached when HMRC reasonably believe that —
the number of related arrangements implementing the proposal is fewer than 21 and defeats have been incurred in the case of 50% or more of those arrangements;
the number of related arrangements implementing the proposal is more than 20 but fewer than 44 and defeats have been incurred in the case of 11 or more of those arrangements;
the number of related arrangements implementing the proposal is more than 43 but fewer than 200 and defeats have been incurred in the case of 25% or more of those arrangements;
the number of related arrangements implementing the proposal is 200 or more and defeats have been incurred in the case of 50 or more of those arrangements.
Sub-paragraph (2) does not apply in relation to a penalty if the person liable to the penalty requests assessment of the penalty sooner than the time allowed by sub-paragraph (2).
Time limit for assessment
An assessment of a person as liable to a penalty under paragraph 1 may not take place after the relevant time.
In this paragraph “the relevant time” means, subject to sub-paragraphs (3) to (6)—
where a GAAR final decision notice within the meaning of paragraph 24(1) has been given in relation to the arrangements to which the penalty relates, the end of 12 months beginning with the date on which T incurs the defeat mentioned in paragraph 1;
where a notice under paragraph 25 has been given to the person mentioned in sub-paragraph (1) above in respect of the arrangements to which the penalty relates, the end of 12 months beginning with the end of the time allowed for making representations in respect of that notice;
where—the end of 12 months beginning with the date on which the opinion of the GAAR Advisory Panel is given on the referral (within the meaning given by paragraph 34(6));
a referral has been made under paragraph 26 in respect of the arrangements to which the penalty relates, and
paragraph (d) does not apply,
where a notice under paragraph 35 has been given to the person mentioned in sub-paragraph (1) above in respect of the arrangements to which the penalty relates, the end of 12 months beginning with the end of the time allowed for making representations in respect of that notice.
Where—the relevant time in relation to that penalty is whichever is the later of—
paragraph 21 prevented a penalty from being assessed before condition 1 or condition 2 was met, and
condition 1 or condition 2 has been met,
the relevant time given by sub-paragraph (2), and
the end of 12 months beginning with the date on which the first of condition 1 or condition 2 was met.
Where under paragraph 21(4) a person requests assessment of a penalty, the relevant time in relation to that penalty is whichever is the later of—and sub-paragraph (3) does not apply to the penalty even if condition 1 or condition 2 is met.
the relevant time given by sub-paragraph (2), and
the end of 12 months beginning with the date on which the request is made,
Sub-paragraph (6) applies where—
at any time a declaration has been made under paragraph 44 for the purposes of any determination of whether a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements concerned”), and
subsequently, facts that in the Commissioners' opinion are sufficient to indicate that the declaration contains a material inaccuracy have come to the Commissioners' knowledge.
The relevant time in respect of any penalty under paragraph 1 payable by that person in relation to the arrangements concerned is whichever is the later of—
the relevant time given by the preceding provisions of this paragraph, and
the end of 12 months beginning with the date on which such facts came to the Commissioners' knowledge.
GAAR Advisory Panel opinion, and representations
Requirement for opinion of GAAR Advisory Panel
A penalty under paragraph 1 may not be assessed unless—
the decision that it should be assessed is taken by a designated HMRC officer, and
either the condition in sub-paragraph (2) or the condition in sub-paragraph (3) is met.
The condition in this sub-paragraph is that, when the assessment is made—
a GAAR final decision notice has been given in relation to—
the arrangements to which the penalty relates (“the relevant arrangements”), or
arrangements that are equivalent to the relevant arrangements,
where a notice is required by paragraph 25 to be given to the person liable to the penalty, that notice has been given and the time allowed for making representations under that paragraph has expired, and
a designated HMRC officer has, in deciding whether the penalty should be assessed, considered—
the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing that GAAR final decision notice, and
any representations made under paragraph 25.
The condition in this sub-paragraph is that, when the assessment is made—
an opinion of the GAAR Advisory Panel which applies to the relevant arrangements has been given on a referral under paragraph 26,
where a notice is required by paragraph 35 to be given to the person liable to the penalty, that notice has been given and the time allowed for making representations under that paragraph has expired, and
a designated HMRC officer has, in deciding whether the penalty should be assessed, considered—
that opinion of the GAAR Advisory Panel, and
any representations made under paragraph 35.
Where a notification of a penalty under paragraph 1 is given, the notification must be accompanied by a report prepared by HMRC of—
if the condition in sub-paragraph (2) is met, the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing the GAAR final decision notice;
if the condition in sub-paragraph (3) is met, the opinion of the GAAR advisory panel mentioned in that sub-paragraph.
Paragraph 24 contains definitions of terms used in this paragraph.
In this Schedule a “GAAR final decision notice” means a notice under—
paragraph 12 of Schedule 43 to FA 2013 (notice of final decision after considering opinion of GAAR Advisory Panel on referral under Schedule 43),
paragraph 8 or 9 of Schedule 43A to FA 2013 (notice of final decision after considering opinion of GAAR Advisory Panel), or
paragraph 8 of Schedule 43B to FA 2013 (notice of final decision after considering opinion of GAAR Advisory Panel on referral under Schedule 43B).
For the purposes of this Part of this Schedule, where the GAAR Advisory Panel gives an opinion on a referral under paragraph 26 the arrangements to which the opinion “applies” are—
the arrangements in respect of which the referral was made (that is, “the arrangements in question” within the meaning given by paragraph 26(1)), and
any arrangements that are equivalent to those arrangements.
For the purposes of this Part of this Schedule, arrangements are “equivalent” to one another if they are substantially the same as one another having regard to—
their substantive results or intended substantive results,
the means of achieving those results, and
the characteristics on the basis of which it could reasonably be argued, in each case, that the arrangements are abusive tax arrangements.
Notice where Panel opinion already obtained in relation to equivalent arrangements
This paragraph applies where a designated HMRC officer is of the view that—
a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements concerned”),
no GAAR final decision notice has been given in relation to those arrangements, but those arrangements are equivalent to arrangements in relation to which a GAAR final decision notice has been given (“the GAAR decision arrangements”), and
accordingly, the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing that GAAR final decision notice is relevant to the arrangements concerned.
A designated HMRC officer must give the person mentioned in sub-paragraph (1) a notice in writing—
explaining that the officer is of the view mentioned there,
specifying the arrangements concerned,
describing the material characteristics of the GAAR decision arrangements,
setting out a report prepared by HMRC of the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing the GAAR final decision notice, and
explaining the effect of sub-paragraphs (3) and (4).
A person to whom a notice under this paragraph is given has 30 days, beginning with the day on which the notice is given, to send to the designated HMRC officer (in writing) any representations that that person wishes to make as to why the arrangements concerned are not equivalent to the GAAR decision arrangements.
A designated HMRC officer may, on a written request by that person, extend the period during which representations may be made by that person.
Paragraph 24 contains definitions of the following terms used in this paragraph—“GAAR final decision notice”;“equivalent”, in relation to arrangements.
Referral to GAAR Advisory Panel
A designated HMRC officer may make a referral under this paragraph if—
the officer considers that a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements in question”), and
the requirements of paragraph 28 (procedure before making of referral) have been complied with.
But a referral may not be made under this paragraph if a GAAR final decision notice (within the meaning of paragraph 24(1)) has already been given in relation to—
the arrangements in question, or
arrangements that are equivalent to those arrangements.
A referral under this paragraph is a referral to the GAAR Advisory Panel of the question whether the entering into and carrying out of tax arrangements such as are described in the referral statement (see paragraph 27) is a reasonable course of action in relation to the relevant tax provisions.
In this Part of this Schedule “the referral statement”, in relation to a referral under paragraph 26, means a statement made by a designated HMRC officer which—
accompanies the referral,
is a general statement of the material characteristics of the arrangements in question (within the meaning given by paragraph 26(1)), and
complies with sub-paragraph (2).
A statement under this paragraph must—
contain a factual description of the arrangements in question,
set out HMRC's view as to whether those arrangements accord with established practice (as it stood when those arrangements were entered into),
explain why it is the designated HMRC officer's view that a tax advantage of the nature described in the statement and arising from tax arrangements having the characteristics described in the statement would be a tax advantage arising from arrangements that are abusive,
set out any matters the designated HMRC officer is aware of which may suggest that any view of HMRC or the designated HMRC officer expressed in the statement is not correct, and
set out any other matters which the designated HMRC officer considers are required for the purposes of the exercise of the GAAR Advisory Panel's functions under paragraphs 33 and 34.
Notice before decision whether to refer
A referral must not be made under paragraph 26 unless—
a designated HMRC officer has given each relevant person a notice under this paragraph,
in the case of each relevant person, the time allowed for making representations has expired, and
in deciding whether to make the referral, a designated HMRC officer has considered any representations made by a relevant person within the time allowed.
In this paragraph a “relevant person” means any person who at the time of the referral is considered by the officer making the referral to be liable to a penalty under paragraph 1 in relation to the arrangements in question (within the meaning given by paragraph 26(1)).
A notice under this paragraph is a notice in writing which—
explains that the officer giving the notice considers that the person to whom the notice is given is liable to a penalty under paragraph 1 in relation to the arrangements in question (specifying those arrangements),
explains why the officer considers those arrangements to be abusive tax arrangements,
explains that HMRC are proposing to make a referral under paragraph 26 of the question whether the entering into and carrying out of tax arrangements that have the characteristics of the arrangements in question is a reasonable course of action in relation to the relevant tax provisions, and
explains the effect of sub-paragraphs (4) and (5).
Each person to whom a notice under this paragraph is given has 45 days, beginning with the day on which the notice is given to that person, to send written representations to the designated HMRC officer in response to the notice.
A designated HMRC officer may, on a written request by a person to whom a notice is given, extend the period during which representations may be made by that person.
Notice of decision whether to refer
Where a designated HMRC officer decides whether to make a referral under paragraph 26, the officer must, as soon as reasonably practicable, give written notice of that decision to each person to whom notice under paragraph 28 was given.
Information to accompany referral
A referral under paragraph 26 must (as well as being accompanied by the referral statement under paragraph 27) be accompanied by—
a declaration that, as far as HMRC are aware, nothing which is material to the GAAR Advisory Panel's consideration of the matter has been omitted from that statement,
a copy of each notice given under paragraph 28 by HMRC in relation to the referral,
a copy of any representations received under paragraph 28 and any comments that HMRC wish to make in respect of those representations, and
a copy of each notice given under paragraph 31 by HMRC.
Notice on making of referral
Where a referral is made under paragraph 26, a designated HMRC officer must at the same time give to each relevant person a notice in writing which—
notifies the person of the referral,
is accompanied by a copy of the referral statement,
is accompanied by a copy of any comments provided to the GAAR Advisory Panel under paragraph 30(c) in respect of representations made by the person,
notifies the person of the period under paragraph 32 for making representations, and
notifies the person of the requirement under that paragraph to send any representations to the officer.
In this paragraph “relevant person” has the same meaning as in paragraph 28 (see sub-paragraph (2) of that paragraph).
Right to make representations to GAAR Advisory Panel
A person who has received a notice under paragraph 31 has 21 days, beginning with the day on which that notice is given, to send to the GAAR Advisory Panel written representations about—
the notice given to the person under paragraph 28, or
any comments provided to the GAAR Advisory Panel under paragraph 30(c) in respect of representations made by the person.
The GAAR Advisory Panel may, on a written request made by the person, extend the period during which representations may be made.
If a person sends representations to the GAAR Advisory Panel under this paragraph, the person must at the same time send a copy of the representations to the designated HMRC officer.
If a person sends representations to the GAAR Advisory Panel under this paragraph and that person made no representations under paragraph 28, a designated HMRC officer—
may provide the GAAR Advisory Panel with comments on that person's representations under this paragraph, and
if such comments are provided, must at the same time send a copy of them to that person.
Decision of GAAR Advisory Panel and opinion notices
Where a referral is made to the GAAR Advisory Panel under paragraph 26, the Chair must arrange for a sub-panel consisting of 3 members of the GAAR Advisory Panel (one of whom may be the Chair) to consider it.
The sub-panel may invite—(or both) to supply the sub-panel with further information within a period specified in the invitation.
any person to whom notice under paragraph 28 was given, or
the designated HMRC officer,
Invitations must explain the effect of sub-paragraph (4) or (5) (as appropriate).
If a person invited under sub-paragraph (2)(a) supplies information to the sub-panel under this paragraph, that person must at the same time send a copy of the information to the designated HMRC officer.
If a designated HMRC officer supplies information to the sub-panel under this paragraph, the officer must at the same time send a copy of the information to each person to whom notice under paragraph 28 was given.
The sub-panel must produce—
one opinion notice stating the joint opinion of all the members of the sub-panel, or
two or three opinion notices which taken together state the opinions of all the members.
The sub-panel must give a copy of the opinion notice or notices to the designated HMRC officer.
An opinion notice is a notice which states that in the opinion of the members of the sub-panel, or one or more of those members—and the reasons for that opinion.
the entering into and carrying out of tax arrangements such as are described in the referral statement is a reasonable course of action in relation to the relevant tax provisions,
the entering into or carrying out of such tax arrangements is not a reasonable course of action in relation to the relevant tax provisions, or
it is not possible, on the information available, to reach a view on that matter,
In forming their opinions for the purposes of sub-paragraph (3) members of the sub-panel must—
have regard to all the matters set out in the referral statement,
have regard to the matters mentioned in paragraphs (a) to (c) of paragraph 3(3) and paragraph 3(4), and
take account of paragraph 3(5) to (7).
For the purposes of the giving of an opinion under this paragraph, the arrangements are to be assumed to be tax arrangements.
For the purposes of this Schedule—
an opinion of the GAAR Advisory Panel is to be treated as having been given on a referral under paragraph 26 when an opinion notice (or notices) has been given under this paragraph in respect of the referral, and
any requirement to consider the opinion of the GAAR Advisory Panel given on such a referral is a requirement to consider the contents of the opinion notice (or notices) given on the referral.
Notice before deciding that arrangements are ones to which Panel opinion applies
This paragraph applies where—
an opinion of the GAAR Advisory Panel has been given on a referral under paragraph 26,
a designated HMRC officer is of the view that a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements concerned”) and that that opinion of the GAAR Advisory Panel applies to those arrangements, and
that person is not a person to whom notice under paragraph 28 was given in connection with the referral.
A designated HMRC officer must give the person mentioned in sub-paragraph (1)(b) a notice in writing—
explaining that the officer is of the view mentioned in that paragraph,
specifying the arrangements concerned,
setting out a report prepared by HMRC of the opinion mentioned in sub-paragraph (1)(a), and
explaining the effect of sub-paragraphs (3) and (4).
A person to whom a notice under this paragraph is given has 30 days, beginning with the day on which the notice is given, to send the designated HMRC officer (in writing) any representations as to why the opinion does not apply to the arrangements concerned.
A designated HMRC officer may, on a written request by that person, extend the period during which representations may be made by that person.
Paragraph 24(2) defines the arrangements that an opinion given on a referral under paragraph 26 “applies to”.
Requirement for court or tribunal to take Panel opinion into account
In this paragraph “enabler penalty proceedings” means proceedings before a court or tribunal in connection with a penalty under paragraph 1.
In determining in enabler penalty proceedings any question whether tax arrangements to which the penalty relates were abusive, the court or tribunal—
must take into account the relevant Panel opinion, and
may also take into account any matter mentioned in sub-paragraph (4).
In sub-paragraph (2)(a) “the relevant Panel opinion” means the opinion of the GAAR Advisory Panel which under this Part of this Schedule was required to be considered by a designated HMRC officer in deciding whether the penalty should be assessed.
The matters mentioned in sub-paragraph (2)(b) are—
guidance, statements or other material (whether of HMRC, a Minister of the Crown or anyone else) that was in the public domain at the time the arrangements were entered into, and
evidence of established practice at that time.
Appeals
A person may appeal against—
a decision of HMRC that a penalty under paragraph 1 is payable by that person, or
a decision of HMRC as to the amount of a penalty under paragraph 1 payable by the person.
An appeal under paragraph 37 is to be treated in the same way as an appeal against an assessment to the tax to which the arrangements concerned 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 (1) does not apply—
so as to require a person to pay a penalty under paragraph 1 before an appeal against the assessment of the penalty is determined;
in respect of any other matter expressly provided for by this Schedule.
In this paragraph “the arrangements concerned” means the arrangements to which the penalty relates.
On an appeal under paragraph 37(a) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.
On an appeal under paragraph 37(b) that is notified to the tribunal, the tribunal may—
affirm HMRC's decision, or
substitute for that decision another decision that HMRC had power to make.
If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 18—
to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 18 was flawed.
In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 38(1)).
Information
Information and inspection powers: application of Schedule 36 to FA 2008
Schedule 36 to FA 2008 (information and inspection powers) applies for the purpose of—as it applies for the purpose of checking a person's tax position, subject to the modifications in paragraphs 41 to 43.
checking a relevant person's position as regards liability for a penalty under paragraph 1 in relation to particular tax arrangements;
ascertaining the identity of any other person who has or may have enabled those arrangements,
In this paragraph and paragraphs 41 to 43—“relevant person” means a person an officer of Revenue and Customs has reason to suspect is or may be liable to a penalty under paragraph 1 (or will become or may become so liable if T incurs a defeat);“the Schedule” means Schedule 36 to FA 2008.
References in this paragraph and paragraphs 41 and 42 to a person who has or may have enabled particular tax arrangements are to be read in accordance with Part 4 of this Schedule (persons who “enabled” the arrangements), save that—
references in that Part to the arrangements mentioned in paragraph 1 (however expressed) are to be read as references to the particular tax arrangements, and
references in that Part to “T” are to be read as references to the person who entered into the particular tax arrangements.
General modifications of Schedule 36 to FA 2008 as applied
In its application for a purpose mentioned in paragraph 40(1) above, the Schedule has effect as if—
any provisions which can have no application for that purpose were omitted,
references to “the taxpayer” were references to the relevant person whose position as regards liability for a penalty under paragraph 1 is to be checked, and references to “a taxpayer” were references to a relevant person,
references to a person's “tax position” were to the relevant person's position as regards liability for a penalty under paragraph 1,
references to prejudice to the assessment or collection of tax included prejudice to —
the investigation of the relevant person's position as regards liability for a penalty under paragraph 1 in relation to particular tax arrangements, or (as the case may be)
the identification of any other person who has or may have enabled those arrangements, and
references to a pending appeal relating to tax were to a pending appeal relating to an assessment of liability for a penalty under paragraph 1.
Specific modifications of Schedule 36 to FA 2008 as applied
The Schedule as it applies for a purpose mentioned in paragraph 40(1) above has effect with the modifications in sub-paragraphs (1A) to (6).
Paragraph 1 (taxpayer notices) has effect as if the reference to checking the taxpayer's tax position (as modified by paragraph 41 of this Schedule) included a reference to ascertaining the identity of any other person who has or may have enabled the particular tax arrangements in relation to which the relevant person's position as regards liability to a penalty under paragraph 1 is to be checked.
Paragraph 10 (power to inspect business premises etc) has effect as if the reference to checking that person's tax position (as modified by paragraph 41 of this Schedule) included a reference to ascertaining the identity of any other person who has or may have enabled the particular tax arrangements in relation to which the relevant person's position as regards liability to a penalty under paragraph 1 is to be checked.
Paragraph 10A (power to inspect business premises of involved third parties) has effect as if the reference in sub-paragraph (1) to the position of any person or class of persons as regards a relevant tax were to the position of a relevant person as regards liability for a penalty under paragraph 1.
Paragraph 25 (tax advisers) is treated as omitted.
Paragraph 47 (right to appeal against penalties under the Schedule) has effect as if after paragraph (b) (but not as part of that paragraph) there were inserted the words “but paragraph (b) does not give a right of appeal against the amount of an increased daily penalty payable by virtue of paragraph 49A.
Paragraph 49A (increased daily default penalty) has effect as if—
in sub-paragraphs (1)(c) and (2) for “imposed” there were substituted “ assessable ”;
for sub-paragraphs (3) and (4) there were substituted—;
in sub-paragraph (5) for “the amount” there were substituted “ the new maximum amount ”.
Paragraph 49B (notification of increased daily default penalty) has effect as if—
in sub-paragraph (1) for “a person becomes liable to a penalty” there were substituted “ the tribunal makes a determination ”;
in sub-paragraph (2) for “the day from which the increased penalty is to apply” there were substituted “ the new maximum amount and the day from which it applies ”;
sub-paragraph (3) were omitted.
Paragraph 49C is treated as omitted.
Paragraphs 50 and 51 are excluded from the application of the Schedule for a purpose mentioned in paragraph 40(1) above.
Declarations about contents of legally privileged communications
Subject to sub-paragraph (5), a declaration under this paragraph is to be treated by—as conclusive evidence of the things stated in the declaration.
HMRC, or
in any proceedings before a court or tribunal in connection with a penalty under paragraph 1, the court or tribunal,
A declaration under this paragraph is a declaration which—
is made by a relevant lawyer,
relates to one or more communications falling within sub-paragraph (3), and
meets such requirements as may be prescribed by regulations under sub-paragraph (4).
A communication falls within this sub-paragraph if—
it was made by a relevant lawyer (whether or not the one making the declaration),
it is legally privileged, and
if it were not legally privileged, it would be relied on by a person for the purpose of establishing that that person is not liable to a penalty under paragraph 1 (whether or not that person is the person who made the communication or is making the declaration).
The Treasury may by regulations impose requirements as to the form and contents of declarations under this paragraph.
Sub-paragraph (1) does not apply where HMRC or (as the case may be) the court or tribunal is satisfied that the declaration contains information which is incorrect.
In this paragraph “a relevant lawyer” means a barrister, advocate, solicitor or other legal representative communications with whom may be the subject of a claim to legal professional privilege or, in Scotland, protected from disclosure in legal proceedings on the grounds of confidentiality of communication.
For the purpose of this paragraph, a communication is “legally privileged” if it is a communication in respect of which a claim to legal professional privilege, or (in Scotland) to confidentiality of communications as between client and professional legal adviser, could be maintained in legal proceedings.
Where a person carelessly or deliberately gives any incorrect information in a declaration under paragraph 44, the person is liable to a penalty not exceeding £5,000.
For the purposes of this paragraph, incorrect information is carelessly given by a person if the information is incorrect because of a failure by the person to take reasonable care.
Paragraphs 19(1), 20, 22(1), 37, 38 and 39(1), (2) and (5) apply in relation to a penalty under this paragraph as they apply in relation to a penalty under paragraph 1, subject to the modifications in sub-paragraphs (4) and (5).
In its application to a penalty under this paragraph, paragraph 22(1) has effect as if for “the relevant time” there were substituted “the end of 12 months beginning with the date on which facts sufficient to indicate that the person is liable to the penalty came to the Commissioners' knowledge”.
In its application to a penalty under this paragraph, paragraph 38(3) has effect as if the reference to the arrangements to which the penalty relates were to the arrangements to which the declaration under paragraph 44 relates.
In paragraph 44 any reference to a penalty under paragraph 1 includes a reference to a penalty under this paragraph.
Publishing details of persons who have incurred penalties
Power to publish details
The Commissioners may publish information about a person where—
the person has incurred a penalty under paragraph 1,
the penalty has become final, and
either the condition in sub-paragraph (2) or the condition in sub-paragraph (3) is met.
The condition in this sub-paragraph is that, at the time when the penalty mentioned in sub-paragraph (1) becomes final, 50 or more other penalties which are reckonable penalties have been incurred by the person.
The condition in this sub-paragraph is that—is more than £25,000.
the amount of the penalty mentioned in sub-paragraph (1), or
the total amount of that penalty and any other penalties incurred by that person which are reckonable penalties,
The information that may be published under this paragraph is—
the person's name (including any trading name, previous name or pseudonym),
the person's address (or registered office),
the nature of any business carried on by the person,
the total number of the penalties in question (that is, the penalty mentioned in sub-paragraph (1) and any penalties that are reckonable penalties in relation to that penalty),
the total amount of the penalties in question, and
any other information that the Commissioners consider it appropriate to publish in order to make clear the person's identity.
The information may be published in any way that the Commissioners consider appropriate.
For the purposes of this Part of this Schedule a penalty becomes “ final ”and “contract settlement” here means a contract between the Commissioners and the person under which the Commissioners undertake not to assess the penalty or (if it has been assessed) not to take proceedings to recover it.
if the penalty has been assessed and paragraph (b) does not apply, at the time when the period for any appeal or further appeal relating to the penalty expires or, if later, when any appeal or final appeal relating to it is finally determined;
if a contract settlement has been made in relation to the penalty, at the time when the contract is made;
“Reckonable penalty” has the meaning given by paragraph 47.
This paragraph is subject to paragraphs 48 to 50.
A penalty is a “reckonable penalty” for the purposes of paragraph 46 if—
it is a penalty under paragraph 1 which becomes final at the same time as, or before, the penalty mentioned in paragraph 46(1),
its entry date and the entry date of the penalty mentioned in paragraph 46(1) are not more than 12 months apart, and
it is not a penalty which under paragraph 48(1) is to be disregarded.
For the purposes of this paragraph the “entry date” of a penalty under paragraph 1 is the date (or, if more than one, the latest date) on which the arrangements concerned or any agreement or transaction forming part of those arrangements was entered into by the taxpayer.
In sub-paragraph (2)—“the arrangements concerned” means the arrangements to which the penalty relates, and“the taxpayer” means the person whose defeat in respect of those arrangements resulted in the penalty being payable.
For the purposes of this paragraph, the entry date of a penalty is not more than 12 months apart from the entry date of another penalty if—
the entry dates of those penalties are the same, or
the period beginning with whichever of the entry dates is the earlier and ending with whichever of the entry dates is the later is 12 months or less.
Restrictions on power
In determining at any time whether or what information may be published in relation to a person under paragraph 46, the following penalties incurred by the person are to be disregarded—
a penalty which has been reduced to nil or stayed;
a penalty by reference to which information has previously been published under paragraph 46;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a penalty that relates to arrangements which are related to arrangements that have already been dealt with (within the meaning given by sub-paragraph (4)).
For the purposes of sub-paragraph (1)(d) arrangements are “related to” each other if they—
implement the same proposal for tax arrangements, and
are substantially the same as each other.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the purposes of sub-paragraph (1)(d) arrangements have “already been dealt with” if information about the person has already been published under paragraph 46 by reference to a penalty that relates to those arrangements.
Publication of information under paragraph 46 on the basis of a penalty or penalties incurred by a person may not take place after the relevant time.
In this paragraph “the relevant time” means the end of 12 months beginning with the date on which the penalty became final or, where more than one penalty is involved, the latest date on which any of them became final.
Sub-paragraph (1) is not to be taken to prevent the re-publishing, or continued publishing, after the relevant time of a set of information published under paragraph 46 before that time.
Information published under paragraph 46 may not be re-published, or continue to be published, after the end of 12 months beginning with the date on which it was first published.
Nothing in paragraph 48 applies in relation to determining whether to re-publish (or continue to publish) a set of information already published under paragraph 46.
Before publishing information under paragraph 46 the Commissioners must—
inform the person that they are considering doing so, and
afford the person the opportunity to make representations about whether it should be published.
Power to amend
The Treasury may by regulations amend this Part of this Schedule so as to alter any of the following—
the figure for the time being specified in paragraph 46(2);
the sum for the time being specified in paragraph 46(3);
any period for the time being specified in paragraph 47(1)(b) or (4).
Miscellaneous
Double jeopardy
A person is not liable to a penalty under paragraph 1 in respect of conduct for which the person has been convicted of an offence.
Application of provisions of TMA 1970
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—
section 108 (responsibility of company officers),
section 114 (want of form), and
section 115 (delivery and service of documents).
General
Meaning of “tax”
In this Schedule “tax” includes any of the following taxes—and also includes national insurance contributions.
income tax,
corporation tax, including any amount chargeable as if it were corporation tax or treated as if it were corporation tax,
capital gains tax,
petroleum revenue tax,
diverted profits tax,
apprenticeship levy,
inheritance tax,
stamp duty land tax, and
annual tax on enveloped dwellings,
The Treasury may by regulations amend sub-paragraph (1) so as to—
add a tax to the list of taxes for the time being set out in that sub-paragraph;
remove a tax for the time being set out in that sub-paragraph;
remove the reference to national insurance contributions;
substitute for that reference a reference to national insurance contributions of a particular class or classes;
where provision has been made under paragraph (d)—
add a class or classes of national insurance contributions to those for the time being specified in that sub-paragraph;
remove a class or classes of national insurance contributions for the time being so specified.
Regulations under this paragraph may—
make supplementary, incidental, and consequential provision, including provision amending or repealing any provision of this Schedule;
make transitional provision.
Meaning of “tax advantage”
In this Schedule “tax advantage” includes—
relief or increased relief from tax,
repayment or increased repayment of tax,
receipt, or advancement of a receipt, of a tax credit,
avoidance or reduction of a charge to tax, an assessment of tax or a liability to pay tax,
avoidance of a possible assessment to tax or liability to pay tax,
deferral of a payment of tax or advancement of a repayment of tax, and
avoidance of an obligation to deduct or account for tax.
Other definitions
In this Schedule—“abusive tax arrangements” has the meaning given by paragraph 3;“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);“business” includes any trade or profession;“the Commissioners” means the Commissioners for Her Majesty‘s Revenue and Customs;“company” has the same meaning as in the Corporation Tax Acts (see section 1121 of CTA 2010);“contract settlement” (except in paragraph 46(6)) means an agreement in connection with a person's liability to make a payment to the Commissioners under or by virtue of an enactment;“a defeat”, in relation to arrangements, is to be read in accordance with paragraph 4; a “designated HMRC officer” means an officer of Revenue and Customs who has been designated by the Commissioners for the purposes of this Schedule;“the GAAR Advisory Panel” has the meaning given by paragraph 1 of Schedule 43 to FA 2013;“group” is to be read in accordance with sub-paragraph (2);“HMRC” means Her Majesty's Revenue and Customs;“national insurance contributions” means contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992; a “NICs decision” means a decision under section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 or Article 7 of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (SI 1999/671) relating to a person‘s liability for relevant contributions;“relevant contributions” means any of the following contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992—Class 1 contributions; Class 1A contributions; Class 1B contributions; Class 2 contributions which must be paid but in relation to which section 11A of the Act in question (application of certain provisions of the Income Tax Acts) does not apply;“tax” is to be read in accordance with paragraph 54;“tax advantage” is to be read in accordance with paragraph 55.
For the purposes of this Schedule two companies are members of the same group if—and in this paragraph “75% subsidiary” has, subject to sub-paragraph (3), the meaning given by section 1154 of CTA 2010.
one is a 75% subsidiary of the other, or
both are 75% subsidiaries of a third company;
So far as relating to 75% subsidiaries, section 151(4) of CTA 2010 (requirements relating to beneficial ownership) applies for the purposes of this Schedule as it applies for the purposes of Part 5 of that Act.
In this Schedule references to an assessment to tax, however expressed—
in relation to inheritance tax and petroleum revenue tax, include a determination;
in relation to relevant contributions, include a NICs decision.
Regulations
Any regulations under this Schedule must be made by statutory instrument.
A statutory instrument which contains (alone or with other provision) any regulations within sub-paragraph (3) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
Regulations within this sub-paragraph are—
regulations under paragraph 12;
regulations under paragraph 14(1);
regulations under paragraph 14(2) which amend or repeal any provision of this Schedule;
regulations under paragraph 51;
regulations under paragraph 54.
A statutory instrument containing only—is subject to annulment in pursuance of a resolution of the House of Commons.
regulations under paragraph 14(2) which do not amend or repeal any provision of this Schedule, or
regulations under paragraph 44,
Consequential amendments
In section 103ZA of TMA 1970 (disapplication of sections 100 to 103 of that Act in the case of certain penalties)—
omit “or” at the end of paragraph (i), and
after paragraph (j) insert
In section 54 of ITTOIA 2005 (no deduction allowed for certain penalties etc) at the end of the table in subsection (2) insert—
In section 1303 of CTA 2009 (no deduction allowed for certain penalties etc) at the end of the table in subsection (2) insert—
In Schedule 34 to FA 2014 (promoters of tax avoidance schemes: threshold conditions), in paragraph 7—
in paragraph (a), for the words after “promoter” substitute;
in paragraph (b), for the words after “referral” substitute.
Commencement
Subject to sub-paragraphs (2) and (3), paragraphs 1 to 61 of this Schedule have effect in relation to arrangements entered into on or after the day on which this Act is passed.
In determining in relation to any particular arrangements whether a person is a person who enabled the arrangements, any action of the person carried out before the day on which this Act is passed is to be disregarded.
The amendments made by paragraph 61 do not apply in relation to a person who is a promoter in relation to arrangements if by virtue of sub-paragraph (2) above that person is not a person who enabled the arrangements.
Disclosure of tax avoidance schemes: VAT and other indirect taxes
Introduction
This Schedule makes provision about the disclosure of information in relation to arrangements, or proposed arrangements, that enable, or might be expected to enable, a person to obtain a tax advantage in relation to VAT or another indirect tax.
Among other things, this Schedule—
imposes duties to provide information to HMRC (and others);
allows HMRC to allocate reference numbers in relation to arrangements and proposed arrangements (in cases where the disclosure duties have been complied with and in other cases);
makes provision about publication of information about arrangements and proposed arrangements, and persons involved in their supply;
makes provision about penalties.
Duties to disclose avoidance schemes etc
Preliminary: application of definitions
The definitions in paragraphs 2, 3, and 7 to 10 apply for the purposes of this Schedule.
“Indirect tax”
“Indirect tax” means any of the following—VAT insurance premium tax general betting duty pool betting duty remote gaming duty machine games duty gaming duty lottery duty... air passenger duty hydrocarbon oils duty tobacco products duty duties on spirits, beer, wine, made-wine and cider vaping products duty soft drinks industry levy aggregates levy landfill tax plastic packaging tax climate change levy carbon border adjustment mechanism customs duties.
The Treasury may by regulations amend the list in sub-paragraph (1) by adding, varying or omitting an entry for a tax.
“Notifiable arrangements” and “notifiable proposal”
“Notifiable arrangements” means any arrangements not excluded by sub-paragraph (2) which—
fall within any description prescribed by the Treasury by regulations,
enable, or might be expected to enable, any person to obtain a tax advantage in relation to any indirect tax that is so prescribed in relation to arrangements of that description, and
are such that the main benefit, or one of the main benefits, that might be expected to arise from the arrangements is the obtaining of that tax advantage.
Arrangements that meet the requirements in paragraphs (a) to (c) of sub-paragraph (1) are not notifiable arrangements if they implement a proposal which is excluded from being a notifiable proposal by sub-paragraph (4).
“Notifiable proposal” means a proposal for arrangements which, if entered into, would be notifiable arrangements (whether the proposal relates to a particular person or to any person who may seek to take advantage of it).
A proposal is not a notifiable proposal if any of the following occur before 1 January 2018—
a promoter first makes a firm approach to another person in relation to the proposal,
a promoter makes the proposal available for implementation by any other person, or
a promoter first becomes aware of any transaction forming part of arrangements implementing the proposal.
HMRC may apply to the tribunal for an order that—
a proposal is notifiable, or
arrangements are notifiable.
An application must specify—
the proposal or arrangements in respect of which the order is sought, and
the promoter.
On an application the tribunal may make the order only if satisfied that paragraph 3(1)(a) to (c) applies to the relevant arrangements and that they are not excluded from being notifiable by paragraph 3(2).
HMRC may apply to the tribunal for an order that—
a proposal is to be treated as notifiable, or
arrangements are to be treated as notifiable.
An application must specify—
the proposal or arrangements in respect of which the order is sought, and
the promoter.
On an application the tribunal may make the order only if satisfied that HMRC—
have taken all reasonable steps to establish whether the proposal or arrangements are notifiable, and
have reasonable grounds for suspecting that the proposal or arrangements may be notifiable.
Reasonable steps under sub-paragraph (3)(a) may (but need not) include taking action under paragraph 29 or 30.
Grounds for suspicion under sub-paragraph (3)(b) may include—
the fact that the relevant arrangements fall within a description prescribed under paragraph 3(1)(a),
an attempt by the promoter to avoid or delay providing information or documents about the proposal or arrangements under or by virtue of paragraph 29 or 30,
the promoter's failure to comply with a requirement under or by virtue of paragraph 29 or 30 in relation to another proposal or other arrangements.
Where an order is made under this paragraph in respect of a proposal or arrangements, the relevant period for the purposes of sub-paragraph (1) of paragraph 11 or 12 in so far as it applies by virtue of the order is the period of 11 days beginning with the day on which the order is made.
An order under this paragraph in relation to a proposal or arrangements is without prejudice to the possible application of any of paragraphs 11 to 15, other than by virtue of this paragraph, to the proposal or arrangements.
“Tax advantage” in relation to VAT
A person (P) obtains a tax advantage in relation to VAT if—
in any prescribed accounting period, the amount by which the output tax accounted for by P exceeds the input tax deducted by P is less than it would otherwise be;
P obtains a VAT credit when P would otherwise not do so, or obtains a larger credit or obtains a credit earlier than would otherwise be the case;
in a case where P recovers input tax as a recipient of a supply before the supplier accounts for the output tax, the period between the time when the input tax is recovered and the time when the output tax is accounted for is greater than would otherwise be the case;
in any prescribed accounting period, the amount of P's non-deductible tax is less than it otherwise would be;
P avoids an obligation to account for tax.
In sub-paragraph (1)(d) “non-deductible tax”, in relation to a taxable person, means—
input tax for which the person is not entitled to credit under section 25 of VATA 1994,
any VAT incurred by the person which is not input tax and in respect of which the person is not entitled to a refund from the Commissioners by virtue of any provision of VATA 1994.
For the purposes of sub-paragraph (2)(b), the VAT “incurred” by a taxable person is—
VAT on the supply to the person of any goods or services,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VAT paid or payable by the person on the importation of any goods ....
A person who is not a taxable person obtains a tax advantage in relation to VAT if that person's non-refundable tax is less that it otherwise would be.
In sub-paragraph (4) “non-refundable tax” means—but excluding (in each case) any VAT in respect of which the person is entitled to a refund from the Commissioners by virtue of any provision of VATA 1994.
VAT on the supply to the person of any goods or services,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VAT paid or payable by the person on the importation of any goods ...,
Terms used in this paragraph which are defined in section 96 of VATA 1994 have the meanings given by that section.
“Tax advantage” in relation to taxes other than VAT
“Tax advantage”, in relation to an indirect tax other than VAT, means—
relief or increased relief from tax,
repayment or increased repayment of tax,
avoidance or reduction of a charge to tax, an assessment of tax or a liability to pay tax,
avoidance of a possible assessment to tax or liability to pay tax,
deferral of a payment of tax or advancement of a repayment of tax, or
avoidance of an obligation to deduct or account for tax.
“Promoter”
This paragraph describes when a person (P) is a promoter in relation to a notifiable proposal or notifiable arrangements.
P is a promoter in relation to a notifiable proposal if, in the course of a relevant business, P—
is to any extent responsible for the design of the proposed arrangements,
makes a firm approach to another person (C) in relation to the proposal with a view to P making the proposal available for implementation by C or any other person, or
makes the proposal available for implementation by other persons.
P is a promoter in relation to notifiable arrangements if—
P is by virtue of sub-paragraph (2)(b) or (c) a promoter in relation to a notifiable proposal which is implemented by the arrangements, or
if in the course of a relevant business, P is to any extent responsible for—
the design of the arrangements, or
the organisation or management of the arrangements.
In this paragraph “relevant business” means any trade, profession or business which—
involves the provision to other persons of services relating to taxation, or
is carried on by a bank or securities house.
In sub-paragraph (4)(b)—“bank” has the meaning given by section 1120 of CTA 2010, and“securities house” has the meaning given by section 1009(3) of that Act.
For the purposes of this paragraph anything done by a company is to be taken to be done in the course of a relevant business if it is done for the purposes of a relevant business falling within sub-paragraph (4)(b) carried on by another company which is a member of the same group.
Section 170 of the TCGA 1992 has effect for determining for the purposes of sub-paragraph (6) whether two companies are members of the same group, but as if in that section—
for each of the references to a 75 per cent subsidiary there were substituted a reference to a 51 per cent subsidiary, and
subsection (3)(b) and subsections (6) to (8) were omitted.
A person is not to be treated as a promoter by reason of anything done in prescribed circumstances.
In the application of this Schedule to a proposal or arrangements which are not notifiable, a reference to a promoter is a reference to a person who would be a promoter under this paragraph if the proposal or arrangements were notifiable.
“Introducer”
A person is an introducer in relation to a notifiable proposal if the person makes a marketing contact with another person in relation to the proposal.
A person is not to be treated as an introducer by reason of anything done in prescribed circumstances.
In the application of this Schedule to a proposal or arrangements which are not notifiable, a reference to an introducer is a reference to a person who would be an introducer under this paragraph if the proposal or arrangements were notifiable.
“Makes a firm approach” and “marketing contact”
A person makes a firm approach to another person in relation to a ... proposal if the person makes a marketing contact with the other person in relation to the proposal at a time when the proposed arrangements have been substantially designed.
A person makes a marketing contact with another person in relation to a notifiable proposal if—
the person communicates information about the proposal to the other person,
the communication is made with a view to that other person, or any other person, entering into transactions forming part of the proposed arrangements, and
the information communicated includes an explanation of the tax advantage that might be expected to be obtained from the proposed arrangements.
For the purposes of sub-paragraph (1) proposed arrangements have been substantially designed at any time if by that time the nature of the transactions to form part of them has been sufficiently developed for it to be reasonable to believe that a person who wished to obtain the tax advantage mentioned in sub-paragraph (2)(c) might enter into—
transactions of the nature developed, or
transactions not substantially different from transactions of that nature.
Duties of promoter in relation to notifiable proposals or notifiable arrangements
A person who is a promoter in relation to a notifiable proposal must, within the relevant period, provide HMRC with prescribed information relating to the proposal.
In sub-paragraph (1) “the relevant period” is the period of 31 days beginning with the relevant date.
In sub-paragraph (2) “the relevant date” is the earliest of the following—
the date on which the promoter first makes a firm approach to another person in relation to the proposal,
the date on which the promoter makes the proposal available for implementation by any other person, or
the date on which the promoter first becomes aware of any transaction forming part of notifiable arrangements implementing the proposal.
A person who is a promoter in relation to notifiable arrangements must, within the relevant period after the date on which the person first becomes aware of any transaction forming part of the arrangements, provide HMRC with prescribed information relating to the arrangements.
In sub-paragraph (1) “the relevant period” is the period of 31 days beginning with that date.
The duty under sub-paragraph (1) does not apply if the notifiable arrangements implement a proposal in respect of which notice has been given to HMRC under paragraph 11(1).
This paragraph applies where a person complies with paragraph 11(1) in relation to a notifiable proposal for arrangements and another person is—
also a promoter in relation to the proposal or is a promoter in relation to a notifiable proposal for arrangements which are substantially the same as the proposed arrangements (whether they relate to the same or different parties), or
a promoter in relation to notifiable arrangements implementing the proposal or notifiable arrangements which are substantially the same as notifiable arrangements implementing the proposal (whether they relate to the same or different parties).
Any duty of the other person under paragraph 11(1) or 12(1) in relation to the notifiable proposal or notifiable arrangements is discharged if—
the person who complied with paragraph 11(1) has notified the identity and address of the other person to HMRC or the other person holds the reference number allocated to the proposed notifiable arrangements under paragraph 22(1), and
the other person holds the information provided to HMRC in compliance with paragraph 11(1).
This paragraph applies where a person complies with paragraph 12(1) in relation to notifiable arrangements and another person is—
a promoter in relation to a notifiable proposal for arrangements which are substantially the same as the notifiable arrangements (whether they relate to the same or different parties), or
also a promoter in relation to the notifiable arrangements or notifiable arrangements which are substantially the same (whether they relate to the same or different parties).
Any duty of the other person under paragraph 11(1) or 12(1) in relation to the notifiable proposal or notifiable arrangements is discharged if—
the person who complied with paragraph 12(1) has notified the identity and address of the other person to HMRC or the other person holds the reference number allocated to the notifiable arrangements under paragraph 22(1), and
the other person holds the information provided to HMRC in compliance with paragraph 12(1).
Where a person is a promoter in relation to two or more notifiable proposals or sets of notifiable arrangements which are substantially the same (whether they relate to the same parties or different parties) the person need not provide information under paragraph 11(1) or 12(1) if the person has already provided information under either of those paragraphs in relation to any of the other proposals or arrangements.
Duty of promoter: supplemental information
This paragraph applies where—
a promoter (P) has provided information in purported compliance with paragraph 11(1) or 12(1), but
HMRC believe that P has not provided all the prescribed information.
HMRC may apply to the tribunal for an order requiring P to provide specified information about, or documents relating to, the notifiable proposal or arrangements.
The tribunal may make an order under sub-paragraph (2) in respect of information or documents only if satisfied that HMRC have reasonable grounds for suspecting that the information or documents—
form part of the prescribed information, or
will support or explain the prescribed information.
A requirement by virtue of sub-paragraph (2) is to be treated as part of P's duty under paragraph 11(1) or 12(1).
In so far as P's duty under sub-paragraph (1) of paragraph 11 or 12 arises out of an order made by virtue of sub-paragraph (2) above the relevant period for the purposes of that sub-paragraph (1) is—
the period of 11 days beginning with the date of the order, or
such longer period as HMRC may direct.
Duty of person dealing with promoter outside United Kingdom
This paragraph applies where a person enters into any transaction forming part of any notifiable arrangements in relation to which—
a promoter is resident outside the United Kingdom, and
no promoter is resident in the United Kingdom.
The person must, within the relevant period, provide HMRC with prescribed information relating to the arrangements.
In sub-paragraph (2) “the relevant period” is the period of 6 days beginning with the day on which the person enters into the first transaction forming part of the arrangements.
Compliance with paragraph 11(1) or 12(1) by any promoter in relation to the arrangements discharges the person's duty under sub-paragraph (1).
Duty of parties to notifiable arrangements not involving promoter
This paragraph applies to any person who enters into any transaction forming part of notifiable arrangements as respects which neither that person nor any other person in the United Kingdom is liable to comply with paragraph 11(1), 12(1) or 17(2).
The person must at the prescribed time provide HMRC with prescribed information relating to the arrangements.
Duty to provide further information requested by HMRC
This paragraph applies where—
a person has provided the prescribed information about notifiable proposals or arrangements in compliance with paragraph 11(1), 12(1), 17(2) or 18(2), or
a person has provided information in purported compliance with paragraph 17(2) or 18(2) but HMRC believe that the person has not provided all the prescribed information.
HMRC may require the person to provide—
further specified information about the notifiable proposals or arrangements (in addition to the prescribed information under paragraph 11(1), 12(1), 17(2) or 18(2));
documents relating to the notifiable proposals or arrangements.
Where HMRC impose a requirement on a person under this paragraph, the person must comply with the requirement within—
the period of 10 working days beginning with the day on which HMRC imposed the requirement, or
such longer period as HMRC may direct.
This paragraph applies where HMRC—
have required a person to provide information or documents under paragraph 19, but
believe that the person has failed to provide the information or documents required.
HMRC may apply to the tribunal for an order requiring the person to provide the information or documents required.
The tribunal may make an order imposing such a requirement only if satisfied that HMRC have reasonable grounds for suspecting that the information or documents will assist HMRC in considering the notifiable proposals or arrangements.
Where the tribunal makes an order imposing such a requirement, the person must comply with the requirement within—
the period of 10 working days beginning with the day on which the tribunal made the order, or
such longer period as HMRC may direct.
Duty of promoters to provide updated information
This paragraph applies where—
information has been provided under paragraph 11(1), or 12(1) about any notifiable arrangements, or proposed notifiable arrangements, to which a reference number is allocated under paragraph 22, and
after the provision of the information, there is a change in relation to the arrangements of a kind mentioned in sub-paragraph (2).
The changes referred to in sub-paragraph (1)(b) are—
a change in the name by which the notifiable arrangements, or proposed notifiable arrangements, are known;
a change in the name or address of any person who is a promoter in relation to the arrangements or, in the case of proposed arrangements, the notifiable proposal.
A person who is a promoter in relation to the notifiable arrangements or, in the case of proposed notifiable arrangements, the notifiable proposal must inform HMRC of the change mentioned in sub-paragraph (1)(b) within 30 days after it is made.
Sub-paragraphs (5) and (6) apply for the purposes of sub-paragraph (3) where there is more than one person who is a promoter in relation to the notifiable arrangements or proposal.
If the change in question is a change in the name or address of a person who is a promoter in relation to the notifiable arrangements or proposal, it is the duty of that person to comply with sub-paragraph (3).
If a person provides information in compliance with sub-paragraph (3), the duty imposed by that sub-paragraph on any other person, so far as relating to the provision of that information, is discharged.
Notice of potential allocation of reference number: arrangements and proposals suspected of being notifiable
This paragraph applies where—
HMRC have become aware that—
a transaction forming part of arrangements has been entered into,
a firm approach has been made to a person in relation to a proposal for arrangements, with a view to making the proposal available for implementation, or
a proposal for arrangements is made available for implementation, and
HMRC have reasonable grounds for suspecting that the arrangements are notifiable, or the proposal is notifiable.
HMRC may issue a notice to a person explaining that, unless the person is able to satisfy HMRC, before the end of the notice period, that the arrangements are not notifiable or (as the case may be) the proposal is not notifiable, HMRC may allocate a reference number to the arrangements or (in the case of a proposal) the proposed arrangements.
But HMRC may not issue a notice under this paragraph before the end of the period of 15 days beginning with the day on which they first become aware that the condition in paragraph (a)(i), (ii) or (iii) of sub-paragraph (1) is met.
A notice under this paragraph must be issued to any person who, on the day the notice is issued, HMRC reasonably suspect to be a promoter in relation to the arrangements or proposal.
A notice under this paragraph may be issued to any other person who HMRC reasonably suspect to be involved in the supply of the arrangements or proposed arrangements.
Allocation of reference number to arrangements
This paragraph applies in—
a sub-paragraph (2) case, or
a sub-paragraph (3) case.
A “sub-paragraph (2) case” is a case where a person complies, or purports to comply, with paragraph 11(1), 12(1), 17(2) or 18(2) in relation to a notifiable proposal or notifiable arrangements.
A “sub-paragraph (3) case” is a case where—
notice in relation to arrangements or a proposal has been issued in accordance with paragraph 21A (notice of potential allocation of reference number),
the notice period has expired, and
the person to whom the notice was given has failed to satisfy HMRC, before the expiry of the notice period, that the arrangements are not notifiable or (as the case may be) that the proposal is not notifiable.
“The notice period” means—
the period of 30 days beginning with the day on which the notice under paragraph 21A is issued, or
such longer period as HMRC may direct.
HMRC may allocate a reference number to the arrangements or, in the case of a proposal, the proposed arrangements, subject to sub-paragraph (6).
HMRC may not allocate a reference number to arrangements or proposed arrangements after the time limit for doing so.
The time limit for allocating a reference number is—
in a sub-paragraph (2) case, the end of the period of 90 days beginning with the compliance, or purported compliance, with paragraph 11(1), 12(1), 17(2) or 18(2), as the case may be;
in a sub-paragraph (3) case, the end of the period of one year beginning with the day after the end of the notice period (see sub-paragraph (4)).
HMRC may at any time withdraw a reference number allocated to arrangements in a sub-paragraph (3) case.
The allocation of a reference number to arrangements or proposed arrangements is not to be regarded as constituting an indication by HMRC that the arrangements could as a matter of law result in the obtaining by any person of a tax advantage.
Duty of HMRC to notify persons of reference number
If a reference number is allocated in a case within paragraph 22(2), HMRC must notify the following of the number—
the person who has complied, or purported to comply, with paragraph 11(1), 12(1), 17(2) or 18(2), and
where the person has complied, or purported to comply, with paragraph 11(1) or 12(1), any other person—
who is a promoter in relation to the proposal (or arrangements implementing it) or the arrangements (or a proposal implemented by them), and
whose identity and address have been notified to HMRC by the person who complied, or purported to comply, with paragraph 11(1) or 12(1).
If a reference number is allocated in a case within paragraph 22(3), HMRC must notify the following of the number—
any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements, and
any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.
The duty in sub-paragraph (2) applies irrespective of whether the notice under paragraph 21A as a result of which the reference number was allocated has been issued to the person concerned.
Right of appeal: paragraph 22(3) case
This paragraph applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within paragraph 22(3).
A person who has been notified of the reference number may appeal to the tribunal against its allocation.
An appeal under this paragraph may be brought only on the following grounds—
that, in issuing the notice under paragraph 21A as a result of which the reference number was allocated, HMRC did not act in accordance with that paragraph;
that, in allocating the reference number, HMRC did not act in accordance with paragraph 22;
that the arrangements are not in fact notifiable arrangements or, in the case of proposed arrangements, that the proposal for the arrangements is not in fact a notifiable proposal.
Notice of appeal under this paragraph must be given to the tribunal in writing before the end of the period of 30 days beginning with the day on which the person is notified of the number by HMRC.
Notice may be given after that time if the tribunal give permission.
The notice of appeal must specify the grounds of appeal.
On an appeal under this paragraph, the tribunal may affirm or cancel HMRC's decision.
If the tribunal cancel HMRC's decision, HMRC must withdraw the reference number.
Bringing an appeal under this paragraph does not prevent—
a power conferred by this Part of this Schedule from being exercised, or
a duty imposed by this Part of this Schedule from continuing to apply.
Duty to provide further information requested by HMRC: paragraph 22(3) case
This paragraph applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within paragraph 22(3).
HMRC may require a relevant person to provide—
specified information about the arrangements or proposed arrangements;
documents relating to the arrangements or proposed arrangements.
In sub-paragraph (2), “relevant person” means—
any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements;
any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.
HMRC may require information or documents only if they have reasonable grounds for suspecting that the information or documents will assist them in considering the arrangements or proposed arrangements.
Where HMRC impose a requirement on a person under sub-paragraph (2), the person must comply with the requirement before the end of—
the period of 10 working days beginning with the day on which HMRC imposed the requirement, or
such longer period as HMRC may direct.
Duty of promoter to notify client of number : paragraph 22(2) case
This paragraph applies where a person who is a promoter in relation to notifiable arrangements is providing (or has provided) services to any person (“the client”) in connection with the arrangements.
The promoter must, within 30 days after the relevant date, provide the client with prescribed information relating to any reference number allocated in a case within paragraph 22(2) (or, if more than one, any one such reference number) that has been notified to the promoter (whether by HMRC or any other person) in relation to—
the notifiable arrangements, or
any arrangements substantially the same as the notifiable arrangements (whether involving the same or different parties).
In sub-paragraph (2) “the relevant date” means the later of—
the date on which the promoter becomes aware of any transaction which forms part of the notifiable arrangements, and
the date on which the reference number is notified to the promoter.
But where the conditions in sub-paragraph (5) are met the duty imposed on the promoter under sub-paragraph (2) to provide the client with information in relation to notifiable arrangements is discharged
Those conditions are—
that the promoter is also a promoter in relation to a notifiable proposal and provides services to the client in connection with them both,
the notifiable proposal and the notifiable arrangements are substantially the same, and
the promoter has provided to the client, in a form and manner specified by HMRC, prescribed information relating to the reference number that has been notified to the promoter in relation to the proposed notifiable arrangements.
HMRC may give notice that, in relation to notifiable arrangements specified in the notice, promoters are not under the duty under sub-paragraph (2) after the date specified in the notice.
Duty to notify client of reference number: paragraph 22(3) case
This paragraph applies where a person is providing (or has provided) services to any person (“the client”) in connection with arrangements or proposed arrangements.
The person must, before the end of the period of 30 days beginning with the relevant date, provide the client with prescribed information relating to any reference number allocated in a case within paragraph 22(3) (or, if more than one, any one such reference number) that has been notified to the person (whether by HMRC or any other person) in relation to—
the arrangements or proposed arrangements, or
any arrangements substantially the same as the arrangements or proposed arrangements (whether involving the same or different parties).
“The relevant date” means the date on which the person has been notified of the reference number.
HMRC may give notice that, in relation to arrangements or proposed arrangements specified in the notice, no person is under the duty under sub-paragraph (2) after the date specified in the notice.
Duty of client to notify parties of number
In this paragraph “client” means a person to whom a person ... is providing (or has provided) services in connection with arrangements or a proposal.
Sub-paragraph (3) applies where—
the client receives prescribed information under paragraph 23 relating to the reference number allocated to—
the arrangements or proposed arrangements, or
any arrangements substantially the same as the arrangements or proposed arrangements; or
the client receives prescribed information under paragraph 23A relating to the reference number allocated to—
the arrangements or proposed arrangements, or
any arrangements substantially the same as the arrangements or proposed arrangements.
The client must, within the relevant period, provide prescribed information relating to the reference number to any other person—
who the client might reasonably be expected to know is or is likely to be a party to the arrangements or proposed arrangements, and
who might reasonably be expected to gain a tax advantage in relation to any relevant tax by reason of the arrangements or proposed arrangements.
In sub-paragraph (3) “the relevant period” is the period of 30 days beginning with the later of—
the day on which the client first becomes aware of any transaction forming part of the arrangements or proposed arrangements, and
the day on which the prescribed information is notified to the client under paragraph 23 or (as the case may be) paragraph 23A.
HMRC may give notice that, in relation to arrangements or a proposal specified in the notice, persons are not under the duty under sub-paragraph (3) after the date specified in the notice.
The duty under sub-paragraph (3) does not apply in prescribed circumstances.
For the purposes of this paragraph a tax is a “relevant tax”, in relation to arrangements or arrangements proposed in a proposal of any description, if it is prescribed in relation to arrangements or proposals of that description by regulations under paragraph 3(1).
Duty of client to provide information ...
This paragraph applies where a person (“the client”) has been provided with information under paragraph 23(2) or 23A(2) (prescribed information about reference number).
The client must, within the relevant period, provide the person who provided the information with prescribed information relating to the client.
In sub-paragraph (2) “the relevant period” is the period of 11 days beginning with the later of—
the date the client receives the reference number for the arrangements, and
the date the client first enters into a transaction which forms part of the arrangements.
The duty under sub-paragraph (2) is subject to any exceptions that may be prescribed.
Duty of parties to notify HMRC of reference number etc
Any person (P) who is a party to any ... arrangements must provide HMRC with prescribed information relating to—
any reference number notified to P under paragraph 23 , 23A or 24, and
the time when P obtains or expects to obtain by virtue of the arrangements a tax advantage in relation to any relevant tax.
For the purposes of sub-paragraph (1) a tax is a “relevant tax” in relation to arrangements of any description if it is prescribed in relation to arrangements of that description by regulations under paragraph 3(1).
Regulations made by the Commissioners may—
in prescribed cases, require the information prescribed under sub-paragraph (1) to be given to HMRC—
in the prescribed manner,
in the prescribed form,
at the prescribed time, and
in prescribed cases, require the information prescribed under sub-paragraph (1) and such other information as is prescribed to be provided separately to HMRC at the prescribed time or times.
In sub-paragraph (3) “prescribed” includes being prescribed in a document made under a power conferred by regulations made by the Commissioners.
HMRC may give notice that, in relation to ... arrangements specified in the notice, persons are not under the duty under sub-paragraph (1) after the date specified in the notice.
The duty under sub-paragraph (1) does not apply in prescribed circumstances.
Duty ... to provide details of clients
This paragraph applies where a person who is a promoter in relation to notifiable arrangements is providing (or has provided) services to any person (“the client”) in connection with the arrangements and either—
the promoter is subject to the requirement under paragraph 23(2) to provide to the client prescribed information relating to the reference number allocated to—
the arrangements, or
any arrangements substantially the same as the arrangements; or
the promoter has failed to comply with paragraph 11(1) or 12(1) in relation to the notifiable arrangements (or the notifiable proposal for them) but would be subject to that requirement if a reference number had been allocated to—
the notifiable arrangements, or
any arrangements substantially the same as the arrangements.
This paragraph also applies where—
a person (“the provider”) is providing (or has provided) services to another person (“the client”) in connection with arrangements or proposed arrangements, and
the provider is subject to the requirement under paragraph 23A(2) to provide to the client prescribed information relating to the reference number allocated to—
the arrangements or proposed arrangements, or
any arrangements substantially the same as the arrangements or proposed arrangements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The promoter or (as the case may be) provider must, within the prescribed period after the end of the relevant period, provide HMRC with prescribed information in relation to the client.
In sub-paragraph (3) “the relevant period” means—
in a case within sub-paragraph (1), such period as is prescribed and is a period during which the promoter is or would be subject to the requirement mentioned in that sub-paragraph;
in a case within sub-paragraph (1A), such period as is prescribed and is a period during which the provider is or would be subject to the requirement mentioned in that sub-paragraph.
The promoter need not comply with sub-paragraph (3) in relation to any notifiable arrangements at any time after HMRC have given notice under paragraph 23(6) in relation to the arrangements.
The provider need not comply with sub-paragraph (3) in relation to any arrangements at any time after HMRC have given notice under paragraph 23A(4) in relation to the arrangements.
Enquiry following disclosure of client details
This paragraph applies where—
a person (“the service provider”) is providing or has provided services to another person (“the client”) in connection with arrangements or proposed arrangements,
the service provider has provided HMRC with information in relation to the client under paragraph 27(3), and
HMRC suspect that a person other than the client is or is likely to be a party to the arrangements.
HMRC may by written notice require the service provider to provide prescribed information in relation to any person other than the client who the service provider might reasonably be expected to know is or is likely to be a party to the arrangements.
The service provider must comply with a requirement under or by virtue of sub-paragraph (2) within—
the relevant period, or
such longer period as HMRC may direct.
In sub-paragraph (3) “the relevant period” is the period of 11 days beginning with the day on which the service provider receives the notice under sub-paragraph (2).
Pre-disclosure enquiry
Where HMRC suspect that a person (P) is the promoter or introducer of a proposal, or the promoter of arrangements, which may be notifiable, they may by written notice require P to state—
whether in P's opinion the proposal or arrangements are notifiable by P, and
if not, the reasons for P's opinion.
The notice must specify the proposal or arrangements to which it relates.
For the purposes of sub-paragraph (1)(b)—
it is not sufficient to refer to the fact that a lawyer or other professional has given an opinion,
the reasons must show, by reference to this Part of this Schedule and regulations under it, why P thinks the proposal or arrangements are not notifiable by P, and
in particular, if P asserts that the arrangements do not fall within any description prescribed under paragraph 3(1)(a), the reasons must provide sufficient information to enable HMRC to confirm the assertion.
P must comply with a requirement under or by virtue of sub-paragraph (1) within—
the relevant period, or
such longer period as HMRC may direct.
In sub-paragraph (4) “the relevant period” is the period of 11 days beginning with the day on which the notice under sub-paragraph (1) is issued.
Reasons for non-disclosure: supporting information
Where HMRC receive from a person (P) a statement of reasons why a proposal or arrangements are not notifiable by P, HMRC may apply to the tribunal for an order requiring P to provide specified information or documents in support of the reasons.
P must comply with a requirement under or by virtue of sub-paragraph (1) within—
the relevant period, or
such longer period as HMRC may direct.
In sub-paragraph (2) “the relevant period” is the period of 15 days beginning with the day on which the order concerned is made.
The power under sub-paragraph (1)—
may be exercised more than once, and
applies whether or not the statement of reasons was received under paragraph 29(1)(b).
Provision of information to HMRC by introducers
This paragraph applies where HMRC suspect—
that a person (P) is an introducer in relation to a proposal, and
that the proposal may be notifiable.
HMRC may by written notice require P to provide HMRC with one or both of the following—
prescribed information in relation to each person who has provided P with any information relating to the proposal,
prescribed information in relation to each person with whom P has made a marketing contact in relation to the proposal.
A notice must specify the proposal to which it relates.
P must comply with a requirement under or sub-paragraph(2) within—
the relevant period, or
such longer period as HMRC may direct.
In sub-paragraph (4) “the relevant period” is the period of 11 days beginning with the day on which the notice under sub-paragraph (2) is given.
Legal professional privilege
Nothing in this Part of this Schedule requires any person to disclose to HMRC any privileged information.
In this Part of this Schedule “privileged information” means information with respect to which a claim to legal professional privilege, or, in Scotland, to confidentiality of communications, could be maintained in legal proceedings.
Information
This paragraph applies where a person is required to provide information under paragraph 23(2) , 23A(2) or 24(3).
HMRC may specify additional information which must be provided by that person to the recipients under paragraph 23(2) , 23A(2) or 24(3) at the same time as the information referred to in sub-paragraph (1).
HMRC may specify the form and manner in which the additional information is to be provided.
For the purposes of this paragraph “additional information” means information supplied by HMRC which relates to notifiable proposals or notifiable arrangements in general.
HMRC may specify the form and manner in which information required to be provided by or under any of the information provisions must be provided if the provision is to be complied with.
The “information provisions” are paragraphs 11(1), 12(1), 17(2), 18(2), 19(2), 21(3), 22C, 23(2), 23A(2), 24(3), 26(1) and (3), 27(3), 28(2), 29(1), 31(2) and 33(2).
No duty of confidentiality or other restriction on disclosure (however imposed) prevents the voluntary disclosure by any person to HMRC of information or documents which the person has reasonable grounds for suspecting will assist HMRC in determining whether there has been a breach of any requirement imposed by or under this Part of this Schedule.
HMRC may publish information about—
any arrangements, or proposed arrangements, to which a reference number is allocated under paragraph 22;
where the reference number is allocated in a case within paragraph 22(2), any person who is a promoter in relation to the arrangements or, in the case of proposed arrangements, the proposal;
where the reference number is allocated in a case within paragraph 22(3), any person who is or has been—
a promoter in relation to the arrangements or proposed arrangements, or
otherwise involved in the supply of the arrangements or proposed arrangements.
The information that may be published is (subject to sub-paragraph (4))—
any information relating to arrangements within sub-paragraph (1)(a), or a person within sub-paragraph (1)(b) or (c), that is prescribed information for the purposes of paragraph any provision of this Part;
any ruling of a court or tribunal relating to—
arrangements within sub-paragraph (1)(a);
a person within sub-paragraph (1)(b), in that person's capacity as a promoter;
a person within sub-paragraph (1)(c), in that person's capacity as a promoter or a person otherwise involved in the supply of arrangements or proposed arrangements;
the number of persons in any period who enter into transactions forming part of ... arrangements within sub-paragraph (1)(a);
any other information that HMRC considers it appropriate to publish for the purpose of identifying arrangements within sub-paragraph (1)(a) or a person within sub-paragraph (1)(b) or (c).
The information may be published in any manner that HMRC considers appropriate.
No information may be published under this paragraph that identifies a person who enters into a transaction forming part of ... arrangements within sub-paragraph (1)(a).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
But where a person within sub-paragraph (1)(b) or (c) is also a person mentioned in sub-paragraph (4), nothing in sub-paragraph (4) is to be taken as preventing the publication under this paragraph of information so far as relating to the person's activities as a promoter or a person involved in the supply of arrangements or proposed arrangements.
Before publishing any information under this paragraph that identifies a person as a person within sub-paragraph (1)(b) or (c), HMRC must—
inform the person that they are considering doing so, and
give the person reasonable opportunity to
make representations about whether it should be published , and
where section 209(2) of FA 2026 applies, provide a declaration made under that subsection substantiating those representations.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This paragraph applies if—
information about ... arrangements, or proposed ... arrangements, is published under paragraph 36,
at any time after the information is published, a ruling of a court or tribunal is made in relation to tax arrangements, and
HMRC is of the opinion that the ruling is relevant to the arrangements mentioned in paragraph (a)
A ruling is “relevant” to the arrangements if—
the principles laid down, or reasoning given, in the ruling would, if applied to the arrangements, allow the purported advantage arising from the arrangements in relation to tax, and
the ruling is final.
HMRC must publish information about the ruling.
The information must be published in the same manner as HMRC published the information mentioned in sub-paragraph (1)(a) (and may also be published in any other manner that HMRC considers appropriate).
A ruling is “final” if it is—
a ruling of the Supreme Court, or
a ruling of any other court or tribunal in circumstances where—
no appeal may be made against the ruling,
if an appeal may be made against the ruling with permission, the time limit for applications has expired and either no application has been made or permission has been refused,
if such permission to appeal against the ruling has been granted or is not required, no appeal has been made within the time limit for appeals, or
if an appeal was made, it was abandoned or otherwise disposed of before it was determined by the court or tribunal to which it was addressed.
Where a ruling is final by virtue of sub-paragraph (ii), (iii) or (iv) of sub-paragraph (5)(b), the ruling is to be treated as made at the time when the sub-paragraph in question is first satisfied.
In this paragraph “tax arrangements” means arrangements in respect of which it would be reasonable to conclude (having regard to all the circumstances) that the main purpose, or one of the main purposes, was the obtaining of a tax advantage.
Power to vary certain relevant periods
The Commissioners may by regulations amend this Part of this Schedule with a view to altering the definition of “the relevant period” for the purposes of—paragraph 5(6) paragraph 11(1) paragraph 12(1) paragraph 16(5) paragraph 17(2) paragraph 24(3) paragraph 25(2) paragraph 27(3) paragraph 28(3) paragraph 29(4) paragraph 30(2)) paragraph 31(4).
Penalties
Penalty for failure to comply with duties under Part 1 ...
A person who fails to comply with a duty imposed by a provision of Part 1 of this Schedule mentioned in the first column of the table is liable to a penalty not exceeding the amount specified in relation to that provision in the second column.
The “applicable rate” means—
£600, or
where an order has been made under paragraph 4 or 5 (orders about notifiability) in respect of the arrangements or proposal in relation to which the person fails to comply—
£600 for each day falling before the end of the period of eleven days beginning with the day on which the order was made, and
£5,000 for each day falling after the end of that period.
This sub-paragraph applies where an authorised officer considers that the amount otherwise specified in relation to the provision is inappropriately low.
The amount specified for paragraph 26(1) or regulations under paragraph 26(3) is—
£10,000, if the person has failed to comply with the paragraph or regulations on two or more other occasions during the period of 36 months ending with the date of the current failure,
£7,500, if the person has failed to comply with the paragraph or regulations on one other occasion during the period of 36 months ending with the date of the current failure, or
£5,000, in any other case.
In sub-paragraph (1), a reference to a day on which a person fails to comply with a duty is a reference to a day that—
begins after the day by which the person was required to comply with the duty, and
ends before the earlier of—
the day on which the person complies with the duty,
the day on which any reference number is allocated to the arrangements or proposed arrangements concerned in the circumstances described in sub-paragraph (6), and
the day on which a penalty under sub-paragraph (1) is imposed in relation to the failure.
The circumstances are—
the duty referred to in sub-paragraph (5) is a duty imposed by paragraph 11(1), 12(1), 17(2) or 18(2), and
it is a case within paragraph 22(3).
In this paragraph “authorised officer” means an officer of Revenue and Customs authorised by HMRC for the purposes of this paragraph.
If—the person is liable to a further penalty not exceeding the applicable rate (as defined in paragraph 39(2)) for each day on which the failure continues.
a penalty under paragraph 39 is imposed in relation to a person’s failure to comply with a duty, and
after the penalty has been imposed, the person continues to fail to comply with the duty,
Sub-paragraph (1) does not apply to a failure to comply with a duty imposed by paragraph 26(1) or regulations under paragraph 26(3).
In assessing the amount of a specified penalty (including considering whether an amount is inappropriately low under paragraph 39(3)), an authorised officer must have regard to all relevant considerations, including—
the desirability of the penalty being set at a level which appears appropriate for deterring the person, or other persons, from similar failures to comply on future occasions;
the amount of any fees received, or likely to have been received, by the person in connection with the proposal or arrangements concerned;
in the case of a person entering into the arrangements, the amount of any advantage gained, or sought to be gained, by that person.
In this paragraph—
“authorised officer” means an officer of Revenue and Customs authorised by HMRC for the purposes of this paragraph;
a “specified penalty” is a penalty under paragraph 39 that is imposed in relation to a person’s failure to comply with a duty imposed by paragraph 11(1), 12(1), 17(2), 18(2), 19 or 22C.
The Treasury may by regulations make provision for the purpose of varying any of the amounts specified in paragraph 39 or 40.
Regulations under this paragraph may include incidental or transitional provision.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Penalty for failure to comply with duties under paragraph 26
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assessment of penalties ...
Where a person is liable to a penalty under paragraph 39 or 40 an authorised officer may assess the amount due by way of a penalty.
An assessment may not be made more than 12 months after evidence of facts sufficient to justify the making of the assessment first comes to the knowledge of HMRC.
A notice of an assessment under sub-paragraph (1) stating—must be served on the person liable to the penalty.
the date on which it is issued, and
the time within which an appeal against the assessment may be made,
After the notice has been served the assessment may not be altered except in accordance with this paragraph or on appeal.
If it is discovered by an authorised officer that the amount of a penalty assessed under this paragraph is or has become insufficient the officer may make an assessment in a further amount so that the penalty is set at the amount which, in the officer's opinion, is correct or appropriate.
A penalty imposed by a decision under this paragraph—
is due and payable at the end of the period of 30 days beginning with the date of the issue of the notice of the decision, and
is to be treated for all purposes as if it were tax charged in an assessment and due and payable.
In this paragraph “authorised officer” means an officer of Revenue and Customs authorised by HMRC for the purposes of this paragraph.
Where a person (P) is served with notice of an assessment under paragraph 46—
P may appeal against the decision that a penalty is payable by P, and
P may appeal against the decision as to the amount of the penalty.
An appeal under sub-paragraph (1) is to be treated for procedural purposes in the same way as an appeal against an assessment to the relevant tax (including by the application of any provision about the bringing of an 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 (2) does not apply—
so as to require P to pay a penalty before an appeal under sub-paragraph (1) is determined, or
in respect of any other matter expressly provided for by this Schedule.
On an appeal under sub-paragraph (1)(a) the tribunal may affirm or cancel the decision that a penalty is payable by P.
On an appeal under sub-paragraph (1)(b) the tribunal may—
affirm the decision as to the amount of the penalty, or
substitute for that decision another decision that the authorised officer had power to make.
In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of sub-paragraph (2)).
Reasonable excuse
Liability to a penalty under this Part of this Schedule does not arise in relation to a particular failure to comply if the person concerned (P) satisfies HMRC or the relevant tribunal (as the case may be) that there is a reasonable excuse for the failure.
For this purpose—
an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control,
where P relied on any other person to do anything, that cannot be a reasonable excuse unless P took reasonable care to avoid the failure,
where P had a reasonable excuse but the excuse has ceased, P is to be treated as continuing to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased, and
reliance on advice is to be taken automatically not to be a reasonable excuse if the advice was addressed to, or was given to, a person other than P or takes no account of P's individual circumstances.
The making of an order under paragraph 4 or 5 against P does not of itself mean that P either did or did not have a reasonable excuse for non- compliance before the order was made.
Where an order is made under paragraph 4 or 5 then for the purposes of paragraph 48—
the person identified in the order as the promoter of the proposal or arrangements cannot, in respect of any time after the end of the period mentioned in paragraph 39(2)(b), rely on doubt as to notifiability as a reasonable excuse for failure to comply with paragraph 11(1) or 12(1), and
any delay in compliance with that provision after the end of that period is not capable of being a reasonable excuse unless attributable to something other than doubt as to notifiability.
Where a person fails to comply with—then for the purposes of paragraph 48 legal advice which the person took into account is to be disregarded in determining whether the person had a reasonable excuse, if the advice was given or procured by that monitored promoter.
paragraph 17(2) and the promoter for the purposes of paragraph 17 is a monitored promoter, or
paragraph 18(2) and the arrangements for the purposes of paragraph 18 are arrangements of a monitored promoter,
In determining for the purpose of paragraph 48 whether or not a person who is a monitored promoter had a reasonable excuse for a failure to do something, reliance on legal advice is to be taken automatically not to constitute a reasonable excuse if either—
the advice was not based on a full and accurate description of the facts, or
the conclusions in the advice that the person relied on were unreasonable.
In this paragraph “monitored promoter” means a person who is a monitored promoter for the purposes of Part 5 of FA 2014
Consequential amendments
VATA 1994
In section 77(4A) of VATA 1994 (cases in which the time allowed for assessment is 20 years), in paragraph (d) after “11A” insert “ or an obligation under paragraph 17(2) or 18(2) of Schedule 17 to FA 2017 ”.
Promoters of tax avoidance schemes
Part 5 of FA 2014 (promoters of tax avoidance schemes) is amended as follows.
Section 281A (VAT: meaning of “tax advantage”) is amended as follows.
In the heading after “VAT” insert “ and other indirect taxes ”.
In subsection (1)—
in paragraph (a) after “VAT” insert “ and other indirect taxes ”, and
in paragraph (b) for the words from “in paragraph 1” to the end substitute “for VAT in paragraph 6, and for other indirect taxes in paragraph 7, of Schedule 17 to FA 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes).
In subsection (3) after “value added tax” (in both places) insert “ or other indirect taxes ”.
After subsection (3) insert—
Schedule 34A (defeated arrangements) is amended as follows.
In paragraph 2(4) after “schemes)” insert “or paragraph 22 of Schedule 17 to FA 2017 (disclosure of avoidance schemes: VAT and other indirect taxes).
In paragraph 14—
in sub-paragraph (1)(a) after “VAT” insert “ or other indirect tax ”, and
in sub-paragraphs (1)(a) and (b), (2) and (3) omit “taxable”.
After paragraph 26 insert—
In the heading before paragraph 27, after “ “disclosable” insert “ Schedule 11A ”.
In paragraph 27—
for “this Schedule” substitute “ paragraph 26A ”, and
after “ “disclosable” insert “ Schedule 11A ”.
In the heading before paragraph 28 for “and 27” substitute “ to 27 ”.
In paragraph 28(1) after “26(1)(a)” insert “26A(2)(a)
Serial tax avoidance
Schedule 18 to FA 2016 (serial tax avoidance) is amended as follows.
In paragraph 4 (meaning of “tax”)—
number the current text as sub-paragraph (1) of that paragraph,
in that sub-paragraph (1), in paragraph (j) after “VAT” insert” “ and indirect taxes ”, and
after that sub-paragraph (1) insert—
Before paragraph 9 (meaning of “disclosable VAT arrangements”) insert—
In the heading before paragraph 9 after “ “Disclosable” insert “ Schedule 11A ”.
In paragraph 9—
for “this Schedule” substitute “ paragraph 8A ”, and
after “ “disclosable” insert “ Schedule 11A ”.
After paragraph 9 insert—
In the heading before paragraph 10 (meaning of “failure to comply”) for “and 9” substitute “ to 9A ”.
In paragraph 10(1) for “or 9(a)” substitute “ , 8A(2)(c), 9(a) or 9A(1)(c) ”.
In paragraph 11(1) (meaning of “relevant defeat”) for “E” substitute “ F ”.
After paragraph 16 (condition E) insert—
In paragraph 17 (annual information notices)—
in sub-paragraph (3)(a) for “or election,” insert “ election, declaration or application for approval, ”,
in sub-paragraphs (3)(b), (4) and (5)(a) for “DOTAS arrangements or VAT” substitute “ disclosable ”,
in sub-paragraph (5) for “or election” insert “ election, declaration or application for approval ”, and
after sub-paragraph (11) insert—
In the heading before paragraph 28 (exclusion of VAT from Part 4 of Schedule) after “VAT” insert “ and indirect taxes ”.
In paragraph 28 after “VAT” insert “ or any other indirect tax ”.
In paragraph 32 (value of counteracted advantage: basic rule for taxes other than VAT)—
in sub-paragraph (1) for “or C” substitute “ C or F ” and after paragraph (c) insert, and
in sub-paragraph (2)(b) for “or (c)” substitute “ (c) or (d) ”.
In paragraph 35 (meaning of “the counteracted advantage” in paragraphs 33 and 34) in sub-paragraph (1) after paragraph (c) insert
In paragraph 43 (paragraph 42: meaning of “the relevant failure”) after sub-paragraph (7) insert—
In paragraph 55 (time of “use” of defeated arrangements) after sub-paragraph (8) insert—
In paragraph 58(1) (interpretation)—
after the definition of “contract settlement” insert—,
after the definition of “HMRC” insert—,
in the definition of “disclosable VAT arrangements” for “9” substitute “ 8A ”, and
in the definition of “tax” for “4” substitute “ 4(1) ”.
Supplemental
Regulations
Any power of the Treasury or the Commissioners to make regulations under this Schedule is exercisable by statutory instrument.
Regulations made under any such power may make different provision for different cases and may contain transitional provisions and savings.
A statutory instrument containing regulations made by the Treasury under paragraph 2(2) or 42(1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
Any other statutory instrument containing regulations made under this Schedule, if made without a draft having been approved by a resolution of the House of Commons, is subject to annulment in pursuance of a resolution of the House of Commons.
Interpretation
In this Schedule—“arrangements” includes any scheme, transaction or series of transactions;“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;“company” has the meaning given by section 1121 of the Corporation Tax Act 2010;“HMRC” means Her Majesty's Revenue and Customs;“indirect tax” has the meaning given by paragraph 2(1);“introducer” is to be construed in accordance with paragraph 9;“makes a firm approach” has the meaning given by paragraph 10(1);“makes a marketing contact” has the meaning given by paragraph 10(2);“marketing contact” has the meaning give by paragraph 10(2);“notifiable arrangements” has the meaning given by paragraph 3(1);“notifiable proposal” has the meaning given by paragraph 3(3);“prescribed” (except in or in references to paragraph 3(1)(a)), means prescribed by regulations made by HMRC;“promoter” is to be construed in accordance with paragraph 8;“reference number” means a reference number allocated under paragraph 22;“TCEA 2007” means the Tribunals, Courts and Enforcement Act 2007;“tax advantage” means a tax advantage within the meaning of—paragraph 6 (in relation to VAT), or paragraph 7 (in relation to indirect taxes other than VAT);“trade” includes every venture in the nature of a trade;“tribunal” means the First-tier tribunal, or where determined by or under Tribunal Procedure Rules, the Upper Tribunal;“working day” means a day which is not a Saturday or a Sunday, Christmas Day, Good Friday or a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.
Requirement to correct certain offshore tax non-compliance
Liability for penalty for failure to correct
Failure to correct relevant offshore tax non-compliance
A penalty is payable by a person who—
has any relevant offshore tax non-compliance to correct at the end of the tax year 2016-17, and
fails to correct the relevant offshore tax non-compliance within the period beginning with 6 April 2017 and ending with 30 September 2018 (referred to in this Schedule as “the RTC period”).
Main definitions: general
Paragraphs 3 to 13 have effect for the purposes of this Schedule.
“Relevant offshore tax non-compliance”
At the end of the 2016-17 tax year a person has “relevant offshore tax non-compliance” to correct if—
Conditions A and B are satisfied in respect of any offshore tax non-compliance committed by that person on or before 5 April 2017 (“the original offshore tax non-compliance”), and
Condition C will be satisfied on the relevant date (see paragraph 6).
Where the original offshore tax non-compliance committed by a person has been corrected in part by the end of the tax year 2016-17, the person's “relevant offshore tax non-compliance” is the uncorrected part of the original offshore tax non-compliance.
Condition A is that the original offshore tax non-compliance has not been fully corrected before the end of the tax year 2016-17 (see paragraph 13).
Condition B is that—
the original offshore tax non-compliance involved a potential loss of revenue when it was committed, and
if the original offshore tax non-compliance has been corrected in part by the end of the tax year 2016-17, the uncorrected part at that time involved a potential loss of revenue.
Condition C is that on the relevant date it is lawful, on the assumptions set out in sub-paragraph (2), for HMRC to assess the person concerned to any tax the liability to which would have been disclosed to or discovered by HMRC if on that date—
where none of the original offshore tax non-compliance was corrected before the end of the 2016-17 tax year, HMRC were aware of the information missing as a result of the failure to correct that tax non-compliance, or
where the original offshore tax non compliance was corrected in part before that time, HMRC were aware of the information missing as a result of the failure to correct the rest of that tax non-compliance.
The assumptions are—
that paragraph 26 is to be disregarded, and
where the tax at stake is inheritance tax, that the relevant offshore tax non-compliance is not corrected before the relevant date
In this paragraph “the relevant date” is—
where the tax at stake is income tax or capital gains tax, 6 April 2017, and
where the tax at stake is inheritance tax, the day after the day on which this Act is passed.
“Offshore tax-non compliance” etc
“Offshore tax non-compliance” means tax non-compliance which involves an offshore matter or an offshore transfer, whether or not it also involves an onshore matter.
Tax non-compliance “involves an onshore matter” if and to the extent that it does not involve an offshore matter or an offshore transfer.
For the meaning of “involves an offshore matter or an offshore transfer” (in relation to the different descriptions of tax non-compliance) see paragraphs 9 to 11.
“Tax non-compliance”
“Tax non-compliance” means any of the following—
a failure to comply on or before the filing date with an obligation under section 7 of TMA 1970 to give notice of chargeability to income tax or capital gains tax,
a failure to comply on or before the filing date with an obligation to deliver to HMRC a return or other document which is listed in sub-paragraph (3), or
delivering to HMRC a return or other document which is listed in sub-paragraph (3) or (4) and contains an inaccuracy which amounts to, or leads to—
an understatement of a liability to tax,
a false or inflated statement of a loss, or
a false or inflated claim to repayment of tax.
In sub-paragraph (1)—
“filing date”, in relation to a notice of chargeability or a return or other document, means the date by which it is required to be given, made or delivered to HMRC,
“loss” includes a charge, expense, deficit and any other amount which may be available for, or relied on to claim, a deduction or relief, and
“repayment of tax” includes a reference to allowing a credit against tax.
The documents relevant for the purposes of both of paragraphs (b) and (c) of sub-paragraph (1) are (so far as they relate to the tax or taxes shown in the first column)—
The documents relevant for the purposes only of paragraph (c) of sub-paragraph (1) are (so far as they relate to the tax or taxes shown in the first column)—
Any other document given to HMRC by a person (“P”) which is likely to be relied on by HMRC to determine, without further inquiry, a question about—P's liability to tax; payments by P by way of or in connection with tax; any other payment by P (including penalties); repayments, or any other kind of payment or credit, to P.
“Involves an offshore matter” and “involves an offshore transfer”
This paragraph applies to any tax non-compliance consisting of a failure to comply with an obligation under section 7 of TMA 1970 to notify chargeability to income tax or capital gains tax.
The tax non-compliance “involves an offshore matter” if the potential loss of revenue is charged on or by reference to—
income arising from a source in a territory outside the UK,
assets situated or held in a territory outside the UK,
activities carried on wholly or mainly in a territory outside the UK, or
anything having effect as if it were income, assets or activities of a kind described above.
The tax non-compliance “involves an offshore transfer” if—
it does not involve an offshore matter, and
the applicable condition is satisfied (see sub-paragraphs (4) and (5)).
Where the tax at stake is income tax the applicable condition is satisfied if the income on or by reference to which tax is charged, or any part of the income—
was received in a territory outside the UK, or
was transferred on or before 5 April 2017 to a territory outside the UK.
Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—
were received in a territory outside the UK, or
were transferred on or before 5 April 2017 to a territory outside the UK.
In the case of a transfer falling within sub-paragraph (4)(b) or (5)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.
In this paragraph and paragraphs 10 and 11 “assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling.
This paragraph applies where—
any tax non-compliance by a person consists of a failure to comply with an obligation to deliver a return or other document, and
a complete and accurate return or other document would have included information that would have enabled or assisted HMRC to assess the person's liability to tax.
The tax non-compliance “involves an offshore matter” if the liability to tax that would have been shown in the return or other document is or includes a liability to tax charged on or by reference to—
income arising from a source in a territory outside the UK,
assets situated or held in a territory outside the UK,
activities carried on wholly or mainly in a territory outside the UK, or
anything having effect as if it were income, assets or activities of a kind described above.
Where the tax at stake is inheritance tax, assets are treated for the purposes of sub-paragraph (2) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.
The tax non-compliance “involves an offshore transfer” if—
it does not involve an offshore matter, and
the applicable condition is satisfied in respect of the liability to tax that would have been shown by the return or other document (see sub-paragraphs (5) to (7)).
Where the tax at stake is income tax the applicable condition is satisfied if the income on or by reference to which tax is charged, or any part of the income—
was received in a territory outside the UK, or
was transferred on or before 5 April 2017 to a territory outside the UK.
Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—
was received in a territory outside the UK, or
was transferred on or before 5 April 2017 to a territory outside the UK.
Where the liability to tax which would have been shown in the document is a liability to inheritance tax, the applicable condition is satisfied if—
the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and
after that disposition but on or before 5 April 2017 the assets, or any part of the assets, are transferred to a territory outside the UK.
In the case of a transfer falling within sub-paragraph (5)(b), (6)(b) or (7)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.
This paragraph applies to any tax non-compliance by a person if—
the tax non-compliance consists of delivering or giving HMRC a return or other document which contains an inaccuracy, and
the inaccuracy relates to information that would have enabled or assisted HMRC to assess the person's liability to tax.
The tax non-compliance to which this paragraph applies “involves an offshore matter” if the information that should have been given in the tax document relates to—
income arising from a source in a territory outside the UK,
assets situated or held in a territory outside the UK,
activities carried on wholly or mainly in a territory outside the UK, or
anything having effect as if it were income, assets or activities of a kind described above.
Where the tax at stake is inheritance tax, assets are treated for the purposes of sub-paragraph (2) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.
Tax non-compliance to which this paragraph applies “involves an offshore transfer” if—
it does not involve an offshore matter, and
the applicable condition is satisfied in respect of the liability to tax that would have been shown by the return or other document (see sub-paragraphs (5) to (7)).
Where the tax at stake is income tax the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—
was received in a territory outside the UK, or
was transferred on or before 5 April 2017 to a territory outside the UK.
Where the tax at stake is capital gains tax, the applicable condition is satisfied if—
the information that should have been given in the tax document relates to the proceeds of the disposal on or by reference to which the tax is charged, and
the proceeds, or any part of the proceeds—
were received in a territory outside the UK, or
were transferred on or before 5 April 2017 to a territory outside the UK.
Where the tax at stake is inheritance tax, the applicable condition is satisfied if—
the information that should have been given in the tax document relates to the disposition that gives rise to the transfer of value by reason of which the tax becomes payable relates to a transfer of assets, and
after that disposition but on or before 5 April 2017 the assets or any part of the assets are transferred to a territory outside the UK.
In the case of a transfer falling within sub-paragraph (5)(b), (6)(b) or (7)(b), references to the income, proceeds or assets transferred are to be read as including references to any assets derived from or representing the income, proceeds or assets.
“Tax”
References to “tax” are (unless in the context the reference is more specific) to income tax, capital gains tax or inheritance tax.
References to “capital gains tax” do not include capital gains tax payable by companies in respect of chargeable gains accruing to them to the extent that those gains are NRCGT gains in respect of which the companies are chargeable to capital gains tax under section 14D or 188D of TCGA 1992 (see section 1(2A)(b) of that Act).
In sub-paragraph (2) “company” has the same meaning as in TCGA 1992.
Correcting offshore tax non-compliance
This paragraph sets out how offshore tax non-compliance may be corrected.
References to the correction of offshore tax non-compliance of any description are to the taking of any action specified in this paragraph as a means of correcting offshore tax non-compliance of that description.
Offshore tax non-compliance consisting of a failure to notify chargeability may be corrected by—
giving the requisite notice to HMRC (unless before doing so the person has received a notice requiring the person to make and deliver a tax return) and giving HMRC the relevant information by any means mentioned in paragraph (b),
giving HMRC the relevant information—
by making and delivering a tax return,
using the digital disclosure service or any other service provided by HMRC as a means of correcting tax non-compliance,
communicating it to an officer of Revenue and Customs in the course of an enquiry into the person's tax affairs, or
using a method agreed with an officer of Revenue and Customs.
In sub-paragraph (3) “relevant information” means information relating to offshore tax that—
had the requisite notice been given in time and the person given a notice to make and deliver a tax return, would have been required to be included in the tax return, and
would have enabled or assisted HMRC to calculate the offshore tax due.
Offshore tax non-compliance consisting of a failure to make or deliver a return or other document may be corrected by giving HMRC the relevant information by—
making or delivering the requisite return or document,
using the digital disclosure service or any other service provided by HMRC as a means of correcting tax non-compliance,
communicating it to an officer of Revenue and Customs in the course of an enquiry into the person's tax affairs, or
using a method agreed with an officer of Revenue and Customs.
In subsection (5) “relevant information” means information relating to offshore tax that—
should have been included in the return or other document, and
would have enabled or assisted HMRC to calculate the offshore tax due.
Offshore tax non-compliance consisting of making and delivering a return or other document containing an inaccuracy may be corrected by giving HMRC the relevant information by—
in the case of an inaccurate tax document, amending the document or delivering a new document,
using the digital disclosure service or any other service provided by HMRC as a means of correcting tax non-compliance,
communicating it to an officer of Revenue and Customs in the course of an enquiry into the person's tax affairs, or
using a method agreed with an officer of Revenue and Customs.
In sub-paragraph (7) “relevant information” means information relating to offshore tax that—
should have been included in the return but was not (whether due to an omission or the giving of inaccurate information), and
would have enabled or assisted HMRC to calculate the offshore tax due.
In this paragraph “offshore tax”, in relation to any offshore tax non-compliance, means tax corresponding to the offshore PLR in respect of the non-compliance.
Amount of penalty
Amount of penalty
The penalty payable under paragraph 1 is 200% of the offshore PLR attributable to the uncorrected offshore tax non-compliance (subject to any reduction under a provision of this Part of this Schedule).
In this Part of this Schedule “the uncorrected offshore tax non-compliance” means—
the relevant offshore tax non-compliance, in a case where none of it is corrected within the RTC period, or
so much of the relevant offshore tax non-compliance as has not been corrected within the RTC period, in a case where part of it is corrected within that period.
Offshore PLR
In this Schedule “offshore PLR”, in relation to any offshore tax non-compliance means the potential loss of revenue attributable to that non-compliance, to be determined as follows.
The potential lost revenue attributable to any offshore tax non-compliance is (subject to sub-paragraphs (5) and (6)) —
if the non-compliance is a failure to notify chargeability, the potential lost revenue under the applicable provisions of paragraph 7 of Schedule 41 to FA 2008 (or, where the original offshore tax non-compliance took place before 1 April 2010, the amount referred to in section 7(8) of TMA 1970),
if the non-compliance is a failure to deliver a return or other document, the amount of the liability to tax under the applicable provisions of paragraph 24 of Schedule 55 to FA 2009 or of paragraph 11 of Schedule 25 to FA 2021, as the case may be (or, where the original offshore tax non-compliance took place before 1 April 2011, the amount of liability to tax that would have been shown in the return as defined in section 93(9) of TMA 1970), and
if the non-compliance is delivering a return or other document containing an inaccuracy, the potential lost revenue under the applicable provisions of paragraphs 5 to 8 of Schedule 24 to FA 2007 (or, where the original offshore tax non-compliance took place before 1 April 2008, the difference described in section 95(2) of TMA 1970).
In its application for the purposes of sub-paragraph (2)(c) above, paragraph 6 of Schedule 24 to FA 2007 has effect as if—
for sub-paragraph (1) there were substituted—; and
in sub-paragraph (4), for paragraphs (b) to (d) there were substituted—
In sub-paragraphs (5) and (6) “combined tax non-compliance” is tax non-compliance that—
involves an offshore matter or an offshore transfer, but
also involves an onshore matter.
Any combined tax non-compliance is to be treated for the purposes of this Schedule as if it were two separate acts of tax non-compliance, namely—
the combined tax non-compliance so far as it involves an offshore matter or an offshore transfer (which is then offshore tax non-compliance within the meaning of this Schedule), and
the combined tax non-compliance so far as it involves an onshore matter.
The potential lost revenue attributable to the offshore tax non-compliance referred to in sub-paragraph (5)(a) is to be taken to be such share of the potential lost revenue attributable to the combined tax non-compliance as is just and reasonable.
Reduction of penalty for disclosure etc by person liable to penalty
This paragraph provides for a reduction in a penalty under paragraph 1 for any uncorrected relevant offshore tax non-compliance if the person (“P”) who is liable to the penalty discloses any matter mentioned in sub-paragraph (2) that is relevant to the non-compliance or its correction or to the assessment or enforcement of the offshore tax attributable to it.
The matters are—
chargeability to income tax or capital gains tax (where the tax non-compliance is a failure to notify chargeability),
a missing tax return,
an inaccuracy in a document,
a supply of false information or a withholding of information, or
a failure to disclose an under-assessment.
A person discloses a matter for the purposes of this paragraph only by—
telling HMRC about it,
giving HMRC reasonable help in relation to the matter (for example by quantifying an inaccuracy in a document),
informing HMRC of any person who acted as an enabler of the relevant offshore tax non-compliance or the failure to correct it, and
allowing HMRC access to records—
for any reasonable purpose connected with resolving the matter (for example for the purpose of ensuring that an inaccuracy in a document is fully corrected), and
for the purpose of ensuring that HMRC can identify all persons who may have acted as an enabler of the relevant offshore tax non-compliance or the failure to correct it.
Where a person liable to a penalty under paragraph 1 discloses a matter HMRC must reduce the penalty to one that reflects the quality of the disclosure.
But the penalty may not be reduced below 100% of the offshore PLR.
In relation to disclosure or assistance, “quality” includes timing, nature and extent.
For the purposes of sub-paragraph (3) a person “acted as an enabler” of relevant offshore tax non-compliance by another if the person encouraged, assisted or otherwise facilitated the conduct by the other person that constituted the offshore tax non-compliance.
If they think it right because of special circumstances, HMRC may reduce a penalty under paragraph 1.
In sub-paragraph (1) “special circumstances” does not include—
ability to pay, or
the fact that a potential loss of revenue from one taxpayer is balanced by a potential overpayment by another.
In sub-paragraph (1) the reference to reducing a penalty includes a reference to—
staying a penalty, or
agreeing a compromise in relation to proceedings for a penalty.
Procedure for assessing penalty, etc
Where a person is found liable for a penalty under paragraph 1 HMRC must—
assess the penalty,
notify the person, and
state in the notice—
the uncorrected relevant offshore tax non-compliance to which the penalty relates, and
the tax period to which that offshore tax non-compliance relates.
A penalty must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
An assessment of a penalty—
is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),
may be enforced as if it were an assessment to tax, and
may be combined with an assessment to tax.
A supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of the liability to tax that would have been shown in a return.
Sub-paragraph (6) applies if—
an assessment in respect of a penalty is based on a liability to offshore tax that would have been shown on a return, and
that liability is found by HMRC to have been excessive.
HMRC may amend the assessment so that it is based upon the correct amount.
But an amendment under sub-paragraph (6)—
does not affect when the penalty must be paid, and
may be made after the last day on which the assessment in question could have been made under paragraph 19.
An assessment of a penalty under paragraph 1 in respect of uncorrected relevant offshore tax non-compliance must be made before the end of the relevant period for that non-compliance.
If the non-compliance consists of a failure to notify chargeability, the relevant period is the period of 12 months beginning with—
the end of the appeal period for the assessment of tax unpaid by reason of the failure, or
if there is no such assessment, the date on which the amount of tax unpaid by reason of the failure is ascertained.
If the non-compliance consists of a failure to submit a return or other document, the relevant period is the period of 12 months beginning with—
the end of the appeal period for the assessment of the liability to tax which would have been shown in the return, or
if there is no such assessment, the date on which that liability is ascertained.
If the non-compliance consists of making and delivering a tax document containing an inaccuracy, the relevant period is the period of 12 months beginning with—
the end of the appeal period for the decision correcting the inaccuracy, or
if there is no assessment to the tax concerned within paragraph (a), the date on which the inaccuracy is corrected.
In this paragraph references to the appeal period are to the period during which—
an appeal could be brought, or
an appeal that has been brought has not been finally determined or withdrawn.
Appeals
A person may appeal against—
a decision of HMRC that a penalty under paragraph 1 is payable by that person, or
a decision of HMRC as to the amount of a penalty under paragraph 1 payable by the person.
An appeal under paragraph 20 is to be treated in the same way as an appeal against an assessment to the tax at stake (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 (1) does not apply—
so as to require the person bringing the appeal to pay a penalty before an appeal against the assessment of the penalty is determined,
in respect of any other matter expressly provided for by this Schedule.
On an appeal under paragraph 20(a) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.
On an appeal under paragraph 20(b) that is notified to the tribunal, the tribunal may—
affirm HMRC's decision, or
substitute for that decision another decision that HMRC had power to make.
If the tribunal substitutes its own decision for HMRC's, the tribunal may rely on paragraph 16 or 17 (or both)—
to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point),
to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of that paragraph was flawed.
In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 21(1)).
Reasonable excuse
Liability to a penalty under paragraph 1 does not arise in relation to a particular failure to correct any relevant offshore tax non-compliance within the RTC period if the person concerned (P) satisfies HMRC or the relevant tribunal (as the case may be) that there is a reasonable excuse for the failure.
For this purpose—
an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control,
where P relied on any other person to do anything, that cannot be a reasonable excuse unless P took reasonable care to avoid the failure,
where P had a reasonable excuse but the excuse has ceased, P is to be treated as continuing to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased, and
reliance on advice is to be taken automatically not to be a reasonable excuse if it is disqualified under sub-paragraph (3).
Advice is disqualified (subject to sub-paragraph (4)) if—
the advice was given to P by an interested person,
the advice was given to P as a result of arrangements made between an interested person and the person who gave the advice,
the person who gave the advice did not have appropriate expertise for giving the advice,
the advice failed to take account of all P's individual circumstances (so far as relevant to the matters to which the advice relates), or
the advice was addressed to, or was given to, a person other than P.
Where advice would otherwise be disqualified under any of paragraphs (a) to (d) of sub-paragraph (3) the advice is not disqualified if at the end of the RTC period P—
has taken reasonable steps to find out whether or not the advice falls within that paragraph, and
reasonably believes that it does not.
In sub-paragraph (3) “an interested person” means, in relation to any relevant offshore tax non-compliance—
a person (other than P) who participated in relevant avoidance arrangements or any transaction forming part of them, or
a person who for any consideration (whether or not in money) facilitated P's entering into relevant avoidance arrangements.
In this paragraph “avoidance arrangements” means arrangements as respects which, in all the circumstances, it would be reasonable to conclude that their main purpose, or one of their main purposes, is the obtaining of a tax advantage.
But arrangements are not avoidance arrangements for the purposes of this paragraph if (although they fall within sub-paragraph (6))—
they are arrangements which accord with established practice, and
HMRC had, at the time the arrangements were entered into, indicated its acceptance of that practice.
Where any relevant offshore tax non-compliance arose originally because information was submitted to HMRC on the basis that particular avoidance arrangements had an effect which they did not have, those avoidance arrangements are “relevant avoidance arrangements” in relation to that tax non-compliance.
In sub-paragraph (6)—
“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
a “tax advantage” includes—
relief or increased relief from tax,
repayment or increased repayment of tax,
avoidance or reduction of a charge to tax or an assessment to tax,
avoidance of a possible assessment to tax,
deferral of a payment of tax or advancement of a repayment of tax.
Double jeopardy
Where by reason of any conduct a person—that conduct does not give rise to liability to a penalty under paragraph 1.
has been convicted of an offence, or
is liable to a penalty otherwise than under paragraph 1 for which the person has been assessed (and the assessment has not been successfully appealed against or withdrawn),
In sub-paragraph (1) the reference to a penalty otherwise than under paragraph 1—
includes a penalty under paragraph 6 of Schedule 55 to FA 2009, but does not include penalties under any other provision of that Schedule, and
includes a penalty under subsection (5) of section 93 of TMA 1970 but, does not include penalties under any other provision of that section.
But the aggregate of—must not exceed 200% of that liability to tax.
the amount of a penalty under paragraph 1, and
the amount of a penalty under paragraph 5 of Schedule 55 which is determined by reference to a liability to tax,
In sub-paragraph (1) “conduct” includes a failure to act.
Application of provisions of TMA 1970
Subject to the provisions of this Part of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Part of this Schedule as they apply for the purposes of the Taxes Acts—
section 108 (responsibility of company officers),
section 114 (want of form), and
section 115 (delivery and service of documents).
Further provisions relating to the requirement to correct
Extension of period for assessment etc of offshore tax
This paragraph applies where—
at the end of the tax year 2016-17 a person has relevant offshore tax non-compliance to correct, and
the last day on which it would (disregarding this paragraph) be lawful for HMRC to assess the person to any offshore tax falls within the period beginning with 6 April 2017 and ending with 4 April 2021.
The period in which it is lawful for HMRC to assess the person to the offshore tax is extended by virtue of this paragraph to end with 5 April 2021.
In this paragraph “offshore tax”, in relation to any relevant offshore tax non-compliance, means tax corresponding to the offshore PLR in respect of the non-compliance.
Further penalty in connection with offshore asset moves
Schedule 21 to FA 2015 (penalties in connection with offshore asset moves) is amended as follows.
In paragraph 2 (original penalties triggering penalties under Schedule 21) omit “and” after paragraph (b) and after paragraph (c) insert
In paragraph 3 (meaning of deliberate failure) after paragraph (c) insert—
In paragraph 5 (meaning of “relevant time”) after sub-paragraph (4) insert—
Asset-based penalty in addition to penalty under paragraph 1
Schedule 22 to FA 2016 (asset-based penalty for offshore inaccuracies and failures) is amended as follows.
In paragraph 2 (meaning of standard offshore penalty)—
in sub-paragraph (1) for “or (4)” substitute “ (4) or (4A) ”,
after sub-paragraph (4) insert—, and
after sub-paragraph (5) insert—
In paragraph 3 (tax year to which standard offshore penalty relates) after sub-paragraph (3) insert—
In paragraph 5 (meaning of offshore PLR), in sub-paragraph (1)(a) after “FA 2008” insert “ or Schedule 18 to FA 2017 ”.
In paragraph 6 (restriction on imposition of multiple asset-based penalties for same asset), in sub-paragraph (1)(a) after “penalty” insert “ (other than one imposed under paragraph 1 of Schedule 18 to FA 2017) ”.
After paragraph 6 insert—
In paragraph 13 (asset-based income tax) after sub-paragraph (2) insert—
In paragraph 19(2) (interpretation: incorporation of definitions from other legislation for “or Schedule 55 to FA 2009” substitute “ Schedule 55 to FA 2009 or Part 1 of Schedule 18 to FA 2017 ”.
TMA 1970 is amended as follows.
In section 103ZA (disapplication of sections 100 to 103 in the case of certain penalties) omit the “or” after paragraph (j) and after paragraph (k) insert
In section 107A (relevant trustees)—
in subsection (2)(a) after “Finance Act 2009” insert or Schedule 18 to the Finance Act 2017”, and
in subsection (3), after paragraph (c) insert—.
Publishing details of persons assessed to penalty or penalties under paragraph 1
The Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) may publish information about a person (P) if in consequence of an investigation they consider that sub-paragraph (2) or (3) applies in relation to P.
This sub-paragraph applies if—
P has been found to have incurred one or more relevant penalties under paragraph 1 (and has been assessed or is the subject of a contract settlement), and
the offshore potential lost revenue in relation to the penalty, or the aggregate of the offshore potential lost revenue in relation to each of the penalties, exceeds £25,000.
This sub-paragraph applies if P has been found to have incurred 5 or more relevant penalties under paragraph 1.
A penalty incurred by P under paragraph 1 is “relevant” if —
P was aware at any time during the RTC period that at the end of the 2016-17 tax year the person had relevant offshore tax non-compliance to correct, and
the penalty relates to the failure to correct that non-compliance.
The information that may be published is—
P's name (including any trading name, previous name or pseudonym),
P's address (or registered office),
the nature of any business carried on by P,
the amount of the penalty or penalties,
the offshore potential lost revenue in relation to the penalty or the aggregate of the offshore potential lost revenue in relation to each of the penalties,
the periods or times to which the uncorrected relevant offshore tax non-compliance relates,
any other information that the Commissioners consider it appropriate to publish in order to make clear the person's identity.
In sub-paragraph (5)(f) the reference to the uncorrected relevant offshore tax non-compliance is to so much of P's relevant offshore tax non-compliance at the end of the 2016-17 tax year as P failed to correct within the RTC period.
The information may be published in any manner that the Commissioners consider appropriate.
Before publishing any information the Commissioners must—
inform P that they are considering doing so, and
afford P the opportunity to make representations about whether it should be published.
No information may be published before the day on which the penalty becomes final or, where more than one penalty is involved, the latest day on which any of the penalties becomes final.
No information may be published for the first time after the end of the period of one year beginning with that day.
No information may be published (or continue to be published) after the end of the period of one year beginning with the day on which it is first published.
No information may be published if the amount of the penalty—
is reduced under paragraph 16 to the minimum permitted amount (being 100% of the offshore PLR), or
is reduced under paragraph 17 to nil or stayed.
For the purposes of this paragraph a penalty becomes final—
if it has been assessed, when the time for any appeal or further appeal relating to it expires or, if later, any appeal or final appeal relating to it is finally determined, and
if a contract settlement has been made, at the time when the contract is made.
In this paragraph “contract settlement”, in relation to a penalty, means a contract between the Commissioners and the person under which the Commissioners undertake not to assess the penalty or (if it has been assessed) not to take proceedings to recover it.
The Treasury may by regulations amend paragraph 30(2) to vary the amount for the time being specified in paragraph (b).
Regulations under this paragraph are to be made by statutory instrument.
A statutory instrument under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
Supplementary
Interpretation: minor
In this Schedule (apart from the amendments made by Part 3)—“HMRC” means Her Majesty's Revenue and Customs;“tax period” means a tax year or other period in respect of which tax is charged (or in the case of inheritance tax, the year beginning with 6 April and ending on the following 5 April in which the liability to tax first arose);“tax year”, in relation to inheritance tax, means a period of 12 months beginning on 6 April and ending on the following 5 April;“UK” means the United Kingdom, including its territorial sea.
A reference to making a return or doing anything in relation to a return includes a reference to amending a return or doing anything in relation to an amended return.
References to delivery (of a document) include giving, sending and any other similar expressions.
A reference to delivering a document to HMRC includes—
a reference to communicating information to HMRC in any form and by any method (whether by post, fax, email, telephone or otherwise, and
a reference to making a statement or declaration in a document.
References to an assessment to tax, in relation to inheritance tax, are to a determination.
An expression used in relation to income tax has the same meaning as in the Income Tax Acts.
An expression used in relation to capital gains tax has the same meaning as in the enactments relating to that tax.
An expression used in relation to inheritance tax has the same meaning as in IHTA 1984.