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
Charge to tax
Income tax is charged for the tax year 2019-20.
Corporation tax is charged for the financial year 2020.
Income tax rates, allowances and limits
For the tax year 2019-20 the main rates of income tax are as follows—
the basic rate is 20%;
the higher rate is 40%;
the additional rate is 45%.
For the tax year 2019-20 the default rates of income tax are as follows—
the default basic rate is 20%;
the default higher rate is 40%;
the default additional rate is 45%.
For the tax year 2019-20 the savings rates of income tax are as follows—
the savings basic rate is 20%;
the savings higher rate is 40%;
the savings additional rate is 45%.
For the tax years 2019-20 and 2020-21, the amount specified in section 10(5) of ITA 2007 (basic rate limit) is “£37,500”.
For the tax years 2019-20 and 2020-21, the amount specified in section 35(1) of ITA 2007 (personal allowance) is “£12,500”.
In consequence of the amendment made by subsection (2), omit section 4 of F(No.2)A 2015 (which has effect only if the personal allowance is less than £12,500).
Omit the following (which relate to the link between the personal allowance and the national minimum wage)—
sections 57(8), 57A and 1014(5)(b)(iia) of ITA 2007, and
section 3 of F(No.2)A 2015.
In consequence of the provision made by this section—for the tax years 2019-20 and 2020-21.
section 21 of ITA 2007 (indexation of basic rate limit and starting rate limit for savings) does not apply in relation to the basic rate limit, and
Section 21 of ITA 2007 (indexation) does not apply in relation to the starting rate limit for savings for the tax year 2019-20 (so that the starting rate limit for savings remains at £5,000 for that tax year).
Employment and social security income
ITEPA 2003 is amended as follows.
In section 120A (optional remuneration arrangements: benefit of a car)—
in subsection (3)(b), for the words from “the amount” to “year is” substitute “ the total foregone amount in connection with the car for the tax year is ”, and
after subsection (3) insert—
In section 121A (optional remuneration arrangements: method of calculating relevant amount)—
in subsection (1), for step 1 substitute— “ Step 1 Take the total foregone amount in connection with the car for the tax year (see section 120A(4)). ”, and
in subsection (2)—
for “ “amount foregone” under” substitute “ “total foregone amount” for the purposes of ”, and
for “the benefit of the car” substitute “ a benefit mentioned in section 120A(4)(a) or (b) ”.
In section 132A (capital contributions by employee: optional remuneration arrangements)—
for subsection (3) substitute—, and
after subsection (4) insert—
In section 154A (optional remuneration arrangements: benefit of a van)—
in subsection (2)(b), for the words from “the amount” to “section 69B)” substitute “ the total foregone amount in connection with the van ”,
in subsection (3), for step 1 substitute— “ Step 1 Take the total foregone amount in connection with the van for the tax year. ”,
in subsection (7), for “the benefit of the van” substitute “ a benefit mentioned in subsection (8)(a) or (b) ”, and
after subsection (7) insert—
In section 239 (exemptions for payments and benefits relating to taxable cars, vans and exempt HGVs), in subsection (3)—
after “by virtue of” insert “ section 120A (optional remuneration arrangements: benefit of a car), ”, and
before “or section 160” insert “ , section 154A (optional remuneration arrangements: benefit of a van) ”.
The amendments made by this section have effect for the tax year 2019-20 and subsequent tax years.
In Chapter 3 of Part 4 of ITEPA 2003 (employment income: travel-related exemptions), after section 237 insert—
The amendment made by subsection (1) has effect for the tax year 2018-19 and subsequent tax years.
Section 248A of ITEPA 2003 (emergency vehicles) is amended in accordance with subsections (2) and (3).
In subsection (1)—
in paragraph (a), for “for the person's private use” substitute “ mainly for use for the person's business travel ”;
in paragraph (b), omit “engaged in on-call”.
In subsection (8)—
in the opening words, omit “engaged in on-call”;
in paragraph (a), for “it” substitute “ the vehicle ”;
omit paragraph (b) (and the “and” before it).
In section 205 of ITEPA 2003 (cost of the benefit: asset made available without transfer), after subsection (4) insert—
The amendments made by subsections (1) to (4) have effect for the tax year 2017-18 and subsequent tax years.
For the tax year 2017-18, the tax year 2018-19 and the tax year 2019-20, sections 205 and 205A of ITEPA 2003 (taxable benefits: assets made available without transfer) have effect, where the asset mentioned in section 205(1)(a) is an emergency vehicle, with the modifications in subsections (7) and (8).
Section 205(1C) has effect as if—
in paragraph (a), at the beginning, there were inserted “the private use proportion of”;
after paragraph (b), and on a new line, there were inserted—
Section 205A(2) has effect as if paragraphs (c) and (d) were omitted.
For the purposes of subsection (6), “emergency vehicle” has the same meaning as in section 248A of ITEPA 2003.
Section 289A of ITEPA 2003 (exemption for paid or reimbursed expenses) is amended as follows.
After subsection (2) insert—
After subsection (4) insert—
In subsection (5)—
for “ “Relevant” substitute “In this section “relevant”, and
before “in respect of” insert “ for or ”.
After subsection (5) insert—
In subsection (6), for “this section” substitute “ subsection (2) ”.
In subsection (7), after “subsection” insert “ (2A)(a) or ”.
After subsection (7) insert—
The amendments made by this section have effect for the tax year 2019-20 and subsequent tax years.
For the tax year 2019-20 and subsequent tax years, the Income Tax (Approved Expenses) Regulations 2015 (S.I. 2015/1948)—
have effect as if made under section 289A(2A)(a) of ITEPA 2003 (and may be revoked, or amended, accordingly), and
have effect as if in regulation 2(1)—
the reference to section 289A of ITEPA 2003 were to section 289A(2A)(a) of that Act,
for the words “in an approved way” there were substituted “ in accordance with these regulations ”, and
the words “purchased by the employee” were omitted.
In section 307(2) of ITEPA 2003 (“death or retirement benefit” is a benefit for employee or others on employee's retirement or death), for “or a member of the employee's family or household” substitute “ , or paid or given in respect of the employee to any other individual or to a charity, ”.
The amendment made by subsection (1) has effect for the tax year 2019-20 and subsequent tax years.
Part 10 of ITEPA 2003 (social security income) is amended as follows.
In Table A in section 660 (taxable UK benefits), at the appropriate place insert—.
In section 658 (amount charged to tax), in subsection (4), after “carer's allowance,” insert “ carer's allowance supplement, ”.
In section 661 (taxable social security income), in subsection (1), after “carer's allowance,” insert “ carer's allowance supplement, ”.
In Part 1 of Table B in section 677(1) (UK social security benefits wholly exempt from tax: benefits payable under primary legislation), insert each of the following at the appropriate place—.
In the heading of Part 1 of Table B in section 677(1), after “Northern Ireland welfare supplementary payments” insert “ etc ”.
In Part 2 of Table B in section 677(1) (UK social security benefits wholly exempt from tax: benefits payable under regulations), insert each of the following at the appropriate place—.
In Part 1 of Schedule 1 to ITEPA 2003 (abbreviations of Acts and instruments), insert each of the following at the appropriate place—.
Chargeable gains: interests in UK land etc
Schedule 1 substitutes a new Part 1 of TCGA 1992 which—
extends the cases in which gains accruing to persons not resident in the United Kingdom are chargeable to tax, and
abolishes the specific charge to tax on ATED-related chargeable gains.
Schedule 1 also—
repeals other provisions contained in the previous version of Part 1 of TCGA 1992 or in Part 2 of that Act and restates their effect in rewritten form (whether in the new Part 1 or elsewhere),
makes provision in relation to collective investment vehicles that (directly or indirectly) hold interests in land in the United Kingdom, and
makes provision connected with the matters mentioned in subsection (1) or this subsection.
Schedule 2 makes provision for the purposes of capital gains tax requiring returns, and payments on account of that tax, to be made where there is—
any direct or indirect disposal of UK land which meets the non-residence condition (whether or not a gain accrues), or
any other direct disposal of UK land on which a residential property gain accrues.
Subsection (1) is to be read as if contained in Part 1 of that Schedule.
International matters
Schedule 3 contains provision about offshore receipts in respect of intangible property.
Schedule 4 contains provision about profit fragmentation arrangements.
Schedule 5 contains provision for non-UK resident companies to be chargeable to corporation tax on—
profits of UK property businesses,
profits consisting of other UK property income, and
profits arising from certain loan relationships and derivative contracts.
Schedule 6 contains provision about diverted profits tax.
Part 6A of TIOPA 2010 (hybrid and other mismatches) is amended as follows.
In section 259HA (circumstances in which Chapter 8 applies)—
for subsection (5) substitute—, and
in subsection (9)(a), for “company” substitute “ payee ”.
For section 259HC (counteraction of the multinational payee deduction/non-inclusion mismatch) substitute—
In section 259N (meaning of “financial instrument”)—
in subsection (3), for paragraph (b) substitute—, and
omit subsection (4).
The amendments made by subsections (2)(a) and (3) have effect in relation to—
payments made on or after 1 January 2020, and
quasi-payments in relation to which the payment period begins on or after that date.
For the purposes of subsection (5)(b), where a payment period begins before 1 January 2020 and ends after that date (“the straddling period”)—
so much of the straddling period as falls before that date, and so much of it as falls on or after that date, are to be treated as separate taxable periods, and
if it is necessary to apportion an amount for the straddling period to the two separate taxable periods, it is to be apportioned—
on a time basis according to the respective length of the separate taxable periods, or
if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.
The amendment made by subsection (2)(b) is to be regarded as always having had effect.
The first regulations under section 259N(3)(b) may have effect in relation to times before they come into force, but not times before 1 January 2019.
Until those regulations come into force section 259N continues to have effect (other than for the purposes of making those regulations) as if—
the amendments made by subsection (4) had not been made, and
the Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209) had not been revoked by paragraph 1 of Schedule 20 to this Act.
Part 9A of TIOPA 2010 (controlled foreign companies) is amended as follows.
In section 371IA (exemptions for profits from qualifying loan relationships), in subsection (4), for the words from “the profits” to the end substitute
In section 371RA (overview of Chapter 18), in subsection (2), for “Section 371RC sets” substitute “ Sections 371RC and 371RG set ”.
After section 371RF insert—
The amendments made by this section have effect in relation to accounting periods of CFCs beginning on or after 1 January 2019.
For the purposes of subsection (5), if a CFC has an accounting period beginning before, and ending on or after, that date (“the straddling period”)—
so much of the straddling period as falls before that date, and so much of it as falls on or after that date, are treated as separate accounting periods, 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.
In this section “CFC” has the same meaning as in Part 9A of TIOPA 2010.
Section 1143 of CTA 2010 (permanent establishments: preparatory or auxiliary activities) is amended as follows.
In subsection (2), at the end insert “ and are not part of a fragmented business operation ”.
After subsection (2) insert—.
In subsection (3), for “For this purpose” substitute “ In this section ”.
The amendments made by this section have effect in relation to accounting periods beginning on or after 1 January 2019.
For the purposes of subsection (5), if a company has an accounting period beginning before, and ending on or after, that date (“the straddling period”)—
so much of the straddling period as falls before that date, and so much of it as falls on or after that date, are treated as separate accounting periods, 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.
Schedule 7 contains provision about CGT exit charge payment plans.
Schedule 8—
amends provisions concerning CT exit charge payment plans,
repeals certain provisions that enable the postponement of exit charges, and
contains amendments concerning the treatment of assets that are the subject of EU exit charges.
In section 134 of CTA 2010 (group relief: meaning of “UK related” company) in paragraph (b) for the words from “carrying on” to the end substitute “ within the charge to corporation tax ”.
In section 188CJ of CTA 2010 (group relief for carried-forward losses: meaning of “UK related” company) in paragraph (b) for the words from “carrying on” to the end substitute “ within the charge to corporation tax ”.
The amendments made by this section have effect for the purpose of determining whether a company is a UK related company at any time on or after 5 July 2016.
In its application in relation to a claim for group relief or group relief for carried-forward losses made in reliance on this section, paragraph 74 of Schedule 18 to FA 1998 (time limit for claims) has effect as if the list of dates in sub-paragraph (1) of that paragraph included 31 December 2019.
Corporation tax: miscellaneous
Schedule 9 contains provision about the debits to be brought into account for corporation tax purposes in respect of goodwill and certain other assets.
Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.
In section 780 (deemed realisation etc on company leaving group) in subsection (5) (exceptions) after paragraph (a) insert—.
After section 782 insert—
In section 785 (principal company becoming member of another group)—
in subsection (2)(b) for the words from “both” to “effective 51%” substitute “ a relevant ”, and
after subsection (2) insert—
The amendments made by this section have effect in relation to a company that ceases to be a member of a group or ceases to meet the condition in section 785(2)(b) of CTA 2009 (as amended by subsection (4)) on or after 7 November 2018.
In its application in relation to a company that ceases to be a member of a group or ceases to meet the condition in section 785(2)(b) of CTA 2009 before 21 December 2018, section 782A of CTA 2009 has effect as if subsection (3) of that section was omitted.
Schedule 10 makes provision about corporation tax relief for losses and other amounts that are carried forward.
Schedule 11 contains provision amending Part 10 of TIOPA 2010 (corporate interest restriction).
Schedule 12 makes provision for preventing a mismatch for corporation tax purposes in a case where—
a company has a debtor relationship which is dealt with in its accounts on the basis of fair value accounting, and
the money it receives under that relationship is wholly or mainly used to lend money to companies that are connected with it (and, accordingly, those creditor relationships are required to be dealt with for corporation tax purposes on an amortised cost basis of accounting).
Capital allowances
The Treasury may by regulations amend CAA 2001 so as to provide for allowances under that Act to be available where—
expenditure has been incurred, on or after 29 October 2018, on the construction of a building,
the building is in qualifying use, and
the expenditure incurred on the construction of the building, or other expenditure, is qualifying expenditure.
Regulations under this section (“the regulations”) must—
specify what is qualifying use;
specify what is qualifying expenditure;
provide for a writing-down allowance to be available at an annual rate of 2% of the qualifying expenditure;
specify the persons to whom allowances may be made;
make provision about how effect is to be given to allowances.
The regulations must secure that—
allowances are not available for expenditure on the acquisition of land or rights in or over land;
qualifying use is restricted to use for prescribed business purposes.
The regulations may provide for allowances not to be available or to be restricted—
in the case of a building that is wholly or partly used as a dwelling-house or for purposes that are ancillary to the purposes of a dwelling-house;
in respect of a building that is used wholly or partly for holiday or overnight accommodation of a prescribed kind;
in respect of a building that is only partly in qualifying use or in respect of periods when a building is not in qualifying use;
in prescribed cases or circumstances.
The regulations may provide that if a person incurs expenditure for the purposes of a qualifying activity before (but not more than 7 years before) the date on which the person starts to carry on that activity, the expenditure is to be treated as if it were incurred by the person on that date.
The regulations may provide that if—allowances are available to B in respect of the residue of the qualifying expenditure.
allowances have been available to a person (A) in respect of expenditure on the construction of a building, and
A sells A's interest in the building to another person (B),
The regulations may make provision about leases, including provision for the grant of a lease to be treated in prescribed circumstances in the same way as the sale of the grantor's interest.
The regulations may make—
provision under which expenditure is apportioned;
provision for balancing adjustments (and about how effect is to be given to them);
provision for qualifying expenditure to be written off;
special provision about highway undertakings;
provision about additional VAT liability and additional VAT rebate (within the meaning given by section 547 of CAA 2001);
anti-avoidance provision;
supplementary or incidental provision;
consequential provision (including provision amending enactments other than CAA 2001).
The regulations may make transitional provision, including provision under which expenditure incurred on or after 29 October 2018 is treated as incurred before that date—
where the expenditure is associated or connected with expenditure incurred before that date,
where the expenditure relates to a contract entered into before that date, or
in other prescribed cases.
Subsections (2) to (9) are not to be read as limiting subsection (1).
A statutory instrument containing the regulations may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
A reference in this section to expenditure on the construction of a building includes a reference to capital expenditure—
on repairs to the building, or
on the renovation or conversion of the building.
In this section—“building” includes structure;“dwelling-house” has the meaning given by the regulations;“prescribed” means prescribed by the regulations.
Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
In section 104D(1) (writing-down allowances in respect of special rate expenditure) for “8%” substitute “ 6% ”.
Accordingly, in—for “8%” substitute “ 6% ”.
section 56(2)(a),
the heading of section 104D, and
section 104E(1)(a),
The amendments made by subsections (2) and (3) have effect in relation to chargeable periods beginning on or after the relevant day.
In relation to a chargeable period that begins before and ends on or after the relevant day, section 104D(1) of CAA 2001 has effect as if the reference to 8% was a reference to X%.
For the purposes of subsection (5), X is—(8×BRD CP)+(6×ARD CP) where—BRD is the number of days in the chargeable period before the relevant day, ARD is the number of days in the chargeable period on or after the relevant day, and CP is the number of days in the chargeable period.
Where X would be a figure with more than 2 decimal places it is to be rounded up to the nearest second decimal place.
In this section “the relevant day” is—
for corporation tax purposes, 1 April 2019, and
for income tax purposes, 6 April 2019.
In relation to expenditure incurred during the period beginning with 1 January 2019 and ending with 31 March 2023, section 51A of CAA 2001 (entitlement to annual investment allowance) has effect as if in subsection (5) the amount specified as the maximum allowance were £1,000,000.
Schedule 13 contains provision about chargeable periods which straddle 1 January 2019 or 1 April 2023.
In Part 2 of CAA 2001 (plant and machinery allowances), the following provisions are repealed—
sections 45A to 45C (energy-saving plant or machinery),
sections 45H to 45J (environmentally beneficial plant or machinery), and
section 262A and Schedule A1 (first-year tax credits).
In consequence of subsection (1)—
in TMA 1970, in the second column of the Table in section 98, in the entry relating to requirements imposed by provisions of CAA 2001, omit “45B(5) and (6),” and “, 45I(5) and (6)”,
in CAA 2001—
in section 2(3), for “262A” substitute “ 262 ”,
in section 3—
in subsection (1), omit “, and no first-year tax credit is to be paid under Schedule A1,”, and
omit subsection (2B),
in the list in section 39, omit—
the entry relating to section 45A, and
the entry relating to section 45H,
in section 46—
in the list in subsection (1), omit the entry relating to section 45A and the entry relating to section 45H, and
omit subsections (5) and (6), and
in the table in section 52(3), omit—
the entry relating to expenditure qualifying under section 45A, and
the entry relating to expenditure qualifying under section 45H, and
the following provisions are repealed—
in FA 2003, paragraphs 2(c), 3, 4(1)(c) and (2) and 5 to 7 of Schedule 30,
in FA 2006, paragraph 11 of Schedule 9,
in FA 2008, section 79 and Schedule 25,
in CTA 2009, paragraph 521 of Schedule 1,
in CTA 2010, paragraph 364 of Schedule 1,
in FA 2011, paragraph 12(16) of Schedule 14,
in the Welfare Reform Act 2012—
paragraph 14 of Schedule 3, and
in the table in Part 1 of Schedule 14, the entry relating to CAA 2001,
in FA 2012—
section 45(2) and (3), and
paragraph 106 of Schedule 16,
in FA 2013—
section 67,
section 68(2), and
paragraph 6 of Schedule 18,
in FA 2014, paragraph 7 of Schedule 4,
in FA 2016, paragraph 7 of Schedule 8,
in F(No.2)A 2017—
paragraph 126 of Schedule 4, and
paragraph 7 of Schedule 6, and
in FA 2018, section 29.
The following orders were made under powers contained in provisions repealed by subsection (1) and are therefore revoked—
the Capital Allowances (Environmentally Beneficial Plant and Machinery) Order 2003 (S.I. 2003/2076), and
any instrument amending that order.
The Capital Allowances (Energy-saving Plant and Machinery) Order 2018 (S.I. 2018/268) is revoked.
The amendments made by this section have effect in relation to expenditure incurred on or after—
for corporation tax purposes, 1 April 2020, and
for income tax purposes, 6 April 2020.
In section 45EA of CAA 2001 (expenditure on plant or machinery for electric vehicle charging point), in subsection (3) (the relevant period) for “2019”, in both places it occurs, substitute “ 2023 ”.
Chapter 3 of Part 2 of CAA 2001 (qualifying expenditure) is amended as follows.
The amendments made by this section—
are treated as always having had effect, but
do not have effect in relation to claims for capital allowances made before 29 October 2018.
Leases
Schedule 14 contains provision relating to the taxation of leases.
Oil activities and petroleum revenue tax
Schedule 15 makes provision for a company which sells an interest in an oil licence and a company which buys that interest to make a joint election for an amount of the seller's profits to be treated, in accordance with the provisions of the Schedule, as if it were an amount of the purchaser's profits.
Schedule 3 to OTA 1975 (petroleum revenue tax: miscellaneous provisions) is amended in accordance with this section.
After paragraph 11 insert—
In paragraph 8, at the end insert—
Miscellaneous reliefs
Schedule 16 contains provision amending Part 5 of TCGA 1992 (transfer of business assets, entrepreneurs' relief and investors' relief) in connection with entrepreneurs' relief.
In section 418 of ITA 2007 (gifts to charities by individuals: restrictions on associated benefits) in subsection (2) (the variable limit) for paragraphs (a) to (c) substitute—
The amendment made by subsection (1) has effect in relation to gifts made on or after 6 April 2019.
In section 197 of CTA 2010 (payments to charities by companies: restrictions on associated benefits) in subsection (2) (the variable limit) for paragraphs (a) to (c) substitute—
The amendment made by subsection (3) has effect in relation to payments made on or after 6 April 2019.
In section 528 of ITA 2007 (exemption for small trades of charitable trust: condition that trading incoming resources etc do not exceed requisite limit) in subsection (6)(b) (the requisite limit)—
for “£5,000” substitute £8,000”, and
for “£50,000” substitute “ £80,000 ”.
The amendments made by subsection (1) have effect for the tax year 2019-20 and subsequent tax years.
Section 482 of CTA 2010 (exemption for small trades of charitable company: condition that trading incoming resources etc do not exceed requisite limit) is amended as follows.
In subsection (6)(b) (the requisite limit)—
for “£5,000” substitute “ £8,000 ”, and
for “£50,000” substitute “ £80,000 ”.
In subsection (7)—
for “£5,000” substitute £8,000”, and
for “£50,000” substitute “ £80,000 ”.
The amendments made by subsections (3) to (5) have effect in relation to accounting periods beginning on or after 1 April 2019.
Other taxes
Stamp duty land tax
Schedule 9 to FA 2003 (stamp duty land tax: shared ownership leases etc) is amended as follows.
In paragraph 4 (shared ownership lease: election where staircasing allowed), after sub-paragraph (4) insert—
After paragraph 14 insert—
After paragraph 15 (as inserted by subsection (3)) insert—
For the italic cross-heading before paragraph 16 substitute “ No relief for first-time buyers for staircasing transactions etc ”.
In paragraph 16 (cases where first-time buyer's relief is not available)—
in sub-paragraph (1), omit paragraphs (a), (b) and (d) (but not “or” at the end of paragraph (d)), and
in sub-paragraph (2), omit paragraphs (a) and (c) (but not “or” at the end of paragraph (c)).
The amendments made by this section have effect in relation to—
any land transaction of which the effective date is on or after 29 October 2018, and
any land transaction of which the effective date is before 29 October 2018 and in respect of which a land transaction return has not been given by that date.
Until 29 October 2019, a claim for the repayment of tax may be made in respect of a land transaction within subsection (2) or (3).
A transaction is within this subsection if the amount of tax chargeable in respect of the transaction would have been less had the amendment made by section 42(3) been in force from the effective date of the transaction.
A transaction is within this subsection if first-time buyer's relief—
could not have been claimed for the transaction, but
Where a claim is made under this section, HMRC must repay—
in a case where the transaction is within subsection (2), so much of the tax paid as exceeds the amount that would have been chargeable had the amendment made by section 42(3) been in force from the effective date of the transaction, and
in a case where the transaction is within subsection (3), so much of the tax paid as exceeds the amount that would have been chargeable had the amendments made by section 42(4), (5) and (6) been in force from the effective date of the transaction and had a claim for first-time buyer's relief been made.
A claim under this section must be made by amendment of the land transaction return.
Sub-paragraphs (2A) and (3) of paragraph 6 of Schedule 10 to FA 2003 do not apply in the case of an amendment of a land transaction return made for the purpose of making a claim under this section.
In this section—
the expressions used have the same meaning as in Part 4 of FA 2003;
“first-time buyer's relief” means relief under Schedule 6ZA to FA 2003.
Schedule 4ZA to FA 2003 (stamp duty land tax: higher rates for additional dwellings and dwellings purchased by companies) is amended as follows.
In paragraph 2 (meaning of “higher rates transaction” etc) after sub-paragraph (4) insert—
The amendment made by subsection (2) has effect in relation to any land transaction of which the effective date is on or after 29 October 2018.
In paragraph 8(3) (period during which land transaction return may be amended to take account of subsequent disposal of main residence) for the words from “whichever” to the end substitute “the period of 12 months beginning with—
the effective date of the subsequent transaction, or
if later, the filing date for the return.
The amendment made by subsection (4) has effect in a case where the effective date of the subsequent transaction is on or after 29 October 2018.
In FA 2003, after section 66 insert—
The amendment made by this section has effect in relation to any land transaction the effective date of which is on or after the day on which this Act is passed.
FA 2003 is amended as follows.
In section 76(1) (duty to deliver land transaction return), for “30 days” substitute “ 14 days ”.
For section 80(2) (adjustment where contingency ceases or consideration is ascertained) substitute—
In section 81 (further return where relief withdrawn)—
in subsection (1B)—
after paragraph (c) insert—, and
after paragraph (d) insert—, and
in subsection (2A), after “subsection (1)” insert “ or (1A) ”.
For section 81A(1) (return or further return in consequence of later linked transaction) substitute—
In section 86(2) (payment of tax), before paragraph (a) insert—.
In section 87 (interest on unpaid tax)—
after subsection (1) insert—,
in subsection (2), after “subsection (1)” insert “ or (1A) ”, and
in subsection (3), before paragraph (a) insert—.
In Schedule 17A (further provisions relating to leases)—
for paragraph 3(3) substitute—,
for paragraph 4(3) substitute—, and
for paragraph 8(3) substitute—
In Schedule 61 to FA 2009 (alternative finance investment bonds)—
in paragraph 7(5) (interest due on first transaction where relief is withdrawn) for “30 days” substitute “ 14 days ”, and
in paragraph 20(3)(a) (no relief where bond-holder acquires control of underlying asset) for “30 days” substitute “ 14 days ”.
The amendments made by this section are to be treated as having effect in relation to—
any land transaction with an effective date on or after 1 March 2019, and
any land transaction with an effective date before 1 March 2019 which becomes notifiable on or after 1 March 2019.
Stamp duty and SDRT
This section applies if—
an instrument transfers listed securities to a company or a company's nominee (whether or not for consideration), and
the person transferring the securities is connected with the company or is the nominee of a person connected with the company.
“Listed securities” are stock or marketable securities which are regularly traded on—and expressions used in paragraphs (a) to (c) have the same meaning as in section 80B of FA 1986 (intermediaries: supplementary).
a regulated market,
a multilateral trading facility, or
a recognised foreign exchange,
For the purposes of the enactments relating to stamp duty—
in a case where listed securities are transferred for consideration which consists of money or any stock or security, or to which section 57 of the Stamp Act 1891 applies, the amount or value of the consideration is to be treated as being equal to—
the amount or value of the consideration for the transfer, or
if higher, the value of the listed securities;
in any other case, the transfer of listed securities effected by the instrument is to be treated as being for an amount of consideration in money equal to the value of the listed securities.
For the purposes of subsection (3)—
“the enactments relating to stamp duty” means the Stamp Act 1891 and any enactment amending that Act or that is to be construed as one with that Act, and
the value of listed securities is to be taken to be the price which they might reasonably be expected to fetch on a sale in the open market at the date the instrument is executed.
Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.
The Treasury may by regulations made by statutory instrument provide for this section not to apply in relation to particular cases.
Regulations under subsection (6) may have effect in relation to instruments executed before the regulations come into force.
A statutory instrument containing regulations under subsection (6) is subject to annulment in pursuance of a resolution of the House of Commons.
This section is to be construed as one with the Stamp Act 1891.
This section has effect in relation to instruments executed on or after 29 October 2018.
This section applies if—
an instrument transfers unlisted securities to a company or a company’s nominee for consideration,
the person transferring the securities is connected with the company or is the nominee of a person connected with the company, and
some or all of the consideration consists of the issue of shares.
In this section “unlisted securities” means stock or marketable securities that are not listed securities within the meaning of section 47 (stamp duty: transfers of listed securities and connected persons).
For the purposes of the enactments relating to stamp duty the amount or value of the consideration is to be treated as being equal to—
the amount or value of the consideration for the transfer, or
if higher, the value of the unlisted securities.
For the purposes of subsection (3) “the enactments relating to stamp duty” means the Stamp Act 1891 and any enactment amending that Act or that is to be construed as one with that Act.
For the purposes of this section—
the value of unlisted securities is to be taken to be the market value of the securities at the date the instrument is executed;
“market value” has the same meaning as in TCGA 1992 and is to be determined in accordance with sections 272 and 273 of that Act (valuation).
Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.
This section is to be construed as one with the Stamp Act 1891.
This section has effect in relation to instruments executed on or after the date on which FA 2020 is passed.
This section applies if a person is connected with a company and—
the person or the person's nominee agrees to transfer listed securities to the company or the company's nominee (whether or not for consideration), or
the person or the person's nominee transfers such securities to the company or the company's nominee for consideration in money or money's worth.
“Listed securities” are chargeable securities which are regularly traded on—and expressions used in paragraphs (a) to (c) have the same meaning as in section 88B of FA 1986 (intermediaries: supplementary).
a regulated market,
a multilateral trading facility, or
a recognised foreign exchange,
For the purposes of stamp duty reserve tax chargeable under section 87 of FA 1986 (the principal charge)—
in a case where the agreement is one to transfer listed securities for consideration in money or money's worth, the amount or value of the consideration is to be treated as being equal to—
the amount or value of the consideration for the transfer, or
if higher, the value of the listed securities at the time the agreement is made;
in any other case, the agrement to transfer listed securities is to be treated as being one for an amount of consideration in money equal to the value of the listed securities at the time the agreement is made.
Subsection (5) has effect for the purposes of stamp duty reserve tax chargeable under section 93 (depositary receipts) or 96 (clearance services) of FA 1986.
If the amount or value of the consideration for any transfer of listed securities is less than the value of those securities at the time they are transferred, the transfer is to be treated as being for an amount of consideration in money equal to that value.
For the purposes of this section, the value of listed securities at any time is the price which they might reasonably be expected to fetch on a sale in the open market at that time.
Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.
The Treasury may by regulations made by statutory instrument provide for this section not to apply in relation to particular cases.
Regulations under subsection (8) may have effect in relation to transactions entered into before the regulations come into force.
A statutory instrument containing regulations under subsection (8) is subject to annulment in pursuance of a resolution of the House of Commons.
This section is to be construed as one with Part 4 of FA 1986.
This section has effect—
in relation to the charge to tax under section 87 of FA 1986 where—
the agreement to transfer securities is conditional and the condition is satisfied on or after 29 October 2018, or
in any other case, the agreement is made on or after that date;
This section applies if a person is connected with a company and—
the person or the person’s nominee—
agrees to transfer unlisted securities to the company or the company’s nominee for consideration in money or money’s worth, or
transfers such securities to the company or the company’s nominee for consideration in money or money’s worth, and
some or all of the consideration consists of the issue of shares.
In this section “unlisted securities” means chargeable securities that are not listed securities within the meaning of section 48 (SDRT: listed securities and connected persons).
For the purposes of stamp duty reserve tax chargeable under section 87 of FA 1986 (the principal charge), the amount or value of the consideration is to be treated as being equal to—
the amount or value of the consideration for the transfer, or
if higher, the market value of the unlisted securities at the time the agreement is made.
Subsection (5) has effect for the purposes of stamp duty reserve tax chargeable under section 93 of FA 1986 (depositary receipts) or section 96 of that Act (clearance services).
If the amount or value of the consideration for any transfer of unlisted securities is less than the value of those securities at the time they are transferred, the transfer is to be treated as being for an amount of consideration in money equal to that value.
For the purposes of this section—
the value of unlisted securities is to be taken to be their market value;
“market value” has the same meaning as in TCGA 1992 and is to be determined in accordance with sections 272 and 273 of that Act (valuation).
Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.
This section is to be construed as one with Part 4 of FA 1986.
This section has effect—In this subsection “the relevant date” is the day on which FA 2020 is passed.
in relation to the charge to tax under section 87 of FA 1986 where—
the agreement to transfer securities is conditional and the condition is satisfied on or after the relevant date, or
in any other case, the agreement is made on or after that date;
In FA 1986, after section 85 insert—
The amendment made by this section has effect in relation to instruments—which are executed on or after the day on which this Act is passed.
within section 85A(2) of FA 1986, or
made under an instrument within section 85A(2) of FA 1986,
In section 95 of FA 2001 (exemptions in relation to approved share incentive plans)—
in subsections (1) and (2), and in the heading, omit “approved”, and
in subsection (3), for “an approved share incentive plan” substitute “ a Schedule 2 SIP ”.
The amendments made by subsection (1) are to be treated as having effect from 6 April 2014.
Value added tax
In section 55A of VATA 1994 (customers to account for tax on certain supplies of goods or services), after subsection (9) insert—
Schedule 17 makes provision about the VAT treatment of vouchers.
Schedule 18 contains provision about the eligibility of individuals and partnerships to be treated as members of a group for the purposes of value added tax.
That Schedule comes into force on such day as the Treasury may by regulations made by statutory instrument appoint.
Alcohol
ALDA 1979 is amended as follows.
In section 62(1A) (rates of duty on cider) in paragraph (a) (rate of duty on sparkling cider of a strength exceeding 5.5%), for “£279.46” substitute “ £288.10 ”.
For Part 1 of the table in Schedule 1 substitute—
The amendments made by this section are treated as having come into force on 1 February 2019.
ALDA 1979 is amended as follows.
In section 62(1A) (rates of excise duty on cider)—
omit the “and” at the end of paragraph (b), and
after paragraph (b) insert—.
In section 62B (cider labelled as strong cider)—
in the heading, after “strong cider” insert “ or mid-strength cider ”,
in subsection (1)—
in the opening words, after “standard cider” insert “ or mid-strength cider ”,
for paragraph (a) substitute—,
in paragraph (b), for “an up-labelled container” substitute “ a container which is up-labelled as a container of strong cider, ”, and
in the words after paragraph (b), after “standard cider” insert “ or mid-strength cider ”,
after subsection (1), insert—,
for subsection (2) substitute—,
in subsection (4)—
in paragraph (a), for “not exceeding 7.5 per cent” substitute “ of less than 6.9 per cent ”,
omit the “and” at the end of that paragraph, and
after paragraph (a), insert—,
in subsection (5), in the opening words, after “up-labelled” insert “ as a container of strong cider ”, and
after subsection (6), insert—
The amendments made by this section are to be treated as having come into force on 1 February 2019.
Tobacco
TPDA 1979 is amended as follows.
For the table in Schedule 1 substitute—
The amendment made by this section is treated as having come into force at 6pm on 29 October 2018.
TPDA 1979 is amended as follows.
In section 1 (tobacco products), in subsection (1)—
in paragraph (d), omit the final “and”;
after paragraph (e) insert.
In that section, in subsection (3), for “and chewing tobacco” substitute “ , chewing tobacco and tobacco for heating ”.
The Commissioners for Her Majesty's Revenue and Customs may by regulations made by statutory instrument make consequential, supplementary, incidental or transitional provision in relation to the provision made by subsections (2) to (4) (including provision amending any enactment).
A statutory instrument containing regulations under subsection (5) is subject to annulment in pursuance of a resolution of the House of Commons.
The amendments made by subsections (2) and (4) come into force on such day as the Treasury may by regulations made by statutory instrument appoint.
Vehicle duties
Schedule 1 to VERA 1994 (annual rates of vehicle excise duty) is amended as follows.
In paragraph 1 (general rate)—
in sub-paragraph (2) (vehicle not covered elsewhere in Schedule with engine cylinder capacity exceeding 1,549cc), for “£255” substitute “ £265 ”, and
in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£155” substitute “ £160 ”.
In paragraph 1B (graduated rates for light passenger vehicles registered before 1 April 2017)—
for the Table substitute—;
in the sentence immediately following the Table, for paragraphs (a) and (b) substitute—
In paragraph 1GC (graduated rates for first licence for light passenger vehicles registered on or after 1 April 2017)—
for Table 1 (vehicles other than higher rate diesel vehicles) substitute—, and
for Table 2 (higher rate diesel vehicles) substitute—.
In paragraph 1GD (rates for any other licence for light passenger vehicles registered on or after 1 April 2017), in sub-paragraph (1)—
in paragraph (a) (the reduced rate) for “£130” substitute “ £135 ”, and
in paragraph (b) (the standard rate) for “£140” substitute “ £145 ”.
In paragraph 1GE (rates for light passenger vehicles registered on or after 1 April 2017 with a price exceeding £40,000), in sub-paragraph (4) for “£310” substitute “ £320 ”.
In paragraph 1J (rates for light goods vehicles), in paragraph (a) for “£250” substitute “ £260 ”.
In paragraph 2(1) (rates for motorcycles)—
in paragraph (a) for “£19” substitute “ £20 ”,
in paragraph (b) for “£42” substitute “ £43 ”,
in paragraph (c) for “£64” substitute “ £66 ”, and
in paragraph (d) for “£88” substitute “ £91 ”.
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2019.
Part 1AA of Schedule 1 to VERA 1994 (annual rates of duty: light passenger vehicles first registered on or after 1 April 2017) is amended as follows.
In paragraph 1GE (higher rates for vehicles with price above £40,000), after sub-paragraph (4) insert—
After paragraph 1GF insert—
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2019.
The new paragraph 1GE(5) has effect, in the case of a vehicle first registered in the two years beginning with 1 April 2017, as if the reference to when the vehicle is first registered were to the start of the first period beginning on or after 1 April 2019 for which a vehicle licence for the vehicle is taken out.
The HGV Road User Levy Act 2013 is amended in accordance with subsections (2) to (6).
In section 6(4) (payment of levy for non-UK heavy goods vehicles) for “in Schedule 1” substitute “ or Table 1A in Schedule 1 (depending on which of those Tables applies to the vehicle) ”.
In section 7 (rebate of levy), after subsection (2) insert—
In section 19 (interpretation)—
in subsection (3)—
after paragraph (b) insert—, and
after subsection (3), insert—
In Schedule 1 (rates of HGV road user levy)—
for paragraph 1 substitute—;
in paragraph 5, after paragraph (b) insert—;
for Table 1 substitute—
The HGV Road User Levy (Rate for Prescribed Vehicles) Regulations 2018 (S.I. 2018/417) are revoked.
In section 19 of VERA 1994 (rebates)—
in subsection (3), after paragraph (g) insert—,
after subsection (3ZA) insert—,
in subsection (7), after “rebate conditions” insert “ (other than the condition in subsection (3)(h)) ”, and
after subsection (7) insert—
The amendments and revocation made by subsections (1) to (7) are to be treated as having effect in relation to HGV road user levy that—
becomes due on or after 1 February 2019, and
is paid on or after that date.
The amendments made by subsection (8) are to be treated as having effect in relation to licences taken out on or after 1 February 2019.
Air passenger duty
In section 30 of FA 1994 (air passenger duty: rates), in subsection (4A) (long haul rates of duty)—
in paragraph (a) for “£78” substitute “ £80 ”, and
in paragraph (b) for “£172” substitute “ £176 ”.
Those amendments have effect in relation to the carriage of passengers beginning on or after 1 April 2020.
Gaming
In section 155(3) of FA 2014 (rate of remote gaming duty) for “15%” substitute “ 21% ”.
That amendment has effect in relation to accounting periods beginning on or after 1 April 2019.
The amount of remote gaming duty charged in respect of an accounting period that begins before and ends on or after 1 April 2019 is the sum of—
the amount of that duty that would have been charged in respect of the accounting period had it consisted only of those days within the period that fell before that date, and
the amount of that duty that would have been charged in respect of the accounting period had it consisted only of those days within the period that fell on or after that date and had the amendment made by subsection (1) had effect in relation to it.
Schedule 19 contains provision about gaming duty.
Environmental taxes
Paragraph 12A of Schedule 6 to FA 2000 (exemption: mineralogical and metallurgical processes) is amended as follows.
In sub-paragraph (1)—
omit “to a person”, and
omit “by the person”.
In sub-paragraph (2), for the words from “has the same meaning” to the end substitute “ means a process falling within Division 23 of NACE Rev 2. ”
In sub-paragraph (4), the words after paragraph (c) become sub-paragraph (4A).
In that sub-paragraph, for “sub-paragraph” substitute “ paragraph ”.
Section 42 of FA 1996 (amount of landfill tax) is amended as follows.
In subsection (1)(a) (standard rate), for “£88.95” substitute “ £91.35 ”.
In subsection (2) (reduced rate for certain disposals), in the words after paragraph (b)—
for “£88.95” substitute “ £91.35 ”, and
for “£2.80” substitute “ £2.90 ”.
The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2019.
Inheritance tax
IHTA 1984 is amended as follows.
In section 8FA(2)(b) and (5) (conditions for entitlement to downsizing addition), for “VT”, in each place it occurs, substitute “ the value transferred by the transfer of value under section 4 on the person's death ”.
In section 8FE(9) (calculation of downsizing addition in section 8FA cases), in Step 2, for “VT” substitute “ the value transferred by the transfer of value under section 4 on the person's death ”.
In section 8E(1) (which, in relation to the person mentioned in section 8D(1), refers to the transfer of value under section 4), after “section 4” insert “ on the person's death ”.
In section 8J(6) (meaning of “inherited”: property disposed of before death by gift subject to a reservation), for the words after “by way of” substitute
The amendments made by this section apply for the purpose of calculating the amount of the charge to inheritance tax under section 4 of IHTA 1984 on a person's death if the person dies after 29 October 2018.
Soft drinks industry levy
In Schedule 10 to F(No.3)A 2010 (which prospectively amends Schedule 55 to FA 2009 (penalties for failure to make returns etc)) in paragraph 7, in the inserted paragraph 13A(1), after “7B” insert “ , 13A ”.
The amendments to Schedule 55 to FA 2009 made by Schedule 10 to F(No.3)A 2010 (including the amendment made by subsection (1)) are taken to have come into force for the purposes of soft drinks industry levy on the day on which this section comes into force.
In Schedule 11 to F(No.3)A 2010 (which prospectively amends Schedule 56 to FA 2009 (penalties for failure to make payments)) in paragraph 5(3), in the substituted text of paragraph 3(1)(a) of Schedule 56 to FA 2009, for “11” substitute “ 11ZA ”.
In section 1(1) of the Isle of Man Act 1979 (common duties), at the end insert—
Part 2 of FA 2017 (soft drinks industry levy) is amended in accordance with subsections (3) and (4).
After section 58 insert—
At the end of section 33, insert—
In section 39, after subsection (5) insert—
This section comes into force on 1 April 2019.
Carbon emissions tax
Introductory
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge to tax
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration and enforcement
Time limits for assessments etc
TMA 1970 is amended as follows.
After section 36 insert—
In section 37A (effect of assessment where allowances transferred), after “or (1A)” insert “ or 36A ”.
In section 40 (personal representatives), in subsection (1), for “or 36” substitute “ , 36 or 36A ”.
The amendments made by this section have effect—
in relation to assessments on a person relating to the 2013-14 year of assessment and subsequent years of assessment, where the loss of tax is brought about carelessly by that person or by a person acting on that person's behalf, and
in any other case, in relation to assessments relating to the 2015-16 year of assessment and subsequent years of assessment.
IHTA 1984 is amended as follows.
In section 240 (underpayments), in subsection (3), at the end insert “ and to section 240B (underpayments involving offshore matter etc). ”
After section 240A insert—
The amendments made by this section have effect—
in a case involving loss of tax brought about carelessly by a person liable for the tax (or a person acting on behalf of such a person), in relation to chargeable transfers taking place on or after 1 April 2013, and
in any other case, in relation to chargeable transfers taking place on or after 1 April 2015.
Section 240(8) of IHTA 1984 applies to the reference to “person liable for the tax” in subsection (4)(a).
Security deposits
In Chapter 3 of Part 3 of FA 2004 (construction industry scheme)—
in the italic heading before section 69, after “returns” insert “ , security ”;
after section 70 insert—
In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), after paragraph 88 insert—
In section 684(4A) of ITEPA 2003 (failure to comply with requirement under PAYE regulations to give security), for “on summary conviction to a fine not exceeding level 5 on the standard scale” substitute.
International agreements
In Chapter 2 of Part 2 of TIOPA 2010 (double taxation relief: miscellaneous provisions) after section 128 insert—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of unlawful advance corporation tax
This section applies where—
on any date before 12 December 2012, a person started proceedings against the Commissioners in the High Court or the Court of Session,
the proceedings include a claim arising out of a relevant payment, and
the claim has not been settled, discontinued or finally determined.
“Relevant payment” means a payment of unlawful ACT that—
was made by the person on or after 1 January 1996 or in the period of 6 years ending immediately before the date the proceedings were started, and
was set off or repaid (wholly or in part) before the proceedings were started.
The person is entitled to an order requiring the Commissioners to pay to the person—
an amount (“the principal amount”) equal to the amount of interest that would have accrued if simple interest had accrued on the relevant payment at the appropriate rate for the period beginning with the date the payment was made and ending with—
the date as regards which the unlawful ACT was set off, or
the date the unlawful ACT was repaid, and
simple interest at the appropriate rate on the principal amount for the period beginning with the day after the date mentioned in paragraph (a)(i) or (ii) and ending with the date the principal amount is paid.
“The appropriate rate” is, in relation to any day, the rate specified in the following table in respect of that day.
Where the unlawful ACT was repaid, any amount of interest or repayment supplement paid by the Commissioners on the making of the repayment is to be deducted from the principal amount (and subsection (3)(b) has effect accordingly).
Where part of the unlawful ACT has been set off or repaid at one time, and part of it has been set off or repaid at another time or has not been set off or repaid, for the purposes of this section treat each part as a separate payment.
In this section—“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs (or, in relation to any time before the commencement of section 5 of the Commissioners for Revenue and Customs Act 2005, the Commissioners of Inland Revenue);“set off or repaid”: references to a payment of unlawful ACT being set off or repaid are—to it being set against a liability to corporation tax of any person, or to it being repaid by the Commissioners;“settled” means settled by agreement;“unlawful ACT” means advance corporation tax that was unlawfully levied.
The Treasury may by regulations substitute for the date for the time being specified in subsection (1)(a) such later date as they consider appropriate.
Regulations under this section are to 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.
This section supplements section 85.
Nothing in section 85 limits the remedies that a court may award in respect of the claim.
However—
a person is not entitled to an order under section 85 in respect of a relevant payment if the person has obtained any other relevant remedy in respect of the relevant payment, and
a person who has obtained an order under section 85 in respect of a relevant payment is not entitled to any other relevant remedy in respect of the relevant payment.
In subsection (3) “relevant remedy” means a remedy for the loss of use of the amount of the relevant payment during the period mentioned in section 85(3)(a) (or during some similar period).
Any interest or repayment supplement paid by the Commissioners on the making of—is not regarded as a relevant remedy in respect of the relevant payment.
a repayment of a relevant payment, or
a repayment of corporation tax occurring as a result of a relevant payment,
Where the right to bring a claim arising out of a payment of unlawful ACT has been transferred from the person who made the payment (“the payor”) to another person (“the successor”)—
in section 85(1) the reference to “a person” is to the payor or the successor;
in section 85(2) the reference to “the person” is to the payor;
in section 85(3) the reference to “the person” is to the successor.
Any amount paid by the Commissioners to a person on a day by virtue of section 85 is to be brought into account when calculating, for tax purposes, the profits (or income) of the person for any period which includes that day.
Voluntary returns
In Part 2 of TMA 1970 (returns of income and gains), after section 12C insert—
In Schedule 18 to FA 1998 (company tax returns etc) at the end of Part 2 insert—
The amendments made by this section are treated as always having been in force.
However, those amendments do not apply in relation to a purported return delivered by a person if, before 29 October 2018—
the person made an appeal under the Taxes Acts, or a claim for judicial review, and
The Treasury may by regulations—
make such amendments of relevant tax legislation as they consider appropriate in consequence of subsection (1) or (2);
In subsection (5)(a) “relevant tax legislation” means—
TMA 1970,
Schedule 18 to FA 1998, or
any other enactment relating to income tax, corporation tax or capital gains tax.
Regulations under this section are to 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.
Interest
Where, before the day on which this Act is passed—the rate has effect for any period of time beginning on or after the day on which the regulations came into force even though no such order was made.
regulations under subsection (1) of section 178 of FA 1989 provide for a rate of interest for the purposes of an enactment to which that section applies, but
no order was made under subsection (7) of that section appointing a day for that enactment,
In section 178 of FA 1989 (setting of rates of interest)—
in subsection (2), omit paragraph (u);
in subsection (3)(f), after “provide that” insert “ rates or ”;
omit subsection (7) (but this repeal does not affect any order already made under that subsection).
In Schedule 35 to FA 2014 (promoters of tax avoidance schemes), in paragraph 11 (interest on penalties)—
in sub-paragraph (1), for the words from “at the rate” to the end substitute “ in accordance with section 101 of FA 2009 ”;
omit sub-paragraph (2).
In the Taxes (Interest Rate) Regulations 1989 (S.I. 1989/1297)—
in regulation 3(1), after paragraph (e) insert—;
after regulation 5 insert—
Regulations under section 178(1) of FA 1989 may revoke or amend the provision made in the Taxes (Interest Rate) Regulations 1989 by subsection (4).
Section 101 of FA 2009 is to be regarded as having come into force on 6 May 2014 for the purposes of—
penalties under paragraphs 6B to 6D of Schedule 55 to FA 2009, in the case of returns falling within item 4 in the Table in paragraph 1 of that Schedule (real time information for PAYE);
penalties under paragraphs 5 to 8 of Schedule 56 to FA 2009, in the case of payments of tax falling within item 2 or 4 of the Table in paragraph 1 of that Schedule (PAYE and CIS amounts);
a penalty under section 208 or 226 of FA 2014 (penalties relating to follower notices, accelerated payment notices and partner payment notices), where the penalty relates to income tax payable under PAYE regulations.
Miscellaneous and final
Regulatory capital securities
Schedule 20—
makes provision revoking the previous rules that applied in relation to regulatory capital securities, and
makes new provision in relation to hybrid capital instruments.
EU withdrawal
The Treasury may by regulations make such provision as they consider appropriate—
for the purpose of maintaining the effect of any relevant tax legislation on the withdrawal of the United Kingdom from the EU (and, accordingly, on the United Kingdom ceasing to be an EEA state);
for the purposes of any relevant tax, in connection with any provision made by regulations under section 8 of the European Union (Withdrawal) Act 2018 (power to remedy deficiencies);
in connection with any reference in relevant tax legislation to euros;
amending paragraph 2(4) of Schedule 5 to FA 1997 (indirect taxes: overpayments etc) for the purposes of removing the reference to EU legislation;
amending section 173 of FA 2006 (international tax enforcement) to permit the disclosure of information to the Commissioners by other public authorities and by the Commissioners (subject to conditions about its use) to persons outside the United Kingdom.
The regulations may—
amend any enactment;
contain incidental, transitional or saving provision;
make different provision for different purposes.
Where—the regulations may provide that the provision has effect from exit day.
regulations under this section are made after exit day, and
a provision of the regulations is made by virtue of any of paragraphs (a) to (d) of subsection (1),
Regulations under this section are to 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—“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;“enactment” includes an enactment comprised in subordinate legislation;“relevant tax” means any tax (including stamp duty) except—value added tax, any duty of customs, or any excise duty under the Alcoholic Liquor Duties Act 1979, the Hydrocarbon Oil Duties Act 1979 or the Tobacco Products Duty Act 1979;“relevant tax legislation” means any enactment relating to a relevant tax.
The provisions of this section only come into force if—
a negotiated withdrawal agreement and a framework for the future relationship have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown for the purposes of section 13(1)(b) of the European Union (Withdrawal) Act 2018, or
the Prime Minister has notified the President of the European Council, in accordance with Article 50(3) of the Treaty on European Union, of the United Kingdom's request to extend the period in which the Treaties shall still apply to the United Kingdom, or
leaving the European Union without a withdrawal agreement and a framework for the future relationship has been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.
Preparatory expenditure
The Secretary of State may incur expenditure in preparing for the introduction of a scheme for charges to be imposed for the allocation of emissions allowances.
In subsection (1), “emissions allowance” means an allowance under paragraph 5 of Schedule 2 to the Climate Change Act 2008 relating to a trading scheme dealt with under Part 1 of that Schedule (schemes limiting activities relating to emissions of greenhouse gas).
Reviews
The Chancellor of the Exchequer must review the impact of—of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act.
section 84,
A review under this section must consider the impact of those provisions on—
child poverty,
households at different levels of income,
people with protected characteristics (within the meaning of the Equality Act 2010), and
different parts of the United Kingdom and different regions of England.
In this section—“parts of the United Kingdom” means—England, Scotland, Wales, and Northern Ireland;“regions of England” has the same meaning as that used by the Office for National Statistics.
The Chancellor of the Exchequer must review the effectiveness of the provisions of this Act relating to tax avoidance and lay a report of that review before the House of Commons within six months of the passing of this Act.
In this section, “the provisions of this Act relating to tax avoidance” means—
section 84.
A review under this section must consider in particular—
the effects of those provisions in reducing tax avoidance and evasion,
the effect of those provisions in inducing new tax avoidance measures unanticipated by the Act, and
estimates of the efficacy of the provisions in reducing the tax gap in each tax year from 2018-19 to 2028-29.
A review under this section must consider—
the effects of those provisions in reducing the negative public health effects of gambling, and
the implications for the public finances of the public health effects of—
those provisions,
the operation of the law relating to remote gaming duty and gaming duty if those provisions were not given effect.
The review under this section must include a comparison of the time limit on proceedings for the recovery of lost tax that involves an offshore matter with other time limits on proceedings for the recovery of lost tax, including, but not limited to, those provided for by Schedules 11 and 12 to the F(No. 2)A 2017.
The review under this section must also consider the extent to which provisions equivalent to section 36A(7)(b) of TMA 1970 (relating to reasonable expectations) apply to the application of other time limits.
Other
In this Act the following abbreviations are references to the following Acts.
This Act may be cited as the Finance Act 2019.
Chargeable gains accruing to non-residents etc
Extending cases in which non-residents are charged to tax etc
TCGA 1992 is amended as follows.
For the sections contained in Part 1 substitute—
Omit sections 16ZB to 16ZD (losses of non-UK domiciled individuals).
After section 36 insert—
Omit Chapter 5 of Part 2 (computation of gains and losses: relevant high value disposals).
Omit Chapter 6 of Part 2 (computation of gains and losses: non-resident CGT disposals).
Omit Chapter 7 of Part 2 (computation of gains and losses: disposals of residential property interests).
After section 103DA insert—
After section 271 insert—
Omit Schedule B1 (disposals of UK residential property interests).
Omit Schedule BA1 (disposals of non-UK residential property interests).
Omit Schedule C1 (section 14F: meaning of “closely-held company” and “widely-marketed scheme”).
For Schedule 1 substitute—
After Schedule 1 insert—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After Schedule 1B insert—
After Schedule 4 insert—
Omit Schedule 4ZZA (relevant high value disposals: gains and losses).
Omit Schedule 4ZZB (non-resident CGT disposals: gains and losses).
Omit Schedule 4ZZC (disposals of residential property interests: gains and losses).
After Schedule 5A insert—
Consequential amendments
TMA 1970
In TMA 1970, after section 8B insert—
TCGA 1992
TCGA 1992 is amended as follows.
In section 16 (computation of losses), omit subsection (3).
Section 25 (non-residents: deemed disposals) is amended as follows.
In subsection (3A), for paragraph (b) substitute—
In subsection (7), for the words from “the disposal—” to the end substitute “ the disposal would be chargeable to capital gains tax under section 1A(3)(a) or to corporation tax under section 2B(3). ”
For section 25ZA substitute—
Section 48A (unascertainable consideration) is amended as follows.
In subsection (1), for paragraph (a) substitute—.
In subsection (2)—
in the opening words, for the words from “condition A” to “the receipt of the ascertained consideration—” substitute “ P is not UK resident for the tax year in which the ascertained consideration is received (as determined for the purposes of Chapter 1 of Part 1)— ”, and
in paragraph (c), in step 2, for “NRCGT gain or loss, ATED-related gain or loss” substitute “ relevant non-resident gain or relevant non-resident loss ”.
After subsection (6) insert—
The amendments made by this paragraph have effect where the ascertained consideration is received on or after 6 April 2019, but, subject to the following modifications, in a case where the original disposal was made before that date.
In that case, section 48A of TCGA 1992—
has effect without the amendments made by sub-paragraphs (2) and (3)(b), and
has effect as if, in step 3 in subsection (2)(c) of that section, for “(of the type appropriate to the computation)” (in both places) there were substituted “ (of a kind most closely corresponding to that accruing on the original disposal) ”.
In section 59 (partnerships), in subsections (2)(b), (3) and (4), for “capital gains of the partnership” substitute “ chargeable gains of the partnership ”.
Section 62 (death: general provisions) is amended as follows.
In subsection (2A)—
in paragraph (a), for “section 10A” substitute “ section 1M ”, and
for paragraph (b) substitute—
In subsection (2AA), for “allowable NRCGT losses (see section 57B and Schedule 4ZZB)” substitute “ relevant non-resident losses (see subsection (11)) ”.
After subsection (10) insert—
The reference to relevant non-resident gains in section 62(2A)(b) of TCGA 1992 (as substituted by sub-paragraph (2)(b)) includes NRCGT gains as defined by section 57B of, and Schedule 4ZZB to, that Act.
The reference here to section 57B of, and Schedule 4ZZB to, TCGA 1992 is to those provisions as they had effect before their repeal by this Schedule.
Section 79B (attribution to trustees of gains of non-resident companies) is amended as follows.
In subsection (3)—
for “section 13(9)” substitute “ section 3(7) ”.
In subsection (4), for “section 13(9)” substitute “ section 3(7) ”.
For section 80A substitute—
In section 85A (transfers of value: attribution of gains to beneficiaries and treatment of losses)—
in subsection (2A), for “any section 2(2) amount” substitute “ any section 1(3) amount ”, and
in subsection (3), for “section 2(2) amount” (in both places) substitute “ section 1(3) amount ”.
Section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements) is amended as follows.
In subsection (1)(e), for “section 2(2)” substitute “ section 1(3) ”.
For subsection (4ZA) substitute—
Section 86A (attribution of gains to settlor in section 10A cases) is amended as follows.
In subsection (1)(a), for “section 10A” substitute “ section 1M(3) ”.
In subsection (2), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In subsection (3), for “section 10A” substitute “ section 1M(3) ”.
In subsection (4)(a), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In subsection (6), for “section 10A” substitute “ section 1M(3) ”.
In subsection (7), for “the section 2(2) amount” (in both places) substitute “ the section 1(3) amount ”.
In subsection (8)(c), for “section 10A” substitute “ section 1M(3) ”.
In the title, for “in section 10A cases” substitute “ where temporarily non-resident ”.
Section 87 (non-UK resident settlements: attribution of gains to beneficiaries) is amended as follows.
In subsection (2), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In subsection (4)—
in the opening words, for “The section 2(2) amount” substitute “ The section 1(3) amount ”, and
in paragraph (a), for “section 2(2)” substitute “ section 1(3) ”.
In subsection (5), for “The section 2(2) amount” substitute “ The section 1(3) amount ”.
For subsection (5A) substitute—
In subsection (5B), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In section 87A (section 87: matching), for “the section 2(2) amount” (in each place) substitute “ the section 1(3) amount ”.
In section 87B (section 87: remittance basis), for subsection (2) substitute—
In section 87J (relevant parts of payment from which onward gift derive), in subsections (2) and (5), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In section 87N (sections 87 and 87A: disregard of payments to migrating beneficiary), in subsection (2)(d)(i) and (ii), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In section 87P (sections 87 and 87A: temporary migration after payment disregarded), in subsection (1)(e)(i) and (ii), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In section 88 (gains of dual settlements), in subsections (2) and (3)(a) and (b), for “section 2(2)” substitute “ section 1(3) ”.
In section 89 (migrant settlements, etc), in subsection (2), for “the section 2(2) amount” substitute “ the section 1(3) amount ”.
In section 96 (payments by and to companies), in subsection (9A)(a), for “section 10A” substitute “ section 1M ”.
Omit section 100A (exemption for certain EEA UCITS).
In section 103KC (carried interest: foreign chargeable gains), for “a foreign chargeable gain within the meaning of section 12” substitute “ a chargeable gain accruing on the disposal of an asset situated outside the United Kingdom ”.
In section 103KE (carried interest: avoidance of double taxation), in subsection (8)(b), for “section 2(2)(b)” substitute “ section 1(3)(b) ”.
Section 139 (reconstruction involving transfer of business) is amended as follows.
In subsection (1A)—
in paragraphs (a) and (b), omit “or NRCGT assets”, and
in the sentence after paragraph (b), for the words from “and would by virtue of” to “purposes” substitute “ chargeable to corporation tax as a result of section 2B(3) or (4) ”.
Omit subsection (1AA).
In section 140A (transfer or division of UK business), in subsection (2), for “section 10B” substitute “ section 2B(3) ”.
Section 140E (merger leaving assets within UK tax charge) is amended as follows.
In subsection (5)(b), for “section 10B” substitute “ section 2B(3) ”.
In subsection (6)(b), for “section 10B” substitute “ section 2B(3) ”.
In section 159 (non-residents: roll-over relief), in subsection (4), for the words from “the disposal—” to the end substitute “ the disposal would be chargeable to capital gains tax under section 1A(3)(a) or to corporation tax under section 2B(3). ”
For section 159A substitute—
Section 161 (appropriations to and from trading stock) is amended as follows.
In subsection (1), for “subsections (3) to (3ZB)” substitute “ subsection (3) ”.
Omit subsections (3ZA) and (3ZB).
In subsection (3A), omit “or (3ZA)”.
Section 165 (relief for gifts of business assets) is amended as follows.
In subsection (7A)(a), for “non-resident CGT disposal” substitute “ direct or indirect disposal of UK land which meets the non-residence condition ”.
In subsection (7B), for “references to “chargeable NRCGT gain”” substitute “ references to “so much of any gain accruing on the disposal as falls to be dealt with as mentioned in subsection (7D)(a) or (b)” ”.
In subsection (7C), for “ “the chargeable NRCGT gain” substitute “ “so much of the gain mentioned in subsection (7B)”.
After that subsection insert—
Section 167A (gifts of UK residential property interests to non-residents) is amended as follows.
In subsection (1)—
in the opening words, for “of a UK residential property interest” substitute “ of an asset within section 1A(3)(b) or (c) ”, and
for paragraph (b) substitute—
In subsection (3)—
in the opening words, for “non-resident CGT disposal” substitute “ direct or indirect disposal of UK land which meets the non-residence condition ”,
in paragraph (a), for “ “chargeable NRCGT gain”” substitute “ “relevant gain” ”,
in paragraph (b), for “ “chargeable NRCGT gain”” substitute “ “relevant gain” ”, and
in paragraph (c), for “ “the chargeable NRCGT gain” substitute “ “the relevant gain”.
In subsection (4)—
in the opening words, for “the interest in UK land” substitute “ the asset within section 1A(3)(b) or (c) ”, and
for paragraph (b) substitute—
For subsection (6) substitute—
In the title, for “UK residential property interests” substitute “ direct or indirect interests in UK land ”.
For section 168A substitute—
In section 169N (amount of entrepreneurs' relief: general), in subsection (4B), for “Section 4” substitute “ Section 1H ”.
In section 169VK (cap on investors' relief for disposal by an individual), in subsection (3), for “Section 4” substitute “ Section 1H ”.
In section 169VL (cap on investors' relief for disposal by trustees of a settlement), in subsection (4), for “Section 4” substitute “ Section 1H ”.
Section 171 (transfers within a group: general provisions) is amended as follows.
In subsection (1A), in the second sentence, for the words from “and would” to the end substitute “ chargeable to corporation tax as a result of section 2B(3) or (4). ”
After subsection (1A) insert—
In subsection (2), omit paragraph (ba).
In section 171A (election to reallocate gain or loss to another member of the group), for subsection (2) substitute—
In section 171B (election under section 171A: effect), in subsection (5), for the words from “and would by virtue of” to the end substitute “ chargeable to corporation tax as a result of section 2B(3) or (4). ”
In section 175 (replacement of business assets by members of a group), in subsection (2AA), for “section 10B” substitute “ section 2B(3) ”.
Section 179 (company ceasing to be member of group: post-appointed day cases) is amended as follows.
In subsection (10A)(a), for the words from “and would by virtue of” to “purposes” substitute “ chargeable to corporation tax as a result of section 2B(3) or (4), ”.
Omit section 187A (deemed disposal under section 185: ATED-related gains and losses).
For section 187B substitute—
Omit sections 188A to 188K (and the italic heading before section 188A).
Section 190 (tax recoverable from another group company or controlling director) is amended as follows.
In subsection (2), for paragraph (b) substitute—
In subsection (3)(b), for the words from “gain forms” to “10B” substitute “ taxpayer company was not resident in the United Kingdom at the time when the gain accrued ”.
Section 199 (exploration or exploitation assets: deemed disposals) is amended as follows.
In subsection (2), for “in respect of whom the residence condition (see section 2(1A)) is not met” substitute “ who is not UK resident for a tax year (as determined for the purposes of Chapter 1 of Part 1) ”.
In subsection (6), for paragraphs (a) and (b) substitute “ would be chargeable to capital gains tax or corporation tax as a result of section 1A(3)(a) or 2B(3) ”.
In section 210A (insurance companies: ring-fencing of losses), in subsection (1), for “Section 8(1)” substitute “ Section 2A(1) ”.
In section 222A (determination of main residence: non-resident CGT disposals), in subsection (1), for paragraph (b) substitute—
Section 222B (non-qualifying tax years) is amended as follows.
In subsection (2), for “a non-resident CGT disposal” substitute “ a disposal falling within section 222A(1)(b) (non-resident disposals) ”.
In subsection (10), for “Section 11(1)(a)” substitute “ Section 271ZA(2) ”.
Section 223 (amount of relief) is amended as follows.
In subsection (7), in paragraph (b), for “an NRCGT gain chargeable to capital gains tax by virtue of section 14D” substitute “ a residential property gain (as defined by Schedule 1B) which is chargeable to capital gains tax because of section 1A(3)(b) ”.
In subsection (7A), for “paragraph 9 of Schedule 4ZZB applies by virtue of sub-paragraph (1)(b) of that paragraph” substitute “ paragraph 8 or 14 of Schedule 4AA applies ”.
In section 228 (conditions for relief: supplementary), in subsection (6), for the words from “, and either” to “section 10B” substitute “ chargeable to capital gains tax or corporation tax on gains ”.
Section 260 (gifts on which inheritance tax is chargeable etc) is amended as follows.
In subsection (6ZA)(a), for “non-resident CGT disposal” substitute “ direct or indirect disposal of UK land which meets the non-residence condition ”.
In subsection (6ZB), for “a reference to “chargeable NRCGT gain”” substitute “ a reference to “so much of any gain accruing on the disposal as falls to be dealt with as mentioned in subsection (6ZD)(a) or (b)” ”.
In subsection (6ZC), for “ “the chargeable NRCGT gain” substitute “ “so much of the gain mentioned in subsection (6ZB)”.
After that subsection insert—
Section 261ZA (gifts of UK residential property interests to non-residents) is amended as follows.
In subsection (1)—
in the opening words, for “of a UK residential property interest” substitute “ of an asset within section 1A(3)(b) or (c) ”, and
for paragraph (b) substitute—
In subsection (3)—
in the opening words, for “non-resident CGT disposal” substitute “ direct or indirect disposal of UK land which meets the non-residence condition ”,
in paragraph (a), for “ “chargeable NRCGT gain”” substitute “ “relevant gain” ”, and
in paragraph (b), for “ “the chargeable NRCGT gain” substitute “ “the relevant gain”.
In subsection (4)—
in the opening words, for “the interest in UK land” substitute “ the asset within section 1A(3)(b) or (c) ”, and
in paragraph (b)—
for “a chargeable NRCGT gain” substitute “ a relevant gain ”, and
for “a non-resident CGT disposal” substitute “ a direct or indirect disposal of UK land which meets the non-residence condition ”.
In subsection (5)(b)(i)—
for “a non-resident CGT disposal” substitute “ a direct or indirect disposal of UK land which meets the non-residence condition ”, and
for “the chargeable NRCGT gain” substitute “ the relevant gain ”.
For subsection (6) substitute—
In the title, for “UK residential property interests” substitute “ direct or indirect interests in UK land ”.
In section 261C (meaning of “the maximum amount” for purposes of section 261B), in subsection (2)(b), for “section 3(1)” substitute “ section 1K(1) ”.
In section 261E (meaning of “the maximum amount” for purposes of section 261D), in subsection (2)—
in paragraph (a), for “section 2(2)” substitute “ section 1(3) ”, and
in paragraph (b), for “section 3(1)” substitute “ section 1K(1) ”.
In section 263ZA (former employees: employment-related liabilities), in subsection (5)—
in paragraph (b), for “section 2(2)” substitute “ section 1(3) ”, and
in paragraph (c), for “section 3(1)” substitute “ section 1K(1) ”.
In section 271B (branch or agency treated as UK representative), in subsection (2), for “under section 10” substitute “ as a result of section 1A(3)(a) ”.
In section 279A (deferred unascertainable consideration: election for treatment of loss), in subsection (7)(b), for “section 10A” substitute “ section 1M ”.
Section 279B (provisions supplementary to section 279A) is amended as follows.
In subsection (1)(b)(ii)—
for “section 2(2)” substitute “ section 1(3) ”, and
for “section 3” substitute “ section 1K ”.
In subsection (7), for “section 10A(2)” substitute “ section 1M ”.
In subsection (8)(a) and (b), for “section 10A(2)” substitute “ section 1M ”.
Section 279C (effect of election under section 279A) is amended as follows.
In subsection (3), for “section 2(2)(a)” substitute “ section 1(3)(a) ”.
In subsection (4)—
for “section 2(2)” substitute “ section 1(3) ”, and
omit “(read, where appropriate, with section 2(4)(a))”.
In subsection (5), for “section 2(2)(b)” substitute “ section 1(3)(b) ”.
In subsection (6)—
in the opening words, for “section 2(2)(b)” substitute “ section 1(3)(b) ”, and
in paragraph (c), for “section 10A” substitute “ section 1M ”.
Section 279D (elections under section 279A) is amended as follows.
In subsection (6)(c), for “section 2(2)(a)” substitute “ section 1(3)(a) ”.
In subsection (7), for “section 2(2)(b)” (in both places) substitute “ section 1(3)(b) ”.
In section 287 (orders and regulations etc), in subsection (4), for “3(4)” substitute “ 1L(2) ”.
Section 288 (interpretation) is amended as follows.
In subsection (1) omit—
the definition of “ATED-related”,
the definition of “non-resident CGT disposal”,
the definition of “NRCGT gain”,
the definition of “NRCGT group”,
the definition of “NRCGT loss”, and
the definition of “relevant high value disposal”.
In subsection (8), in the Table, in the entry relating to “branch or agency”, for “s 10(6)” substitute “ s 1B(5) ”.
In Schedule 4A (disposal of interest in settled property etc), in paragraph 6(1), for “met the residence condition set out in section 2(1A)” substitute “ was UK resident for the tax year (as determined in accordance with Chapter 1 of Part 1 of this Act) ”.
Schedule 4C (transfers of value: attribution of gains to beneficiaries) is amended as follows.
For “the section 2(2) amount” or “the section 2(2) amounts”, in each place, substitute “ the section 1(3) amount ” or “the section 1(3) amounts” respectively.
In paragraph 1A(3), for “meets the residence condition set out in section 2(1A)” substitute “ is UK resident for the tax year (as determined in accordance with Chapter 1 of Part 1 of this Act) ”.
In paragraph 4—
in sub-paragraph (2), for “section 2(2)” substitute “ section 1(3) ”, and
for sub-paragraph (3) substitute—
In paragraph 6(1)(b), for “section 10A” substitute “ section 1M ”.
In paragraph 12(1)(a) and (5), and in the italic heading before paragraph 12, for “section 10A” substitute “ section 1M ”.
In paragraph 12A(1) and (5), and in the italic heading before paragraph 12, for “section 10A” substitute “ section 1M ”.
Schedule 5 (attribution of gains to settlors with interest in non-resident or dual resident settlements) is amended as follows.
In paragraph 1(1), for “section 3” substitute “ section 1K ”.
In paragraph 1(2)(a), for “section 2(2)” substitute “ section 1(3) ”.
In paragraph 1(3)—
in the second sentence—
for “Subsections (12) and (13) of section 13” substitute “ Section 3B(1) to (3) ”, and
for “that section” substitute “ section 3 ”.
In Schedule 7A (restriction on set-off of pre-entry losses), in paragraph 6(1)(c) and (d), for “section 8(1)” substitute “ section 2A(1) ”.
In Schedule 7AC (exemptions for disposals by companies with substantial shareholdings), in paragraph 3(2)(c)(ii), for the words from “would” to “purposes” substitute “ would be chargeable to corporation tax as a result of section 2B(3) or (4) ”.
In Schedule 7C (relief for transfers to Schedule 2 share plans), in paragraph 8—
in paragraph (a), for “under section 2(1)” substitute “ as a result of section 1A(1) ”, and
in paragraph (b), for “under section 10(1)” substitute “ as a result of section 1A(3)(a) ”.
IHTA 1984
IHTA 1984 is amended as follows.
In Schedule A1 (non-excluded overseas property), in paragraph 8(3)—
in the definition of “interest in UK land”, for the words from “the meaning” to the end substitute “ the same meaning as it has for the purposes of section 1A(3)(b) of the 1992 Act (see section 1C of that Act); ”,
in the definition of “dwelling”, for the words from “the meaning” to the end substitute “ the same meaning as it has for the purposes of Schedule 1B to the 1992 Act; ”, and
in the definition of “contract for an off-plan purchase”, for the words from “has the meaning” to the end substitute “ means a contract for the acquisition of land consisting of, or including, a building, or part of a building, that is to be constructed or adapted for use as a dwelling. ”
FA 2005
FA 2005 is amended as follows.
Section 32 (non-UK resident vulnerable persons: amount of relief) is amended as follows.
In subsection (3), in the definitions of “TLVB” and “TLVA”, omit “for the purposes of section 3 of TCGA 1992”.
After that subsection insert—
Schedule 1 (non-UK resident vulnerable persons: interpretation) is amended as follows.
In paragraph 3—
in sub-paragraph (1)(a), for “for the purposes of section 3 of TCGA 1992” substitute “ (as defined by section 32(3A)) ”,
in sub-paragraph (1)(b), for “for the purposes of that section” substitute “ (as defined by section 32(3A)) ”,
in sub-paragraph (2)—
in paragraph (a), for “section 2(2)(b)” substitute “ section 1(3)(b) ”, and
omit paragraph (b) (together with the “and” before it).
In paragraph 7—
in sub-paragraph (1)(b), for “subsection (3) of that section” substitute “ section 1E(2) of that Act ”, and
in sub-paragraph (2), for “section 10A” substitute “ section 1M ”.
ITA 2007
ITA 2007 is amended as follows.
In section 641 (accrued income profits and losses: trustees of a disabled person's trusts), in subsection (4), in the definition of “disabled person's trusts”, for “paragraph 1(1) of Schedule 1” substitute “ paragraph 3 of Schedule 1C ”.
In section 643 (accrued income profits and losses: non-residents), in subsection (5), for “section 10(6)” substitute “ section 1B(5) ”.
In section 809F (remittance basis: effect on what is chargeable), in subsection (4), for “section 12 of TCGA 1992” substitute “ paragraph 1 of Schedule 1 to TCGA 1992 ”.
In section 809G (claim for remittance basis: effect on allowances etc), in subsection (3), for “section 3(1A)” substitute “ section 1K(6) ”.
In section 809K (introduction to rules on remittance of income and gains), in subsection (1), for paragraph (e) substitute—
In section 809VK (retention of funds to meet CGT liabilities), for subsection (5) substitute—
Section 809YD (chargeable gains accruing on sales of exempt property) is amended as follows.
In subsection (3), for “section 12 of TCGA 1992” substitute “ paragraph 1 of Schedule 1 to TCGA 1992 ”.
In subsection (5)(a)—
for “section 10A” substitute “ section 1M ”, and
for “the year of return” substitute “ the tax year that consists of or includes the period of return ”.
In subsection (7)—
in the opening words, for “fell within the definition of foreign chargeable gains in section 12(4) of that Act” substitute “ accrued on the disposal of a foreign asset (within the meaning of Schedule 1 to TCGA 1992) ”, and
for paragraphs (a) to (d) substitute—
In subsection (8), for “section 14A(2)” substitute “ section 3D(2) ”.
In section 809Z7 (meaning of “foreign income and gains” etc), in subsection (5), for the words from “are the foreign” to the end substitute “ are the chargeable gains accruing to the individual in that year on the disposal of foreign assets (within the meaning of Schedule 1 to TCGA 1992) ”.
CTA 2009
CTA 2009 is amended as follows.
In section 2 (charge to corporation tax), omit subsection (2A).
Section 5 of CTA 2009 (territorial scope of charge to corporation tax) is amended as follows.
In subsections (1), (2A) and (3), for “chargeable to corporation tax” substitute “ chargeable to corporation tax on income ”.
In subsection (2), for “within the charge to corporation tax” substitute “ within the charge to corporation tax on income ”.
After subsection (4) insert—
In section 18A (exemption for profits or losses of foreign permanent establishments), after subsection (2A) insert—
Section 19 (chargeable profits) is amended as follows.
In subsection (1), after “applies” insert “ for the purposes of the charge to corporation tax on income ”.
In subsection (3)—
at the end of paragraph (a), insert “ and ”, and
omit paragraph (c).
After subsection (3) insert—
CTA 2010
CTA 2010 is amended as follows.
In section 533 (financial statements: supplementary), after subsection (1) insert—
After section 535 insert—
In section 547 (funds awaiting reinvestment), at the end insert—
In section 550(3) (attribution of distributions), after “section 535” insert “ or 535A ”.
Section 556 (disposal of assets) is amended as follows.
After subsection (3) insert—
In subsection (7), for “Section 535 is” substitute “ Sections 535 and 535A are ”.
In section 582 (early exit), in subsection (3)(b), for “or 535(1)” substitute “ , 535(1) or 535A ”.
Commencement and transitional provisions etc
The amendments made by this Schedule have effect—
for the purposes of capital gains tax, for the tax year 2019-20 and subsequent tax years, and
for the purposes of corporation tax, for accounting periods beginning on or after 6 April 2019.
The amendments made by this Schedule also have effect for the purposes of corporation tax in relation to disposals made on or after 6 April 2019 (whether in their application to accounting periods beginning on, and ending on or after, that date or to later accounting periods).
This paragraph applies to—so far as they have not been deducted under section 2B, 8(1)(b)(ii), 14D or 188D of TCGA 1992 (as those provisions have effect before the amendments made by this Schedule) from chargeable gains accruing before that date.
allowable NRCGT losses accruing to a person before 6 April 2019, and
ring-fenced ATED-related allowable losses accruing to a person before that date,
If losses to which this paragraph applies accrued to a company, they are deductible in accordance with section 2A(1) of TCGA 1992 as if they had accrued to the company while it was within the charge to corporation tax.
If losses to which this paragraph applies accrued to any other person, they—
are deductible in accordance with section 1(3) of TCGA 1992, and
are to be treated for the purposes of section 1E of TCGA 1992 as if they accrued on a disposal of assets that were within section 1A(3) of that Act.
In this paragraph—
the reference to allowable NRCGT losses is to be read in accordance with Schedule 4ZZB to TCGA 1992 (as that Schedule has effect before its repeal by this Schedule), and
the reference to ring-fenced ATED-related allowable losses is to be read in accordance with section 2B of that Act (as that section has effect before its repeal by this Schedule).
The Treasury may by regulations make any transitional provisions or savings that they consider appropriate in connection with the coming into force of any provision made by this Schedule.
This paragraph applies where this Schedule re-enacts in TCGA 1992 (with or without modification) an enactment contained in TCGA 1992 repealed by this Schedule.
The repeal and re-enactment does not affect the continuity of the law.
Any subordinate legislation or other thing which—has effect in relation to times after that date as if made or done under or for the purposes of the corresponding provision of TCGA 1992.
has been made or done, or has effect as if made or done, under or for the purposes of the repealed provision, and
is in force or effective on 5 April 2019,
Any reference (express or implied) in any enactment, instrument or document to a provision of TCGA 1992 is to be read as including, in relation to times, circumstances or purposes in relation to which the corresponding repealed provision had effect, a reference to that corresponding provision.
Any reference (express or implied) in any enactment, instrument or document to a repealed provision of TCGA 1992 is to be read as including, in relation to times, circumstances or purposes in relation to which the corresponding provision has effect, as or (as the context may require) as including a reference to that corresponding provision.
The generality of this paragraph is not to be affected by specific transitional, transitory or saving provision made elsewhere by this Schedule.
This paragraph has effect instead of section 17(2) of the Interpretation Act 1978.
The Treasury may by regulations make such provision as they consider appropriate in consequence of the provision made by this Schedule.
The Treasury may by regulations make provision, in relation to a case in which they consider that a provision of this Schedule changes the effect of a provision of TCGA 1992 that is re-enacted by this Schedule, for the purpose of returning the effect of the law to what it would have been if this Act had not been passed.
The power conferred by this paragraph may not be exercised on or after 6 April 2022.
This paragraph applies to regulations made under paragraph 124 or 125.
The regulations may amend, repeal or revoke any provision made by or under—
this Schedule, or
any other provision of the Taxes Acts (within the meaning of section 118(1) of TMA 1970).
The regulations may, if made before 6 April 2020, contain provision (however expressed) for securing that the provision made by the regulations has effect in accordance with paragraph 120 (commencement) as it were included in the amendments made by this Schedule.
The regulations may contain incidental, supplemental, consequential or transitional provision or savings.
Returns for disposals of UK land etc
Returns and payments on account: disposals of UK land etc
Disposals to which Schedule applies
This Schedule applies for the purposes of capital gains tax to—but this Schedule does not apply to excluded disposals.
any direct or indirect disposal of UK land which meets the non-residence condition (whether or not a gain accrues) and which is made on or after 6 April 2019, and
any other direct disposal of UK land on which a residential property gain accrues and which is made on or after 6 April 2020,
A disposal is an excluded disposal if—
it is a disposal on which, as a result of any of the no gain/no loss provisions, neither a gain nor a loss accrues,
it is the grant of a lease for no premium to a person not connected with the grantor under a bargain made at arm's length,
it is a disposal made by a charity, or
it is a disposal of any pension scheme investments.
The Treasury may by regulations amend sub-paragraph (2).
See also paragraph 9 for a case where a disposal which would have been within sub-paragraph (1)(b) if a gain had accrued is treated, for certain purposes, as if it were a disposal to which this Schedule applies.
A disposal is a “direct or indirect disposal of UK land which meets the non-residence condition” if it is—
a disposal on which a gain accrues that falls to be dealt with by section 1A(3) of TCGA 1992 because the asset disposed of is within paragraph (b) or (c) of that subsection,
a disposal on which a gain accrues that falls to be dealt with by section 1A(1) of that Act in accordance with section 1G(2) because the asset disposed of is within section 1A(3)(b) or (c), or
a disposal of an asset on which a gain does not accrue but which, had a gain accrued, would fall to be dealt with as mentioned in either of the preceding paragraphs of this sub-paragraph.
A disposal is “any other direct disposal of UK land on which a residential property gain accrues” if the disposal is a disposal on which a residential property gain accrues where—and the disposal does not fall within sub-paragraph (1).
the land in question is in the United Kingdom, and
the gain falls to be dealt with by section 1A(1) or (3)(a) of TCGA 1992,
This paragraph applies for the purposes of this Part of this Schedule.
Obligation to deliver a return to officer of Revenue and Customs
If a person makes a disposal to which this Schedule applies, the person—
must make a return in respect of the disposal, and
must deliver the return to an officer of Revenue and Customs on or before the 60th day following the day of the completion of the disposal.
If—the person must make and deliver a single return with respect to the disposals.
a person makes two or more disposals to which this Schedule applies, and
the disposals are made in the same tax year with the same completion date,
This paragraph is subject to—
paragraph 4 (residential property gain accruing but no payment on account required),
paragraph 5 (ordinary tax return already delivered etc), and
paragraph 10 (disposal in case of a collective investment scheme).
If—the person is not required to make or deliver a return under this Schedule in respect of the disposal.
a person makes a disposal to which this Schedule applies as a result of paragraph 1(1)(b), and
the person would not be liable under paragraph 6 to pay an amount on account of the person's liability to capital gains tax for the tax year concerned,
In determining whether sub-paragraph (1)(b) applies, it is to be assumed that the person is required to make a return under this Schedule in respect of the disposal.
A person is not required to make or deliver a return under this Schedule in respect of a disposal if the filing date for the return would otherwise fall on or after—
the date on which the person has delivered to an officer of Revenue and Customs the person's ordinary tax return containing a self-assessment that takes account of the disposal, or
the date on or before which the person has (by notice) been required to deliver to an officer of Revenue and Customs the person's ordinary tax return for the tax year concerned.
For the purposes of sub-paragraph (1)(a), a self-assessment does not take account of the disposal if the amount of capital gains tax that is self-assessed is less than the amount that would be payable under paragraph 6 if the person were required to make and deliver a return under this Schedule in respect of the disposal.
Obligation to make a payment on account of capital gains tax
This paragraph applies if—
a person is required to make a return under this Schedule in respect of any disposal, and
as at the filing date for the return, an amount of capital gains tax is notionally chargeable on the person (as determined in accordance with paragraph 7).
The person is liable to pay that amount on account of the person's liability to capital gains tax for the tax year concerned so far as that amount has not already become payable as a result of any previous return under this Schedule in respect of a disposal in that period.
The amount is payable on the filing date for the return.
For cases where there are repayments of amounts previously paid on account of capital gains tax, see paragraphs 8 and 9.
Calculation of an amount of capital gains tax notionally chargeable
This paragraph applies for determining the amount of capital gains tax (if any) which is notionally chargeable on a person as at the filing date for a return.
The amount of capital gains tax notionally chargeable on the person as at that date is the amount of that tax for which the person would be liable for the tax year concerned, ignoring, for this purpose, the following disposals—
disposals which have a completion date later than the completion date of the disposal in respect of which the return is made (but see sub-paragraph (3)), and
disposals on which gains accrue but which are not disposals to which this Schedule applies.
A disposal on which a loss accrues is not to be ignored under sub-paragraph (2)(a) if the time at which the disposal is made (as determined under section 28 of TCGA 1992) falls on or before the completion date of the disposal in respect of which the return is made.
In the case of a disposal to which this Schedule applies as a result of paragraph 1(1)(b) where a proportion of the chargeable gain accruing on the disposal is not a residential property gain, ignore that proportion for the purposes of this paragraph.
For provision relevant to the operation of this paragraph, see paragraphs 14 and 15 (making of assumptions, reasonable estimates etc).
Repayments of amounts previously paid on account of capital gains tax
This paragraph applies if—
a person makes and delivers a return under this Schedule in respect of a disposal,
the person has previously paid amounts on account of the person's liability to capital gains tax for the tax year concerned, and
the amounts exceed the amount of capital gains tax notionally chargeable on the person as at the filing date for the return.
The excess is repayable to the person on the filing date for the return.
In determining the total amount of payments that have, at any time, been made on account of a person's liability to capital gains tax for a tax year, account must be taken of amounts already repaid under this paragraph.
If—the person may make and deliver a return under this Schedule in respect of the disposal for the purpose of securing the application of paragraph 8.
a person makes a disposal on which an allowable loss accrues, and
had a gain accrued instead, the disposal would have been one to which this Schedule applies as a result of paragraph 1(1)(b),
Accordingly, the disposal is treated for that purpose as if it were a disposal to which this Schedule applies.
This paragraph does not apply in respect of a disposal if the filing date for the return which the person would otherwise be entitled to make and deliver falls on or after the date mentioned in paragraph 5(1)(a) or (b).
Collective investment vehicles to which Sch.5AAA to TCGA 1992 applies
A person is not required to make or deliver a return under this Schedule in respect of a disposal if—
the disposal has an appropriate connection to a collective investment vehicle for the purposes of paragraph 6 of Schedule 5AAA to TCGA 1992, and
the person would not be liable under paragraph 6 of this Schedule to pay an amount on account of the person's liability to capital gains tax for the tax year concerned.
In determining whether sub-paragraph (1)(b) applies, it is to be assumed that the person is required to make a return under this Schedule in respect of the disposal.
If, by virtue of sub-paragraph (1), a person is not required to make or deliver a return under this Schedule in respect of a disposal, the person is not required to make a claim to obtain relief under section 6(2)(a) or (3)(a) of TIOPA 2010 in respect of the disposal (despite subsection (6) of that section).
This paragraph applies if—
an election under paragraph 8 of Schedule 5AAA to TCGA 1992 (election for CIV to be treated as partnership for purposes of Act) has effect in respect of an offshore collective investment vehicle (within the meaning of that Schedule),
a disposal is made of property that is the subject of or held by the vehicle,
the disposal is made before the day on which this election is made, and
a person is required to make a return under this Schedule in respect of the disposal.
The disposal is treated for the purposes of this Part of this Schedule as if it completed on the day on which the election is made.
This paragraph applies if—
a disposal is deemed to have been made by a person as a result of paragraph 21 or 22 of Schedule 5AAA to TCGA 1992 (qualifying offshore CIV etc), and
the person is required to make a return under this Schedule in respect of the disposal.
If the disposal is one to which paragraph 23 of that Schedule applies (gains treated as accruing when value received)—
a disposal to which this Schedule applies is treated as being made by the person on each occasion on which any part of the gain is treated as accruing to the person under that paragraph, and
the time at which that disposal is treated as completing is the time at which the part of the gain is treated as so accruing to the person or, if later, the time at which the required notification is given to the person.
If the disposal is not one to which paragraph 23 of Schedule 5AAA to TCGA 1992 applies, it is treated for the purposes of this Part of this Schedule as if it completed on the day on which the required notification is given to the person.
In this paragraph “the required notification” means notification under paragraph 25 of Schedule 5AAA to TCGA 1992 in relation to the disposal deemed to have been made as a result of paragraph 21 or 22 of that Schedule.
In determining for the purposes of sub-paragraph (1)(b) whether a person is required to make a return under this Schedule in respect of the disposal the effect of paragraphs 4, 5 and 10 is ignored.
Effect of s.144(2) or 144A(2)(b) of TCGA 1992 when asset sold on exercise of option
This paragraph applies if—
an option is granted binding the grantor to sell an asset and the grant of the option is a disposal to which this Schedule applies, and
the option is then exercised so that, as a result of section 144(2) or 144A(2)(b) of TCGA 1992, the grant of the option is treated as the same transaction as the sale.
Despite section 144(2) or 144A(2)(b) of TCGA 1992, the grantor remains subject to the obligations under this Schedule in relation to the grant of the option.
In this paragraph references to sale are to be read in accordance with section 144(6) of TCGA 1992.
Making of assumptions, reasonable estimates etc
If, in determining whether a disposal is one to which this Schedule applies—it is to be assumed that the provision does apply if, at the time of the completion of the disposal, it is reasonable to expect that it will apply.
a question arises as to whether a provision of TCGA 1992 applies, and
the determination of the question requires account to be taken of times after the completion of the disposal,
For the purposes of this Schedule it is to be assumed that a person has made a claim or election or given a notice if, at the time of the completion of the disposal in respect of which a return is required to be made under this Schedule, it is reasonable to expect that one will be made or given.
Nothing in sub-paragraph (2) is to be read as affecting—
any requirement imposed by or under any Act for a claim, election or notice to be made or given in a particular way or by a particular time, or
any other provision made by or under any Act that is concerned with the making or giving of the claim, election or notice.
If—the person may make a reasonable estimate of that matter in the return.
a person is required to make and deliver a return under this Schedule, and
having regard to the person's knowledge and all other relevant circumstances, it is reasonable to make an estimate of a qualifying matter,
For this purpose “qualifying matter” means—
anything that is relevant to the application of section 1I of TCGA 1992,
the value of anything, or
the value of amounts to be apportioned to anything.
This paragraph applies if a person is required to make and deliver a return under this Schedule in respect of a disposal and, at any time after the completion of the disposal—
it becomes reasonable to expect that, by reference to the person's residence, a provision of TCGA 1992 will apply,
it becomes reasonable to conclude that a provision of TCGA 1992 conferring a relief applies in relation to the disposal,
matters relevant to the application of section 1I of TCGA 1992 become known, or it becomes reasonable to make a different estimate of those matters, where an estimate of those matters was used in the return, or
the value of anything, or of any amount to be apportioned to anything, becomes known where an estimate was used in the return.
The person may (but need not) assume, for the purposes of this Schedule—
that there is an additional disposal to which this Schedule applies,
that the additional disposal completed at the later time by reference to which this paragraph applies, and
that the additional disposal is in all other respects a replication of the actual disposal.
In determining the amount of capital gains tax notionally chargeable as at the filing date for a return in respect of the additional disposal, the actual disposal is ignored.
Contents of return
A return under this Schedule—
must contain information of a description specified by an officer of Revenue and Customs (and different descriptions of information may be specified for different cases), and
must include a declaration by the person making it that the return is, to the best of the person's knowledge, correct and complete.
Interpretation of “residential property gains”
In this Part of this Schedule “residential property gain” means so much of a chargeable gain accruing to a person on a disposal of residential property as, in accordance with paragraph 16B, is attributable to that property.
The question whether or not a person disposes of residential property is determined in accordance with paragraphs 16C to 16G.
For the purposes of paragraph 16A the proportion of a chargeable gain attributable to residential property is equal to—
the relevant fraction of the gain, and
if there has been mixed use of the land to which the disposal relates on one or more days in the applicable period, the relevant fraction of the gain as adjusted, on a just and reasonable basis, to take account of the mixed use on the day or days.
The relevant fraction is A/B where—A is the number of days in the applicable period on which the land to which the disposal relates consists of or includes a dwelling, and B is the total number of days in the applicable period.
There is mixed use of land on any day on which the land consists of—
one or more dwellings, and
other land.
If the disposal is of an interest in land subsisting under a contract for the acquisition of land consisting of or including a building that is to be constructed or adapted for use as a dwelling, that land is taken to consist of or include a dwelling throughout the applicable period.
In this paragraph “the applicable period” means the period—
beginning with the day on which the person making the disposal acquired the interest in land being disposed of or, if later, the day from which the interest in land became chargeable, and
ending with the day before the day on which the disposal occurs.
For the purposes of this paragraph an interest in land became “chargeable”—
in any case where the disposal is of an interest in land in the United Kingdom—from 6 April 2015, and
by a person in a tax year in which the person is not UK resident, or
by a person in the overseas part of a tax year which is, as respects the person, a split year,
in any other case, from 31 March 1982.
If the interest in land disposed of by the person results from interests in land acquired by the person at different times, the person is regarded for the purposes of this paragraph as having acquired the interest disposed of at the time of the first acquisition.
For the purposes of paragraph 16A a person “disposes of residential property” if the person disposes of an interest in land in a case where—
the land consisted of or included a dwelling at any time falling on or after the date on which the applicable period begins,
the interest in land subsisted for the benefit of land that consisted of or included a dwelling at any time falling on or after that date, or
the interest in land subsists under a contract for the acquisition of land consisting of or including a building that is to be constructed or adapted for use as a dwelling.
No account is to be taken for the purposes of this paragraph of any time falling on (or after) the day on which the disposal is made.
For the purposes of paragraphs 16B to 16H an “interest in land” means—other than an excluded interest.
an estate, interest, right or power in or over land, or
the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over land,
The following interests are “excluded interests”—
any interest or right held for securing the payment of money or the performance of any other obligation,
a licence to use or occupy land,
in relation to land in England and Wales or Northern Ireland, a tenancy at will or an advowson, franchise or manor, and
such other descriptions of interest or right in relation to land as may be specified in regulations made by the Treasury.
An interest or right is not within sub-paragraph (2)(a) if it is—
a rentcharge, or
in relation to land in Scotland, a feu duty or a payment mentioned in section 56(1) of the Abolition of Feudal Tenure etc. (Scotland) Act 2000.
The grant of an option by a person binding the person to dispose of an interest in land is (so far as it would not otherwise be the case) regarded as a disposal of an interest in land by the person for the purposes of this Schedule.
This does not affect the operation of section 144 in relation to the grant of the option (or otherwise).
In applying the domestic concepts of law mentioned in this paragraph to land outside the United Kingdom, this paragraph is to be read so as to produce the result most closely corresponding with that produced in relation to land in the United Kingdom.
In this paragraph—“franchise” means a grant from the Crown such as the right to hold a market or fair, or the right to take tolls, and“land” includes—buildings and structures, and land under the sea or otherwise covered by water.
For the purposes of paragraphs 16B to 16H a building is a dwelling at any time when—and, in each case, it is not an institutional building.
it is used, or suitable for use, as a dwelling, or
it is in the process of being constructed or adapted for use as a dwelling,
Land that at any time is, or is intended to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure) is taken to be part of the dwelling at that time.
A building is an institutional building if—
it is used as residential accommodation for school pupils,
it is used as residential accommodation for members of the armed forces,
it is used as a home or other institution providing residential accommodation for children,
it is used as a home or other institution providing residential accommodation with personal care for persons in need of personal care because of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder,
it is used as a hospital or hospice,
it is used as a prison or similar establishment,
it is used as a hotel or inn or similar establishment,
it is otherwise used, or suitable for use, as an institution that is the sole or main residence of its residents,
it falls within—
paragraph 3A or 4 of Schedule 14 to the Housing Act 2004(buildings in England or Wales occupied by students and managed or controlled by educational establishment etc), or
any provision having effect in Scotland or Northern Ireland that is designated by regulations made by the Treasury as provision corresponding to paragraph 3A or 4 of that Schedule, or
it qualifies in accordance with the next sub-paragraph as student accommodation.
A building qualifies as student accommodation in accordance with this sub-paragraph at any time if the time falls in a tax year in which—
the accommodation provided by the building includes at least 15 bedrooms,
the accommodation is purpose-built, or is converted, for occupation by students, and
the accommodation is occupied by students on at least 165 days.
Accommodation is to be regarded as occupied by persons as students if they occupy it wholly or mainly for undertaking a course of education (otherwise than as school pupils).
A building is treated for the purposes of paragraph 16E as continuing to be suitable for use as a dwelling at any time when it has become temporarily unsuitable for use as a dwelling.
There is an exception to this rule if—
the temporary unsuitability resulted from accidental damage to the building, and
the damage resulted in the building becoming unsuitable for use as a dwelling for a period of at least 90 consecutive days (“the 90 day period”).
This exception does not apply if the damage occurred in the course of work that—
was being done for the purpose of altering the building, and
itself involved, or could be expected to involve, making the building unsuitable for use as a dwelling for at least 30 consecutive days.
If the exception applies, work done in the 90 day period to restore the building to suitability for use as a dwelling is not to count for the purposes of paragraph 16E as constructing or adapting the building for use as a dwelling.
For the purposes of this paragraph—
references to accidental damage include damage otherwise caused by events beyond the control of the person disposing of the interest in land,
references to alteration of a building include its partial demolition, and
the 90 day period does not include the day of the disposal (or later days).
For the purposes of this paragraph a building’s unsuitability for use as a dwelling is not regarded as temporary if paragraph 16G applies (disposal of a building that has undergone works).
If—the building is to be regarded for the purposes of paragraph 16E as unsuitable for use as a dwelling throughout the works period.
a person disposes of an interest in land on which a building has been suitable for use as a dwelling, and
as a result of qualifying works, the building has, at or before the time of completion of the disposal, ceased to exist or become unsuitable for use as a dwelling,
For the purposes of this paragraph works are “qualifying” works if—
any planning permission or development consent required for the works, or for any change of use with which they are associated, has been granted (whether before or after completion), and
the works have been carried out in accordance with the permission or consent.
In this paragraph “the works period” means—
the period when the works were in progress, and
such period (if any) ending immediately before the start of the works throughout which the building was, for reasons connected with the works, not used as dwelling.
If at any time when qualifying works are in progress—the works period does not include that time.
the building was undergoing any other work, or put to any other use, in relation to which planning permission or development consent was required but has not (at any time) been granted, or
anything else was being done in contravention of a condition or requirement attached to a planning permission or development consent relating to the building,
If sub-paragraph (1) would have applied but for the fact that, at the completion of the disposal, the works are not qualifying works, the works are regarded as not affecting the building's suitability for use as a dwelling at any time before the disposal.
For the purposes of paragraphs 16B to 16G a building is regarded as ceasing to exist from the time when either—
it has been demolished completely to ground level, or
it has been demolished to ground level except for a single facade (or a double facade if it is on a corner site) the retention of which is a condition or requirement of planning permission or development consent.
For the purposes of paragraphs 16B to 16G the completion of the disposal of an interest in land is regarded as occurring—
at the time of the disposal, or
if the disposal is under a contract which is completed by a conveyance, transfer or other instrument, at the time when the instrument takes effect.
For the purposes of paragraphs 16B to 16G—“building” includes a part of a building,“development consent” means—in the case of land in the United Kingdom, development consent under the Planning Act 2008, and in the case of land outside the United Kingdom, consent corresponding to development consent under that Act, and planning permission“—in the case of land in England or Wales, has the meaning given by section 336(1) of the Town and Country Planning Act 1990, in the case of land in Scotland, has the meaning given by section 227(1) of the Town and Country Planning (Scotland) Act 1997, in the case of land in Northern Ireland, has the meaning given by Article 2(2) of the Planning (Northern Ireland) Order 1991, and in the case of land outside the United Kingdom, means permission corresponding to any planning permission in relation to land anywhere in the United Kingdom.
Other interpretation
In this Part of this Schedule—“the filing date”, in relation to a return in respect of a disposal, means the date on or before which the return in respect of the disposal must be delivered to an officer of Revenue and Customs,“lease” has the meaning given by paragraph 10 of Schedule 8 to TCGA 1992,“ordinary tax return” means a return under section 8 or 8A of TMA 1970,“pension scheme investments” means investments held for the purposes of a registered pension scheme or an overseas pension scheme (and expressions used in this definition have the same meaning as they have in section 271(1A) of TCGA 1992),“premium” has the meaning given by paragraph 10 of Schedule 8 to TCGA 1992,... and“the tax year concerned”, in relation to a disposal, means the tax year in which the disposal is made.
In this Part of this Schedule the “completion” of a disposal is regarded as occurring—
at the time of the disposal, or
if the disposal is under a contract which is completed by a conveyance, transfer or other instrument later than the time of the disposal, at the time when the instrument takes effect.
This Part of this Schedule has effect as if it were included in TCGA 1992.
Notification of chargeable amounts, amendments of returns, enquiries etc
Requirement to notify HMRC of amounts chargeable to tax
A person is not required to give a notice under section 7 of TMA 1970 merely by reference to a chargeable gain accruing on a disposal if—
the person delivers a return under this Schedule in respect of the disposal, and
the return is delivered before the end of the notification period within the meaning of that section.
But sub-paragraph (1) does not apply if the amount of capital gains tax notionally chargeable on the person as at the filing date for the return (as determined in accordance with paragraph 7) is less than the amount of capital gains tax for which the person is liable for the tax year concerned.
Amendments of returns
The amendment provisions applicable to ordinary tax returns apply in relation to returns made by a person under this Schedule as they apply in relation to ordinary tax returns, but subject to the following limitations or other modifications.
An amendment is permitted only so far as the return under this Schedule could, when originally delivered, have included the amendment by reference to things already done.
A person may not make an amendment of a return under this Schedule in respect of a disposal at any time on or after—
the date on which the person has delivered to an officer of Revenue and Customs the person's ordinary tax return containing a self-assessment that takes account of the disposal, or
the date on or before which the person has (by notice) been required to deliver to an officer of Revenue and Customs the person's ordinary tax return for the tax year concerned.
If a person is not required to deliver an ordinary tax return for the tax year concerned, the person may not make an amendment of a return under this Schedule more than 12 months after the last day for delivery of an ordinary tax return.
For the purposes of this paragraph “the amendment provisions applicable to ordinary tax returns” means sections 9ZA and 9ZB of TMA 1970.
Enquiries
The enquiry provisions apply in relation to returns made by a person under this Schedule as they apply in relation to ordinary tax returns, but subject as follows.
If the person is required to deliver an ordinary tax return for the tax year concerned, the time allowed for giving a notice of enquiry into a return under this Schedule is the same as that allowed for giving a notice of enquiry into the ordinary tax return.
If the person is not required to deliver an ordinary tax return for the tax year concerned, the time allowed for giving a notice of enquiry into a return under this Schedule is determined on the assumption that the person was required to deliver an ordinary tax return for that year and that it was delivered at the later of—
the last day for delivery of an ordinary tax return, and
the day on which the return under this Schedule was delivered.
If there is an enquiry into a return under this Schedule—
nothing in paragraph 8 requires any repayment to be made before the day on which the enquiry is completed, but
the officer of Revenue and Customs concerned may, at any time before that day, make the repayment, on a provisional basis, to such extent as the officer thinks fit.
If—the main enquiry notice is also taken to constitute a notice of enquiry into the return under this Schedule in respect of the disposal.
a notice of enquiry (“the main enquiry notice”) is given at any time into an ordinary tax return for a tax year, and
a notice of enquiry into a return under this Schedule has not been given, on or before that time, in respect of a disposal to which this Schedule applies which is made in that tax year,
If—the main closure notice is also taken to constitute a final closure notice of the enquiry into the return under this Schedule in respect of the disposal.
a final closure notice (“the main closure notice”) is given at any time which completes an enquiry into an ordinary tax return for a tax year, and
a final closure notice of an enquiry into a return under this Schedule has not been given, on or before that time, in respect of a disposal to which this Schedule applies which is made in that period,
For the purposes of this paragraph “the enquiry provisions” means sections 9A and 28A of TMA 1970 and the other provisions of that Act so far as they relate to those sections.
Nothing in this paragraph is to be read as affecting the operation of the enquiry provisions in relation to ordinary tax returns.
Amendments of returns during enquiry etc
For other provisions which, as a result of paragraph 19 and 20, are relevant to returns made by a person under this Schedule, see sections 9B and 9C of TMA 1970.
In the case of Schedule 3ZA to TMA 1970 (date by which payment to be made after amendment or correction of self-assessment)—
paragraph 1(2) of that Schedule has effect as if the reference to section 59B(3) and (4) of TMA 1970 included a reference to paragraph 7 of this Schedule, and
the other provisions of that Schedule have effect in accordance with the provision made elsewhere by this Part of this Schedule (see, in particular, paragraph 24(3)).
For provisions of that Schedule relevant to returns made by a person under this Schedule, see—
paragraph 2 (amendment of return by taxpayer),
paragraph 3 (correction of return by HMRC),
paragraph 4 (jeopardy amendment by HMRC), and
paragraph 5 (amendment of return by closure notice).
Revenue determinations
The Revenue determination provision applicable to ordinary tax returns applies in relation to returns made by a person under this Schedule as it applies in relation to ordinary tax returns, but subject to the following modifications.
The modifications are that—
any reference to being given a notice is to be read as a reference to being required to deliver a return under this Schedule,
any reference to the filing date is to be read as a reference to the filing date within the meaning of this Part of this Schedule (but see paragraph (e)),
any reference to the amounts to be determined is to be read as a reference to the amount of capital gains tax which is notionally chargeable on a person as at the filing date for a return under this Schedule,
any reference in any enactment to the purposes for which a determination is to have effect is to be ignored, and
the determination may not be made after the end of the period of 3 years beginning with the last day for delivery of an ordinary tax return.
If—any amount which, as a result of the supersession, is payable or repayable under paragraph 6 or 8 is to be payable or repayable on the filing date for the return.
a determination is made as a result of this paragraph, but
it is then superseded by a return made under this Schedule,
For the purposes of this paragraph “the Revenue determination provision” means section 28C of TMA 1970.
Discovery assessments
A return made by a person under this Schedule is treated for the purposes of the discovery provisions as if it were an assessment required to be included as part of the person's ordinary tax return (whether or not the person is actually required to deliver an ordinary tax return).
References in the discovery provisions to an ordinary tax return for a tax year include a return under this Schedule made in respect of a disposal for the tax year concerned.
For the purposes of this paragraph “the discovery provisions” means section 29 of TMA 1970 and the other provisions of that Act relating to that section.
Interpretation
Expressions have the same meaning in this Part of this Schedule as they have in Part 1 of this Schedule (see paragraph 17).
For the purposes of this Part of this Schedule any reference to the last day for delivery of an ordinary tax return is to 31 January in the tax year following the tax year concerned.
A return made by a person under this Schedule is to be treated for the purposes of any provision made by or under TMA 1970 as if it contained a self-assessment of an amount of capital gains tax.
Consequential amendments
Amendments of TMA 1970
TMA 1970 is amended as follows.
Omit section 7A (disregard of certain NRCGT gains for purposes of section 7).
Omit sections 12ZA to 12ZN (NRCGT returns) and the italic heading before those sections.
In section 28A (completion of enquiry into personal or trustee return)—
in subsection (1), omit “or 12ZM”, and
in the heading, omit “or NRCGT return”.
Omit section 28G (determination of amount notionally chargeable where no NRCGT return delivered).
In section 29 (assessment where loss of tax discovered), omit subsection (7)(a)(ia).
Omit section 29A (non-resident CGT disposals: determination of amount which should have been assessed).
In section 34 (ordinary time limit of 4 years), omit subsection (1A).
In section 42 (procedure for making claims etc), in subsection (11)(a)—
omit “12ZB”, and
after “12AA of this Act” insert “ or a return under Schedule 2 to the Finance Act 2019 ”.
After section 59A insert—
Omit section 59AA (non-resident CGT disposals: payments on account of capital gains tax).
In section 59B (payment of income tax and capital gains tax: assessments other than simple assessments)—
in subsection (1)(b), for “or 59AA of this Act” substitute “ of this Act or under Schedule 2 to the Finance Act 2019 ”, and
omit subsection (2A).
In section 59BA (payment of income tax and capital gains tax: simple assessments), in subsection (2)(b), for “or 59AA” substitute “ of this Act or under Schedule 2 to the Finance Act 2019 ”.
In section 107A (relevant trustees), in subsection (2)(b)—
omit “, 59AA”, and
after “59B of this Act” insert “ or under Schedule 2 to the Finance Act 2019 ”.
In section 118 (interpretation), omit the definition of “NRCGT return”.
In Schedule 3ZA (date by which payment to be made after amendment or correction of self-assessment)—
in paragraph 1(1), omit “or an advance self-assessment (see section 12ZE(1))”,
in paragraph 1(2), omit “59AA(2) or”,
in paragraph 2(1), omit “or an amendment of an advance self-assessment under section 12K (amendment of NRCGT return by taxpayer)”,
in paragraph 2(3), omit “or 12ZN(3)” and “or advance self-assessment”,
in paragraph 3(1), omit “or 12ZL” and “or NRCGT return”, and
in paragraph 5(1), omit “or advance self-assessment”.
Amendments of other Acts
TCGA 1992 is amended as follows.
In section 222A (determination of main residence: disposals by non-residents)—
in subsection (6)(a), for “the NRCGT return” substitute “ the return under Schedule 2 to the Finance Act 2019 ”, and
in subsection (7)(a), for “an NRCGT return” substitute “ a return under Schedule 2 to the Finance Act 2019 ”.
In section 223A (amount of relief: disposals by non-residents), in subsection (3)(b), for “the NRCGT return” substitute “ the return under Schedule 2 to the Finance Act 2019 ”.
Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
In paragraph 1(4), in the entry relating to capital gains tax, in the second column, for “section 12ZB of TMA 1970 (NRCGT return)” substitute “ Schedule 2 to FA 2019 ”.
In paragraph 21C, for “section 59AA(2) of TMA 1970 (non-resident CGT disposals: payments on account of capital gains tax)” substitute “ Schedule 2 to FA 2019 ”.
Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
For paragraph 21ZA and the italic heading before it substitute—
Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended as follows.
In the table in paragraph 1(5), in item 2A, in the third column, for “NRCGT return under section 12ZB of TMA 1970” substitute “ Return under Schedule 2 to FA 2019 (other than one made under paragraph 9 or 15 of that Schedule) ”.
Schedule 55 to FA 2009, as amended by this paragraph, is taken to have come into force for the purposes of returns under this Schedule on the day on which this Act is passed.
Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended as follows.
In paragraph 1, in the Table, after item 3A insert—
In paragraph 3(1)(a), after “3” insert “ , 3B ”.
In paragraph 5(3) of Schedule 11 to F(No.3)A 2010 (which amends paragraph 3(1)(a) of Schedule 56 to FA 2009), after “3” insert (in both places) “ 3B ”.
Schedule 56 to FA 2009, as amended by this paragraph, is taken to have come into force for the purposes of returns under this Schedule on the day on which this Act is passed.
Late payment interest
So far as relating to amounts that are payable (or repayable) as a result of a requirement under this Schedule, sections 101 to 103 of FA 2009 (late payment interest on sums due to HMRC etc) come into force on 6 April 2019.
Commencement
The amendments made by this Part of this Schedule have effect in relation to disposals made on or after 6 April 2019.
But section 12ZG of TMA 1970 (cases where advance self-assessment not required) continues to have effect in relation to disposals made on or after that date but before 6 April 2020; and that section has effect in relation to those disposals—
as if references to an NRCGT return were to a return under this Schedule, and
as if references to section 12ZE(1) of TMA 1970 were to paragraph 6 of this Schedule.
Offshore receipts in respect of intangible property
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Avoidance involving profit fragmentation arrangements
Introduction and overview
This Schedule contains provision about countering the tax effects of certain arrangements (“profit fragmentation arrangements”).
Profit fragmentation arrangements involve the following parties—
a person resident in the United Kingdom (“the resident party”),
an overseas person or entity (“the overseas party”) who is not resident in the United Kingdom, and
an individual (a “related individual”) who is—
the resident party,
a member of a partnership of which the resident party is a partner, or
a participator in a company which is the resident party.
An “overseas person or entity” means—
a person abroad within the meaning given by section 718 of ITA 2007, or
a company, partnership, trust or other entity or arrangements established or having effect under the law of a country or territory outside the United Kingdom (regardless of whether it has legal personality as a body corporate).
Paragraphs 2 to 6 deal with the definition of profit fragmentation arrangements.
Paragraph 7 deals with the adjustments which must be made to counteract the effects of such arrangements.
Other provisions of this Schedule—
deal with double taxation and the tax treatment of reimbursement payments (paragraphs 8 and 9), and
deal with interpretation and commencement (paragraphs 10 to 12).
Profit fragmentation arrangements
Arrangements are “profit fragmentation arrangements” if—
provision has been made or imposed as between the resident party and the overseas party by means of the arrangements (“the material provision”),
as a result of the material provision, value is transferred from the resident party to the overseas party which derives directly or indirectly from the profits of a business chargeable to income tax or corporation tax (see paragraph 3),
the value transferred is greater than it would have been if it had resulted from provision made or imposed as between independent parties acting at arm's length, and
any of the enjoyment conditions are met in relation to a related individual (see paragraph 4).
But arrangements are not “profit fragmentation arrangements” if—
the material provision does not result in a tax mismatch for a tax period of the resident party (see paragraphs 5 and 6), or
it is not reasonable to conclude that the main purpose, or one of the main purposes, for which the arrangements were entered into was to obtain a tax advantage.
For the purposes of sub-paragraph (1)(a) provision made or imposed as between a partnership of which the resident party is a member and the overseas party is to be regarded as provision made or imposed as between the resident party and the overseas party.
Transfer of value deriving directly or indirectly from a business
In determining whether value deriving directly or indirectly from a business is transferred from the resident party to the overseas party, account is to be taken of any method, however indirect, by which—
any property or right is transferred or transmitted, or
the value of any property or right is enhanced or diminished.
Sub-paragraph (1) applies in particular to—
sales, contracts and other transactions made otherwise than for full consideration or for more than full consideration,
any method by which any property or right, or the control of any property or right, is transferred or transmitted by assigning—
share capital or other rights in a company,
rights in a partnership, or
an interest in settled property,
the creation of an option affecting the disposition of any property or right and the giving of consideration for granting it,
the creation of a requirement for consent affecting such a disposition and the giving of consideration for granting it,
the creation of an embargo affecting such a disposition and the giving of consideration for releasing it, and
the disposal of any property or right on the winding up, dissolution or termination of a company, partnership or trust.
Value may be traced through any number of individuals, companies, partnerships, trusts and other entities or arrangements.
The property held by a company, partnership, trust or other entity or under any arrangements must be attributed to the shareholders, partners or members, beneficiaries or other participants at each stage on a just and reasonable basis.
The enjoyment conditions
The enjoyment conditions are met in relation to a related individual if—
it is reasonable to conclude that some or all of the value transferred as a result of the material provision relates to something done by, or any property or purported right of, the individual, and
either of the conditions in sub-paragraph (2) is met.
The conditions are that—
under the arrangements—
the value transferred, or part of it, is so dealt with by any person as to be calculated at some time to enure for the benefit of the individual,
the value transferred, or part of it, operates to increase the value of any assets which the individual holds or are held for the benefit of the individual,
the individual receives or is entitled to receive any benefit provided or to be provided out of the value transferred or part of it,
the individual may become entitled to the beneficial enjoyment of the value transferred, or part of it, if one or more powers are exercised or successively exercised (and for those purposes it does not matter who may exercise the powers or whether they are exercisable with or without the consent of another person), or
the individual (whether acting alone or together with any other person) is able in any manner to control directly or indirectly the application of the value transferred or part of it, or
it is reasonable to conclude that the individual (whether acting alone or with any other person) procured the transfer of value from the resident party to the overseas party in such a way as to avoid the conditions in paragraph (a) being met.
In determining whether the conditions in sub-paragraph (2)(a) are met in relation to an individual and the value transferred as a result of the material provision, all benefits which may at any time accrue to a person as a result of the value being transferred must be taken into account, irrespective of—
the nature or form of the benefits, or
whether the person has legal or equitable rights in respect of the benefits.
For the purposes of sub-paragraphs (2) and (3), references to an individual include a reference to any person connected with that individual and, for the purposes of this paragraph, section 993 of ITA 2007 (meaning of “connected”) has effect but as if—
subsection (4) of that section were omitted, and
members of a partnership in which the individual is also a member were not “associates” of the individual for the purposes of sections 450 and 451 of CTA 2010 (“control”).
For the purposes of sub-paragraph (4), an individual is treated as connected with a person or entity if—
the individual or a person connected with the individual (whether acting alone or with any other person)—
is able to secure that the person or entity acts in accordance with the wishes of the individual or any person connected with the individual,
is able to acquire rights which would enable the individual or any person connected with the individual to secure that the person or entity acts in accordance with the wishes of the individual or any person connected with the individual, or
is able to exercise significant influence over the person or entity (whether or not as a result of a legal entitlement of the individual or any person connected with the individual), or
the person or entity can reasonably be expected to act, or typically acts, in accordance with the wishes of the individual or a person connected with the individual.
Tax mismatch
The material provision results in a tax mismatch for a tax period of the resident party if—
in that period, in relation to a relevant tax, it results in one or both of—
an increase in the expenses of the resident party for which a deduction is taken into account in calculating the amount of the relevant tax payable by the resident party, or
a reduction in the income of the resident party which would otherwise have been taken into account in calculating the amount of the relevant tax payable by the resident party,
it is reasonable to conclude that—
the resulting reduction in the amount of the relevant tax which is payable by the resident party exceeds the resulting increase in relevant taxes payable by the overseas party for the period corresponding to the tax period, and
the overseas party does not meet the 80% payment test, and
the results described in paragraphs (a) and (b)(i) are not exempted by sub-paragraph (5).
In this Schedule references to “the tax reduction” are to the amount of the excess mentioned in sub-paragraph (1)(b)(i).
It does not matter whether the tax reduction results from the application of different rates of tax, the operation of a relief, the exclusion of any amount from a charge to tax, or otherwise.
“The 80% payment test” is met by the overseas party if the resulting increase in relevant taxes paid by that party as mentioned in sub-paragraph (1)(b)(i) is at least 80% of the amount of the resulting reduction in the amount of the relevant tax payable by the resident party.
The results described in sub-paragraph (1)(a) and (b)(i) are exempted if they arise solely by reason of—
contributions paid by an employer under a registered pension scheme, or overseas pension scheme, in respect of any individual,
a payment to a charity,
a payment to a person who, on the ground of sovereign immunity, cannot be liable for any relevant tax, or
a payment to an offshore fund or authorised investment fund—
which meets the genuine diversity of ownership condition (whether or not a clearance has been given to that effect), or
at least 75% of the investors in which are, throughout the accounting period, registered pension schemes, overseas pension schemes, charities or persons who cannot be liable for any relevant tax on the ground of sovereign immunity.
In this paragraph and paragraph 6, where the overseas party does not have an actual period for the purposes of relevant taxes which coincides with the tax period of the resident party—
references to the corresponding period of the overseas party in relation to that tax period are to a notional period of that party for the purposes of relevant taxes that would coincide with that tax period, and
such apportionments as are just and reasonable are to be made to determine the income or tax liability of that party for that corresponding period.
In this paragraph—“relevant tax” means—income tax, corporation tax on income, a sum chargeable under section 269DA of CTA 2010 (surcharge on banking companies) as if it were an amount of corporation tax, a sum chargeable under section 330(1) of CTA 2010 (supplementary charge in respect of ring fence trades as if it were an amount of corporation tax), or any non-UK tax on income, and“tax period”, in relation to a resident party, means—a tax year, or if the resident party is a company, an accounting period of that party.
Tax mismatch: resulting reduction and resulting increase
For the purposes of paragraph 5, the resulting reduction in the resident party's liability to a relevant tax for a tax period is—A×TR where—A is the sum of—if there are expenses within paragraph 5(1)(a)(i), the lower of the amount of expenses and the amount of the deduction mentioned in that provision, and any reduction in income mentioned in paragraph 5(1)(a)(ii), and TR is the rate at which, assuming the resident party has profits equal to A chargeable to the relevant tax for the tax period, those profits would be chargeable to that tax. For this purpose, the rate at which those profits would be chargeable to that tax for that period is the highest rate at which that tax would be chargeable for that period if those profits were added to the resident party's total income.
For the purposes of paragraph 5(1)(b) and (4), the resulting increase in relevant taxes payable by the overseas party for the period corresponding to the tax period is any increase in the total amount of relevant taxes that would fall to be paid by that party (and not refunded) assuming that—
the overseas party's income for that period, in consequence of the material provision were an amount equal to A,
account were taken of any deduction or relief (other than any qualifying deduction or qualifying loss relief) taken into account by the overseas party in determining that party's actual liability to any relevant taxes in consequence of the material provision, and
all further reasonable steps were taken—to minimise the amount of tax which would fall to be paid by the overseas party in the country or territory in question (other than steps to secure the benefit of any qualifying deduction or qualifying loss relief).
under the law of any part of the United Kingdom or any country or territory outside the United Kingdom, and
under double taxation arrangements made in relation to any country or territory,
The steps mentioned in sub-paragraph (2)(c) include—
claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances, and
making elections for tax purposes.
For the purposes of this paragraph, any withholding tax which falls to be paid on payments made to the overseas party is (unless it is refunded) to be treated as tax which falls to be paid by that party (and not the person making the payment).
For the purposes of this paragraph, an amount of tax payable by the overseas party is refunded if and to the extent that—but an amount refunded is to be ignored if and to the extent that it results from qualifying loss relief obtained by that party.
any repayment of tax, or any payment in respect of a credit for tax, is made to any person, and
that repayment or payment is directly or indirectly in respect of the whole or part of the amount of tax payable by the overseas party,
Where some or all of the overseas party's income is treated for the purposes of a relevant tax charged under the law of a country or territory outside the United Kingdom as the income of a person or persons other than the overseas party, in paragraph 5 and this paragraph—and sub-paragraph (4) applies to that person or any of those persons as it applies to that party.
references to that party's liability to any tax (however expressed) include a reference to the liabilities of that person or those persons to the relevant tax,
references to any tax being payable by that party (however expressed) include a reference to the relevant tax being payable by that person or those persons, and
references to loss relief obtained by that party include a reference to loss relief obtained by that person or those persons,
In this paragraph—“qualifying deduction” means a deduction which—is made in respect of actual expenditure of the overseas party, does not arise directly from the arrangements, is of a kind for which the resident party would have obtained a deduction in calculating that party's liability to any income tax or corporation tax had that party incurred the expenditure in respect of which the deduction is given, and does not exceed the amount of the deduction that the resident party would have so obtained,“qualifying loss relief” means any means by which a loss might be used for tax purposes to reduce the amount in respect of which the overseas party is liable to tax on the profits of a business, and“relevant tax” has the same meaning as in paragraph 5.
Adjustments required to be made in relation to arrangements
Adjustments must be made so as to counteract the tax advantages that would (ignoring this Schedule) arise from profit fragmentation arrangements.
The adjustments—
must relate to the expenses, income, profits or losses of the resident party for the tax period in which value is transferred as a result of the material provision,
must be based on what the value transferred would have been if it had resulted from a provision made or imposed as between independent parties acting at arm's length, and
must be just and reasonable.
References in this paragraph to “the resident party” are references to the resident party at the time at which the material provision is made or imposed.
Double taxation
This paragraph applies where—
the resident party has paid a relevant tax by virtue of the application of paragraph 7,
at any time, the resident party or another person pays—
a further amount of the relevant tax, or
an amount of non-UK tax corresponding to the relevant tax, and
the result is a double payment of tax calculated by reference to the same income or profits.
In order to avoid the double payment of tax, the resident party may make a claim in writing for one or more consequential adjustments to be made in respect of the tax paid mentioned in sub-paragraph (1)(a).
On a claim under this paragraph an officer of Revenue and Customs must make such of the consequential adjustments claimed (if any) as are just and reasonable.
The amount of any consequential adjustments must not exceed the lesser of—
the tax paid by the resident party as mentioned in sub-paragraph (1)(a), and
the tax paid as mentioned in sub-paragraph (1)(b).
Consequential adjustments may be made—
in respect of any tax period,
by way of an assessment, the modification of an assessment, the amendment of a claim or otherwise, and
despite any time limit imposed by or under any enactment.
Reimbursement payments ignored for tax purposes
In calculating income, profits or losses for any tax purposes, no account is to be taken of any amount which is paid (directly or indirectly) by a person for the purposes of meeting or reimbursing the cost of tax charged on the resident party by virtue of the application of paragraph 7.
Treatment of a person who is a member of a partnership
This paragraph applies where a person is a member of a partnership.
Any references in this Schedule to the expenses, income, profits or losses of, or to the adjustment of the expenses, income, profits or losses of, the person includes a reference to the person's share of the expenses, income, profits or losses of, or adjustment of the expenses, income, profits or losses of, the partnership.
For this purpose “the person's share” of an amount is determined by apportioning the amount between the members of the partnership on a just and reasonable basis.
Other defined terms
In this Schedule—“arrangements” includes any scheme, agreement, understanding, transaction or series of transactions (whether or not legally enforceable),“authorised investment fund” means—an open-ended investment company within the meaning of section 613 of CTA 2010, or an authorised unit trust within the meaning of section 616 of that Act,“business” includes any trade, profession or vocation,“employer” has the same meaning as in Part 4 of FA 2004 (see section 279(1) of that Act),“genuine diversity of ownership condition” means—in the case of an offshore fund, the genuine diversity of ownership condition in regulation 75 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), and in the case of an authorised investment fund, the genuine diversity of ownership condition in regulation 9A of the Authorised Investment Fund (Tax) Regulations 2006 (S.I. 2006/964),“material provision” has the same meaning as in paragraph 2,“non-UK tax” has the meaning given by section 187 of CTA 2010,“offshore fund” has the same meaning as in section 354 of TIOPA 2010 (see section 355 of that Act),“the overseas party” has the meaning given by paragraph 1(2),“overseas pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(7) of that Act),“participator” has the same meaning as in Part 10 of CTA 2010 (see section 454 of that Act),“partnership” includes an entity established under the law of a country or territory outside the United Kingdom of a similar character to a partnership, and “member” of a partnership is to be construed accordingly,“related individual” and “the resident party” have the meanings given by paragraph 1(2),“tax advantage” includes—relief or increased relief from income tax or corporation tax, repayment or increased repayment of income tax or corporation tax, avoidance or reduction of a charge or an assessment to income tax or corporation tax, avoidance of a possible assessment to income tax or corporation 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,“tax period” has the meaning given by paragraph 5(7),“the tax reduction” has the meaning given by paragraph 5(2), and“trust” includes arrangements—which have effect under the law of a country or territory outside the United Kingdom, and under which persons acting in a fiduciary capacity hold and administer property on behalf of other persons, and “beneficiaries”, in relation to such arrangements, is to be construed accordingly.
Commencement
This Schedule has effect—
for income tax purposes, in relation to any value transferred on or after 6 April 2019 as a result of a material provision, and
for corporation tax purposes, in relation to any value transferred on or after 1 April 2019 as a result of a material provision.
Non-UK resident companies carrying on UK property businesses etc
Extension of scope of charge
Section 5 of CTA 2009 (territorial scope of charge to corporation tax) is amended as follows.
In subsection (2) (circumstances in which non-UK resident company is within the charge)—
omit “or” at the end of paragraph (a), and
after paragraph (b) insert
After subsection (3) insert—
In subsection (4) for “(2A) and (3)” substitute “ and (2A) to (3B) ”.
At the end insert—
Supplementary & Consequential amendments
FA 1998
Paragraph 2 of Schedule 18 to FA 1998 (duty to give notice of chargeability) is amended as follows.
After sub-paragraph (1) insert—
In sub-paragraph (2) for “The notice” substitute “ A notice required to be given under this paragraph ”.
FA 2004
After section 55 of FA 2004 insert—
ITTOIA 2005
In Part 3 of ITTOIA 2005 (property businesses), omit section 362 (effect of company starting or ceasing to be within charge to income tax in respect of UK property business).
ITA 2007
In section 5 of ITA 2007 (income tax and companies) in paragraph (b) for the words from “the income” to the end substitute “ it is chargeable to corporation tax in respect of the income, or would be so chargeable but for an exemption. ”
CTA 2009
CTA 2009 is amended as follows.
In section 3 (exclusion of charge to income tax) in subsection (1)(b) (non-UK resident companies) for the words from “and—” to the end substitute “ and it is chargeable to corporation tax in respect of the income, or would be so chargeable but for an exemption ”.
In section 18A (exemption for profits or losses of foreign permanent establishments) in subsection (2A) for the words from “, or would” to the end substitute
In section 19 (chargeable profits) for subsection (2A) substitute—
In section 289 (effect of company starting or ceasing to be within charge to corporation tax) in subsection (1) for “a property business” substitute “ an overseas property business ”.
Section 301 (calculation of non-trading profits and deficits from loan relationships: non-trading credits and debits) is amended as follows.
In subsection (1) for “as follows” substitute “ in accordance with subsections (4) to (7) ”.
After subsection (1) insert—
In section 333 (company with loan relationship ceasing to be UK resident) in subsection (2)—
after “owed” insert, and
at the end insert
Section 334 (non-UK resident company ceasing to hold loan relationship for UK permanent establishment) is amended as follows.
In the heading, for “UK permanent establishment” substitute “ section 333(2) purposes ”.
In subsection (1) for the words from “the purposes” to “United Kingdom” substitute “ section 333(2) purposes ”.
In subsection (3)(b) for “the purposes of the permanent establishment” substitute “ section 333(2) purposes ”.
After subsection (4) insert—
In section 574 (non-trading credits and debits to be brought into account under Part 5) after subsection (2) insert—.
In section 609 (company with derivative contract ceasing to be UK resident) in subsection (2)—
after “owed” insert, and
at the end insert
Section 610 (non-UK resident company ceasing to hold derivative contract for UK permanent establishment) is amended as follows.
In the heading, for “UK permanent establishment” substitute “ section 609(2) purposes ”.
In subsection (1) for the words from “the purposes” to “United Kingdom” substitute “ section 609(2) purposes ”.
In subsection (3)(b) for “the purposes of the permanent establishment” substitute “ section 609(2) purposes ”.
After subsection (4) insert—
Section 697 (derivative contracts with non-UK residents: exceptions) is amended as follows.
For subsection (2) substitute—
In subsection (6) omit the definition of “relevant entity” and “, and” immediately before it.
In section 746 (“non-trading credits” and “non-trading debits”) in subsection (2) for paragraph (b) substitute—.
Section 792 (reallocation of charge within group) is amended as follows.
Omit subsection (5).
In subsection (6) for “makes further provision” substitute “ sets out further requirements ”.
After subsection (6) insert—
In subsection (8) after “793” insert “ , 793A ”.
Section 793 (further requirements about elections under section 792) is amended as follows.
In subsection (1) for “or (3)” substitute “ , (3), (3A) or (3B) ”.
In subsection (3), in the words before paragraph (a), after “if” insert “ subsection (2) does not apply and ”
After subsection (3) insert—
After section 793 insert—
In section 795 (recovery of charge from another group company or controlling director) in subsection (4) omit the words from “but” to “establishment”.
In section 863 (asset becoming chargeable intangible asset), in subsection (1)(b)—
after “held” insert, and
after “establishment,” insert—.
CTA 2010
CTA 2010 is amended as follows.
Section 9 (non-UK resident company preparing return of accounts in currency other than sterling) is amended as follows.
For subsection (1) substitute—
In subsection (4) omit from “of its” to “United Kingdom”.
In section 107 (group relief: restriction on losses etc surrenderable by non-UK resident) in subsection (1) for “company” (in the second place it occurs) to the end substitute “ company within the charge to corporation tax ”.
In section 188BI (group relief for carried-forward losses: restriction on surrender of losses made when non-UK resident) in subsection (1) for “company” (in the second place it occurs) to the end substitute “ company within the charge to corporation tax ”.
TIOPA 2010
Part 10 of TIOPA 2010 (corporate interest restriction) is amended as follows.
Section 415 (qualifying net group-interest expense: interpretation) is amended as follows.
In subsection (1) for paragraph (b) substitute—
After subsection (1) insert—
In section 438 (exemption for interest payable to third parties etc) after subsection (5) insert—
Commencement and transitional provisions
Commencement
This Schedule comes into force on 6 April 2020 (“the commencement date”).
Transitional provisions
Where a period of account of a company begins before and ends on or after the commencement date, it is to be assumed for the purposes of the amendments made by this Schedule—
that the period (“the straddling period of account”) consists of two separate periods of account—
the first beginning with the date on which the straddling period of account begins and ending with 5th April 2020, and
the second beginning with the commencement date and ending with the date on which the straddling period of account ends, and
that separate accounts have been drawn up for each of those separate periods in accordance with generally accepted accounting practice.
This paragraph applies if—
in a tax year ending before the commencement date a company makes a loss in a UK property business that is within the charge to income tax,
relief for the purposes of income tax is not given to the company for an amount of the loss (“the unrelieved amount”), and
on the commencement date the UK property business ceases to be within the charge to income tax and comes within the charge to corporation tax as a result of section 5(3A) of CTA 2009.
Relief for the purposes of corporation tax is given to the company under this paragraph for the unrelieved amount.
For this purpose—
the unrelieved amount is carried forward to post-commencement accounting periods of the company (for so long as the company continues to carry on the UK property business), and
the profits of any such accounting period that are mentioned in sub-paragraph (4) are to be reduced by the unrelieved amount (so far as that amount cannot be used under this paragraph to reduce the profits of an earlier period).
The profits are—
profits of the UK property business, and
profits arising from loan relationships or derivative contracts that the company is a party to for the purposes of that business.
In this paragraph “post-commencement accounting period” means an accounting period ending after the commencement date.
This paragraph applies if—
in the tax year 2019-20 a non-UK resident company is a partner in a firm which—
carries on a trade, and
has untaxed income or relievable losses from a UK property business, and
accordingly, the company is treated under section 854 of ITTOIA 2005 as having a notional business for the tax year.
The basis period for the notional business for the tax year is taken to end with 5th April in that tax year (if it would not otherwise do so).
In this paragraph “untaxed income” has the meaning given by section 854(6) of ITTOIA 2005.
This paragraph applies if—
on or after the commencement date a loss arises in connection with a loan relationship of a company,
the loss is wholly or partly referable to a time before the commencement date (“the pre-commencement time”), and
had the loss arisen at the pre-commencement time it would have been brought into account in accordance with Part 3 of ITTOIA 2005 in calculating the profits of the UK property business of the company.
Section 327 (disallowance of imported losses etc) does not apply in relation to so much of the loss as is referable to the pre-commencement time.
This paragraph applies for an accounting period (“the loss period”) of a non-UK resident company beginning on or after the commencement date if—
apart from this paragraph, a loss arising in connection with a derivative contract of the company would by reason of this Schedule fall to be brought into account in accordance with Part 7 of CTA 2009,
the loss is wholly or partly referable to a time before the commencement date when the derivative contract was not subject to corporation tax, and
had the loss arisen at that time it would not have been brought into account in accordance with Part 3 of ITTOIA 2005 in calculating the profits of the UK property business of the company.
The amounts brought into account for the loss period in accordance with Part 7 of CTA 2009 must be such as to secure that none of the loss referable to that time is treated as arising in the loss period or any other accounting period of the company.
For the purposes of this section a loss is referable to a time when a contract is not subject to corporation tax so far as, at the time to which the loss is referable, the company would not have been chargeable to corporation tax on any profits arising from the contract.
If the company was not a party to the contract at the time to which the loss is referable, subparagraph (3) applies as if the reference to the company were a reference to the person who at that time was in the same position as respects the contract as is subsequently held by the company.
An amount which would be brought into account in accordance with Part 7 of CTA 2009 in respect of a derivative contract apart from this paragraph is treated for the purposes of section 699(1) of CTA 2009 (amounts brought into account under Part 7 excluded from being otherwise brought into account) as if it were so brought into account.
Accordingly, that amount must not be brought into account for corporation tax purposes as respects the derivative contract either in accordance with Part 7 of CTA 2009 or otherwise.
Section 607ZA of CTA 2009 (debits referable to times before UK property business carried on) has effect subject to this paragraph.
This paragraph applies for an accounting period (“the relevant period”) of a non-UK resident company beginning on or after the commencement date if—
a profit arising in connection with a loan relationship or derivative contract of the company (“the first instrument”) falls by reason of this Schedule to be brought into account in the relevant period in accordance with Part 5 or Part 7 of CTA 2009,
an amount of the profit (“the profit amount”) is referable to a time before the commencement date when the first instrument was not subject to corporation tax,
had the profit arisen at that time it would not have been brought into account in accordance with Part 3 of ITTOIA 2005 in calculating the profits of the UK property business of the company,
at that time the first instrument and another loan relationship or derivative contract (“the second instrument”) were in a hedging relationship with one another, and
an amount of a loss (“the loss amount”) arising in connection with the second instrument would (apart from this paragraph) be prevented by reason of paragraph 40 or section 327 of CTA 2009 from being brought into account in the relevant period accordance with Part 5 or Part 7 of CTA 2009.
So much of the loss amount as does not exceed the profit amount may be brought into account in the relevant period in accordance with Part 5 or Part 7 of CTA 2009.
For the purposes of sub-paragraph (1) the first instrument and the second instrument are in a hedging relationship with one another in so far as one of them is intended to act as a hedge of the company's exposure to changes in the fair value of the other.
In a case where the first instrument and the second instrument are in a hedging relationship with one another to a limited extent, subsection (2) has effect in relation to so much of the loss amount as is just and reasonable having regard to the extent of that hedging relationship.
For the purposes of this paragraph a profit is referable to a time when the first instrument is not subject to corporation tax so far as, at the time to which the profit is referable, the company would not have been chargeable to corporation tax on any profits arising from the instrument.
If the company was not a party to the first instrument at the time to which the profit is referable, subparagraph (5) applies as if the reference to the company were a reference to the person who at that time was in the same position as respects the instrument as is subsequently held by the company.
Where—the amounts to be brought into account in respect of the derivative contract for the purposes of Part 7 of CTA 2009 are to be adjusted in such manner as is just and reasonable having regard to the tax asymmetry.
before the commencement date a company is chargeable to income tax on the profits of its UK property business,
on the commencement date the company becomes chargeable to corporation tax on the profits arising from a derivative contract that it is a party to for the purposes of its UK property business, and
there is a tax asymmetry in relation to the derivative contact,
For the purposes of subparagraph (1) there is a tax asymmetry in relation to the derivative contract if—
fair value amounts arising in relation to the derivative contract are brought into account in calculating for the purposes of income tax the profits or losses of the company's UK property business for tax years ending before the commencement date, but
by reason of regulation 9 of the Disregard Regulations, fair value amounts arising in relation to the contract are not brought into account for the purposes of Part 7 of CTA 2009 for accounting periods of the company beginning on or after the commencement date.
In this paragraph—“fair value amount” means an amount representing a change in the fair value of a derivative contract which is recognised in determining a company's profit or loss for a period of account in accordance with generally accepted accounting practice;“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).
This paragraph applies if—
an amount representing a change in the fair value of a derivative contract is recognised in determining a company's profit or loss for a period of account beginning before the commencement date, and
the amount would have been brought into account in calculating for the purposes of income tax the profits or losses of the company's UK property business for a tax year ending before the commencement date but for its having been treated as an amount of a capital nature.
In determining the amounts the company is to bring into account for the purposes of Part 7 of CTA 2009 for an accounting period beginning on or after the commencement date—
the derivative contract is to be treated as being one in relation to which an election has effect under regulation 6A of the Disregard Regulations, and
if regulation 7 or 8 of those Regulations applies in relation to the derivative contract, the amount referred to in subparagraph (1) is to be treated for the purposes of regulation 10 of those Regulations as being an amount that has previously been excluded from being brought into account for the purposes of Part 7 of CTA 2009 by regulation 7 or 8 (as the case may be).
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);“recognised” means recognised in accordance with generally accepted accounting practice.
This paragraph applies if—
before 1 January 2015 a company measures a relevant derivative contract at fair value,
on the commencement date the company comes within the charge to corporation tax by reason of this Schedule, and
the first relevant period of the company begins on or after the commencement date.
The company is to be treated for the purposes of regulation 6A of the Disregard Regulations as if it was a new adopter.
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), and“the first relevant period” and “relevant derivative contract” have the meaning given by regulation 6A(5) of the Disregard Regulations.
In determining for the purposes of this paragraph whether, on the commencement date, a company comes within the charge to corporation tax by reason of this Schedule, no account is to be taken of any disposal made by the company before that date where any gain accruing to the company on the disposal would be chargeable to corporation tax as a result of section 2B(4) of TCGA 1992.
This paragraph applies if on the commencement date—
an asset held by a non-UK resident company for the purposes of its UK property business becomes a chargeable intangible asset in relation to the company by reason of the business coming within the charge to corporation tax, or
an asset held by a non-UK resident company for the purposes of enabling it to generate other UK property income becomes a chargeable intangible asset in relation to the company by reason of that income coming within the charge to corporation tax.
Part 8 of CTA 2009 applies as if—
the company had acquired the asset immediately on the commencement date, and
had done so for its accounting value at that time.
In this paragraph—“accounting value” and “chargeable intangible asset” have the meaning they have in Part 8 of CTA 2009, and“other UK property income” has the meaning it has in Part 2 of CTA 2009.
An election under section 792 of CTA 2009 (reallocation of degrouping charge within a group) may not be made if—
subsection (3A) of section 793 applies to B, and
the relevant time is before 5 July 2016.
An election under section 792 of CTA 2009 may not be made if—
subsection (3B) of section 793 applies to B, and
the relevant time is before the commencement date.
In this paragraph references to “B” and “the relevant time” must be read in accordance with section 792 of CTA 2009.
This paragraph applies if—
before the commencement date a company incurs expenditure for the purposes of a UK property business it is about to carry on,
the company begins to carry on the business on or after the commencement date, and
when the company begins to carry on the business it is non-UK resident.
Subsection (7) of section 1147 of CTA 2009 (which enables a company to obtain relief for expenditure on contaminated or derelict land incurred prior to carrying on a UK property business) does not apply in relation to the expenditure.
Where on the commencement date—the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175) do not have effect in relation to that accounting period.
a non-UK resident company ceases to be within the charge to income tax and comes within the charge to corporation tax by reason of this Schedule, and
an accounting period of the company begins in accordance with section 9(1)(a) of CTA 2009,
This paragraph applies if on or after 29 October 2018 a company enters into an arrangement the main purpose or one of the main purposes of which is to secure for any person a tax advantage related to the coming into force of this Schedule.
The tax advantage is to be counteracted by means of adjustments.
The adjustments may be made (whether by an officer of Revenue and Customs or the person who would obtain the tax advantage) by way of an assessment, the modification of an assessment, an amendment or disallowance of a claim, or otherwise.
In this paragraph—“arrangement” 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 paragraph applies if—
a company enters into an arrangement of a kind mentioned in paragraph 49(1),
the arrangements are effected by taking only ordinary commercial steps in accordance with a generally prevailing commercial practice,
the tax advantage that the arrangements secure is the benefit of a relief expressly conferred by Part 10 of TIOPA 2010 (corporate interest restriction), and
securing that tax advantage is wholly consistent with the policy objectives of that Part.
If the arrangement is entered into on or after 29 October 2018, the tax advantage is not to be counteracted by means of adjustments under paragraph 49.
In addition, the tax advantage is not to be counteracted by means of adjustments under section 461 of TIOPA 2010 irrespective of the date on which the arrangement was entered into.
Diverted profits tax
Introduction
Part 3 of FA 2015 (diverted profits tax) is amended as follows.
Calculation of taxable diverted profits
In subsection (3) for “(9)” substitute “ (10) ”.
In subsection (7) (when the “actual provision condition” is met) in paragraph (a) omit “(ignoring Part 4 of TIOPA 2010 (transfer pricing))”.
After subsection (7) insert—
After subsection (9) insert—
In section 84 (section 80 or 81: calculation of profits by reference to the actual provision) in subsection (2) for the words from “the amount (if any)” to the end substitute “ an amount equal to so much of the diverted profits of the company for the accounting period as are not taken into account in an assessment to corporation tax included before the end of the review period in the company's company tax return for that accounting period. ”
In subsection (4) for paragraph (a) (but not the “and” immediately after it) substitute—.
In subsection (6) (meaning of “the notional additional amount”)—
in the words before paragraph (a) omit “the amount by which”,
in paragraph (a) before “amount” insert “ additional ”,
at the end of paragraph (a) for “exceeds” substitute “ less ”, and
in paragraph (b)(i) for the words from “the application” to the end substitute “ any adjustment required to be made to the results of the material provision (whether under Part 4 of TIOPA 2010 (transfer pricing) or otherwise), ”.
After subsection (6) insert—
After subsection (5A) insert—
In subsection (9)(a) omit “(ignoring Part 4 of TIOPA 2010 (transfer pricing)”.
After subsection (9) insert—
After section 111 insert—
The amendments made by paragraphs 2 to 7 have effect in relation to accounting periods beginning on or after 29 October 2018.
Extension of period for issuing a preliminary notice
Section 93 (preliminary notice) is amended as follows.
In subsection (5) (period for issuing a notice) for the words from “, a preliminary notice” to the end substitute
After subsection (5) insert—
The amendments made by this paragraph do not have effect in relation to a preliminary notice if the period during which it may be issued (but for the amendments) expires before this Act is passed.
Relief from corporation tax
After section 100 insert—
The amendment made by this paragraph has effect in relation to accounting periods beginning on or after 1 April 2015.
Extension of the review period
In section 101 (HMRC review of charging notice)—
in subsection (2) (meaning of “review period”) for “12 months” substitute “ 15 months ”, and
in subsection (13) (events that bring the review period to an end early) for “12 months” substitute “ 15 months ”.
The amendments made by this paragraph do not have effect in relation to a review period that, but for the amendments, expires before 29 October 2018.
Extension of period for amendment of company tax return
After section 101 insert—
Payment of CGT exit charges
CGT exit charge payment plans
In TMA 1970, after section 59BA insert—
After Schedule 3ZA to TMA 1970 insert—
Penalties
Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended as follows.
In the Table at the end of paragraph 1, after entry 3B insert—
In paragraph 3(1)(a), after “3B” insert “ , 3C ”.
In section 107A of TMA 1970 (relevant trustees), in subsection (3)(c)(i), after “1,” insert “ 3C, ”.
In paragraph 5(3) of Schedule 11 to F(No.3)A 2010 (penalties for failure to make payments on time), omit “items 1, 3” in both places.
CT exit charge payment plans
In sections 59FA, 109B and 109E of and Schedule 3ZB to TMA 1970 (including any headings of, and in, those provisions)—
for “an exit charge payment plan”, in each case it occurs, substitute “ a CT exit charge payment plan ”,
for “exit charge payment plan”, in each case where it occurs without “an” before it, substitute “ CT exit charge payment plan ” (but this does not apply to paragraph 10(2A) or 11(1) of Schedule 3ZB to TMA 1970 as respectively inserted and substituted by Schedule 8 to this Act), and
for “exit charge payment plans” in each case it occurs, substitute “ CT exit charge payment plans ”.
In Schedule 56 to FA 2009 (penalties), in the Table at the end of paragraph 1, in entry 6ZA, in the third column, for “an exit charge payment plan” substitute “ a CT exit charge payment plan ”.
Commencement
The amendments made by paragraphs 1 and 2 have effect in relation to amounts of capital gains tax which a person is liable to pay by virtue of section 25(1) or (3) or 80 of TCGA 1992 in relation to events occurring on or after 6 April 2019.
Corporation tax exit charges
CT exit charge payment plans
Schedule 3ZB to TMA 1970 (CT exit charge payment plans) is amended as follows.
In paragraph 1 (circumstances in which plan may be entered into: company ceasing to be resident in UK)—
in subparagraph (1)(b) for “another” substitute “ a relevant ”,
in subparagraph (5) for “an” substitute “ a relevant ”,
in subparagraph (6) for “other” substitute “ relevant ”, and
in subparagraph (7) at the end insert
Paragraph 4 (circumstances in which plan may be entered into: non-UK resident companies with UK permanent establishments) is amended as follows.
In subparagraph (4) (meaning of “PE qualifying event”)—
omit “and” at the end of paragraph (b), and
after paragraph (c) insert
In subparagraph (6)—
for “and” substitute “ , ”, and
after “ “eligible company”” insert “ and “relevant EEA state” ”.
In paragraph 8(1) (entering into a plan)—
in paragraph (a) for the words from “the standard” to the end substitute “ paragraphs 11 to 14 ”, and
in paragraph (c) for “paragraphs 10 to 12” substitute “ paragraph 10 ”.
Paragraph 10 (contents of plan) is amended as follows.
In subparagraph (1)(b) before “EEA state” insert “ relevant ”.
After subparagraph (2) insert—
In subparagraph (3) for paragraph (c) substitute—
Omit subparagraphs (4) and (5).
For paragraphs 11 to 17, and the italic heading before those paragraphs, substitute—
In Schedule 56 to FA 2009 (penalty for failure to make payments on time) in paragraph 4 (amount of penalty in respect of certain late payments) in subparagraph (1) for “item 5, 6 or 6ZZA” substitute “ any of items 5 to 6ZA ”.
The amendments made by paragraphs 1 to 6 have effect in relation to accounting periods ending on or after 1 January 2020.
Repeal of certain postponement provisions
Section 187 of TCGA 1992 (postponement of charge on deemed disposal under section 185) is repealed.
The following amendments have effect in consequence of that repeal.
In section 185(1) of TCGA 1992 (deemed disposal of assets on company ceasing to be resident in UK) for “and section 187 apply” substitute “ applies ”.
In Schedule 3ZB to TMA 1970 (CT exit charge payment plans)—
in paragraph 2(3) (meaning of “exit charge provisions” in Part 1) omit paragraph (b), and
in paragraph 3 (interpretation: exit charge assets and liabilities)—
in subparagraph (2)(a) omit “, (b)”, and
in subparagraph (2)(c)(ii) omit “or (b)”.
The amendments made by this paragraph have effect in relation to a company in a case where section 185 of TCGA 1992 applies to the company by reason of its ceasing to be resident in the United Kingdom on or after 1 January 2020.
Sections 860 to 862 of CTA 2009 (postponement of gain on deemed realisation under section 859) are repealed.
The following amendments have effect in consequence of that repeal.
In section 859 of CTA 2009 (asset ceasing to be chargeable intangible asset: deemed realisation at market value) omit subsection (3).
In Schedule 3ZB to TMA 1970 (CT exit charge payment plans)—
in paragraph 2(3) (meaning of “exit charge provisions” in Part 1)—
at the end of paragraph (e) insert “ and ”, and
omit paragraph (g) and the “and” immediately before it, and
in paragraph 3 (interpretation: exit charge assets and liabilities) in subparagraph (2)(c)(i) omit “or (g)”.
The amendments made by this paragraph have effect in relation to a company in a case where section 859 of CTA 2009 applies to the company by reason of its ceasing to be resident in the United Kingdom on or after 1 January 2020.
Treatment of assets subject to EU exit charges
After section 184I of TCGA 1992 insert—
The amendment made by this paragraph has effect in relation to assets that become chargeable assets on or after 1 January 2020.
Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.
In section 863 (asset becoming chargeable intangible asset) after subsection (2) insert—
After section 863 insert—
The amendments made by this paragraph have effect in relation to assets that become chargeable intangible assets on or after 1 January 2020.
Intangible fixed assets: restrictions on goodwill and certain other assets
Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.
In section 711 (overview of Part) in subsection (8) after paragraph (f) (but before the following “and”) insert—.
In section 715 (application of Part to goodwill) in subsection (2) for the words from “section 816A” to the end substitute “ Chapter 15A (debits in respect of goodwill and certain other assets)). ”
In section 746 (“non-trading credits” and “non-trading debits”) in subsection (2) for paragraph (ba) substitute—.
Omit section 816A (restrictions on goodwill and certain other assets).
After section 879 insert—
The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 April 2019.
For the purposes of sub-paragraph (1), an accounting period beginning before, and ending on or after, 1 April 2019 is to be treated as if so much of the accounting period as falls before that date, and so much of the accounting period as falls on or after that date, were separate accounting periods.
Corporation tax relief for carried-forward losses
Restrictions on deductions from profits
CTA 2010 is amended as follows.
In section 188DD (group relief for carried-forward losses: claimant company's relevant maximum for overlapping period) omit subsection (4).
In section 188ED (group relief for carried-forward losses: claimant company's relevant maximum for overlapping period)—
omit subsection (4), and
in subsection (5) for “(4)” substitute “ (3) ”.
In section 269ZB (restriction on deductions from trading profits) in subsection (8) for paragraph (b) substitute—
In section 269ZC (restriction on deductions from non-trading profits) in subsection (6) for paragraph (b) substitute—
Section 269ZD (restriction on deductions from total profits) is amended as follows.
In subsection (2)—
in paragraph (b)—
at the end of sub-paragraph (i) insert “ and ”, and
omit sub-paragraph (iii) and the “and” immediately before it, and
in the second sentence omit “and section 269ZE”.
In subsection (4)(a) after “period” insert “ (see section 269ZFA) ”.
Omit subsection (5).
For subsection (7) substitute—
Omit section 269ZE (restriction on deductions from total profits: insurance companies).
After section 269ZF insert—
After section 269ZFA (as inserted by paragraph 8) insert—
In section 269ZJ (exclusion of shock losses from restrictions) omit subsection (4).
In section 269ZQ (power to amend) in subsection (2)(b) for “124E” substitute “ 124C ”.
In section 269ZV (group allowance allocation statement: requirements and effects) after subsection (5) insert—.
In section 269CC (restrictions on deductions by banking companies: management expenses etc) in subsection (7) (how to determine “relevant maximum”) in Step 1 for “269ZD(5)” substitute “ 269ZFA ”.
In section 269CN (restrictions on deductions by banking companies: definitions) in the definition of “relevant profits” for “269ZD(5)” substitute “ 269ZFA ”.
In section 304(7) (certain deductions in respect of losses made in a ring fence trade to be ignored for the purposes of the restriction on deductions from trading profits) in paragraph (b) for “total” substitute “ trade ”.
FA 2012 is amended as follows.
In section 124 (carry forward of pre-1 April 2017 BLAGAB trade losses against subsequent profits) in subsection (5) omit “(but see also section 124D)”.
In section 124A (carry forward of post-1 April 2017 BLAGAB trade losses against subsequent profits) in subsection (5) omit “(but see also section 124D)”.
In section 124C (further carry forward against subsequent profits of post-1 April 2017 loss not fully used) in subsection (6) omit “(but see also section 124D)”.
Omit sections 124D and 124E (restriction on deductions from BLAGAB trade profits).
Terminal losses: straddling periods
For section 45G of CTA 2010 substitute—
Group relief for carried-forward losses
CTA 2010 is amended as follows.
In section 188BG(3) (types of loss that may not be surrendered by a Solvency 2 insurance company)—
omit “or” at the end of paragraph (b), and
after paragraph (c) insert.
Section 188DD (claimant company's relevant maximum for overlapping period in case of claim under section 188CB) is amended as follows.
In subsection (3)—
for “relevant” (in both places) substitute “ qualifying ”, and
for “section 269ZD(5)” (in both places) substitute “ subsection (3A) ”.
After subsection (3) insert—
Section 188ED (claimant company's relevant maximum for overlapping period in case of claim under section 188CC) is amended as follows.
In subsection (3)—
for “relevant” (in both places) substitute “ qualifying ”, and
for “section 269ZD(5)” (in both places) substitute “ subsection (3A) ”.
After subsection (3) insert—
Transferred trades
CTA 2010 is amended as follows.
In section 357JI (Northern Ireland losses: transfers of trade without a change of ownership) in subsection (2) for the words from the beginning to “that section” substitute “ Sections 943A to 944C (which modify the application of Chapter 2 of Part 4) have effect as if the references in those sections ”.
In section 676 (disallowance of trading loss on change in ownership of company: company reconstructions)—
in subsection (2) for the words from “section 944(3)” to “successor company)” substitute “ Chapter 1 of Part 22 ”,
in subsection (4)(a) after “45” insert “ , 45A, 45B, 303B, 303C or 303D ”, and
in subsection (4)(b) for “944(3)” substitute “ Chapter 1 of Part 22 ”.
In section 676AF (restriction on use of carried-forward post-1 April 2017 trade losses)—
the existing provision becomes subsection (1), and
after that subsection insert—
In section 676BC (disallowance of relief for trade losses)—
in subsection (1) omit “by the company”,
in subsection (4), in the words before paragraph (a), after “made” insert “ by the company ”, and
after subsection (4) insert—
Deduction buying
In section 730C of CTA 2010 (disallowance of deductible amounts: relevant claims)—
in subsection (2) omit paragraph (aa), and
in subsection (3A) for “paragraphs (a) to (e)” substitute “ paragraph (a) or (b) ”.
In Schedule 4 to F(No.2)A 2017 (relief for carried-forward losses) omit paragraph 172.
Commencement
The amendments made by this Schedule have effect in relation to accounting periods beginning on or after the relevant date (see subparagraph (3)).
For the purposes of the amendments made by this Schedule, where a company has an accounting period beginning before the relevant date and ending on or after that date (“the straddling period”)—
so much of the straddling period as falls before the relevant date, and so much of that period as falls on or after that date, are to be treated as separate accounting periods, and
where it is necessary to apportion an amount for the straddling period to the two separate accounting period, 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.
The “relevant date” is—
1 April 2017, in relation to the amendments made by paragraphs 24 and 25 of this Schedule,
6 July 2018, in relation to the amendments made by paragraphs 1 to 11, 13 and 14 and 16 to 20 of this Schedule, and
1 April 2019, in relation to the other amendments made by this Schedule.
Corporate interest restriction
Introductory
Part 10 of TIOPA 2010 (corporate interest restriction) is amended as follows.
Tax-interest amounts: amounts capitalised in intangible fixed assets
In Chapter 3 (tax-interest amounts), after section 391 insert—
Carry forward of interest allowance: new holding company
After section 395 insert—
Carry forward of excess debt cap: new holding company
After section 400 insert—
Adjusted net group-interest expense: capitalised interest
Section 410 (net group-interest expense), after subsection (5) insert—
Section 413 (adjusted net group-interest expense) is amended as follows.
In subsection (3)—
in paragraph (a), for “an asset or liability” substitute “ a non-financial asset or non-financial liability ”, and
in paragraph (b), after “an amount that” insert “ , in the case of a non-financial asset, ”.
In subsection (4)—
in paragraph (a), for “an asset or liability” substitute “ a non-financial asset or non-financial liability ”, and
in paragraph (b), after “an amount that” insert “ , in the case of a non-financial asset, ”.
For subsection (5) substitute—
Section 423 (capitalised interest brought into account for tax purposes in accordance with GAAP) is amended as follows.
After subsection (2) insert—
In subsection (3), for “But subsection (2)(b) of this section is of no effect where” substitute “ But subsections (2)(b) and (2A) of this section are of no effect so far as ”.
In subsection (4), at the end insert “ (and, for the purposes of this subsection, an asset is a GAAP-taxable asset even if an election under section 730 of CTA 2009 is, or could be, made in respect of it) ”.
Adjusted net group-interest expense: impairment debts and credits and connected companies
Section 413 (meaning of “adjusted net group-interest expense”) is amended as follows.
In subsection (3)(d)(i)—
for “or 323A” substitute “ , 323A, 358 or 359 ”, and
omit “(cases where credits not required to be brought into account)”.
In subsection (4)(d)(i)—
after “section 323A” insert “ or 354 ”, and
omit “(cases where credits not required to be brought into account)”.
Interest allowance (alternative calculation) election: unpaid employees' remuneration
After section 424 insert—
Interest allowance (alternative calculation) election: changes in accounting policy
Section 426 (changes in accounting policy in cases where interest allowance (alternative calculation) election has effect) is amended as follows.
In subsection (3)—
after “means” insert “ the following provisions as modified by subsection (4) ”, and
after paragraph (a) insert—.
For subsection (4) substitute—
Interest allowance (non-consolidated investment) election
In section 427 (group interest and group-EBITDA), after subsection (5) insert—
Public infrastructure
In section 433 (meaning of “qualifying infrastructure company”), in subsection (5), after paragraph (c) insert—.
In section 439 (exemption in respect of certain pre-13 May 2016 loan relationships), in subsection (3), after paragraph (b) insert—
Real Estate Investment Trusts
Section 452 (Real Estate Investment Trusts) is amended as follows.
In subsection (4), at the end insert “ (and, accordingly, the profits mentioned in section 534(1) or (2) of CTA 2010 are not calculated for the purposes of this Part in accordance with section 599 of that Act) ”.
After subsection (4) insert—
For subsection (5) substitute—
Interest restriction returns
In—for “six months” substitute “ 12 months ”.
paragraph 1(4)(a) of Schedule 7A (period for appointing a group's reporting company), and
paragraph 2(4)(a) of that Schedule (period for revoking appointment),
In paragraph 7(5) of Schedule 7A (meaning of “the filing date”)—
for paragraph (b) substitute—
after that paragraph insert—
In paragraph 7 of Schedule 7A (submission of interest restriction returns), after sub-paragraph (5) insert—
After that paragraph insert—
In paragraph 20 of Schedule 7A (required contents of interest restriction return: full returns and abbreviated returns), after sub-paragraph (5) insert—
Consequential amendments
In section 411 (definitions of “relevant expense amount” and “relevant income amount”), omit subsection (4).
In section 494(1) (other interpretation), after “interest restriction return” insert—.
In Part 7 of Schedule 11 (index of defined expressions used in Part 10 of TIOPA 2010), at the appropriate place insert—
Commencement
The amendments made by paragraphs 2, 5 to 11 and 14(2) and (4) have effect in relation to periods of account of worldwide groups that begin on or after 1 January 2019.
In this paragraph “period of account” and “worldwide group” have the same meaning as in Part 10 of TIOPA 2010.
The amendments made by paragraphs 3 and 4 have effect in relation to any change in ownership taking place on or after 29 October 2018.
Part 10 of TIOPA 2010 has effect, and is to be deemed always to have had effect, with the amendments made by paragraphs 12, 13, 14(3) and 19 to 21.
The amendment made by paragraph 17 has effect where the affected period ends on or after 29 October 2018.
The amendment made by paragraph 18 has effect in relation to any interest restriction return submitted on or after 1 April 2019.
Transitional provision in case of interest allowance (alternative calculation) elections
This paragraph applies if—
an interest allowance (alternative calculation) election has been made before 7 November 2018 with effect in relation to any period of account of a worldwide group ending before that date, and
the election would, but for this paragraph, have been irrevocable as a result of paragraph 16(3)(b) of Schedule 7A to TIOPA 2010.
If the appointment of a reporting company has effect in relation to the first period of account of the group beginning on or after 7 November 2018, the reporting company may revoke the election so that it ceases to have effect in relation to that period of account and subsequent periods of account of the group.
The revocation—
must be made before the end of the period of 3 months beginning with the day on which this Act is passed, and
must be made by notice in writing given to an officer of Revenue and Customs (and, accordingly, paragraph 12(2) of Schedule 7A to TIOPA 2010 does not apply to the revocation).
Expressions used in this paragraph have the same meaning as in Part 10 of TIOPA 2010.
Eliminating tax mismatch for certain debt
Loan relationships with qualifying link
After section 352A of CTA 2009 insert—
In section 465B of CTA 2009 (meaning of “tax-adjusted carrying value”), in subsection (9), after paragraph (k) insert—.
Commencement and transitional provisions
The amendments made by this Schedule have effect for accounting periods beginning on or after 1 January 2019.
An accounting period beginning before and ending on or after 1 January 2019 is to be treated for the purposes of any provision made by this Schedule as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.
This paragraph applies in relation to an accounting period of a company beginning on 1 January 2019 (“the 2019 period”) to bring in credits or debits in respect of a loan relationship which is the external loan relationship for the purposes of section 352B of CTA 2009 so far as they would not otherwise be brought into account.
If there is a difference between—a credit or debit (as the case may be) of an amount equal to the difference must be brought into account for the purposes of Part 5 of CTA 2009 for the 2019 period in the same way as a credit or debit which is brought into account in determining the company's profit or loss for that period in accordance with generally accepted accounting practice.
the tax-adjusted carrying value of the liability representing the external loan relationship at the end of the accounting period of the company ending on 31 December 2018, and
the tax-adjusted carrying value of that liability at the beginning of the 2019 period,
Section 465B of CTA 2009 (meaning of “tax-adjusted carrying value”) applies for the purposes of this paragraph as it applies for the purposes of Part 5 of that Act.
Power to amend section 352B of CTA 2009
The Treasury may by regulations amend section 352B of CTA 2009.
The power conferred by this paragraph may not be exercised after 31 December 2019.
The regulations may contain incidental, supplementary, consequential and transitional provision and savings.
The consequential provision that may be made by the regulations includes provision amending any provision made by or under any Act.
The regulations may contain retrospective provision.
Annual investment allowance: periods straddling 1 January 2019 or 1 April 2023
Chargeable periods which straddle 1 January 2019
This paragraph applies in relation to a chargeable period which begins before 1 January 2019 and ends on or after that date (“the first straddling period”).
The maximum allowance under section 51A of CAA 2001 for the first straddling period is the sum of the maximum allowances that would be found if the following were treated as separate chargeable periods—
so much of the first straddling period as falls before 1 January 2019;
so much of the first straddling period as falls on or after that date.
But, so far as concerns expenditure incurred before 1 January 2019, the maximum allowance under section 51A of CAA 2001 for the first straddling period is what would be the maximum allowance if the modification made by section 32(1) were not made.
Chargeable periods which straddle 1 April 2023
This paragraph applies in relation to a chargeable period (“the second straddling period”) which begins before 1 April 2023 and ends on or after that date.
The maximum allowance under section 51A of CAA 2001 for the second straddling period is the sum of the maximum allowances that would be found if the following were treated as separate chargeable periods—
so much of the second straddling period as falls before 1 April 2023;
so much of the second straddling period as falls on or after that date.
But, so far as concerns expenditure incurred on or after 1 April 2023, the maximum allowance under section 51A of CAA 2001 for the second straddling period is the maximum allowance, calculated in accordance with sub-paragraph (2), for the period mentioned in paragraph (b) of that sub-paragraph.
Operation of annual investment allowance where restrictions apply
Paragraphs 1 and 2 apply for the purpose of determining the maximum allowance under section 51K of CAA 2001 (operation of annual investment allowance where restrictions apply) in a case where one or more chargeable periods in which the relevant AIA qualifying expenditure is incurred are chargeable periods within paragraph 1(1) or 2(1).
There is to be taken into account for that purpose only chargeable periods of one year or less (whether or not they are chargeable periods within paragraph 1(1) or 2(1)), and, if there is more than one such period, only that period which gives rise to the greatest maximum allowance.
Sub-paragraph (4) applies to a chargeable period if—
it is longer than one year, and
any part of the chargeable period is within the period beginning with 1 January 2019 and ending with 31 March 2023.
For the purposes of sub-paragraph (2) the chargeable period (the “relevant period”) is to be divided into two periods, as follows—
a chargeable period of one year ending when the relevant period ends, and
a chargeable period consisting of so much of the relevant period as is not within paragraph (a).
Nothing in this paragraph affects the operation of sections 51M and 51N of CAA 2001.
Leases: changes to accounting standards etc
Finance leases: amendments as a result of changes to accounting standards
Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
In section 67 (plant or machinery treated as owned by person entitled to benefit of contract, etc), in subsection (2B), for the words from “falls (or would fall)” to the end substitute
In section 70E (disposal events and disposal values), in subsection (2D)(a), after “finance charges” insert “ , or interest expenses, ”.
In section 70YA (changes in accountancy classification of long funding leases)—
in subsection (1)(b), for “or an operating lease” substitute “ , an operating lease or a right-of-use lease ”,
in subsection (4)—
for “or an operating lease” substitute “ , an operating lease or a right-of-use lease ”, and
for “and (6)” substitute “ to (6A) ”,
in subsection (5)—
omit the “and” at the end of paragraph (a), and
after paragraph (b) insert,
in subsection (6)—
omit the “and” at the end of paragraph (a), and
after paragraph (b) insert,
after subsection (6) insert—, and
after subsection (10) insert—
In section 70YI (general definitions), in subsection (1)—
for the definition of “long funding finance lease” substitute—, and
at the appropriate places insert—;.
In section 228J (anti-avoidance: plant or machinery subject to further operating lease), in subsection (7)—
for paragraph (a) substitute—, and
in paragraph (b), for the words from “fall” to the end substitute
ITTOIA 2005 is amended as follows.
In section 148G (lessee under long funding finance lease: limit on deductions), in subsection (2), after “finance charges” insert “ , or interest expenses, ”.
After that section insert—
In section 809BZN of ITA 2007 (finance arrangements: exceptions), after subsection (9) insert—
CTA 2010 is amended as follows.
In section 288 (sale and lease-back)—
in subsection (5), for sub-paragraph (a) substitute—, and
in subsection (9), for the definition of “long funding operating lease” substitute—.
In section 331 (meaning of “financing costs” etc)—
in subsection (3), after paragraph (d) insert—,
in subsection (4)(a), after “finance charge” insert “ , or an interest expense, ”,
for subsection (6) substitute—, and
in subsection (9)—
omit the “and” at the end of the definition of “exchange gains” and “exchange losses”, and
after that definition insert—
In section 377 (lessee under long funding finance lease: limit on deductions), in subsection (3), after “as finance charges” insert “ , or interest expenses, ”.
After that section insert—
In section 381 (interpretation of Chapter 2 of Part 9), in subsection (2), for the definition of “long funding finance lease” substitute—.
In section 437 (interpretation of the sales of lessors Chapters)—
for subsection (4) substitute—, and
in subsection (6), for “and “long funding operating lease”” substitute “, “long funding operating lease” and “right-of-use lease””.
In section 544 (meaning of “property profits” and “property financing costs”), after subsection (5) insert—
In section 771 (finance arrangements: exceptions), after subsection (9) insert—
In section 494 of TIOPA 2010 (corporate interest restriction: other interpretation), in subsection (1)—
for the definition of “finance lease” substitute—, and
insert at the appropriate place—.
Commencement
The amendments made by this Part of this Schedule have effect in relation to periods of account beginning on or after 1 January 2019.
But, for the purposes of Chapter 7 of Part 10 of TIOPA 2010 (corporate interest restriction: group-interest and group-EBITDA), the amendments made by paragraph 5 have effect in relation to periods of account of a worldwide group (within the meaning given by section 480 of that Act) beginning on or after 1 January 2019.
Long funding leases
Amendments to Part 2 of CAA 2001
Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
Meaning of “short lease”
In section 70I (“short lease”)—
in subsections (2) and (9)(d), for “5” substitute “ 7 ”, and
omit subsections (3) to (8).
In section 70YF (the “term” of a lease)—
in subsection (5)(b), for “5” substitute “ 7 ”,
in subsection (6), for “5” substitute “ 7 ”, and
omit subsection (7).
In section 220 (allocation of expenditure to a chargeable period), in subsection (4)(c), for “5” substitute “ 7 ”.
The lease payments test: interest rate implicit in lease
Section 70O (the lease payments test) is amended as follows.
In subsection (4), for paragraph (b) substitute—
After that subsection insert—
Commencement
The amendments made by this Part of this Schedule have effect in relation to leases entered into on or after 1 January 2019.
Changes to accounting standards and tax adjustments
Repeal of section 53 of FA 2011
In FA 2011, omit section 53 (leases and changes to accounting standards).
The amendment made by this paragraph has effect in relation to periods of account beginning on or after 1 January 2019.
But, for the purposes of Chapter 7 of Part 10 of TIOPA 2010 (corporate interest restriction: group-interest and group-EBITDA), the amendment made by this paragraph has effect in relation to periods of account of a worldwide group (within the meaning given by section 480 of that Act) beginning on or after 1 January 2019.
Transitional provisions following repeal of section 53 of FA 2011: introductory
This paragraph and paragraphs 13 to 17 modify the effect of the change of basis provisions in relation to periods of account of a lessee beginning on or after 1 January 2019 if the lease is one—
in respect of which, under generally accepted accounting practice, a right-of-use asset falls (or would fall) to be recognised for accounting purposes in the accounts of the lessee for any period of account (whether beginning before or on or after that date), and
which would not fall to be treated in those accounts as a finance lease if the lessee were required under generally accepted accounting practice to determine whether the lease would fall to be treated in those accounts as a finance lease.
In this Part of this Schedule, “the change of basis provisions” means—
Chapter 17 of Part 2 and Chapter 7 of Part 3 of ITTOIA 2005 (adjustment income), and
Chapter 14 of Part 3 and sections 261 and 262 of CTA 2009 (adjustment on change of basis).
Cases where asset first recognised for period of account beginning on or after 1 January 2019
This paragraph applies if the first period of account for which the right-of-use asset falls (or would fall) to be recognised for accounting purposes in the accounts of the lessee begins on or after 1 January 2019 (referred to in the following provisions of this paragraph as “the first period of account”).
Any adjustment income or adjustment expense, or any receipt or expense, treated by any of the change of basis provisions as arising in consequence of a change of accounting policy that results in the right-of-use asset being first recognised for accounting purposes is to be treated as arising over a period (“the spreading period”) determined in accordance with the following steps—Step 1 Find for each lease the amount by which the credits exceed the debits (or vice-versa). For this purpose, the credits and the debits are the amounts which, under generally accepted accounting practice—are taken to equity as adjustments in the accounts of the lessee for the first period of account, and are in consequence of the change of accounting policy that results in the right-of-use asset being first recognised for accounting purposes in those accounts. Step 2 Calculate for each lease the percentage (“the relevant percentage”) that—the amount found under Step 1 for the lease bears to the total of all amounts found under Step 1 (treating such amounts as positive amounts). Step 3 Find for each lease the period which results from applying the relevant percentage to the term of the lease that remains unexpired as at the date on which the first period of account begins. For this purpose, the term of a lease is to be determined in accordance with generally accepted accounting practice as it applies for the first period of account. Step 4 Calculate the sum of all periods found under Step 3. Step 5 The spreading period is the period equal to the sum calculated under Step 4 beginning with the day on which the first period of account begins.
An amount to be treated as arising in any period falling wholly or partly in the spreading period is to be determined in proportion to the number of days of the period falling within the spreading period.
This paragraph is subject to paragraphs 15 and 16 (transfers of leases and cessation of activities).
Cases where asset first recognised for an earlier period of account
This paragraph applies if the first period of account for which the right-of-use asset falls (or would fall) to be recognised for accounting purposes in the accounts of the lessee begins before 1 January 2019.
The change of basis provisions and this Part of this Schedule have effect—
as if there were a change of accounting policy with respect of the accounts of the lessee for the first period of account beginning on or after 1 January 2019, and
as if that period of account were the first period of account for which the right-of-use asset falls (or would fall) to be recognised for accounting purposes in the accounts of the lessee.
Certain cases where there is a transfer of a lease
This paragraph applies if—
before the whole of an amount has been treated by paragraph 13 as arising to the lessee, there is a transfer of a lease or part of a lease from the lessee to another person,
the transferee is connected to the lessee,
immediately after the transfer, the transferee carries on activities the profits of which are chargeable to income tax or corporation tax, and
the transfer is not one where it is reasonable to suppose that the transfer is, or arrangements of which the transfer is part are, designed to avoid tax.
The amount is to continue to be dealt with in accordance with paragraph 13 but is to be treated as arising to the transferee over so much of the spreading period as falls on or after the date on which the transfer takes place.
If, following the transfer, it is necessary to apportion between more than one person an amount treated by paragraph 13 or this paragraph as arising, the apportionment is to be made on a just and reasonable basis.
In this paragraph—“connected” is to be read in accordance with sections 993 and 994 of ITA 2007 and sections 1122 and 1123 of CTA 2010, and“the spreading period” has the same meaning as in paragraph 13.
Cases where lessee permanently ceases to carry on activities
Sub-paragraph (2) applies if—
before the whole of an amount has been treated by paragraph 13 as arising, the lessee permanently ceases to carry on activities the profits of which are chargeable to income tax or corporation tax, and
the whole of the amount so far as not treated by paragraph 13 as arising is not treated by paragraph 15(2) as arising to a transferee.
The amount so far as not otherwise treated as arising—immediately before the cessation.
is to be treated as arising to the lessee, and
is to be brought into account in calculating the profits of the lessee,
Application of paragraphs 12 to 16 to lease portfolios
This paragraph applies if a lessee, in accordance with generally accepted accounting practice, prepares accounts by reference to a portfolio of leases having similar characteristics rather than by reference to the individual leases.
Paragraphs 12 to 14 and 16 apply to the portfolio (subject to any necessary modifications) in the same way as they apply to a lease.
If there is a transfer of the portfolio (or an individual lease within the portfolio), paragraph 15 applies to the transfer (subject to any necessary modifications) in the same way as it applies to the transfer of a lease.
Corporate interest restriction: changes of accounting policy
In section 426 of TIOPA 2010 (changes of accounting policy), in subsection (3), after paragraph (e) insert—
The amendment made by this paragraph has effect in relation to periods of account of a worldwide group (within the meaning given by section 480 of TIOPA 2010) beginning on or after 1 January 2019.
Corporate interest restriction: treatment of certain adjustments
Sub-paragraph (2) applies if—
an amount is brought into account for corporation tax purposes for a period of account beginning on or after 1 January 2019 as a receipt or expense treated by any of the change of accounting policy provisions as arising to a company which is a lessee,
the receipt or expense is treated as arising to the company in consequence of a change of accounting policy relating to a lease in respect of which the company is the lessee,
under the old accounting policy, the lease fell to be treated as a finance lease in the accounts of the company, and
under the new accounting policy, the lease would fall to be treated as a right-of-use lease in those accounts but for—
the short term of the lease, or
the low value of the leased asset.
For the purposes of Part 10 of TIOPA 2010 (corporate interest restriction)—
if the amount is brought into account as an expense, “tax-interest expense amount” (see section 382 of that Act) does not include that amount;
if the amount is brought into account as a receipt, “tax-interest income amount” (see section 385 of that Act) does not include that amount.
This paragraph has effect in relation to adjustments to which the financial statements of a worldwide group are treated by section 426 of TIOPA 2010 (changes in accounting policy) as subject in the same way as it has effect in relation to adjustments made under the change of accounting policy provisions by a company and accordingly—
if the amount is brought into account as an expense, “relevant expense amount” (see section 411(1) of that Act) does not include that amount;
if the amount is brought into account as a receipt, “relevant income amount” (see section 411(2) of that Act) does not include that amount.
In this paragraph—“the change of accounting policy provisions” means Chapter 14 of Part 3 and sections 261 and 262 of CTA 2009 (adjustment on change of basis), and“right-of-use lease” has the meaning given by section 494 of TIOPA 2010 (other interpretation).
Oil activities: transferable tax history
Election to transfer tax history
Entitlement to make a TTH election
This Schedule applies if, on or after 1 November 2018, the OGA gives consent for a company (the “seller”) to sell an interest in a UK oil licence to another company (the “purchaser”).
On or after the licence transfer date, the seller and purchaser may jointly make a TTH election in respect of an interest (“the TTH asset”) in a transferred oil field (the “TTH oil field”).
A “TTH election” is an election for—
an amount of the seller's ring fence profits (the “total TTH amount”) to be treated, in accordance with the provisions of this Schedule, as if it were an amount of the purchaser's profits (instead of the seller's profits), and
a corresponding amount of the seller's adjusted ring fence profits to be so treated for the purpose of Chapter 6 of Part 8 of CTA 2010 (supplementary charge).
The total TTH amount
The total TTH amount
The total TTH amount may comprise—
an amount representing the seller's eligible ring fence profits for the reference accounting period, and
amounts representing the seller's eligible ring fence profits for so many of the preceding accounting periods ending on or after 17 April 2002 as the seller and purchaser may determine.
Sub-paragraph (1) is subject to—
paragraph 4 (limits on total TTH amount),
paragraph 11 (consecutive accounting periods), and
paragraph 12 (the transferred profits amount for an accounting period).
See—
paragraph 13 for the meaning of “eligible ring fence profits”, and
paragraph 102 for the meaning of “reference accounting period” in relation to the seller.
Limits on total TTH amount
The total TTH amount must not exceed the lower of—
the uplifted decommissioning costs estimate in relation to the TTH asset, and
the total amount of the seller's eligible ring fence profits for the period—
beginning with 17 April 2002, and
ending at the end of the reference accounting period.
The “uplifted decommissioning costs estimate”
To determine the “uplifted decommissioning costs estimate” in relation to the TTH asset—
determine the transferred proportion of the net cost amount (see paragraphs 6 and 7),
allocate the relevant proportion of the amount determined under paragraph (a) to the TTH asset (see paragraph 8),
adjust the allocated amount in accordance with paragraph 9, and
double the adjusted amount.
The “net cost amount” is the appropriate DSA estimate of the decommissioning costs for the TTH oil field.
A “DSA estimate” is an estimate approved for the purposes of a qualifying decommissioning security agreement.
If there is only one qualifying decommissioning security agreement relating to the TTH oil field, the “appropriate DSA estimate” is the most recent DSA estimate approved for the purposes of that agreement within the relevant period.
If there is more than one qualifying decommissioning security agreement relating to the TTH oil field, the “appropriate DSA estimate” is the lowest of the DSA estimates approved for the purposes of any of those agreements within the relevant period.
For the purposes of sub-paragraphs (3) and (4), the “relevant period” is the period of 12 months ending with—
the date on which the TTH election is made, or
in a case where the hive down condition (see paragraph 56(5)) is met, the date on which the seller and the purchaser cease to be associated with one another.
The “transferred proportion” of the net cost amount is the proportion of the decommissioning costs for the TTH oil field that, under the qualifying decommissioning security agreement for the purposes of which the appropriate DSA estimate is approved, is allocated to—
the seller, in the case of an agreement entered into before the sale of the interest in the UK oil licence concerned, or
the purchaser, in the case of an agreement entered into on or after that date.
In paragraph 5(b), the “relevant proportion” means—
the proportion that the interest in the TTH oil field which is the TTH asset bears to—
the seller's other interests in the TTH oil field, if paragraph 7(a) applies, or
the purchaser's other interests in the TTH oil field, if paragraph 7(b) applies, or
if the proportion cannot reasonably be determined in accordance with paragraph (a), such other proportion determined on a just and reasonable basis.
To adjust the allocated amount for the purposes of paragraph 5(c)—
disregard the adjustments listed in sub-paragraph (2) made, for the purposes of calculating the net cost amount, in accordance with the terms of the decommissioning security agreement, and
if, in making that calculation in accordance with those terms, the relevant proportion of the estimate of the decommissioning costs is increased by an amount to take account of inflation, disregard the amount (if any) by which the increase exceeds the standard inflation adjustment amount.
The adjustments to be disregarded are—
any discount applied by reference to the period of time expected to elapse before the decommissioning costs are payable in relation to the TTH oil field, and
any adjustment made for the purposes of taking account of the risk that the decommissioning costs for the TTH oil field will exceed the estimate of those costs.
The “standard inflation adjustment amount” means the amount (if any) by which the relevant proportion of the estimate of the decommissioning costs for the TTH oil field would be increased if an adjustment for the purposes of taking account of inflation were made on the basis specified by Her Majesty's Revenue and Customs for the purposes of this paragraph.
A “decommissioning security agreement” is an agreement entered into for the purpose of—
determining the costs of decommissioning an oil field, and
providing security for—
the performance of obligations under an abandonment programme for the purposes of section 38A of the Petroleum Act 1998 (whether or not such a programme has been approved at the time the agreement is entered into), or
the costs of decommissioning plant or machinery which is, or forms part of, a relevant onshore installation.
A decommissioning security agreement is “qualifying” for the purposes of this Schedule if—
the seller is a party to the agreement,
at least one of the parties is not associated with the seller, and
the estimate approved for the purposes of the agreement is a reasonable estimate of the decommissioning costs for the oil field.
In a case where the corporate restructuring condition (see paragraph 56(2)) is met, sub-paragraph (2)(a) has effect as if the reference to the seller were a reference to a party to the third party election (as defined in that paragraph).
In sub-paragraph (1)—“abandonment programme” has the meaning given by section 29 of the Petroleum Act 1998, and“relevant onshore installation” has the same meaning as in section 163 of CAA 2001 (see subsection (3C) of that section).
See paragraph 98 of this Schedule and section 271 of CTA 2010 for further provision about the meaning of “associated companies”.
Consecutive accounting periods
The total TTH amount may not include an amount representing the eligible ring fence profits for a particular accounting period (other than the reference accounting period) unless it also includes an amount representing the eligible ring fence profits for the next following qualifying accounting period.
An accounting period is “qualifying” for the purposes of this Schedule if the seller has eligible ring fence profits for that period.
The transferred profits amount
The transferred profits amount for an accounting period, other than the earliest period, must be an amount equal to the amount of the seller's eligible ring fence profits for the period.
The transferred profits amount for the earliest period must be an amount equal to the amount of the seller's eligible ring fence profits for that period, so far as that amount does not exceed the TTH balance for the earliest period.
The “TTH balance” for the earliest period is an amount equal to—
the total TTH amount, less
the transferred profits amounts for each later accounting period.
In this paragraph, “earliest period” means the earliest accounting period for which there is a transferred profits amount.
“Eligible ring fence profits”
Ring fence profits of an accounting period are “eligible” for the purposes of a TTH election if, as at the date the TTH election is made—
corporation tax is charged on the profits of that period at the main ring fence profits rate,
neither section 279B nor section 279C of CTA 2010 (marginal relief) applies in relation to the seller in that period,
the seller's liability to corporation tax in respect of the profits has been discharged in full, and
the total TTH amount for any other TTH election made by the seller (whether made with the purchaser or with another person) does not include an amount representing those profits.
In determining, for the purposes of this Schedule, the amount of the seller's eligible ring fence profits for an accounting period that falls partly before 17 April 2002, the amount of the seller's eligible ring fence profits for that period is to be reduced by the proportion which the part of the accounting period falling before that date bears to the whole of the accounting period.
Effect of a TTH election on the seller
Application of this Part
This Part applies if—
the seller and the purchaser have jointly made a TTH election in respect of the TTH asset, and
the TTH election has been approved by an officer of Revenue and Customs (see paragraphs 61 and 62).
Effect of a TTH election: corporation tax
Sub-paragraphs (2) and (3) apply if the seller makes a loss in a trade in an accounting period.
For the purposes of section 37(3)(b) of CTA 2010 (including for the purposes of that provision as it has effect under the other trade loss relief provisions), the seller's total profits of a pre-transfer accounting period are treated as being—
the seller's total profits for that period, less
the transferred profits amount for that period.
For the purposes of section 42 of CTA 2010, the seller's profits of a ring fence trade of a pre-transfer accounting period are treated as being—
the seller's ring fence profits for that period, less
the transferred profits amount for that period.
The transferred profits amount for an accounting period is to be disregarded for the purposes of the application of any provision of the Corporation Tax Acts by reference to which the seller would (apart from this paragraph) be entitled to relief from, or a repayment of, corporation tax.
Paragraphs 16 and 17 are subject to this paragraph.
If, on or after the licence transfer date, the seller's eligible ring fence profits for a pre-transfer accounting period are reduced to an amount which is lower than the transferred profits amount for that period—
the seller is treated as incurring a loss in a ring fence trade, of an amount equal to the difference, for the accounting period, and
paragraph 17 does not apply to the difference.
Effect of a TTH election: supplementary charge
Paragraphs 20 and 21 apply in relation to an accounting period for which there is a transferred profits amount.
The transferred adjusted ring fence profits amount for the accounting period is to be disregarded for the purposes of any provision of the Corporation Tax Acts by reference to which the seller would (apart from this paragraph) be entitled to a repayment of supplementary charge.
The “transferred adjusted ring fence profits amount” is—
in the case of an accounting period other than the earliest period, the amount of the seller's eligible adjusted ring fence profits for the period;
in the case of the earliest period, an amount equal to the transferred proportion of the seller's eligible adjusted ring fence profits for the period.
For the purposes of the application of any provision of Part 4 or Part 8 of CTA 2010 in relation to the seller—
the amount of each ARFP component, or (in the case of the earliest period) an amount equal to the transferred proportion of each ARFP component, for the accounting period is to be disregarded, and
in the case of the earliest period, references in those provisions to an ARFP component for the accounting period are to be treated as references to the retained proportion of that ARFP component for the period.
“ARFP component”, in relation to an accounting period, means—
the financing costs for the period that are left out of account for the purposes of the assumption mentioned in section 330(3) of CTA 2010, and
the amount of any reduction of the seller's adjusted ring fence profits by reference to the cumulative total amount of activated allowance for the period under any of the following provisions of CTA 2010—
section 332E (investment allowance),
section 356D (onshore allowance), and
section 356JG (cluster area allowance).
See paragraph 17 for provision about disregarding the transferred profits amount for an accounting period.
Sub-paragraph (1) does not apply in relation to the application of any provision for the purposes of determining the seller's eligible adjusted ring fence profits for an accounting period for the purposes of this Schedule.
For the purposes of paragraphs 20(2) and 21(1)—
“earliest period” has the meaning given by paragraph 12(4),
the “transferred proportion” is the same as the proportion that the transferred profits amount for the accounting period bears to the seller's ring fence profits amount for the period, and
the “retained proportion” is the same as the proportion that the retained profits amount for the accounting period bears to the seller's ring fence profits amount for the period.
In sub-paragraph (1)(c), “retained profits amount” means the amount of the difference between the amount of the seller's ring fence profits for the earliest period and the transferred profits amount for that period.
For the purposes of this Schedule, adjusted ring fence profits of an accounting period are “eligible” if—
an amount is charged on the profits under section 330(1) of CTA 2010 (supplementary charge in respect of ring fence trades), and
as at the TTH election is made, the seller's liability to tax under that section in respect of the adjusted ring fence profits has been discharged in full.
Effect of a TTH election on the purchaser
Application of this Part
This Part applies if—
the seller and the purchaser have jointly made a TTH election in respect of the TTH asset,
the TTH election has been approved by an officer of Revenue and Customs (see paragraphs 61 and 62),
the winning of oil from the TTH oil field has permanently ceased, and
in a post-acquisition accounting period (the “loss period”)—
the purchaser makes a loss in a ring fence trade,
the loss is a decommissioning loss, and
the purchaser holds, for the loss period, an activated TTH amount (see Parts 5 and 6).
In paragraph 23(d)(ii), “decommissioning loss” means a loss in respect of which—
relief is given under section 42 of CTA 2010 (ring fence trades: further extension of period for relief).
Effect of trade loss relief provisions
The total activated TTH amount held by the purchaser for the loss period is to be applied in accordance with sub-paragraph (2)(b) or (3)(b).
The purchaser's total profits of a pre-acquisition accounting period are to be treated, for the purposes of section 37(3)(b) of CTA 2010 (including for the purposes of that provision as it has effect under the other trade loss relief provisions) as being the total of—
the amount of the purchaser's total profits for that period, and
if and so far as the loss in respect of which relief is claimed exceeds the amount mentioned in paragraph (a), the activated transferred profits amount for that period.
The purchaser's profits of a ring fence trade of a pre-acquisition accounting period are to be treated for the purposes of section 42 of CTA 2010, as being the total of—
the purchaser's profits of a ring fence trade for that period, and
if and so far as the loss in respect of which relief is claimed exceeds the amount mentioned in paragraph (a), the activated transferred profits amount for that period.
The “activated transferred profits amount” for a pre-acquisition accounting period means the amount allocated to the period under paragraph 44 for the purposes of the application of this paragraph in relation to the loss period.
See paragraphs 38 to 42 for provision about the “total activated TTH amount”.
Repayment of supplementary charge
This paragraph applies where, in respect of a loss period, an activated transferred profits amount for a pre-acquisition accounting period is to be applied in accordance with paragraph 25(2)(b) or (3)(b).
A repayment of tax to be determined as if—
an amount had been charged under section 330(1) of CTA 2010 in respect of the activated ARFP amount for the pre-acquisition accounting period,
that amount had been charged on, and paid by, the purchaser (instead of the seller), and
the transferred adjusted ring fence profits amount for the pre-acquisition accounting period were recalculated in accordance with paragraph 50.
See paragraph 53 for provision about the “activated ARFP amount”.
In this Schedule, references to the transferred adjusted ring fence profits amount for a pre-acquisition accounting period of the purchaser are references to—
the transferred adjusted ring fence profits amount (see paragraph 20(2)) for the accounting period of the seller which coincides with the pre-acquisition accounting period of the purchaser, or
if there is no coinciding accounting period of the seller, the overlapping proportion of the transferred adjusted ring fence profits amount for each accounting period of the seller that overlaps with the pre-acquisition accounting period of the purchaser.
The overlapping proportion, in relation to an accounting period of the seller, is the same as the proportion that the part of the seller's accounting period that overlaps with the pre-acquisition accounting period of the purchaser bears to the whole of the seller's accounting period.
Supplementary provision: repayment and enquiries
For the purposes of section 59D(2) of TMA 1970 (repayment of excess corporation tax), the following amounts paid by the seller are treated as having been paid by the purchaser—
the amount of corporation tax in respect of an activated transferred profits amount, for a pre-acquisition accounting period, that is applied in accordance with 25(2)(b) or (3)(b), and
the amount of supplementary charge in respect of the transferred adjusted ring fence profits amount for that accounting period.
An enquiry under Part 4 of Schedule 18 to FA 1998 into a tax return for the accounting period in which the claim under section 37 of CTA 2010 in respect of a decommissioning loss in a loss period is made (see paragraphs 23 and 24), or an enquiry into the claim under Schedule 1A to TMA 1970, extends to—
the decommissioning expenditure amount attributable to the TTH oil field for any accounting period,
the tracked profit or loss amount attributable to the TTH asset for any accounting period, and
whether a TTH activation event has occurred in relation to the TTH asset.
See Part 5 for provision about “the decommissioning expenditure amount” and a TTH activation event, and paragraphs 64 and 65 for provision about the “tracked profit and loss amount”.
TTH activation
TTH activation event
A TTH activation event occurs in relation to the TTH asset if—
the winning of oil from the TTH oil field has permanently ceased, and
at the end of a post-acquisition accounting period of the purchaser, the total decommissioning expenditure amount exceeds the total net profits amount.
The “total decommissioning expenditure amount” is the relevant proportion of the total of the decommissioning expenditure amounts (see paragraph 31) attributable to the TTH oil field, in respect of which an allowance or allocation is made to the purchaser, for—
the period mentioned in sub-paragraph (1)(b), and
each preceding accounting period which is a post-acquisition accounting period.
The “total net profits amount” is the aggregate of the tracked profit or loss amounts (see paragraphs 64 and 65) attributable to the TTH asset for—
the period mentioned in sub-paragraph (1)(b), and
each preceding accounting period which is a post-acquisition accounting period.
But if the aggregate of the tracked profit or loss amounts attributable to the TTH asset for the periods mentioned in sub-paragraph (3)(a) and (b) is a negative amount, the total net profits amount is nil.
In this paragraph, “the relevant proportion” means the proportion that the interest in the TTH oil field which is the TTH asset bears to the purchaser's other interests in the TTH oil field or, if the proportion cannot reasonably be determined on that basis, such other proportion determined on a just and reasonable basis.
Decommissioning expenditure amount
The “decommissioning expenditure amount” attributable to the TTH oil field for an accounting period, is the total of each of the following amounts attributable to the field for the post-acquisition accounting period—
the special allowance amount,
the post-cessation expenditure amount, and
the restoration expenditure amount.
The “special allowance amount” for an accounting period is the amount of a special allowance made under section 164 of CAA 2001 (general decommissioning expenditure incurred before cessation of ring fence trade) for that period.
A special allowance amount is attributable to the TTH oil field so far as the expenditure in respect of which the allowance is made is expenditure incurred on decommissioning plant or machinery brought into use for the purposes of oil-related activities carried on wholly or partly in direct connection with the field.
The “post-cessation expenditure amount” for an accounting period is the amount that, under section 165(3)(a) of CAA 2001 (general decommissioning expenditure after ceasing ring fence trade), is allocated to the appropriate pool for that period.
A post-cessation expenditure amount is attributable to the TTH oil field so far as the general decommissioning expenditure in respect of which the amount is allocated is expenditure incurred on decommissioning plant or machinery brought into use for the purposes of oil-related activities carried on wholly or partly in direct connection with the field.
The “restoration expenditure amount” for an accounting period is the amount that is treated as qualifying expenditure under section 416ZA of CAA 2001 (ring fence trades: expenditure on site restoration) for that period.
A restoration expenditure amount is attributable to the TTH oil field if the qualifying expenditure is incurred in relation to the field.
For the purposes of paragraphs 32(2), 33(2) and 34(2), expenditure for an accounting period is to be apportioned between the TTH oil field and other oil fields (or parts of oil fields) on a just and reasonable basis.
Allocation of activated TTH amount
Application of this Part
This Part of this Schedule applies if a TTH activation event occurs in relation to the TTH asset.
In this Schedule—
“first activation period” means the first post-acquisition accounting period of the purchaser in which a TTH activation event occurs, and
“post-activation period” means a subsequent accounting period of the purchaser.
“Total activated TTH amount”
The “total activated TTH amount” held by the purchaser for a loss period which is the first activation period is the lower of—
the amount by which, at the end of that period, the total decommissioning expenditure amount exceeds the total net profits amount (see paragraph 30), and
the total TTH amount.
The “total activated TTH amount” held by the purchaser for a loss period which is a post-activation period is the lower of—
the adjusted activated TTH amount (see paragraphs 40 to 42), and
the closing balance of the total TTH amount for the immediately preceding accounting period (see paragraph 49).
This paragraph applies if, in relation to a post-activation period—
the relevant proportion of the decommissioning expenditure amount attributable to the TTH oil field for that period, exceeds
the tracked profit or loss amount attributable to the TTH asset for that period.
The “additional activated TTH amount” for the post-activation period is an amount equal to the excess.
For the purposes of paragraph 39, the adjusted activated TTH amount is the total of—
the closing balance of activated TTH for the immediately preceding accounting period, and
the additional activated TTH amount for the post-activation period.
In this paragraph and in paragraph 41, “relevant proportion” has the same meaning as in paragraph 30(5).
This paragraph applies if, in relation to a post-activation period—
the tracked profit or loss amount attributable to the TTH asset for that period, exceeds
the relevant proportion of the decommissioning expenditure amount attributable to the TTH oil field for that period.
The “TTH reduction amount” for the post-activation period is an amount equal to the excess.
If the TTH reduction amount is less than the closing balance amount, the adjusted activated TTH amount for the purposes of paragraph 39 is an amount equal to the difference.
If the TTH reduction amount is equal to, or greater than, the closing balance amount, the adjusted activated TTH amount for the purposes of paragraph 39 is nil.
In this paragraph, references to the “closing balance amount” are references to the closing balance of activated TTH for the accounting period immediately preceding the post-activation period.
If neither paragraph 40 nor paragraph 41 applies in relation to a post-activation period, the “adjusted activated TTH amount” for the purposes of paragraph 39 is—
an amount equal to the closing balance of activated TTH for the immediately preceding accounting period, if it is greater than nil, or
nil, if the closing balance of activated TTH for the immediately preceding accounting period is nil or a negative amount.
Allocation of activated TTH to an accounting period
Paragraph 44 applies for the purposes of paragraph 25 (effect of trade loss relief provisions in relation to the purchaser).
The total activated TTH amount for a loss period is to be allocated, for the purposes of the application of paragraph 25 in relation to that loss period, to pre-acquisition accounting periods of the purchaser as follows—Step 1 Take the most recent pre-acquisition accounting period for which there is an unused transferred profits amount which is greater than nil. Step 2 Allocate to that pre-acquisition accounting period an amount equal to the lower of—the unused transferred profits amount, and the total activated TTH amount held by the purchaser for the loss period. Step 3 Allocate to the next most recent pre-acquisition accounting period an amount equal to the lower of—the transferred profits amount for that period, and the available activated TTH amount for the loss period. Step 4 Repeat Step 3 (taking later pre-acquisition accounting periods before earlier ones) until the amount given by paragraph (a) or (b) is nil.
Transferred profits amount for a pre-acquisition accounting period
In this Schedule, references to the transferred profits amount for a pre-acquisition accounting period of the purchaser are references to—
the transferred profits amount for the accounting period of the seller which coincides with the pre-acquisition accounting period of the purchaser, or
if there is no coinciding accounting period of the seller, the overlapping proportion of the transferred profits amount for each accounting period of the seller that overlaps with the pre-acquisition accounting period of the purchaser.
The overlapping proportion, in relation to an accounting period of the seller, is the same as the proportion that the part of the seller's accounting period that overlaps with the pre-acquisition accounting period of the purchaser bears to the whole of the seller's accounting period.
“Unused transferred profits amount”
This paragraph applies for the purposes of Steps 1 and 2 of paragraph 44.
If the loss period is the first activation period, the reference to the “unused transferred profits amount” for a pre-acquisition accounting period is a reference to the transferred profits amount for that period.
If the loss period is a post-activation period, the reference to the “unused transferred profits amount” for a pre-acquisition accounting period is a reference to the amount equal to—
the transferred profits amount for the pre-acquisition accounting period, less
the total of the amounts applied for the pre-acquisition accounting period in accordance with paragraph 25, for the purposes of the application of that paragraph in relation to the first activation period or an earlier post-activation period.
“Available activated TTH amount”
This paragraph applies for the purposes of allocating an amount to a pre-acquisition accounting period under Step 3 of paragraph 44.
The “available activated TTH amount” held by the purchaser for the loss period, is an amount equal to—
the total activated TTH amount for the period, less
the total of the activated transferred profits amounts allocated under paragraph 44 to later pre-acquisition accounting periods.
In sub-paragraph (2)(b) the reference to “later pre-acquisition accounting periods” is a reference to pre-acquisition accounting periods that begin after the period mentioned in sub-paragraph (1).
“Closing balance of activated TTH”
The closing balance of activated TTH for the first activation period, or a post-activation period in relation to which paragraph 40, 41(3) or 42 applies, the closing balance of activated TTH for the period is—
the total activated TTH amount held by the purchaser for that period, less
the amount applied in accordance with paragraph 25 for that period.
If paragraph 41(4) applies in relation to a post-activation period, the closing balance of activated TTH for the period is the negative amount determined by deducting—
the TTH reduction amount for that period, from
the closing balance of activated TTH for the immediately preceding accounting period.
“Closing balance of the total TTH amount”
The closing balance of the total TTH amount for an accounting period is—
the total TTH amount, less
the total of the amounts (if any) applied in accordance with paragraph 25 for that accounting period and earlier accounting periods.
Supplementary charge: recalculation of adjusted ring fence profits
Recalculation: steps
This paragraph applies for the purposes of recalculating the transferred adjusted ring fence profits amount for the pre-acquisition accounting period mentioned in paragraph 26(1) (for the purposes of paragraph 26(2)(c)).
The recalculated transferred adjusted ring fence profits amount for the period is the aggregate of—
the reduced ARFP amount for the pre-acquisition period (see paragraphs 51 and 52), and
the adjusted finance cost amount for the loss period mentioned in paragraph 26(1) (see paragraph 55).
But if the amount given by taking the steps in sub-paragraph (2) is a negative amount, the recalculated transferred adjusted ring fence profits amount is nil.
“Reduced ARFP amount”
To determine the “reduced ARFP amount” for a pre-acquisition accounting period—
take the activated ARFP amount for the period, and
reduce that amount by the amount applied, in relation to the loss period mentioned in paragraph 26(1), in accordance with paragraph 25(2)(b) or (3)(b) for the pre-acquisition accounting period.
This paragraph is subject to paragraph 52.
This paragraph (instead of paragraph 51) applies if the percentage specified in section 330(1) of CTA 2010 for the pre-acquisition accounting period mentioned in paragraph 26(1) is greater than 20%.
To determine the “reduced ARFP amount” for the pre-acquisition accounting period—
calculate the total of—
the activated ARFP amount for the period, and
the ARFP uplift amount for the period (see paragraph 54),
reduce the amount given by paragraph (a) by the amount applied, in relation to the loss period mentioned in paragraph 26(1), in accordance with paragraph 25(2)(b) or (3)(b) for the pre-acquisition accounting period.
“Activated ARFP amount”
The “activated ARFP amount” for a pre-acquisition accounting period is the amount equal to—(A/T)×ARFP where—A is the amount applied, in relation to the loss period, in accordance with paragraph 25(2)(b) or (3)(b) for the pre-acquisition accounting period, T is the unused transferred profits amount for that period, and
In sub-paragraph (1), “unused transferred profits amount” has the same meaning as it has for the purposes of Steps 1 and 2 of paragraph 44 (see paragraph 46).
Sub-paragraph (4) applies if, in respect of an earlier loss period—
an activated transferred profits amount for the pre-acquisition accounting period mentioned in paragraph 26(1) is applied in accordance with paragraph 25(2)(b) or (3)(b), and
a corresponding repayment is determined under paragraph 26(2) (an “earlier repayment”).
The amount of the transferred adjusted ring fence profits for the pre-acquisition accounting period is treated, for the purposes of sub-paragraph (1), as being reduced by an amount equal to the total of the activated ARFP amounts for that period for the purposes of each earlier repayment.
“ARFP uplift amount”
The “ARFP uplift amount” for a pre-acquisition accounting period is the amount equal to—((SC−20%)/SC)×A where—SC is the percentage specified in section 330(1) of CTA 2010 for the pre-acquisition accounting period, and A is the amount applied, in relation to the loss period, in accordance with paragraph 25(2)(b) or (3)(b) for the pre-acquisition accounting period.
“Adjusted finance cost amount”
The “adjusted finance cost amount” for a loss period is the amount equal to—(A/L)×FC where—A is the amount applied, in relation to the loss period, in accordance with paragraph 25(2)(b) or (3)(b) for the pre-acquisition accounting period, L is the amount of the decommissioning loss in the loss period (see paragraph 23(d)(i) and (ii)), and FC is the lower of—the amount of the financing costs brought into account under section 330(3) of CTA 2010 for the purposes of determining the purchaser's adjusted ring fence profits for the loss period, and the amount of the purchaser's loss in the ring fence trade for the loss period (see paragraph 23(d)(i)).
TTH elections: conditions and procedure
Election conditions: associated companies
A TTH election may only be made if—
the seller and purchaser are not associated with one another on the licence transfer date,
the corporate restructuring condition is met, or
the hive down condition is met.
The “corporate restructuring condition” is met for the purposes of a TTH election if —
the seller and purchaser are associated with one another on the licence transfer date, and
either—
a third party election is made in respect of the TTH asset within the permitted period, or
a hive down election is made in respect of the TTH asset within the permitted period.
For the purposes of sub-paragraph (2)(b)(i)—
a “third party election” is an election made between two companies that are not associated with one another, and
the “permitted period” in relation to a third party election in respect of the TTH asset is—
the period of 90 days ending with the licence transfer date referred to in sub-paragraph (2)(a), or
the period of 90 days beginning with that date.
For the purposes of sub-paragraph (2)(b)(ii)—
a “hive down election” is an election in respect of which the hive down condition is met, and
the “permitted period” in relation to a hive down election in respect of the TTH asset is the period of 180 days ending with the licence transfer date referred to in sub-paragraph (2)(a).
The “hive down” condition is met for the purposes of a TTH election if the seller and purchaser—
are associated with one another on the licence transfer date, but
before the end of the period of 90 days beginning with that date, the purchaser ceases to be associated with—
the seller, and
any other company that is associated with the seller.
See paragraph 98 of this Schedule and section 271 of CTA 2010 for further provision about the meaning of “associated companies”.
Election conditions: decommissioning relief agreements
If the seller is a party to a decommissioning relief agreement, a TTH election may only be made if the agreement provides for the total TTH amount to be disregarded when determining the reference amount.
In this Schedule, “decommissioning relief agreement” and “reference amount” have the meaning given by section 80(2) of FA 2013.
Timing of election
A TTH election in respect of a TTH asset may not be made—
before the licence transfer date, or
after the end of the period of 90 days beginning with that date or, if later, 1 June 2019.
Paragraph 3 of Schedule 1A to TMA 1970 (amendment of claims and elections) does not apply in relation to a TTH election (but see paragraph 74 (amounts discovered to be incorrect)).
Content
The election must contain such information and declarations as an officer of Revenue and Customs may reasonably require.
The officer may, in particular, require information and declarations as to—
the TTH asset to which the election relates,
the amount of the seller's taxable profits that are represented by the total TTH amount and each transferred profits amount,
the rate of tax chargeable on those taxable profits, and the amount of tax paid,
any decommissioning security agreement which relates to the TTH oil field and the seller, and any estimate of the decommissioning costs for the field determined for the purposes of any such agreement, and
any decommissioning relief agreement to which the seller is a party (see paragraph 57).
Timing of an enquiry: cases where the corporate restructuring condition is met
This paragraph applies if—
a TTH election is made, and
the corporate restructuring condition or the hive down condition is met in relation to that election.
Paragraph 5(2)(a) of Schedule 1A to TMA 1970 (power to enquire into claims: time limits) has effect in relation to the election as if the reference in that provision to the day on which the claim was made were a reference to—
in a case where the corporate restructuring condition is met by reference to paragraph 56(2)(b)(i), the day on which the third party election was made;
in a case where the corporate restructuring condition is met by reference to paragraph 56(2)(b)(ii), the day on which the seller and purchaser cease to be associated with one another;
in a case where the hive down condition is met, the day on which the seller and the purchaser ceased to be associated with one another.
TTH elections: approval
Approval notice
An officer of Revenue and Customs may approve the TTH election by giving notice in writing (an “approval notice”) to the seller and the purchaser.
Deemed approval
If no approval notice or enquiry notice is given, in respect of the TTH election, before the end of the period mentioned in paragraph 5(2) of Schedule 1A to TMA 1970 (time limit for opening an enquiry), the election is deemed to have been approved by an officer of Revenue and Customs at the end of that period.
In sub-paragraph (1), the reference to an “enquiry notice” is a reference to a notice under paragraph 5(1) of Schedule 1A to TMA 1970 (intention to enquire into a claim or election).
Conditions of approval
The purchaser is required, as a condition of the approval of the election—
to comply with the profit tracking requirements in relation to—
the accounting period in which the interest in a UK oil licence, referred to in paragraph 1, is acquired by the purchaser, and
each subsequent accounting period; and
to keep and preserve records, in accordance with such requirements as may be specified by an officer of Revenue and Customs, for the purposes of giving effect to this Schedule.
Profit tracking requirements
The purchaser complies with the profit tracking requirements in relation to an accounting period if the purchaser's company tax return for the period is accompanied by a statement of the tracked profit or loss amount for the period.
The “tracked profit or loss amount” for an accounting period is the amount of profit or loss that is attributable to the TTH asset, excluding the relevant proportion of the decommissioning expenditure amount attributable to the TTH oil field, for that period.
In sub-paragraph 64(2), “relevant proportion” has the same meaning as in paragraph 30 (see paragraph 30(5)).
For the purposes of determining the tracked profit or loss amount for an accounting period—
just and reasonable apportionments are to be made of the receipts, expenses, assets and liabilities of—
the purchaser, and
any other company that is associated with the purchaser and has an interest in the TTH asset (including an interest in a share in the oil won and saved in the TTH oil field), and
for the purposes of paragraph (a), an officer of Revenue and Customs may require that financing costs for an accounting period are to be apportioned on such basis as the officer may reasonably specify before the beginning of that period.
In this paragraph “financing costs” has the meaning it has for the purposes of section 330 of CTA 2010 (see section 331 of that Act).
Senior tracking officers
The purchaser's senior tracking officer must—
take reasonable steps to ensure that the tracked profit and loss amount attributable to a TTH asset for each tracking period is determined in accordance with paragraph 65, and
provide the Commissioners for Her Majesty's Revenue and Customs with a certificate as to compliance with paragraph (a).
For each tracking period, the purchaser must notify the Commissioners for Revenue and Customs of the name of each person who was its senior tracking officer at any time during the period.
The certificate under sub-paragraph (1)(b), and the notice under sub-paragraph (2), must be given—
in the form and manner specified by an officer of Revenue and Customs, and
on or before the filing date for the purchaser's tax return for the tracking period (see paragraph 14 of Schedule 18 to FA 1998).
In this Part, “tracking period”, in relation to the TTH asset, means each accounting period in relation to which the purchaser is required under paragraph 63(a) to comply with the profit tracking requirements.
The purchaser's “senior tracking officer” is the officer of the purchaser or of an associated company who, in the purchaser's reasonable opinion, has overall responsibility for the purchaser's financial accounting arrangements.
In this section, “officer”, in relation to a company, means—
a director,
a manager,
a secretary, and
any other person managing or purporting to manage any of the company's affairs.
The senior tracking officer is liable to a penalty of £5,000 if the officer, without reasonable excuse—
fails to comply with paragraph 66(1)(a) at any time in a tracking period, or
fails to provide a certificate in accordance with paragraph 66(1)(b) and (3).
The senior tracking officer is not liable to more than one penalty under paragraph 68(1)(a) in respect of the TTH asset and the same tracking period.
If the purchaser, without reasonable excuse, fails to give a notice in accordance with paragraph 66(2) and (3), the purchaser is liable to a penalty of £5,000.
If (but for this sub-paragraph) more than one person would be liable for a penalty under sub-paragraph 68(1)(a) or (b) in respect of the TTH asset and a tracking period, only the person who became the senior tracking officer latest in the tracking period is liable to such a penalty.
Where a senior tracking officer, or the purchaser, becomes liable for a penalty under paragraph 68—
Her Majesty's Revenue and Customs may assess the penalty, and
if they do so, they must notify the person liable for the penalty.
An assessment of a penalty under this Part for a failure in respect of a tracking period may not be made—
more than 6 months after the failure first comes to the attention of an officer of Revenue and Customs, or
more than 6 years after the filing date for the purchaser's tax return for the tracking period (see paragraph 14 of Schedule 18 to FA 1998).
See paragraph 94 for provision about appeals against a penalty under paragraph 68.
A penalty under paragraph 68 must be paid—
before the end of the period of 30 days beginning with the date on which the notification under paragraph 69 was issued, or
if a notice of 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 this Schedule may be enforced as if it were income tax charged in an assessment and due and payable or, in the case of the purchaser, corporation tax charged in an assessment and due and payable.
TTH elections: effective date and withdrawal
Effective date of a TTH election
A TTH election in respect of a TTH asset—
has effect, if it is approved in accordance with paragraph 61 or 62, from the licence transfer date,
continues to have effect indefinitely in relation to seller, and
continues to have effect in relation to the purchaser unless it is withdrawn in accordance with the provisions of this Schedule.
References in this Schedule to the “effective date of a TTH election” are to be construed in accordance with sub-paragraph (1)(a).
Withdrawal of a TTH election by an officer of Revenue and Customs
A TTH election ceases to have effect in relation to the purchaser if—
the purchaser, without reasonable excuse, persistently fails to comply with either of the conditions mentioned in paragraph 63, and
an officer of Revenue and Customs gives notice to the purchaser of the withdrawal of the election.
If notice is given under sub-paragraph (1), the TTH election ceases to have effect in relation to the purchaser for the accounting period in which the notice is given and each subsequent accounting period.
A notice given under sub-paragraph (1) does not affect any relief given by reference to paragraph 25 or 26 for a loss period ending before the notice is given.
See paragraph 94 for provision about appeals against a decision to withdraw an election under this paragraph.
TTH elections: inaccuracies
Penalties for errors
If a document provided for the purposes of making a TTH election contains an inaccuracy which is, or results in, an overstatement of the total TTH amount, Schedule 24 to FA 2007 has effect as if—
the seller (and not the purchaser) is treated as giving the document to Her Majesty's Revenue and Customs,
the inaccuracy is treated (so far as would not otherwise be the case) as leading to a false or inflated claim to repayment of tax, and
“the potential lost revenue” in respect of the inaccuracy is an amount equal to 10% of the amount by which the total TTH amount is overstated.
Amendment of TTH election: amounts discovered to be incorrect
This paragraph applies if an officer of Revenue and Customs discovers that a TTH election incorrectly states an amount that affects, or may affect—
the amount which may be applied in accordance with paragraph 25 (effect of trade loss relief provisions), or
the amount of a repayment determined by reference to paragraph 26 (supplementary charge: repayment of tax).
The officer—
may amend the TTH election to correct that amount, subject to paragraph 75, and
must give notice to the purchaser of an amendment under paragraph (a).
But the power to amend the TTH election under this paragraph may only be exercised if, at the time the election was approved (see paragraphs 61 and 62), an officer of Revenue and Customs could not have been reasonably expected, on the basis of the information made available to the officer before that time, to be aware that the amount stated was incorrect.
An amendment under this paragraph may not be made more than 12 months after information that, in the opinion of an officer of Revenue and Customs, justifies the correction of the TTH election, comes to the officer's attention.
An amendment under this paragraph is to be ignored for the purposes of the application of Part 3 of this Schedule (effect of a TTH election on the seller).
If, on or after the licence transfer date, the seller's total profits for a pre-transfer accounting period are reduced, the statement of the total profits (or a statement of an amount determined by reference to the total profits) is not to be regarded as incorrect for the purposes of this paragraph (but see paragraph 18).
See paragraph 94 for provision about appeals against a decision under this paragraph.
This paragraph applies if, before the correction under paragraph 74 is made, an activated transferred profits amount for a pre-acquisition accounting period has been applied in accordance with paragraph 25(2)(b) or (3)(b).
An amendment made under paragraph 74(2) may not—
reduce the transferred profits amount for that pre-acquisition accounting period to an amount which is less than the amount that has been applied, in respect of loss periods ending before the determination is made, in accordance with paragraph 25 for the pre-acquisition accounting period, or
reduce the total TTH amount to an amount which is less than the total of the amounts that have been applied in accordance with paragraph 25 in respect of loss periods ending before the determination is made.
Chargeable gains
Transferred tax history is not to be regarded as an asset
Where the seller and the purchaser jointly make a TTH election in respect of the TTH asset, the transfer of tax history is not to be treated as—
the disposal or acquisition of an asset for the purposes of TCGA 1992, or
the disposal or acquisition of an intangible fixed asset for the purposes of Part 8 of CTA 2009.
Consideration for transferred tax history to be treated as consideration for the licence interest
The amount or value of any consideration for the transfer of tax history is to be treated as part of the consideration for the licence interest for the purposes of—
computing the chargeable gain or allowable loss accruing on the disposal (or on any subsequent disposal) of the licence interest (see section 8 of TCGA 1992), and
computing the disposal value of the licence interest, on its disposal, for the purposes of Part 5 of CAA 2001 (mineral extraction allowances).
Market value of the licence interest: value of transferred tax history to be taken into account
Any value attributable to the transfer of tax history is to be taken into account in determining the market value of the licence interest for the purposes of—
section 17 of TCGA 1992 (disposals and acquisitions treated as being made at market value);
Part 5 of CAA 2001, if the disposal value of the licence interest for the purposes of that Part is the market value of the licence interest at the time of that disposal (see section 423 of CAA 2001).
Licence swaps: references to disposal include references to transfer of tax history
For the purposes of the application of sections 195A to 196 of TCGA 1992 (oil licence swaps) in relation to the disposal of the licence interest by the seller to the purchaser, references in those sections to the disposal are treated as including references to the transfer of tax history.
Interpretation of this Part
References in this Part to “the transfer of tax history” are references to—
the seller, in consequence of the TTH election, ceasing to be entitled to take the transferred profits for an accounting period into account for certain corporation tax purposes in the circumstances specified in Part 3 of this Schedule, and
the purchaser, in consequence of the TTH election, acquiring an entitlement, in the circumstances specified in Part 4 of this Schedule, to apply an amount of the transferred profits for the purposes of the trade loss relief provisions and to a corresponding repayment of supplementary charge.
References in this Part to “the licence interest” are references to the interest in a UK oil licence referred to in paragraph 1.
Onward sale
Application of paragraphs 83 to 90
This Part applies if—
the purchaser (referred to in this Part as “the first purchaser”) and the seller jointly make a TTH election (the “first TTH election”) in respect of an interest (the “first TTH asset”) in the TTH oil field,
the first purchaser subsequently sells to another company (“the second purchaser”) an interest in a UK oil licence which applies to the area which includes the TTH oil field, and
the first purchaser and the second purchaser jointly make a TTH election (the “subsequent TTH election”) in respect of an interest (the “subsequent TTH asset”) in the TTH oil field.
Sub-paragraph (2) applies if—
the first purchaser has an interest in the UK oil licence referred to in paragraph 1, in addition to the interest in that licence acquired from the seller, and
the UK oil licence referred to in paragraph 81(b) is the same UK oil licence referred to in paragraph 1.
Interests in the licence acquired later by the first purchaser are treated, for the purposes of this Part, as being transferred to the second purchaser before interests in the licence acquired earlier by the first purchaser.
Original TTH amount treated as eligible ring fence profits
This Schedule applies, for the purposes of the subsequent TTH election, as if the original TTH amount for all relevant accounting periods were an amount of the first purchaser's eligible ring fence profits for that period.
Sub-paragraph (1) is subject to paragraphs 85 to 88.
In this Part of this Schedule, “relevant accounting period” means a pre-acquisition accounting period of the first purchaser for which there is, immediately before the effective date of the subsequent TTH election, an unused transferred profits amount.
In this Part of this Schedule, references to the “original TTH amount” mean, in relation to a relevant accounting period—
the unused transferred profits amount for that period, or
if the first TTH asset is not the same as the subsequent TTH asset, the relevant proportion of that amount for that period.
For the purposes of sub-paragraph (4)(b), the “relevant proportion” is the proportion that the subsequent TTH asset bears to the first TTH asset or, if the proportion cannot reasonably be determined on that basis, such other proportion determined on a just and reasonable basis.
In this paragraph, references to the unused transferred profits amount for an accounting period are references to—
the transferred profits amount, in relation to the first TTH election, for that period, less
the total of the amounts applied for that period in accordance with paragraph 25, for the purposes of the application of that paragraph in relation to a loss period of the first purchaser.
The original TTH amount for each relevant accounting period ceases to be treated, for the purposes of the first TTH election, as a transferred profits amount for that period in relation to the first purchaser.
Original TTH amount transferred before eligible ring fence profits (subject to opt-out)
Paragraphs 86 and 87 apply in relation to the subsequent TTH election, subject to sub-paragraph (2).
The first purchaser and the second purchaser may elect, at the time the TTH election is made, that neither paragraph 86 nor paragraph 87 applies in relation to the subsequent TTH election.
The total TTH amount may not include an amount representing the first purchaser's eligible ring fence profits for an accounting period unless it also includes an amount representing, in respect of each relevant accounting period, the original TTH amount for that period.
Paragraph 11 (consecutive accounting periods) does not apply in relation to an amount representing an original TTH amount for a relevant accounting period (but see sub-paragraph (3)).
The total TTH amount may not include an amount representing the original TTH amount for a particular accounting period unless it also includes an amount representing the original TTH amount for the next following relevant accounting period.
If the original TTH amount exceeds the total TTH amount, the transferred profits amount for the earliest relevant accounting period must be an amount equal to—
the total TTH amount, less
the transferred profits amount for later relevant accounting periods.
For the purposes of paragraph 12 (the transferred profits amount)—
references to the “earliest period” are to be treated as references to the earliest accounting period for which there is a transferred profits amount by reason of the first purchaser's eligible ring fence profits for that period (and not by reason of an original TTH amount for that period), and
the reference in sub-paragraph (2) to the TTH balance for the earliest period is to be treated as a reference to the TTH balance less the transferred profits amounts for each relevant accounting period.
In the application of this Schedule for the purposes of the subsequent TTH election—
in sub-paragraph (2) of paragraph 30 (TTH activation event), the reference to an allowance or allocation made to the purchaser includes a reference to the relevant proportion (within the meaning of paragraph 83(5)) of an allowance or allocation made to the first purchaser;
in paragraph 30(2)(b) and (3)(b), and in paragraph 31 (decommissioning expenditure amount), references to a post-acquisition accounting period of the purchaser include references to a post-acquisition accounting period of the first purchaser;
in paragraph 30(3) as it applies in relation to post-acquisition accounting periods of the first purchaser, the reference to amounts attributable to the TTH asset is to be treated as a reference to the relevant proportion (within the meaning of paragraph 83(5)) of those amounts;
in paragraph 30(5) as it applies for the purposes of determining the total decommissioning expenditure amount in relation to a post-acquisition accounting period of the first purchaser, the reference to the purchaser is to be treated as a reference to the first purchaser;
references in this Schedule to a pre-acquisition accounting period of the purchaser include references to a pre-acquisition accounting period of the first purchaser;
references in paragraphs 83 to 86 and 89 to an amount of the first purchaser's eligible ring fence profits do not includes references to an original TTH amount.
Opt-out under paragraph 85(2): further provision about the application of this Schedule
This paragraph applies if—
the first purchaser and the second purchaser make an election under paragraph 85(2) (disapplication of paragraphs 86 and 87), and
in relation to the subsequent TTH election, the total TTH amount exceeds the total amount of the first purchaser's eligible ring fence profits for—
the accounting period which is, at the licence transfer date in relation to the subsequent TTH election, the first purchaser's most recent qualifying accounting period in respect of which the amendment period has ended, and
each earlier accounting period which is, in relation to the first TTH election, a post-acquisition accounting period of the first purchaser.
In the application of this Schedule for the purposes of the subsequent TTH election—
in sub-paragraph (2) of paragraph 30 (TTH activation event), the reference to an allowance or allocation made to the purchaser includes a reference to the relevant proportion (within the meaning of paragraph 83(5)) of an allowance or allocation made to the first purchaser;
in paragraph 30(2)(b) and (3)(b), and in paragraph 31 (decommissioning expenditure amount), references to a post-acquisition accounting period of the purchaser include references to the accounting periods of the first purchaser mentioned in sub-paragraph (1)(b)(i) and (ii);
in paragraph 30(3) as it applies in relation to the accounting periods of the first purchaser mentioned in sub-paragraph (1)(b)(i) and (ii), the reference to amounts attributable to the TTH asset is to be treated as a reference to the relevant proportion (within the meaning of paragraph 83(5)) of those amounts;
in paragraph 30(5) as it applies for the purposes of determining the total decommissioning expenditure amount in relation to an accounting period of the first purchaser mentioned in sub-paragraph (1)(b)(i) or (ii), the reference to the purchaser is to be treated as a reference to the first purchaser;
in paragraph 83 and in sub-paragraph (1)(b) of this paragraph, references to an amount of the first purchaser's eligible ring fence profits do not include references to an original TTH amount.
Supplementary charge: treatment of transferred adjusted ring fence profits
The provisions of this Schedule apply, for the purposes of the subsequent TTH election, as if—were an amount of the first purchaser's eligible adjusted ring fence profits for that period.
the transferred adjusted ring fence profits amount for each relevant accounting period, or
if the first TTH asset is not the same as the subsequent TTH asset, the relevant proportion of that amount for that period,
For the purposes of sub-paragraph (1)(b), “the relevant proportion” means the proportion that the subsequent TTH asset bears to the first TTH asset or, if the proportion cannot reasonably be determined on that basis, such other proportion determined on a just and reasonable basis.
Tracking
This paragraph applies if, after the effective date of the subsequent TTH election, the first purchaser continues to be liable for the decommissioning costs, or for a proportion of the decommissioning costs, for the subsequent TTH asset.
In the application of this Schedule for the purposes of the subsequent TTH election, references to the “purchaser” in paragraph 65 are to be treated, in respect of the period beginning with the effective date of the subsequent TTH election, as including references to the second purchaser.
Sale by the second purchaser or subsequent sale
In the case of a sale by the second purchaser, or a subsequent sale, of an interest within paragraph 81(c) in respect of which the parties make a TTH election—
references in paragraph 86 to the original TTH amount are references to the original TTH amount in relation to each election,
amounts in relation to earlier elections are to be applied for the purposes of paragraph 86(1) and (3) before amounts in relation to later elections,
the provisions of paragraph 87 apply in relation to the second purchaser, and each subsequent purchaser, as they apply in relation to the first purchaser, and
in paragraph 90—
the reference to the first purchaser in sub-paragraph (1) is treated as including a reference to the second purchaser, or a subsequent purchaser, and
sub-paragraph (2) applies in relation to each subsequent purchaser as it applies in relation to the second purchaser.
Supplementary
Multiple interests in the same oil field
This paragraph applies if—
interests in more than one UK oil licence are sold by the seller to the purchaser at the same time, and
the seller and the purchaser would be entitled to jointly make a TTH election in respect of more than one interest in the same oil field that falls within both licensed areas.
The seller and purchaser may jointly make a TTH election in respect of all interests in the oil field.
If an election is made in accordance with this paragraph, the interests mentioned in sub-paragraph (2) are to be treated as a single interest for the purposes of this Schedule (and references in this Schedule to “the TTH asset” are to be construed accordingly).
Multiple TTH elections
This paragraph applies if, in a loss period, more than one TTH election in respect of the TTH asset has effect in relation to the purchaser.
For the purposes of paragraph 44 (allocation of activated TTH to an accounting period)—
references to the unused transferred profits amount for an accounting period are to be treated as references to the total of the unused transferred profits amounts for that period in respect of each of the TTH elections, and
the amount in respect of a later TTH election is to be allocated to an accounting period before the amount which is subject to an earlier TTH election.
Appeals
A person may appeal against—
a decision that a penalty under paragraph 68 is payable by that person;
a decision to withdraw a TTH election under paragraph 72;
a decision to amend a TTH election under paragraph 74 (amounts discovered to be incorrect).
Notice of an appeal must be given—
in writing,
before the end of the period of 30 days beginning with the date on which notice of the decision is given, and
to an officer of Revenue and Customs.
Notice of an appeal must state the grounds of appeal.
On an appeal that is notified to the tribunal, the tribunal may—
confirm or cancel the decision, or
in the case of an appeal within sub-paragraph (1)(c), substitute for the decision another decision that an officer of Revenue and Customs had power to make.
If a decision under paragraph 72 (withdrawal) is cancelled, the TTH election is to be treated as having had continuing effect (subject to any further appeal).
Subject to this paragraph and (in the case of an appeal within sub-paragraph (1)(a)) paragraph 70, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this paragraph as they have effect in relation to appeals against an assessment to corporation tax.
Anti-avoidance
If a person enters into arrangements within sub-paragraph (2), an officer of Revenue and Customs may—to secure that the election or claim has effect as if the arrangements had not been entered into.
amend a TTH election, or
amend or disallow a claim,
Arrangements are within this sub-paragraph if it is reasonable to regard the arrangements as—
designed to secure that an entitlement to a repayment, or an increased repayment, of tax by reason of the application of any provision of this Schedule, arises earlier than would (apart from the arrangements) be the case,
circumventing the intended limits of the provisions of this Schedule on an amount that is relevant for the purposes of determining a repayment of tax by reference to those provisions, or
otherwise exploiting shortcomings in those provisions.
In this paragraph, “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
If relief is given to a person under the trade loss relief provisions by reference to an amount of the seller's ring fence profits which (by reason of the application of the provisions of this Schedule) is treated as if it were an amount of the purchaser's profits, no relief may be given to any other person by reference to the same amount.
If a repayment of supplementary charge is made to a person by reference to an amount of the seller's adjusted ring fence profits which (by reason of the application of the provisions of this Schedule) is treated as if it were an amount of the purchaser's adjusted ring fence profits, no repayment may be made to any other person by reference to the same amount.
Interpretation
Introductory
The following definitions apply for the purposes of this Schedule.
Expressions used in this Schedule that are defined for the purposes of Part 8 of CTA 2010 (oil activities) have the same meaning in this Schedule as in Part 8 of that Act.
“UK oil licence”
“UK oil licence” means a licence granted under—
Part 1 of the Petroleum Act 1998, or
the Petroleum (Production) Act (Northern Ireland) 1964 (c.28 (N.I.)).
“Licensed area” and “transferred oil field”
In this Schedule—
references to the “licensed area” are references to the area to which the UK oil licence mentioned in paragraph 1 applies, and
references to a “transferred oil field” are references to an oil field, or such part of an oil field, that falls within the licensed area.
“Licence transfer date”
“Licence transfer date”, in relation to a TTH election, means the date of completion of the sale of the TTH asset in respect of which the election is made.
The seller's “reference accounting period”
The seller's “reference accounting period” is the accounting period which is, at the licence transfer date, the seller's most recent qualifying accounting period in respect of which the amendment period has ended.
The “amendment period”, in relation to an accounting period, is 12 months beginning with the filing date for the company tax return for the accounting period.
In this paragraph “filing date” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 14 of that Schedule).
The purchaser's “reference accounting period”
The “purchaser's reference accounting period” means—
an accounting period of the purchaser that begins with the same date as, and ends with the same date as, the seller's reference accounting period, or
if no accounting period of the purchaser falls within paragraph (a), the earliest accounting period of the purchaser that overlaps with the seller's reference accounting period.
See paragraph 106 for provision about accounting periods before the purchaser comes within the charge to corporation tax.
The seller's “pre-transfer accounting periods”
Each of the following is a “pre-transfer accounting period” of the seller—
the reference accounting period (see paragraph 102), and
each preceding accounting period.
The purchaser's “pre-acquisition accounting periods” and “post-acquisition accounting periods”
Each of the following is a “pre-acquisition accounting period” of the purchaser—
the purchaser's reference accounting period, and
each preceding accounting period.
Each of the following is a “post-acquisition accounting period” of the purchaser—
the first accounting period after the purchaser's reference accounting period,
each subsequent accounting period, and
each period which is a notional accounting period for the purposes of section 165 or section 416ZA of CAA 2001.
See paragraph 106 for provision about accounting periods before the purchaser comes within the charge to corporation tax.
Accounting periods before the purchaser comes within the charge to corporation tax
This paragraph applies if the date on which the purchaser comes within the charge to corporation tax falls after the end of the seller's reference accounting period.
The provisions of this Schedule have effect as if the purchaser had—
an accounting period of 12 months ending on the day before the purchaser comes within the charge to corporation tax, and
successive accounting periods of 12 months in the preceding period.
“Transferred profits amount” and “activated transferred profits amount”
References to the “transferred profits amount” for an accounting period of the seller are references to the amount representing the seller's ring fence profits for that period which forms part of the total TTH amount.
See paragraph 45 for provision about references to the “transferred profits amount” for a pre-acquisition accounting period of the purchaser.
See paragraph 25(4) for provision about the meaning of “activated transferred profits amount”.
“Trade loss relief provisions”
“Trade loss relief provisions” means 37 to 44 of CTA 2010 (trade losses: carry back relief etc).
Entrepreneurs' relief
Periods throughout which conditions for relief must be met
Chapter 3 of Part 5 of TCGA 1992 (transfer of business assets: entrepreneurs' relief) is amended as follows.
In section 169I (material disposal of business assets)—
in subsections (3), (6) and (7A)(b) and (c), for “1 year” substitute “ 2 years ”,
in subsection (4)(a), for “1 year” substitute “ 2 years ”,
in subsections (7) and (7B)(b) and (c), for “1 year” substitute “ 2 years ”, and
after subsection (7) insert—
In section 169J (disposal of trust business assets)—
in subsection (4), for “1 year” substitute “ 2 years ”, and
in subsection (5)(a), for “1 year” substitute “ 2 years ”.
In section 169K(4) (disposal associated with relevant material disposal), for “1 year” substitute “ 2 years ”.
In section 169O(6) (amount of relief: special provisions for certain trust disposals), for “1 year” substitute “ 2 years ”.
In Schedule 7ZA (“trading company” and “trading group”), in paragraph 25 (meaning of “relevant period”)—
in sub-paragraph (a), for “1 year” substitute “ 2 years ”, and
in sub-paragraphs (b) and (c), for “1 year” substitute “ 2 years ”.
Additional requirements relating to the beneficial ownership of companies
Chapter 3 of Part 5 of TCGA 1992 (transfer of business assets: entrepreneurs' relief) is amended as follows.
In section 169K(1B) (disposals associated with relevant material disposal), for paragraph (a) (together with the “and” at the end of it) substitute—.
In section 169LA (relevant business assets: goodwill transferred to a close company)—
for subsection (1) substitute—, and
in subsection (1A)(a), for “subsection (1)(aa)” substitute “ subsection (1)(b) ”.
In section 169S (interpretation of Chapter), for subsections (3) and (4) substitute—
Relief where company ceases to be individual's personal company
In Part 5 of TCGA 1992 (transfer of business assets), after Chapter 3 (entrepreneurs' relief) insert—
Commencement
Subject as follows, the amendments made by paragraph 1 of this Schedule have effect in relation to disposals on or after 6 April 2019.
The amendments made by paragraph 1(2)(b), (3)(b) and (4) do not have effect in relation to a disposal where the time at which the business ceases to be carried on is before 29 October 2018.
The amendments made by paragraph 1(2)(c), (3)(a) and (6)(b) do not have effect in relation to a disposal where the date on which the company—is before 29 October 2018.
ceases to be a trading company without continuing to be or becoming a member of a trading group, or
ceases to be a member of a trading group without continuing to be a trading company,
The amendments made by paragraph 2 of this Schedule have effect in relation to disposals on or after 29 October 2018 but, in the case of a disposal made before 21 December 2018, section 169LA(1ZA)(a) of TCGA 1992 has effect as if the reference to section 169S(3)(c)(ii) of that Act were omitted.
The amendment made by paragraph 3 of this Schedule has effect in relation to relevant share issues (within the meaning given by section 169SC(5) of TCGA 1992) which take place on or after 6 April 2019.
VAT treatment of vouchers
VATA 1994 is amended as follows.
In section 51B—
in the heading, at the end insert “ issued before 1 January 2019 ”;
the existing text becomes subsection (1);
after that subsection insert—
After section 51B insert—
In the heading to Schedule 10A, at the end insert “ issued before 1 January 2019 ”.
After Schedule 10A insert—
In regulation 38ZA(2) of the Value Added Tax Regulations 1995 (S.I. 1995/2518), in the definition of “cash refund”, after “Act” insert “ or a voucher falling within Schedule 10B to the Act ”.
VAT groups: eligibility
Eligibility of individuals and partnerships
Section 43A of VATA 1994 (groups: eligibility) is amended as follows.
In subsection (1), in the opening words—
for “bodies corporate” substitute “ UK bodies corporate ”;
omit “each is established or has a fixed establishment in the United Kingdom and”.
Omit subsections (2) and (3).
At the end insert—
In that Act, after section 43A insert—
Consequential amendments
VATA 1994
VATA 1994 is amended as follows.
In section 18A (fiscal warehousing), in subsection (9), for “body corporate which” substitute “ person who ”.
Section 43 (groups of companies) is amended in accordance with this paragraph.
In subsection (1), for “bodies corporate” substitute “ persons ”.
In subsection (1AA)—
in paragraph (c)(ii), for “body which” substitute “ person who ”;
in the closing words, for “body” substitute “ person ”.
In section 43AA (power to alter eligibility for grouping), in subsection (1), for “section 43A” substitute “ sections 43A and 43AZA ”.
Section 43B (groups: applications) is amended in accordance with this paragraph.
In subsection (1), for “bodies corporate, which” substitute “ persons, who ”.
In subsection (2)—
in the opening words, for “bodies corporate” substitute “ persons ”;
in paragraph (a), for “body corporate, which” substitute “ person, who ”;
in paragraph (b), for “body corporate” substitute “ person ”;
in paragraph (d), for “bodies corporate” substitute “ persons ”;
In subsection (3)—
in the opening words, for “bodies corporate” substitute “ persons ”;
in paragraph (b), for “bodies” substitute “ persons ”;
In subsection (5)—
in paragraph (a), for “bodies corporate” substitute “ persons ”;
in paragraph (b), for “body corporate” substitute “ person ”.
Section 43C (groups: termination of membership) is amended in accordance with this paragraph.
In subsection (1), for “body corporate” substitute “ person ”.
In subsection (3)(a) and (b) and in the closing words, for “body” substitute “ person ”.
In subsection (4)(a) and (b), for “body” substitute “ person ”.
Section 43D (groups: duplication) is amended in accordance with this paragraph.
In subsection (1), for “body corporate” substitute “ person ”.
In subsection (2), for “body which” substitute “ person who ”.
In subsection (3)—
in paragraph (b), for “bodies” substitute “ persons ”;
in the closing words, for “body or bodies” substitute “ person or persons ”.
In subsection (4)(b), for “body” substitute “ person ”.
In subsection (5), for “body” substitute “ person ”.
In section 44 (supplies to groups), in subsection (1)(a) and (b), for “body corporate” substitute “ person ”.
In section 53 (tour operators), in subsection (2)(d), for “body corporate” substitute “ person ”.
In section 97 (orders, rules and regulations), in subsection (4)(ca), for “bodies” substitute “ persons ”.
Schedule 9 (exemptions) is amended in accordance with this paragraph.
In Group 14, in Note (13)—
in the opening words, for “body corporate” substitute “ person ”;
in paragraph (a) for “body” substitute “ person ”;
in paragraph (b)—
for “body corporate, or of any other body corporate which”, substitute “ person, or of any other person who ”;
for “body, at a time when that body” substitute “ person, at a time when that person ”.
in paragraph (c), for “body corporate” substitute “ person ”.
In that Group, in Note (14), for “body corporate's” substitute “person's”.
Schedule 9A (anti-avoidance provisions: groups) is amended in accordance with this paragraph.
In paragraph 1(2), for “body corporate” substitute “ person ”.
In paragraph 2—
in sub-paragraph (1)(a), for “body corporate” substitute “ person ”;
in sub-paragraph (2), for “body corporate's” substitute “person's”.
In paragraph 3—
in sub-paragraph (1)(a) and (b), for “body corporate” substitute “ person ”;
in sub-paragraph (3), for “body corporate” (in both places) substitute “ person ”;
in sub-paragraph (5), for “body corporate which” substitute “ person who ”.
In paragraph 5—
in sub-paragraph (1)(b)—
for “body corporate which” substitute “ person who ”;
for “that person” substitute “ the person mentioned in paragraph (a) ”;
in sub-paragraph (2)—
for “body corporate (“the relevant body”)” substitute “ person (“the relevant person”) ”;
for “that body or to any body corporate which” substitute “ that person or to any person who ”;
for “the relevant body” substitute “ the relevant person ”.
In paragraph 6—
in sub-paragraph (7)(b), for “body corporate that” substitute “ person who ”;
in sub-paragraph (11)(b)—
for “body corporate which” substitute “ person who ”;
for “that person” substitute “ the person mentioned in paragraph (a) ”;
in sub-paragraph (11)(c), for “body corporate which” substitute “ person who ”.
Schedule 10 (buildings and land) is amended in accordance with this paragraph.
In paragraph 3—
in sub-paragraph (1), for “body corporate” substitute “ person ”;
in sub-paragraph (2)—
in the opening words (in both places) and paragraph (c), for “body corporate” substitute “ person ”;
in paragraph (c), for “that body” substitute “ that person ”;
in sub-paragraph (3), for “body corporate” substitute “ person (“P”) ”;
in sub-paragraph (4)—
in the opening words, for “The body corporate” substitute “ P ”;
in paragraphs (a), (aa), (b) and (c), for “the body corporate” substitute “ P ”;
in sub-paragraph (5)—
in the opening words, for “The body corporate” substitute “ P ” and for “the body corporate” substitute “ P ”;
in the closing words, for “the body corporate” substitute “ P ”.
In paragraph 4—
in sub-paragraph (1), for “body corporate which” substitute “ person (“P”) who ”;
in sub-paragraph (2), for “the body corporate, it” substitute “ P, P ”;
in sub-paragraph (3)(b), for “the body corporate” substitute “ P ”;
in sub-paragraph (3)(c)—
for “the body corporate” substitute “ P ”;
for “it” substitute “ P ”;
in sub-paragraph (4)(b)—
for “the body corporate” substitute “ P ”;
for “it” substitute “ P ”;
in sub-paragraph (5), in the opening words—
for “the body corporate” substitute “ P ”;
for “it” substitute “ P ”;
in sub-paragraph (6)(a)—
for “the body corporate” substitute “ P ”;
for “its” substitute “P's”;
in sub-paragraph (6)(b), for “the body corporate” substitute “ P ”;
in sub-paragraph (7), for “the body corporate” substitute “ P ”.
In paragraph 21—
in sub-paragraph (1)(b)—
for “body corporate” substitute “ person ”;
for “the body” substitute “ the person ”;
in sub-paragraph (3)(a), for “body corporate which” substitute “ person who ”;
in sub-paragraph (9)(b), for “body corporate which” substitute “ person who ”;
in sub-paragraph (11)(b), for “body corporate which” substitute “ person who ”;
in sub-paragraph (12), in the definition of “relevant group member”—
after “any person” insert “ (“P”) ”;
for “body corporate which” substitute “ person who ”;
for “that person” substitute “ P ”.
In paragraph 35(3), for “body corporate” substitute “ person ”.
Gaming duty
Accounting periods
Section 11 of FA 1997 (rate of gaming duty) is amended as follows.
In subsection (2), for “subsection (3)” substitute “ subsections (3), (4A) and (4B) ”.
After subsection (4) insert—
Paragraph 9 of Schedule 1 to FA 1997 (accounting periods) is amended as follows.
For sub-paragraph (1) substitute—.
In sub-paragraph (2), for “sub-paragraph (1) above” substitute “ this paragraph ”.
Omit sub-paragraphs (3) and (4).
For sub-paragraph (5) substitute—
In paragraph 11(2) of Schedule 1 to FA 1997 (regulations), after “of this Act” insert “ or paragraph 9 of this Schedule ”.
Carrying forward of losses
In section 11 of FA 1997, for subsection (10) substitute—
Removal of obligation to make payments on account
In section 12 of FA 1997 (liability to pay gaming duty) omit subsections (4) and (6).
The Gaming Duty Regulations 1997 (S.I. 1997/2196) are amended as follows.
In regulation 2 (interpretation) omit the definition of “quarter”.
Omit regulations 3 to 6 (Part II: payments on account) and the heading before them.
Commencement
The amendments made by this Schedule come into force on 1 October 2019.
Where there is an agreement under paragraph 9(1) of Schedule 1 to FA 1997 and as a result the period to be treated as the accounting period for any premises is a period beginning on or before 30 September 2019 and ending after 30 September 2019 (a “paragraph 9(1) accounting period”), sub-paragraph (2) applies.
The period to be treated as the accounting period for those premises is instead a period (a “transitional accounting period”) beginning on the date specified in the agreement and ending on 30 September 2019.
For the purposes of determining the amount of gaming duty which is to be charged on those premises for the transitional accounting period, the Table in section 11(2) of FA 1997 is modified in accordance with sub-paragraph (4).
Each amount specified in column 1 of the Table is multiplied by—A B where—A is the number of days in the transitional accounting period, and B is the number of days in the paragraph 9(1) accounting period.
Taxation of hybrid capital instruments
Revocation of special rules for regulatory capital securities
The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209) are revoked.
In consequence of the revocation made by sub-paragraph (1), the Taxation of Regulatory Capital Securities (Amendment) Regulations 2015 (S.I. 2015/2056) are revoked.
Corporation tax, income tax and capital gains tax
Distributions in respect of hybrid capital instruments
At the end of Chapter 12 of Part 5 of CTA 2009 insert—
After section 475B of CTA 2009 insert—
In a case where a company became a party to a loan relationship before 1 January 2019, section 475C(8)(b) of CTA 2009 has effect as if the election were required to be made on or before 30 September 2019.
In section 1015 of CTA 2010 (meaning of “special securities”) after subsection (1) insert—
Loan relationships: credits and debits to be brought into account
After section 320A of CTA 2009 insert—
Normal commercial loans
In section 162 of CTA 2010 (meaning of “normal commercial loan”) after subsection (1) insert—
Consequential amendments
Part 5 of CTA 2009 (loan relationships) is amended as follows.
In section 398 (overview of Chapter 12), in subsection (2)—
omit the “and” at the end of paragraph (d), and
after paragraph (e) insert
In section 465(3) (provisions preventing amounts from being distributions), before paragraph (za) insert—.
Part 10 of TIOPA 2010 (corporate interest restriction) is amended as follows.
In section 413(6) (adjusted net group-interest expense: “relevant enactment”) for paragraph (b) substitute—
In section 415 (qualifying net group-interest expense: interpretation), omit subsection (8).
The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256) are amended in accordance with this paragraph.
In regulation 2(1) (interpretation)—
after the definition of “fair value profit or loss” insert—, and
omit the definition of “regulatory capital security”.
In regulation 3 (exchange gains or losses arising from liabilities or assets hedging shares etc), in paragraph (5)(c), for “a regulatory capital security” substitute “ a hybrid capital instrument ”.
In regulation 4 (exchange gains or losses arising from derivative contracts hedging shares etc), in paragraph (4A)(c), for “a regulatory capital security” substitute “ a hybrid capital instrument ”.
Commencement for purposes of corporation tax
The following have effect for accounting periods beginning on or after 1 January 2019—
the provision made by paragraphs 1 to 4 and 6 so far as relating to corporation tax, and
the amendments made by paragraphs 5 and 7 to 9.
An accounting period beginning before and ending on or after 1 January 2019 is to be treated for the purposes of the provision made by this Schedule (other than paragraph 12 or 13) as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.
This paragraph applies in the case of a security which was a regulatory capital security for the purposes of the Taxation of Regulatory Capital Securities Regulations 2013 immediately before 1 January 2019 (referred to in this Part of this Schedule as a “transitional qualifying instrument”).
The revocations made by paragraph 1 do not affect any case where regulation 3(2)(a) or (b), (3) or (3A) of those Regulations would have applied in relation to accounting periods ending on or before 31 December 2023 but for the provision made by paragraph 1.
In a case where sub-paragraph (2) has applied, paragraph 13 makes provision for corporation tax purposes in relation to an accounting period beginning on 1 January 2024 (“the 2024 period”) to bring in credits or debits in respect of a transitional qualifying instrument which exists immediately before that date so far as they would not otherwise be brought into account.
For the purposes of this paragraph and paragraph 13, an accounting period beginning before and ending on or after 1 January 2024 is to be treated as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.
If there is a difference between—a credit or debit (as the case may be) of an amount equal to the difference must be brought into account for the purposes of Part 5 of CTA 2009 for the 2024 period in the same way as a credit or debit which is brought into account in determining the company's profit or loss for that period in accordance with generally accepted accounting practice.
the tax-adjusted carrying value of a transitional qualifying instrument which is an asset or liability at the end of an accounting period ending on 31 December 2023, and
the tax-adjusted carrying value of that instrument at the beginning of the 2024 period,
For the purposes of this paragraph “tax-adjusted carrying value” is to be construed in accordance with—
section 465B of CTA 2009 (tax-adjusted carrying value in relation to the asset or liability representing a loan relationship), and
section 702 of CTA 2009 (tax-adjusted carrying value in relation to a contract).
Where in the 2024 period, in accordance with generally accepted accounting practice, the rights and liabilities under the transitional qualifying instrument have been treated as divided between—the reference in this paragraph to the tax-adjusted carrying value of the transitional qualifying instrument means the sum of the tax-adjusted carrying values for each of those component instruments.
a loan relationship, and
one or more derivative financial instruments or equity instruments,
In sub-paragraph (3) “equity instrument” has the meaning it has for accounting purposes.
This paragraph applies to a transitional qualifying instrument which qualified as a regulatory capital security as a result of falling within regulation 2(1)(c) or (d) of the Taxation of Regulatory Capital Securities Regulations 2013.
The revocations made by paragraph 1 do not affect the application of regulation 3(2)(c)(i) of those Regulations in a case where the writing down or conversion concerned took place before 1 July 2019.
This paragraph applies if—
regulation 3(2)(c)(i) of the Taxation of Regulatory Capital Securities Regulations 2013 applied in relation to a transitional qualifying instrument as a result of the writing down of the principal amount of the security on a temporary basis, and
a credit was, accordingly, not brought into account under Part 5 of CTA 2009.
No debit is to be brought into account under that Part in respect of the writing up of the principal amount of the security in accordance with any regulatory requirements or the provisions governing the security.
Commencement for purposes of income tax and CGT
The provision made by paragraphs 1 to 4 has effect for the purposes of income tax in relation to payments made on or after 1 January 2019.
But the revocations made by paragraph 1—
do not affect the application of regulation 6 or 9 of the Taxation of Regulatory Capital Securities Regulations 2013 in relation to payments made before the day on which this Act is passed, and
do not, in the case of a transitional qualifying instrument, apply to payments made before 1 January 2024 in any case where regulation 6 or 9 of those Regulations would have applied but for the provision made by paragraph 1.
The revocations made by paragraph 1 have effect for the purposes of capital gains tax in relation to disposals made on or after 1 January 2019.
In so far as it relates to the definition of “corporate bond” in section 117(1) of TCGA 1992, the amendment made by paragraph 6 has effect in relation to disposals made on or after 1 January 2019.
Power to amend definition of “hybrid capital instrument”
The Treasury may by regulations amend section 475C of CTA 2009.
The power conferred by this paragraph may not be exercised after 31 December 2019.
The regulations may contain incidental, supplementary, consequential and transitional provision and savings.
The consequential provision that may be made by the regulations includes provision amending any provision made by or under any Act.
The regulations may contain retrospective provision.
Stamp duty and stamp duty reserve tax
A transfer of a hybrid capital instrument (within the meaning of section 475C of CTA 2009) is exempt from all stamp duties.
The revocations made by paragraph 1, and the provision made by paragraph 20, have effect—
for the purposes of stamp duty, in relation to instruments executed on or after the day on which this Act is passed, and
for the purposes of stamp duty reserve tax—
in the case of agreements to transfer securities which are not conditional, in relation to agreements made on or after that day, and
in the case of agreements to transfer securities which are conditional, in relation to agreements where the condition is satisfied on or after that day.