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Finance (No. 2) Act 2005

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Part 1 E+W+S+N.I.Value added tax

1Goods subject to warehousing regime: place of acquisition or supplyE+W+S+N.I.

In section 18 of VATA 1994 (goods subject to warehousing regime: place and time of acquisition or supply), after subsection (1) insert—

(1A)The Commissioners may by regulations prescribe circumstances in which subsection (1) above shall not apply.

2Cars: determination of consideration for fuel supplied for private useE+W+S+N.I.

(1)Section 57 of VATA 1994 (determination of consideration for fuel supplied for private use) is amended as follows.

(2)After subsection (4) (power of Treasury by order to substitute a different Table for Table A) insert—

(4A)The power conferred by subsection (4) above includes power to substitute for Table A a Table (whether or not of the same or a similar configuration) where any description of vehicle may be by reference to any one or more of the following—

(a)the CO2 emissions figure for the vehicle;

(b)the type or types of fuel or power by which the vehicle is, or is capable of being, propelled;

(c)the cylinder capacity of the engine in cubic centimetres.

(4B)The provision that may be included in any such Table includes provision for the purpose of enabling the consideration to be determined by reference to the Table—

(a)by applying a percentage specified in the Table to a monetary amount specified in the Table, or

(b)by any other method.

(4C)Table A, as from time to time substituted by virtue of subsection (4A) above, may be implemented or supplemented by either or both of the following—

(a)provision in Rules inserted before the Table, prescribing how the consideration is to be determined by reference to the Table;

(b)provision in Notes inserted after the Table in accordance with the following provisions of this section.

(4D)The provision that may be made in Notes includes provision—

(a)with respect to the interpretation or application of the Table or any Rules or Notes;

(b)with respect to the figure that is to be regarded as the CO2 emissions figure for any vehicle or any particular description of vehicle;

(c)for treating a vehicle as a vehicle with a particular CO2 emissions figure;

(d)for treating a vehicle with a CO2 emissions figure as a vehicle with a different CO2 emissions figure;

(e)for or in connection with determining the consideration appropriate to vehicles of any particular description (in particular, vehicles falling within any one or more of the descriptions in subsection (4E) below).

(4E)The descriptions are—

(a)vehicles capable of being propelled by any particular type or types of fuel or power;

(b)vehicles first registered before 1st January 1998;

(c)vehicles first registered on or after that date which satisfy the condition in subsection (4F) below (registration without a CO2 emissions figure).

(4F)The condition is that the vehicle is not one which, when it is first registered, is so registered on the basis of—

(a)an EC certificate of conformity that specifies a CO2 emissions figure, or

(b)a UK approval certificate that specifies such a figure.

(4G)Any Rules or Notes do not form part of the Table, but the Treasury, by order taking effect from the beginning of any prescribed accounting period beginning after the order is made, may—

(a)insert Rules or Notes,

(b)vary or remove Rules or Notes, or

(c)substitute any or all Rules or Notes..

(3)In subsection (5) (fuel supplied for 2 or more vehicles)—

(a)in paragraph (a), for “Table A above, that Table” substitute “ Table A above or any Notes, that Table and those Notes ”;

(b)in paragraph (b), after “that Table”, in both places, insert “ or those Notes ”.

(4)In subsection (7) (cubic capacity of internal combustion engine with reciprocating pistons) after “for the purposes of Table A above” insert “ and any Notes ”.

(5)In subsection (8) (cubic capacity in other cases) after “for the purposes of Table A above” insert “ and any Notes ”.

(6)After subsection (8) insert—

(9)In this section—

  • CO2 emissions figure” means a CO2 emissions figure expressed in grams per kilometre driven;

  • EC certificate of conformity” means a certificate of conformity issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as from time to time amended;

  • Notes” means Notes inserted by virtue of subsection (4C)(b) above;

  • Rules” means Rules inserted by virtue of subsection (4C)(a) above;

  • UK approval certificate” means a certificate issued under—

    (a)

    section 58(1) or (4) of the Road Traffic Act 1988, or

    (b)

    Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981.

(10)If the Treasury consider it necessary or expedient to do so in consequence of—

(a)the form or content of any Table substituted or to be substituted by virtue of subsection (4A) above, or

(b)any provision included or to be included in Rules or Notes,

they may by order amend, repeal or replace so much of this section as for the time being follows subsection (1) and precedes Table A and relates to the use of that Table..

(7)The amendments made by this section come into force on such day or days as the Treasury may appoint by order made by statutory instrument; and different days may be so appointed for different purposes.

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Commencement Information

I1S. 2(2)-(6) in force at 22.3.2007 for the purposes of the amendments made by those sub-sections by S.I. 2007/946, art. 2

3Credit for, or repayment of, overstated or overpaid VATE+W+S+N.I.

(1)Section 80 of VATA 1994 (recovery of overpaid VAT) is amended as follows.

(2)For subsection (1) (liability of Commissioners to repay overpaid VAT) substitute—

(1)Where a person—

(a)has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and

(b)in doing so, has brought into account as output tax an amount that was not output tax due,

the Commissioners shall be liable to credit the person with that amount.

(1A)Where the Commissioners—

(a)have assessed a person to VAT for a prescribed accounting period (whenever ended), and

(b)in doing so, have brought into account as output tax an amount that was not output tax due,

they shall be liable to credit the person with that amount.

(1B)Where a person has for a prescribed accounting period (whenever ended) paid to the Commissioners an amount by way of VAT that was not VAT due to them, otherwise than as a result of—

(a)an amount that was not output tax due being brought into account as output tax, or

(b)an amount of input tax allowable under section 26 not being brought into account,

the Commissioners shall be liable to repay to that person the amount so paid..

(3)In subsection (2) (Commissioners only liable to repay an amount on a claim) before “repay” insert “ credit or ”.

(4)After subsection (2) insert—

(2A)Where—

(a)as a result of a claim under this section by virtue of subsection (1) or (1A) above an amount falls to be credited to a person, and

(b)after setting any sums against it under or by virtue of this Act, some or all of that amount remains to his credit,

the Commissioners shall be liable to pay (or repay) to him so much of that amount as so remains..

(5)In subsection (3) (defence of unjust enrichment) for “under this section, that repayment” substitute “ under this section by virtue of subsection (1) or (1A) above, that the crediting ”.

(6)For subsection (3A) (cost of payment borne for practical purposes by third party) substitute—

(3A)Subsection (3B) below applies for the purposes of subsection (3) above where—

(a)an amount would (apart from subsection (3) above) fall to be credited under subsection (1) or (1A) above to any person (“the taxpayer”), and

(b)the whole or a part of the amount brought into account as mentioned in paragraph (b) of that subsection has, for practical purposes, been borne by a person other than the taxpayer..

(7)In subsection (3B) (loss or damage to be disregarded) in paragraph (a), for “repayment” substitute “ crediting ”.

(8)For subsection (4) (time limit on claims) substitute—

(4)The Commissioners shall not be liable on a claim under this section—

(a)to credit an amount to a person under subsection (1) or (1A) above, or

(b)to repay an amount to a person under subsection (1B) above,

if the claim is made more than 3 years after the relevant date.

(4ZA)The relevant date is—

(a)in the case of a claim by virtue of subsection (1) above, the end of the prescribed accounting period mentioned in that subsection, unless paragraph (b) below applies;

(b)in the case of a claim by virtue of subsection (1) above in respect of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

(c)in the case of a claim by virtue of subsection (1A) above in respect of an assessment issued on the basis of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

(d)in the case of a claim by virtue of subsection (1A) above in any other case, the end of the prescribed accounting period in which the assessment was made;

(e)in the case of a claim by virtue of subsection (1B) above, the date on which the payment was made.

In the case of a person who has ceased to be registered under this Act, any reference in paragraphs (b) to (d) above to a prescribed accounting period includes a reference to a period that would have been a prescribed accounting period had the person continued to be registered under this Act.

(4ZB)For the purposes of this section the cases where there is an erroneous voluntary disclosure are those cases where—

(a)a person discloses to the Commissioners that he has not brought into account for a prescribed accounting period (whenever ended) an amount of output tax due for the period;

(b)the disclosure is made in a later prescribed accounting period (whenever ended); and

(c)some or all of the amount is not output tax due..

(9)For subsections (4A) and (4B) (recovery of excess repayments) substitute—

(4A)Where—

(a)an amount has been credited under subsection (1) or (1A) above to any person at any time on or after 26th May 2005, and

(b)the amount so credited exceeded the amount which the Commissioners were liable at that time to credit to that person,

the Commissioners may, to the best of their judgement, assess the excess credited to that person and notify it to him..

(10)For subsection (7) (no other liability of Commissioners to repay VAT not due) substitute—

(7)Except as provided by this section, the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them..

(11)The side-note to the section accordingly becomes “ Credit for, or repayment of, overstated or overpaid VAT ”.

(12)Section 4 contains consequential and supplementary provision.

4Section 3: consequential and supplementary provisionE+W+S+N.I.

(1)In consequence of the amendments made by section 3, VATA 1994 is amended as follows.

(2)In section 78 (interest in certain cases of official error) in subsection (1)(a) (overstated output tax) for “and which they are in consequence liable to repay to him” substitute “ and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him, ”.

(3)In section 80A (arrangements for reimbursing customers)—

(a)in subsection (2)(a), for “repayment” substitute “ crediting ”;

(b)in subsection (2)(b), for “the cost of the original payment of that amount to the Commissioners” substitute “ the amount brought into account as mentioned in paragraph (b) of subsection (1) or (1A) of that section ”;

(c)in subsection (3)(a), for “repayment” substitute “ crediting of the amount ”;

(d)for subsection (3)(b) substitute—

(b)provision for cases where an amount is credited but an equal amount is not reimbursed in accordance with the arrangements;;

(e)in subsection (3)(c), for “repaid” substitute “ paid (or repaid) ”;

(f)in subsection (4)(a), for “to make the repayments to the Commissioners that they are required to make” substitute “ to make the repayments, or give the notifications, to the Commissioners that they are required to make or give ”;

(g)in subsection (7)—

(i)for “repayment”, in the first place, substitute “ credit ”;

(ii)for “the making of any repayment” substitute “ the crediting of any amount ”.

(4)In section 80B (assessment of amounts due under section 80A arrangements) after subsection (1) (person liable to pay an amount) insert—

(1A)Where—

(a)an amount (“the gross credit”) has been credited to any person under subsection (1) or (1A) of section 80,

(b)any sums were set against that amount, in accordance with subsection (2A) of that section, and

(c)the amount reimbursed in accordance with the reimbursement arrangements was less than the gross credit,

subsection (1B) below applies.

(1B)In any such case—

(a)the person shall cease to be entitled to so much of the gross credit as exceeds the amount so reimbursed, and

(b)the Commissioners may, to the best of their judgement, assess the amount due from that person and notify it to him,

but an amount shall not be assessed under this subsection to the extent that the person is liable to pay it to the Commissioners as mentioned in subsection (1) above.

(1C)In determining the amount that a person is liable to pay as mentioned in subsection (1) above, any amount reimbursed in accordance with the reimbursement arrangements shall be regarded as first reducing so far as possible the amount that he would have been liable so to pay, but for the reimbursement of that amount.

(1D)For the purposes of this section, nil is an amount.

(1E)Any reference in any other provision of this Act to an assessment under subsection (1) above includes, if the context so admits, a reference to an assessment under subsection (1B) above..

(5)In section 83 (appeals)—

(a)in paragraph (t) (repayment of amounts under section 80 etc) before “repayment” insert “ crediting or ”;

(b)in paragraph (ta) (assessments under section 80B(1) etc) after “80B(1)” insert “ or (1B) ”.

(6)The amendments made by section 3 and this section have effect in any case where a claim under section 80(2) of VATA 1994 is made on or after 26th May 2005, whenever the event occurred in respect of which the claim is made.

5Reverse charge: gas and electricity valuationE+W+S+N.I.

(1)In paragraph 8 of Schedule 6 to VATA 1994 (valuation in case of reverse charge)—

(a)after “8” insert “ , or any supply of goods is treated by virtue of section 9A, ”, and

(b)after “the services” insert “ or goods ”.

(2)This section has effect in relation to supplies made on or after 17th March 2005.

6Disclosure of value added tax avoidance schemesE+W+S+N.I.

(1)Schedule 1 (which contains amendments of Schedule 11A to VATA 1994) has effect.

(2)Subsection (1) and Schedule 1 shall come into force on such day as the Treasury may by order made by statutory instrument appoint.

(3)An order under subsection (2) may—

(a)appoint different days for different purposes, and

(b)contain transitional provisions and savings.

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Commencement Information

I2S. 6 partly in force; s. 6(2)(3) in force at Royal Assent, see s. 6(3)

I3S. 6(1) in force at 1.8.2005 by S.I. 2005/2010, art. 2 (with arts. 3, 4)

Part 2 E+W+S+N.I.Income tax, corporation tax and capital gains tax

Chapter 1E+W+S+N.I.Personal taxation

Social security pension lump sumsE+W+S+N.I.

7Charge to income tax on lump sumE+W+S+N.I.

(1)A charge to income tax arises where a person becomes entitled to a social security pension lump sum.

(2)For the purposes of the Tax Acts (including subsection (5)) a social security pension lump sum—

(a)is to be treated as income, but

(b)is not to be taken into account in determining the total income of any person.

(3)The person liable to a charge under this section is the person (“P”) entitled to the lump sum, whether or not P is resident F1... or domiciled in the United Kingdom.

(4)The charge is imposed on P for the applicable year of assessment (see subsection (6)).

(5)A charge under this section [F2for a person who is [F3neither a Scottish taxpayer nor a Welsh taxpayer] in the applicable year of assessment] is a charge in respect of the amount of the lump sum at the following rate—

(a)if P's [F4Step 3 income] for the applicable year of assessment is nil, 0%;

F5(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)if P's [F4Step 3 income] for that year of assessment [F6is greater than nil] but does not exceed the basic rate limit for that year, the basic rate F7... for that year;

(d)if P's [F4Step 3 income] for that year of assessment exceeds the basic rate limit for that year [F8but does not exceed the higher rate limit for that year], the higher rate F9... for that year.

[F10(e)if P's Step 3 income for that year of assessment exceeds the higher rate limit for that year, the additional rate F11... for that year.]

[F12(5A)Where P is a Scottish taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—

(a)if P’s Step 3 income for the applicable year of assessment is nil, 0%;

F13(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)if P’s Step 3 income for that year of assessment [F14is greater than nil], the highest Scottish rate for that tax year that is [F15applicable to P’s Step 3 income for that year].]

[F16(5B)Where P is a Welsh taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—

(a)if P’s step 3 income for the applicable year of assessment is nil, 0%;

(b)if P’s step 3 income for that year of assessment is greater than nil but does not exceed the basic rate limit for that year, the Welsh basic rate for that year;

(c)if P’s step 3 income for that year of assessment is greater than the basic rate limit but does not exceed the higher rate limit for that year, the Welsh higher rate for that year;

(d)if P’s step 3 income for that year of assessment is greater than the higher rate limit for that year, the Welsh additional rate for that year.]

(6)Section 8 makes provision as to the meaning of “the applicable year of assessment” for the purposes of this section.

(7)Section 9 contains further definitions and makes provision as to commencement.

(8)Section 10 contains consequential amendments.

[F17(9) For the purposes of this section P's “ Step 3 income ” means P's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).]

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Amendments (Textual)

F1Words in s. 7(3) omitted (with effect in accordance with Sch. 46 para. 135(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 135(1)

F2Words in s. 7(5) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 9(2)(a)

F3Words in s. 7(5) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 11(2)

F4Words in s. 7(5) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 604(2) (with Sch. 2)

F5S. 7(5)(b) omitted (with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 64(a)

F6Words in s. 7(5)(c) substituted (with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 64(b)

F7Words in s. 7(5)(c) omitted (with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 9(2)(b)

F8Words in s. 7(5)(d) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 24(a)

F9Words in s. 7(5)(d) omitted (with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 9(2)(c)

F10S. 7(5)(e) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 24(b)

F11Words in s. 7(5)(e) omitted (with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 9(2)(d)

F12S. 7(5A) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 9(3)

F16S. 7(5B) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 11(3)

F17S. 7(9) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 604(3) (with Sch. 2)

8Meaning of “applicable year of assessment” in section 7E+W+S+N.I.

(1)For the purposes of section 7 “the applicable year of assessment” has the meaning given by this section.

(2)Subject to subsections (5) to (7), the applicable year of assessment is—

(a)the year of assessment in which the first benefit payment day falls, or

(b)if P dies before the beginning of that year of assessment, the year of assessment in which P dies.

(3)For the purposes of subsection (2) “the first benefit payment day” is, subject to [F18subsections (4) [F19, (4A) and (4B)]] , the day as from which P's—

(a)Category A or Category B retirement pension,

(b)shared additional pension, or

(c)graduated retirement benefit,

becomes payable following the period of deferment by virtue of which P's entitlement to the lump sum arises.

(4)But where—

(a)the lump sum is a state pension lump sum to which P is entitled under paragraph 7A of Schedule 5 to SSCBA 1992 or paragraph 7A of Schedule 5 to SSCB(NI)A 1992 or a graduated retirement benefit lump sum to which P is entitled under a provision corresponding to either of those paragraphs, and

(b)at the time of S's death, P was entitled to a Category A or Category B retirement pension or (as the case may be) graduated retirement benefit,

the first benefit payment day is the day on which S died; and for this purpose “S” is the person by virtue of whose period of deferment P's entitlement to the lump sum arises.

[F20(4A)In a case where the social security pension lump sum is a lump sum under section 8 of the Pensions Act 2014 or under any corresponding provision under the law of Northern Ireland, “the first benefit payment day” for the purposes of subsection (2) is the day as from which the lump sum becomes payable.]

[F21(4B)In a case where the social security pension lump sum is a lump sum under regulations under section 10 of the Pensions Act 2014 which make provision corresponding or similar to section 8 of that Act or under any corresponding provision under the law of Northern Ireland, “the first benefit payment day” for the purposes of subsection (2) is the day as from which the lump sum becomes payable.]

(5)Subsections (6) and (7) apply where social security regulations make provision enabling the making of an election for a social security pension lump sum to be paid in the year of assessment (“the later year of assessment”) next following that given by subsection (2).

(6)If such an election is made by P and is not revoked, the applicable year of assessment is—

(a)the later year of assessment, or

(b)if P dies before the beginning of that year of assessment, the year of assessment in which P dies.

(7)If—

(a)P dies after the beginning of the later year of assessment,

(b)by the time of P's death, P has not notified the Secretary of State as to whether or not P wishes to make such an election,

(c)social security regulations make provision enabling the making of such an election in such a case by the personal representatives of P, and

(d)P's personal representatives make such an election in accordance with the regulations,

the applicable year of assessment is the later year of assessment.

(8)For the purposes of determining the applicable year of assessment, it does not matter when the lump sum is actually paid.

(9)In this section—

  • Category A or Category B retirement pension” means Category A or Category B retirement pension under Part 2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992;

  • graduated retirement benefit” means graduated retirement benefit under section 36 or 37 of NIA 1965 or section 35 or 36 of NIA(NI) 1966;

  • shared additional pension” means shared additional pension under Part 2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992;

  • social security regulations” means any regulations under—

    (a)

    the Social Security Administration Act 1992 (c. 5), or

    (b)

    the Social Security Administration (Northern Ireland) Act 1992 (c. 8).

(10)This section is to be construed as one with section 7.

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Amendments (Textual)

9Interpretation and commencementE+W+S+N.I.

(1)In sections 7 and 8 “social security pension lump sum” means—

(a)a state pension lump sum,

(b)a shared additional pension lump sum, or

(c)a graduated retirement benefit lump sum.

(2)In section 8 and this section—

  • graduated retirement benefit lump sum” means a lump sum payable under—

    (a)

    section 36 or 37 of NIA 1965, or

    (b)

    section 35 or 36 of NIA(NI) 1966;

  • shared additional pension lump sum” means a lump sum payable under—

    (a)

    section 55C of, and Schedule 5A to, SSCBA 1992, or

    (b)

    section 55C of, and Schedule 5A to, SSCB(NI)A 1992;

  • state pension lump sum” means a lump sum payable under—

    (za)

    [F22section 8 of the Pensions Act 2014 or under any corresponding provision under the law of Northern Ireland,]

    (zb)

    [F23regulations under section 10 of the Pensions Act 2014 which make provision corresponding or similar to section 8 of that Act or under any corresponding provision under the law of Northern Ireland, 1992, or]

    (a)

    section 55 of, and Schedule 5 to, SSCBA 1992, or

    (b)

    section 55 of, and Schedule 5 to, SSCB(NI)A 1992.

(3)In section 8 and this section—

  • NIA 1965” means the National Insurance Act 1965 (c. 51);

  • NIA(NI) 1966” means the National Insurance Act (Northern Ireland) 1966 (c. 6 (N.I.));

  • SSCBA 1992” means the Social Security Contributions and Benefits Act 1992 (c. 4);

  • SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).

(4)Sections 7 and 8 and this section have effect in relation to the year 2006-07 and subsequent years of assessment.

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Amendments (Textual)

10Consequential amendmentsE+W+S+N.I.

(1)ITEPA 2003 is amended as follows.

(2)In section 577 (UK social security pensions) after subsection (1) insert—

(1A)But this section does not apply to any social security pension lump sum (within the meaning of section 7 of F(No.2)A 2005)..

(3)In section 683 (PAYE income) in subsection (3) (meaning, subject to subsection (4), of “PAYE pension income”) in the opening words, for “subsection (4)” substitute “ subsections (3A) and (4) ”.

(4)In that section, after subsection (3) insert—

(3A)PAYE pension income” for a tax year also includes any social security pension lump sum (within the meaning of section 7 of F(No.2)A 2005) in respect of which a charge to income tax arises under that section for that tax year..

(5)In section 686 (meaning of “payment”) in subsection (1) (rules as to when payment of, or on account of, PAYE income is to be treated as made for the purposes of PAYE regulations) at the end of the subsection insert— “ But this is subject to subsection (5) (PAYE pension income: social security pension lump sums). ”.

(6)In that section, after subsection (4) insert—

(5)For the purposes of PAYE regulations, a payment of, or on account of, an amount which is PAYE pension income of a person by virtue of section 683(3A) (social security pension lump sums) is to be treated as made at the time when the payment is made..

F24(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F24S. 10(7) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), s. 126(6)(b)

Gift aidE+W+S+N.I.

F2511Donations to charity by individualsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F25S. 11 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

Employee securitiesE+W+S+N.I.

12Employee securities: anti-avoidanceE+W+S+N.I.

Schedule 2 contains amendments relating to employee securities.

Chapter 2E+W+S+N.I.Scientific research organisations

F2613Corporation tax exemption for organisationsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F26S. 13 repealed (1.4.2010, with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

14Income tax deduction for payments to organisationsE+W+S+N.I.

(1)Section 88 of ITTOIA 2005 (income tax deduction for payments to research associations etc.) is amended as follows.

(2)In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “research” in paragraph (b) substitute—

(a)pays any sum to an Association in the case of which exemption may be claimed under section 508 of ICTA and which has as its object the undertaking of research and development which may lead to or facilitate an extension of the class of trade to which the trade carried on by the person belongs, or

(b)pays any sum to be used for scientific research related to that class of trade.

(3)In subsection (4), omit paragraph (a) (meaning of “approved” in relation to scientific research association).

(4)In subsection (5) (references to scientific research related to a class of trade), for “references in this section” substitute “ reference in subsection (1)(b) ”.

(5)This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).

15Corporation tax deduction for payments to organisationsE+W+S+N.I.

(1)Section 82B of ICTA (corporation tax deduction for payments to research associations etc.) is amended as follows.

(2)In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “above” in paragraph (b) substitute—

(a)pays any sum to an Association in the case of which exemption may be claimed under section 508 and which has as its object the undertaking of research and development which may lead to or facilitate an extension of the class of trade to which the trade carried on by the company belongs, or

(b)pays any sum to be used for scientific research related to that class of trade.

(3)In subsection (3) (reference to scientific research related to a class of trade), for “this section” substitute “ subsection (1)(b) above ”.

(4)This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).

Chapter 3E+W+S+N.I.Authorised investment funds etc

F2716Open-ended investment companiesE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F27S. 16 repealed (1.4.2010, with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

17Authorised unit trusts and open-ended investment companiesE+W+S+N.I.

(1)The following provisions shall cease to have effect—

(a)sections 468H to 468Q of ICTA (authorised unit trusts),

F28(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F28(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)section 373(4) and (6) of ITTOIA 2005 (open-ended investment company: interest distributions), and

(e)section 376(4) and (6) of ITTOIA 2005 (authorised unit trust: interest distributions).

(2)In this Chapter “authorised investment funds” means—

(a)authorised unit trust schemes, and

(b)open-ended investment companies.

(3)The Treasury may, by regulations—

(a)make provision about the treatment of authorised investment funds for the purposes of an enactment relating to taxation;

(b)provide for the modification of an enactment relating to taxation in its application in relation to—

(i)authorised investment funds,

(ii)shareholders or unit holders in authorised investment funds, or

(iii)transactions involving authorised investment funds;

(c)impose requirements on persons responsible for the management of an authorised investment fund in relation to the provision of information, the form of accounts, the keeping of records or other administrative matters.

(4)For the purposes of this Chapter—

(a)unit trust scheme” has the meaning given by section 237 of the Financial Services and Markets Act 2000 (c. 8),

(b)a unit trust scheme is authorised in relation to an accounting period if an order under section 243 of the Financial Services and Markets Act 2000 is in force in relation to that scheme during the whole or part of that accounting period,

(c)unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme,

(d)a reference to a shareholder or unit holder includes a person beneficially entitled to shares or units (and a reference to owning units or shares shall be construed accordingly),

(e)open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies,

(f)associate” has the meaning given by section 417 of ICTA,

(g)net asset value” means the value of the assets of the authorised investment fund, after the deduction of specified liabilities,

(h)a reference to a distribution includes investing an amount on behalf of a unit holder or shareholder in respect of his accumulation units or accumulation shares,

(i)distribution accounts” means accounts showing—

(i)the total amount available for distribution to unit holders or shareholders, and

(ii)how that amount is computed,

(j)the “distribution date” for a distribution period in relation to an authorised investment fund means—

(i)the date specified by or in accordance with the terms of the trust or the instrument of incorporation of the company for any distribution for that distribution period, or

(ii)if no date is specified, the last day of that distribution period,

(k)distribution period” in relation to an authorised investment fund means a period by reference to which the total amount available for distribution to unit holders or shareholders is ascertained,

(l)umbrella company” has the meaning given by [F29section 615 of the Corporation Tax Act 2010],

(m)umbrella scheme” has the meaning given by [F30section 619 of the Corporation Tax Act 2010], and

(n)[F31section 1122 of the Corporation Tax Act 2010] (connected persons) applies.

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Amendments (Textual)

F28S. 17(1)(b)(c) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F29Words in s. 17(4)(l) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 479(a) (with Sch. 2)

F30Words in s. 17(4)(m) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 479(b) (with Sch. 2)

F31Words in s. 17(4)(n) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 479(c) (with Sch. 2)

Commencement Information

I4S. 17 partly in force; s. 17(2)-(4) in force at Royal Assent, see s. 19(1)

I5S. 17(1) in force at 1.4.2006 for the purposes of corporation tax, with effect as specifed in art. 2(3) of the commencing S.I. and 6.4.2006 for the purposes of income tax, with effect as specifed in art. 2(2) of the commencing S.I. by S.I. 2006/982, art. 2

18Section 17(3): specific powersE+W+S+N.I.

(1)Regulations under section 17(3)(a) or (b) may make provision about distributions which may, in particular—

(a)require an authorised investment fund to comply with prescribed rules for determining (whether by reference to a formula or otherwise) what proportion of an amount shown in distribution accounts as available for distribution is to be distributed by way of dividends and what proportion is to be distributed by way of yearly interest;

(b)permit persons responsible for the management of an authorised investment fund to elect to distribute entirely by way of dividends;

(c)require distribution accounts to show the amount available for distribution—

(i)by way of dividends;

(ii)by way of yearly interest;

(d)allow a distribution of yearly interest for a distribution period to be deducted, in the prescribed manner, in computing the profits of the authorised investment fund for the accounting period in which the last day of that distribution period falls;

(e)make provision for determining the distribution date in relation to a distribution period of an authorised investment fund;

(f)permit distributions to be made, in prescribed circumstances, to or for the benefit of a person not F32... resident in the United Kingdom without deducting tax;

(g)permit distributions to be made without deducting tax, in prescribed circumstances, to a person F32... resident in the United Kingdom who is unlikely to be liable to pay an amount by way of income tax for the year of assessment in which the distribution is made;

(h)include provision, in respect of a unit holder or shareholder who is within the charge to corporation tax, about—

(i)the liability to corporation tax resulting from receipt of a distribution, and

(ii)the method of computing that liability.

(2)Regulations under section 17(3)(a) or (b) may, in particular—

(a)make special provision for loan relationships held by an authorised investment fund;

(b)make special provision for derivative contracts held by an authorised investment fund;

[F33(c) modify the meaning of “ relevant holding ” for the purposes of—

(i)sections 490 and 492 of the Corporation Tax Act 2009 (loan relationships), and

(ii)section 587 of that Act (derivative contracts).]

(d)make special provision in relation to the treatment of umbrella companies and umbrella schemes (or shareholders or unit holders in umbrella companies or umbrella schemes);

(e)prohibit action which favours a class of unit holders or shareholders.

(3)Regulations under section 17(3)(a) or (b) may, in particular—

(a)make special provision in relation to a person who, alone or together with associates or connected persons, owns (otherwise than as a nominee) units or shares, in a fund designated by the [F34Financial Conduct Authority] as a Qualified Investor Scheme, which represent 10% or more (or such other percentage as the regulations may specify) of the net asset value of the fund;

(b)include exceptions from provision made by virtue of paragraph (a) above including, in particular, an exception relating to units or shares held—

(i)by a charity F35...,

(ii)by a registered pension scheme (within the meaning of section 150 of FA 2004),

[F36(iii)by an insurance company (within the meaning of section 65 of FA 2012) as assets for the purposes of its long-term business (within the meaning of section 63 of that Act),]or

(iv)by such other persons, in such circumstances, as the regulations may specify.

(4)Regulations under section 17(3)(c) may, in particular, require persons responsible for the management of an authorised investment fund to supply information to, and make available books, documents and other records for inspection by, the Commissioners for Her Majesty's Revenue and Customs.

(5)Regulations under section 17(3) may, in particular—

(a)amend a reference in an enactment to a provision repealed by section 17(1);

(b)make different provision for different circumstances;

(c)make incidental, consequential, supplemental or transitional provision.

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Amendments (Textual)

F32Word in s. 18(1)(f)(g) omitted (17.7.2013) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 136

F33S. 18(2)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 669 (with Sch. 2 Pts. 1, 2)

F34Words in s. 18(3)(a) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 18 para. 108 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F35Words in s. 18(3)(b)(i) omitted (1.4.2012) by virtue of Finance Act 2010 (c. 13), Sch. 6 paras. 22, 34(2); S.I. 2012/736, art. 16

F36S. 18(3)(b)(iii) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 124

19Section 17: commencement and procedureE+W+S+N.I.

(1)Section 17(1) shall come into force on such day as the Treasury may appoint by order.

(2)An order under subsection (1) may—

(a)commence only a specified repeal;

(b)commence different repeals at different times;

(c)commence a repeal at different times for different purposes;

(d)include savings.

(3)Regulations under section 17(3) shall be subject to annulment by a resolution of the House of Commons.

(4)But the first set of regulations under section 17(3) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

20Unauthorised unit trusts: chargeable gainsE+W+S+N.I.

(1)Section 100 of TCGA 1992 (exemption for authorised unit trusts, etc) shall be amended as follows.

(2)After subsection (2) insert—

(2A)In determining whether subsection (2) applies no account shall be taken of units in a scheme which—

(a)have been disposed of by a unit holder, and

(b)are held by the managers of the scheme (in that capacity) pending disposal.

(2B)In determining whether subsection (2) applies no account shall be taken of the possibility of a charge to corporation tax on income in respect of a gain accruing on a disposal by—

(a)an insurance company (within the meaning given by section 431 of the Taxes Act), or

(b)a friendly society (being an incorporated friendly society or registered friendly society within the meaning given by section 466(2) of the Taxes Act).

(3)This section shall have effect for the year 2005-06 and subsequent years of assessment.

21Unit trusts: treatment of accumulation unitsE+W+S+N.I.

(1)In Chapter 3 of Part 3 of TCGA 1992 (collective investment schemes, etc) after section 99A insert—

99BCalculation of the disposal cost of accumulation units

(1)For the purposes of computing the gain accruing on a disposal by a unit holder of units in a unit trust scheme and for the purposes of all other provisions of this Act, an amount shall be treated as expenditure falling within section 38(1)(b) if—

(a)it represents income from the investments subject to the unit trust scheme,

(b)it has been reinvested in respect of the units on behalf of the unit holder (without an issue of new units), and

(c)it is either—

(i)charged to income tax as income of the unit holder (or would be charged to income tax as his income but for a relief which has effect in respect of it) for the purposes of the Income Tax Acts, or

(ii)taken into account as a receipt in calculating profits, gains or losses of the unit holder for the purposes of the Income Tax Acts.

(2)Where an amount is treated as expenditure by virtue of subsection (1), the expenditure shall be treated for the purposes of this Act as having been incurred—

(a)in relation to an authorised unit trust, on the distribution date for the distribution period in respect of which the amount is reinvested, and

(b)in relation to any other unit trust scheme, on the date on which the amount is reinvested.

(3)In subsection (2)(a) “distribution date” and “distribution period” shall have the meaning given by section 468H of the Taxes Act.

(2)This section shall have effect in relation to a disposal of units on or after 16th March 2005.

22Section 349B ICTA: exemption for distributions to PEP/ISA managersE+W+S+N.I.

(1)Section 349B(4) of ICTA (requirement for individual to be entitled to income tax exemption) shall be amended as follows.

(2)In paragraph (a) after “of a plan” insert “ of a kind to which regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) apply ”.

(3)Paragraph (b) shall cease to have effect.

(4)This section shall have effect in relation to payments made on or after 6th April 2005.

F3723Offshore fundsE+W+S+N.I.

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Amendments (Textual)

F37S. 23 repealed (with effect in accordance with reg. 1(2)(3), Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), reg. 1(1), Sch. 2

Chapter 4E+W+S+N.I.Avoidance involving tax arbitrage

F3824Deduction casesE+W+S+N.I.

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Amendments (Textual)

F38Ss. 24-28 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 152, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F3825Rules relating to deductionsE+W+S+N.I.

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Amendments (Textual)

F38Ss. 24-28 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 152, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F3826Receipts casesE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F38Ss. 24-28 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 152, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F3827Rule as to qualifying paymentE+W+S+N.I.

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Amendments (Textual)

F38Ss. 24-28 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 152, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F3828Notices under sections 24 and 26E+W+S+N.I.

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Amendments (Textual)

F38Ss. 24-28 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 152, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F3929Amendments relating to company tax returnsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F39S. 29 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F4030InterpretationE+W+S+N.I.

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Amendments (Textual)

F40S. 30 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 153, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

F4131CommencementE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F41S. 31 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 154, Sch. 10 Pt. 3 (with Sch. 9 paras. 1-9, 22)

Chapter 5E+W+S+N.I.Chargeable gains

Residence, location of assets etcE+W+S+N.I.

32Temporary non-residentsE+W+S+N.I.

(1)Section 10A of TCGA 1992 is amended as follows.

(2)In subsection (3) (certain gains or losses to be excluded from being treated by virtue of subsection (2) as accruing to the taxpayer in year of return)—

(a)in paragraph (a), for “he was neither resident nor ordinarily resident in the United Kingdom” substitute—

(i)he was neither resident nor ordinarily resident in the United Kingdom, or

(ii)he was resident or ordinarily resident in the United Kingdom but was Treaty non-resident;;

(b)in paragraph (d), after “152(1)(b)” insert “ , 153(1)(b) ”.

(3)In subsection (8) (definitions) in the definition of “relevant disposal”, after “United Kingdom” insert “ and was not Treaty non-resident ”.

(4)For subsection (9) substitute—

(9)For the purposes of this section an individual satisfies the residence requirements for a year of assessment—

(a)if, during any part of that year of assessment, he is resident in the United Kingdom and not Treaty non-resident, or

(b)if he is ordinarily resident in the United Kingdom during that year of assessment, unless he is Treaty non-resident during that year of assessment.

(9A)For the purposes of this section an individual is Treaty non-resident at any time if, at that time, he falls to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief arrangements having effect at that time.

(9B)Where this section applies in the case of any individual in circumstances in which one or more intervening years would, but for his being Treaty non-resident during some or all of that year or those years, not be an intervening year, this section shall have effect in the taxpayer's case—

(a)as if subsection (2)(a) above did not apply in the case of any amount treated by virtue of section 87 or 89(2) as an amount of chargeable gains accruing to the taxpayer in any such intervening year, and

(b)as if any such intervening year were not an intervening year for the purposes of subsections (2)(b) and (c) and (6) above..

(5)After subsection (9B) (as inserted by subsection (4) above) insert—

(9C)Nothing in any double taxation relief arrangements shall be read as preventing the taxpayer from being chargeable to capital gains tax in respect of any of the chargeable gains treated by virtue of subsection (2)(a) above as accruing to the taxpayer in the year of return (or as preventing a charge to that tax from arising as a result)..

(6)Omit subsection (10) (section to be without prejudice to right to claim relief under double taxation relief arrangements).

(7)The amendments in subsections (2)(a), (4), (5) and (6) have effect—

(a)in any case in which the year of departure is, or (on the assumption that the amendment in subsection (4) had always had effect) would be, the year 2005-06 or a subsequent year of assessment; and

(b)in any case in which—

(i)the year of departure is, or (on that assumption) would be, the year 2004-05, and

(ii)at a time in that year on or after 16th March 2005, the taxpayer was resident or ordinarily resident in the United Kingdom and was not Treaty non-resident (within the meaning given by section 10A(9A) of TCGA 1992, as inserted by subsection (4)).

(8)The amendment in subsection (2)(b) has effect in relation to relevant disposals made on or after 16th March 2005.

(9)The amendment in subsection (3) has effect for determining whether a disposal of an asset is a relevant disposal for the purposes of section 10A of TCGA 1992 in any case in which the person making the disposal acquired the asset on or after 16th March 2005.

33Trustees both resident and non-resident in a year of assessmentE+W+S+N.I.

(1)After section 83 of TCGA 1992 insert—

83ATrustees both resident and non-resident in a year of assessment

(1)This section applies if a chargeable gain accrues to the trustees of a settlement on the disposal by them of an asset in a year of assessment and the trustees—

(a)are within the charge to capital gains tax in that year of assessment, but

(b)are non-UK resident at the time of the disposal.

(2)Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing the trustees from being chargeable to capital gains tax (or as preventing a charge to tax arising, whether or not on the trustees) by virtue of the accrual of that gain.

(3)For the purposes of this section the trustees of a settlement are within the charge to capital gains tax in a year of assessment—

(a)if, during any part of that year of assessment, they are resident in the United Kingdom and not Treaty non-resident, or

(b)if they are ordinarily resident in the United Kingdom during that year of assessment, unless they are Treaty non-resident during that year of assessment.

(4)For the purposes of this section the trustees of a settlement are non-UK resident at a particular time if, at that time,—

(a)they are neither resident nor ordinarily resident in the United Kingdom, or

(b)they are resident or ordinarily resident in the United Kingdom but are Treaty non-resident.

(5)For the purposes of this section the trustees of a settlement are Treaty non-resident at any time if, at that time, they fall to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief arrangements having effect at that time..

(2)The amendment made by this section has effect in relation to disposals made on or after 16th March 2005.

34Location of assets etcE+W+S+N.I.

Schedule 4 (which makes provision in relation to the situation of assets for the purposes of TCGA 1992 and which makes minor amendments in that Act in relation to non-resident companies with United Kingdom permanent establishments) has effect.

MiscellaneousE+W+S+N.I.

35Exercise of options etcE+W+S+N.I.

Schedule 5 (which makes provision, for the purposes of the taxation of chargeable gains, in relation to options) has effect.

F4236Notional transfers within a groupE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F42S. 36 omitted (with effect in accordance with Sch. 12 para. 5 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 12 para. 4(d)

Chapter 6E+W+S+N.I.Miscellaneous

Accounting practice and related mattersE+W+S+N.I.

37Accounting practice and related mattersE+W+S+N.I.

Schedule 6 (accounting practice and related matters) has effect.

Financial avoidance etcE+W+S+N.I.

38Charges on income for the purposes of corporation taxE+W+S+N.I.

(1)Section 338A of ICTA (meaning of “charges on income” for the purposes of corporation tax) is amended as follows.

(2)In subsection (2) (what are charges on income) paragraph (a) (annuities or other annual payments that meet the conditions in section 338B) shall cease to have effect.

F43(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In section 434A(2)(a) of ICTA (loss resulting to insurance company from computation in accordance with Case I of Schedule D: reduction by specified amounts) omit sub-paragraph (i) (which relates to charges on income).

F44(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)The amendment made by subsection (4) has effect for accounting periods beginning on or after 1st April 2004.

(7)The other amendments made by this section have effect in relation to payments made on or after the commencement date in respect of annuities or other annual payments.

(8)Where—

(a)an accounting period of a company begins before, and ends on or after, the commencement date,

(b)a payment in respect of an annuity or other annual payment is made by the company in that period but before the commencement date, and

(c)the payment is deductible as a charge on income for the purposes of corporation tax,

subsection (9) applies.

(9)In any such case, so much of any amount as represents that payment—

(a)is not deductible under section 75 of ICTA (expenses of management), and

(b)is not to be brought into account under section 76 of that Act (expenses of insurance companies) as expenses payable,

for that or any subsequent accounting period.

(10)Subsection (12) applies in any case where—

(a)a payment in respect of an annuity or other annual payment is made by a company on or after the commencement date, and

(b)the condition in subsection (11) is satisfied.

(11)The condition is that the payment represents an amount which (apart from subsection (12))—

(a)would not be deductible under section 75 of ICTA, or

(b)would not fall to be brought into account under section 76 of that Act,

by reason only of section 337A(1)(b) of that Act (company's income from any source to be computed without any deduction in respect of charges on income) as it applies by virtue of section 338A(2)(a) of that Act.

(12)In any such case, the amount represented by the payment—

(a)is deductible under section 75 of ICTA, or

(b)falls to be brought into account under section 76 of that Act as expenses payable,

for the accounting period in which the payment is made.

(13)In this section “the commencement date” means 16th March 2005.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F43S. 38(3) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

F44S. 38(5) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

39Avoidance involving financial arrangementsE+W+S+N.I.

Schedule 7 (which makes provision in relation to tax avoidance involving financial arrangements) has effect.

Financing of companies etcE+W+S+N.I.

40Transfer pricing and loan relationshipsE+W+S+N.I.

Schedule 8 (which amends Schedule 28AA to ICTA and Schedule 9 to FA 1996) has effect.

Intangible fixed assetsE+W+S+N.I.

F4541Intangible fixed assetsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F45S. 41 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

Insurance companies etcE+W+S+N.I.

42Insurance companies etcE+W+S+N.I.

Schedule 9 (which makes provision about insurance companies etc) has effect.

International mattersE+W+S+N.I.

F4643Implementation of the amended Parent/Subsidiary DirectiveE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F46S. 43 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

44Territories with a lower level of taxation: reduction of amount of local taxE+W+S+N.I.

(1)Section 750 of ICTA (controlled foreign companies: territories with a lower level of taxation) is amended as follows.

(2)In subsection (1), after “if” insert “ , after giving effect to subsections (1A) and (1B) below, ”.

(3)After subsection (1) insert—

(1A)If in the case of that accounting period there is any income, or any income and any expenditure, of the company—

(a)which is brought into account in determining the profits of the company in respect of which tax is paid under the law of that territory, but

(b)which does not also fall to be brought into account in determining the chargeable profits of the company,

the local tax shall be treated for the purposes of this Chapter as reduced to what it would have been had that income and any such expenditure not been so brought into account.

(1B)If—

(a)under the law of that territory any tax (“the company's tax”) falls to be paid by the company in respect of profits of the company arising in that accounting period,

(b)under that law, any repayment of tax, or any payment in respect of a credit for tax, is made to a person other than the company, and

(c)that payment or repayment is directly or indirectly in respect of the company's tax,

the local tax shall be treated for the purposes of this Chapter as reduced (or further reduced) by the amount of that payment or repayment..

(4)The amendments made by this section have effect in relation to accounting periods of companies resident outside the United Kingdom beginning on or after 2nd December 2004.

(5)Where an accounting period of a company resident outside the United Kingdom—

(a)would, without amendment, have ended on or after 2nd December 2004, but

(b)is amended on or after that date so as to end before that date,

an accounting period of the company shall be deemed for the purposes of Chapter 4 of Part 17 of ICTA to have ended with 1st December 2004.

(6)In this section “accounting period” has the same meaning as in Chapter 4 of Part 17 of ICTA (see section 751).

MiscellaneousE+W+S+N.I.

45Lloyd's underwriters: assessment and collection of taxE+W+S+N.I.

(1)Omit section 173 of, and Schedule 19 to, FA 1993 (Lloyd's underwriters: assessment and collection of tax).

(2)In section 182 of that Act (regulations) in subsection (1)(a) (power of Commissioners for Her Majesty's Revenue and Customs to make regulations providing for assessment and collection of tax charged in accordance with section 171 of FA 1993, so far as not provided for by Schedule 19 to that Act) omit “(so far as not provided for by Schedule 19 to this Act)”.

(3)In that section, at the end insert—

(6)Any power to make regulations conferred by this section includes power to make—

(a)different provision for different cases or different purposes, and

(b)incidental, supplemental or transitional provision and savings..

(4)Omit section 221 of FA 1994 (Lloyd's underwriters: corporations etc: assessment and collection of tax).

(5)Renumber section 229 of that Act (regulations) as subsection (1) of that section.

(6)In subsection (1) of that section (as amended by subsection (5) above), in paragraph (a) (power of Commissioners for Her Majesty's Revenue and Customs to make regulations providing for assessment and collection of tax charged in accordance with section 219 of FA 1994, so far as not provided for by Schedule 19 to FA 1993 as applied by section 221 of FA 1994) omit “(so far as not provided for by Schedule 19 to the 1993 Act as applied by section 221 above)”.

(7)In that section, at the end insert—

(2)Any power to make regulations conferred by this section includes power to make—

(a)different provision for different cases or different purposes, and

(b)incidental, supplemental or transitional provision and savings..

(8)For the purpose of enabling the making of any regulations under—

(a)section 182(1)(a) of FA 1993 (as amended by subsection (2)), or

(b)section 229(1)(a) of FA 1994 (as amended by subsection (6)),

subsections (1) to (7) come into force on the day on which this Act is passed.

(9)Subject to that, those subsections come into force in accordance with provision made by the Treasury by order.

(10)Section 828(3) of ICTA shall not apply in relation to an order under subsection (9).

(11)The Commissioners for Her Majesty's Revenue and Customs may by regulations make such amendments, repeals or revocations in any enactment (including an enactment amended by this section) as appear to them to be appropriate in consequence of any one or more of the following—

(a)any amendment made by this section;

(b)the exercise by them of the power in section 182(1)(a) of FA 1993 (as amended by subsection (2));

(c)the exercise by them of the power in section 229(1)(a) of FA 1994 (as amended by subsection (6)).

(12)Any power conferred by this section to make an order or regulations includes power to make—

(a)different provision for different cases or different purposes, and

(b)incidental, supplemental or transitional provision and savings.

(13)In this section—

  • enactment” includes an enactment comprised in subordinate legislation;

  • subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30) (see section 21 of that Act).

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Commencement Information

I6S. 45 partly in force; s. 45(1)-(7) in force for certain purposes at Royal Assent and s. 45(8)-(13) in force at Royal Assent, see s. 45(8)(9)

I7S. 45(1)-(3) in force at 6.4.2006 in so far as not already in force by S.I. 2005/3337, art. 3

I8S. 45(4)-(7) in force at 1.1.2006 in so far as not already in force by S.I. 2005/3337, art. 2

46Energy Act 2004 and Health Protection Agency Act 2004E+W+S+N.I.

(1)This section provides for certain enactments to cease to have effect which relate to—

(a)the United Kingdom Atomic Energy Authority (“UKAEA”),

(b)the National Radiological Protection Board (“NRPB”), or

(c)pension schemes run by UKAEA.

(2)In ICTA the following provisions shall cease to have effect—

(a)section 349B(3)(g) (no deduction of tax from certain payments to UKAEA);

(b)section 349B(3)(h) (no deduction of tax from certain payments to NRPB);

(c)section 512(1) and (3) (certain exemptions from income tax and corporation tax for UKAEA and NRPB);

(d)section 512(2) (treatment of certain income of pension schemes run by UKAEA).

(3)In section 271(7) of TCGA 1992 (miscellaneous exemptions from tax in respect of chargeable gains)—

(a)for “Memorial Fund, the” substitute “ Memorial Fund and the ”;

(b)omit “, the United Kingdom Atomic Energy Authority”;

(c)omit “and the National Radiological Protection Board”;

(d)omit from “; and for the purposes” to the end of the subsection (treatment of gains accruing to pension schemes run by UKAEA).

(4)In subsection (2)—

(a)paragraph (a) has effect in relation to payments made on or after 1st April 2005;

(b)paragraph (b) has effect in relation to payments made after 1st April 2005;

(c)paragraph (c), so far as relating to UKAEA, has effect on and after 1st April 2005;

(d)paragraph (c), so far as relating to NRPB, has effect after 1st April 2005;

(e)paragraph (d) has effect in relation to income arising on or after 1st April 2005.

(5)In subsection (3)—

(a)paragraphs (a) and (c) have effect in relation to gains accruing after 1st April 2005;

(b)paragraphs (b) and (d) have effect in relation to gains accruing on or after 1st April 2005.

(6)The repeal of subsection (3)(g) of section 349B of ICTA does not affect the application of any other provision of that section in relation to UKAEA.

(7)Nothing in this section affects—

(a)any accounting period of UKAEA ending before 1st April 2005, or

(b)any accounting period of NRPB ending on or before 1st April 2005.

Part 3 E+W+S+N.I.Stamp taxes

Stamp duty land taxE+W+S+N.I.

47E-conveyancingE+W+S+N.I.

F47(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In section 79(1) of FA 2003 (registration of land transactions) after “in relation to the transaction” insert “ or such information about compliance as the Commissioners for Her Majesty's Revenue and Customs may specify in regulations. ”

(3)In section 119(1) of FA 2003 (land transactions: effective date) for “the date of completion” substitute—

(a)the date of completion, or

(b)such alternative date as the Commissioners for Her Majesty's Revenue and Customs may prescribe by regulations.

(4)After paragraph 7(1) of Schedule 10 to FA 2003 (land transaction returns: correction of errors) insert—

(1A)The power under sub-paragraph (1) may, in such circumstances as the Commissioners for Her Majesty's Revenue and Customs may specify in regulations, be exercised—

(a)in relation to England and Wales, by the Chief Land Registrar;

(b)in relation to Scotland, by the Keeper of the Registers of Scotland;

(c)in relation to Northern Ireland, by the Registrar of Titles or the registrar of deeds;

(d)in any case, by such other persons with functions relating to the registration of land as the regulations may specify.

(5)The Commissioners for Her Majesty's Revenue and Customs—

(a)may make regulations conferring administrative functions on a land registrar in connection with stamp duty land tax, and

(b)may make payments to land registrars in respect of the exercise of those functions.

(6)In subsection (5) “land registrar” means—

(a)in relation to England and Wales, the Chief Land Registrar,

F48(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)in relation to Northern Ireland, the Registrar of Titles or the registrar of deeds, and

(d)in any case, such other persons with functions relating to the registration of land as regulations under subsection (5) may specify.

(7)Regulations under subsection (5)—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of the House of Commons.

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Amendments (Textual)

F47S. 47(1) omitted (with effect in accordance with s. 29(4) of the amending Act) by virtue of Scotland Act 2012 (c. 11), s. 44(2)(b)(3)(b), Sch. 3 para. 29(a) (with s. 29(5)(6)); S.I. 2015/637, art. 2

F48S. 47(6)(b) omitted (with effect in accordance with s. 29(4) of the amending Act) by virtue of Scotland Act 2012 (c. 11), s. 44(2)(b)(3)(b), Sch. 3 para. 29(b) (with s. 29(5)(6)); S.I. 2015/637, art. 2

48Disclosure of information contained in land transaction returnsE+W+S+N.I.

(1)After section 78 of FA 2003 insert—

78ADisclosure of information contained in land transaction returns

(1)Relevant information contained in land transaction returns delivered under section 76 (whether before or after the commencement of this section) is to be available for use—

(a)by listing officers appointed under section 20 of the Local Government Finance Act 1992, for the purpose of facilitating the compilation and maintenance by them of valuation lists in accordance with Chapter 2 of Part 1 of that Act,

(b)as evidence in an appeal by virtue of section 24(6) of that Act to a valuation tribunal established under Schedule 11 to the Local Government Finance Act 1988,

(c)by the Commissioner of Valuation for Northern Ireland, for the purpose of maintaining a valuation list prepared, and from time to time altered, by him in accordance with Part 3 of the Rates (Northern Ireland) Order 1977, and

(d)by such other persons or for such other purposes as the Treasury may by regulations prescribe.

(2)In this section, “relevant information” means any information of the kind mentioned in paragraph 1(4) of Schedule 10 (information corresponding to particulars required under previous legislation).

(3)The Treasury may by regulations amend the definition of relevant information in subsection (2).

(2)In section 245 of FA 1994 (production of documents: supplementary) for subsection (2) substitute—

(2)The information contained in any document produced to the Commissioners under section 244(2) above shall be available for use by the Commissioner of Valuation for Northern Ireland.

(3)For the heading to Part 6 of FA 1994 substitute “ Stamp duty ”.

(4)Regulation 3 of the Stamp Duty Land Tax (Consequential Amendment of Enactments) Regulations 2005 (S. I. 2005/82) is hereby revoked.

(5)Subsections (1) to (4) come into force on such day as the Treasury may by order appoint.

(6)Section 114(3) of FA 2003 (negative resolution procedure) does not apply to an order made under subsection (5).

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Commencement Information

I9S. 48 partly in force; s. 48(5)(6) in force at Royal Assent, see s. 48(5)

I10S. 48(1)-(4) in force at 30.7.2009 by S.I. 2009/2094, art. 2

49Miscellaneous amendmentsE+W+S+N.I.

Schedule 10 (which makes miscellaneous amendments of Part 4 of FA 2003) has effect.

Stamp duty and stamp duty reserve taxE+W+S+N.I.

F4950Power to extend exceptions relating to recognised exchangesE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

Part 4 E+W+S+N.I.European company statute

51Chargeable gainsE+W+S+N.I.

(1)After section 140D of TCGA 1992 (transfer of non-UK trade) insert—

Formation of SE by mergerE+W+S+N.I.

140EMerger leaving assets within UK tax charge

(1)This section applies where—

(a)an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea),

(b)each merging company is resident in a member State,

(c)the merging companies are not all resident in the same State, and

(d)section 139 does not apply to any qualifying transferred assets.

(2)Where this section applies, qualifying transferred assets shall be treated for the purposes of corporation tax on chargeable gains as if acquired by the SE for a consideration resulting in neither gain nor loss for the transferor.

(3)For the purposes of subsections (1) and (2) an asset is a qualifying transferred asset if—

(a)it is transferred to the SE as part of the process of the merger forming it, and

(b)subsections (4) and (5) are satisfied in respect of it.

(4)This subsection is satisfied in respect of a transferred asset if—

(a)the transferor is resident in the United Kingdom at the time of the transfer, or

(b)any gain that would have accrued to the transferor, had it disposed of the asset immediately before the time of the transfer, would have been a chargeable gain forming part of the transferor's chargeable profits in accordance with section 10B.

(5)This subsection is satisfied in respect of a transferred asset if—

(a)the transferee SE is resident in the United Kingdom on formation, or

(b)any gain that would accrue to the transferee SE were it to dispose of the asset immediately after the transfer would be a chargeable gain forming part of the SE's chargeable profits in accordance with section 10B.

(6)For the purposes of this section a company is resident in a member State if—

(a)it is within a charge to tax under the law of the State as being resident for that purpose, and

(b)it is not regarded, for the purposes of any double taxation relief arrangements to which the State is a party, as resident in a territory not within a member State.

(7)This section does not apply to the formation of an SE by merger if—

(a)it is not effected for bona fide commercial reasons, or

(b)it forms part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoiding liability to corporation tax, capital gains tax or income tax;

and section 138 (clearance in advance) shall apply to this subsection as it applies to section 137 (with any necessary modifications).

140FMerger not leaving assets within UK tax charge

(1)This section applies where—

(a)an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea),

(b)each merging company is resident in a member State,

(c)the merging companies are not all resident in the same State,

(d)in the course of the merger a company resident in the United Kingdom (“company A”) transfers to a company resident in another member State (“company B”) all assets and liabilities relating to a business which company A carried on in a member State other than the United Kingdom through a permanent establishment, and

(e)the aggregate of the chargeable gains accruing to company A on the transfer exceeds the aggregate of any allowable losses so accruing.

(2)Where this section applies, for the purposes of this Act—

(a)the allowable losses accruing to company A on the transfer shall be set off against the chargeable gains so accruing, and

(b)the transfer shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses.

(3)Where this section applies, section 815A of the Taxes Act shall also apply.

(4)Subsections (6) and (7) of section 140E apply for the purposes of this section as they apply for the purposes of that section.

140GTreatment of securities issued on merger

(1)This section applies where—

(a)an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea),

(b)each merging company is resident in a member State,

(c)the merging companies are not all resident in the same State, and

(d)the merger does not constitute or form part of a scheme of reconstruction within the meaning of section 136.

(2)Where this section applies, the merger shall be treated for the purposes of section 136 as if it were a scheme of reconstruction.

(3)Where section 136 applies by virtue of subsection (2) above section 136(6) (and section 137) shall not apply.

(4)Subsections (6) and (7) of section 140E apply for the purposes of this section as they apply for the purposes of that section.

(2)Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.

52Intangible fixed assetsE+W+S+N.I.

(1)After paragraph 85 of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transfer of trade) insert—

Formation of SE by merger

85A(1)This paragraph applies where—

(a)an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea),

(b)each merging company is resident in a member State,

(c)the merging companies are not all resident in the same State, and

(d)paragraph 84 above does not apply to any qualifying transferred assets.

(2)Where this paragraph applies a transfer of qualifying transferred assets is treated for the purposes of this Schedule as tax-neutral (see paragraph 140).

(3)For the purposes of sub-paragraphs (1) and (2) an asset is a qualifying transferred asset if—

(a)it is transferred as part of the process of the merger,

(b)it is a chargeable intangible asset in relation to the transferor immediately before the transfer, and

(c)it is a chargeable intangible asset in relation to the transferee immediately after the transfer.

(4)Sub-paragraph (2) shall apply in relation to the formation of an SE by merger only if—

(a)it is effected for bona fide commercial reasons, and

(b)it does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoiding liability to corporation tax, capital gains tax or income tax.

(5)Paragraph 84(6) (and therefore paragraph 88) shall apply, with any necessary modifications, in relation to sub-paragraph (4) above as in relation to paragraph 84(5).

(6)For the purposes of this paragraph a company is resident in a member State if—

(a)it is within a charge to tax under the law of the State as being resident for that purpose, and

(b)it is not regarded, for the purposes of any double taxation relief arrangements to which the State is a party, as resident in a territory not within a member State.

(2)Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.

53Intangible fixed assets: permanent establishment in another member StateE+W+S+N.I.

(1)After paragraph 87 of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transfer of non-UK trade) insert—

Formation of SE by merger: transfer of non-UK trade

87A(1)This paragraph applies where—

(a)an SE is formed by the merger of two or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea),

(b)each merging company is resident in a member State,

(c)the merging companies are not all resident in the same State,

(d)in the course of the merger a company resident in the United Kingdom (“the transferor”) transfers to a company resident in another member State (“the transferee”) the whole or part of a trade that, immediately before the transfer, the transferor carried on in a member State other than the United Kingdom through a permanent establishment,

(e)the transfer includes the whole of the assets of the transferor used for the purposes of the trade or part,

(f)the transfer includes intangible fixed assets—

(i)that are chargeable intangible assets in relation to the transferor immediately before the transfer, and

(ii)in the case of one or more of which the proceeds of realisation exceed the cost recognised for tax purposes, and

(g)no claim is made under paragraph 86 above in relation to those assets.

(2)Where tax would, but for the Mergers Directive, have been chargeable in the member State in which the permanent establishment is located, Part 18 of the Taxes Act 1988 (double taxation relief), including any arrangements having effect by virtue of section 788 (double taxation agreements), shall have effect as if the amount of tax that would, but for the Mergers Directive, have been charged in respect of the transfer of the chargeable intangible assets, had actually been charged.

(3)In this paragraph “the Mergers Directive” has the same meaning as in paragraph 87.

(4)For the purposes of this paragraph a company is resident in a member State if—

(a)it is within a charge to tax under the law of the State as being resident for that purpose, and

(b)it is not regarded, for the purposes of any double taxation relief arrangements to which the State is a party, as resident in a territory not within a member State.

(5)This paragraph does not apply to the formation of an SE by merger if—

(a)it is not effected for bona fide commercial reasons, or

(b)it forms part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoiding liability to corporation tax, capital gains tax or income tax.

(6)Sub-paragraph (5) shall not affect the operation of this paragraph in any case where, before the transfer, Her Majesty's Revenue and Customs have, on the application of the transferor, notified the transferor that they are satisfied that the merger will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in sub-paragraph (5)(b).

(7)An application under sub-paragraph (6) must be made in accordance with paragraph 88.

(2)Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.

54Loan relationshipsE+W+S+N.I.

F50(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.

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Amendments (Textual)

F50S. 54(1) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F5155Derivative contractsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F51S. 55 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

56Capital allowancesE+W+S+N.I.

(1)After section 561 of CAA 2001 (transfer of UK trade to company in another member State) insert—

561ATransfer during formation of SE by merger

(1)This section applies to the transfer of a qualifying asset as part of the process of a merger to which section 140E of TCGA 1992 (formation of SE by merger) applies (or would apply but for section 140E(1)(d)).

(2)Where this section applies to a transfer—

(a)the transfer does not give rise to any allowance or charge under this Act,

(b)anything done to or by the transferor in relation to assets transferred is to be treated after the transfer as having been done to or by the transferee (with any necessary apportionment of expenditure being made in a reasonable manner), and

(c)section 343 of ICTA (company reconstruction without change of ownership) shall not apply.

(3)For the purposes of subsection (1) an asset is a “qualifying asset” if—

(a)it is transferred to the SE as part of the merger forming it, and

(b)subsections (4) and (5) are satisfied in respect of it.

(4)This subsection is satisfied in respect of an asset if—

(a)the transferor is resident in the United Kingdom at the time of the transfer, or

(b)the asset is an asset of a permanent establishment in the United Kingdom of the transferor.

(5)This subsection is satisfied in respect of an asset if—

(a)the transferee SE is resident in the United Kingdom on formation, or

(b)the asset is an asset of a permanent establishment in the United Kingdom of the transferee SE on its formation.

(2)Subsection (1) shall have effect in relation to a transfer made on or after 1st April 2005.

57Stamp duty reserve taxE+W+S+N.I.

(1)At the end of section 99(4) of FA 1986 (stamp duty reserve tax: interpretation: chargeable securities) add— , or

(d)they are issued or raised by an SE (whether or not in the course of its formation in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) and, at the time when it falls to be determined whether the securities are chargeable securities, the SE has its registered office in the United Kingdom.

(4A)Chargeable securities” does not include securities falling within paragraph (a), (b) or (c) of subsection (3) above if—

(a)they are securities issued or raised by an SE (whether or not in the course of its formation in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)), and

(b)at the time when it falls to be determined whether the securities are chargeable securities, the SE has its registered office outside the United Kingdom.

(2)Subsection (1) shall have effect for the purposes of determining, in relation to anything occurring on or after 1st April 2005, whether securities (whenever issued or raised) are chargeable securities for the purposes of Part 4 of FA 1986.

58Bearer instruments: stamp duty and stamp duty reserve taxE+W+S+N.I.

(1)In section 90(3C)(a) of FA 1986 (stamp duty reserve tax: bearer instruments) after “United Kingdom” insert “ (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ”.

(2)In section 90(3E)(a) of FA 1986 (stamp duty reserve tax: bearer instruments) after “United Kingdom” insert “ (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ”.

(3)In paragraph 11 of Schedule 15 to FA 1999 (bearer instruments) for the definition of “UK company” substitute—

UK company” means—

(a)a company that is formed or established in the United Kingdom (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)), or

(b)an SE which has its registered office in the United Kingdom following a transfer in accordance with Article 8 of that Regulation;.

(4)This section shall have effect for the purposes of determining whether or not stamp duty or stamp duty reserve tax is chargeable in respect of anything done on or after 1st April 2005.

59Consequential amendmentsE+W+S+N.I.

F52(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F53(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In section 140A of TCGA 1992 (transfer of UK trade)—

(a)in subsection (1)(b) for “securities” substitute “ shares or debentures ”, and

(b)in subsection (7) omit the definition of “securities”.

(4)In section 140C of TCGA 1992 (transfer of non-UK trade)—

(a)in subsection (1)(c) for “securities” substitute “ shares or debentures ”, and

(b)in subsection (9) omit the definition of “securities”.

(5)In paragraph 88(1) and (5) of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transferred assets: application for clearance) after “85(5),” insert “ 85A(5), 87A(6), ”.

(6)In paragraph 127 of that Schedule (acquired assets to be treated as existing assets) after sub-paragraph (1)(b)(ii) insert— , or

(iii)section 140E of that Act (transfer on formation of SE by merger),.

(7)Subsections (3) and (4) shall have effect in relation to an issue effected on or after 1st April 2005.

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Amendments (Textual)

F52S. 59(1) repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

F53S. 59(2) omitted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 70(h)

F5460ResidenceE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F54S. 60 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F5561Continuity for transitional purposesE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F55S. 61 repealed (1.4.2010, with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 7 para. 110, Sch. 10 Pt. 12 (with Sch. 9 paras. 1-9, 22)

62GroupsE+W+S+N.I.

(1)After section 170(10) of TCGA 1992 (groups: merger, etc) insert—

(10A)Where the principal company of a group (Group 1)—

(a)becomes an SE by reason of being the acquiring company in the formation of an SE by merger by acquisition (in accordance with Articles 2(1), 17(2)(a) and 29(1) of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)),

(b)becomes a subsidiary of a holding SE (formed in accordance with Article 2(2) of that Regulation), or

(c)is transformed into an SE (in accordance with Article 2(4) of that Regulation),

Group 1 and any group of which the SE is a member on formation shall be regarded as the same; and the question whether or not a company has ceased to be a member of a group shall be determined accordingly.

(2)Subsection (1) shall have effect in relation to the formation of an SE (including its formation by transformation) which occurs on or after 1st April 2005.

F5663Groups: intangible fixed assetsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Amendments (Textual)

F56S. 63 repealed (with effect in accordance with s. 1329(1) of the amedning Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

64Held-over gainsE+W+S+N.I.

(1)In section 116(11) of TCGA 1992 (shares: reorganisation, etc) after “140A,” insert “ 140E, ”.

(2)After section 140(6A) of that Act (postponement of charge on transfer of assets to foreign company) insert—

(6B)If, as part of the process of a merger forming an SE in circumstances in which section 140E applies, securities are transferred to the SE by a transferor company—

(a)the transfer to the SE shall be disregarded for the purposes of subsection (4), and

(b)the SE shall be treated as if it were the transferor company in relation to—

(i)any subsequent disposal of the securities, and

(ii)any subsequent disposal by the transferee company of assets to which subsection (5) applies.

(3)After section 154(2) of that Act (held over gains: depreciating assets) insert—

(2A)If, as part of the process of a merger forming an SE in circumstances in which section 140E applies, asset No 2 or shares in a company which holds asset No 2 are transferred to the SE, the transfer to the SE shall be disregarded for the purposes of subsection (2), and—

(a)if the SE holds asset No 2, it shall be treated for the purposes of subsection (2), in relation to asset No 2, as if it were the claimant, or

(b)if the SE holds shares in the company which holds asset No 2, section 175 shall apply in relation to the group of which the SE is a member as if it were the same group as any group of which the claimant was a member before the formation of the SE.

(2B)If, as part of the process of a merger forming an SE in circumstances in which section 140E applies, the SE becomes a member (whether or not as the principal company) of a group of which the claimant is also a member, for the purposes of subsection (2) section 175 shall apply in relation to the trade carried on by the claimant as if the group of which the SE is a member were the same group as the group of which the claimant was a member before the formation of the SE.

(4)After section 179(1A) of that Act (company ceasing to be member of group) insert—

(1B)Where, as part of the process of a merger to form an SE in circumstances in which section 140E applies, a company which is a member of a group (“Group 1”) ceases to exist and in consequence of that cessation—

(a)assets are transferred to the SE, or

(b)shares in one or more companies which were also members of the group are transferred to the SE,

a company which has ceased to exist, or the shares in which have been transferred to the SE, shall not be treated for the purposes of this section as having left Group 1.

(1C)If subsection (1B) applies in relation to a company then for the purposes of this section—

(a)the SE and a company which has ceased to exist in consequence of the merger to form the SE shall be treated as the same entity, and

(b)if the SE is a member of a group (“Group 2”) following its formation (whether or not as the principal company of the group) a company which was a member of Group 1 and became a member of Group 2 in consequence of the formation of the SE shall be treated, for the purposes of this section, as if Group 1 and Group 2 were the same.

(5)This section shall have effect in relation to the formation of an SE in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea) which occurs on or after 1st April 2005.

65Restrictions on set-off of pre-entry lossesE+W+S+N.I.

(1)Schedule 7A to TCGA 1992 (restrictions on set-off of pre-entry losses) shall be amended as follows.

F57(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F57(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In paragraph 1(6)(a) after “subsection (10)” insert “ or (10A) ”.

F58(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)This section shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.

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Amendments (Textual)

F57S. 65(2)(3) repealed (with effect in accordance with Sch. 11 paras. 11, 12 of the amending Act) by Finance Act 2011 (c. 11), Sch. 11 para. 10(d)

F58S. 65(5) repealed (with effect in accordance with Sch. 11 paras. 11, 12 of the amending Act) by Finance Act 2011 (c. 11), Sch. 11 para. 10(d)

Part 5 E+W+S+N.I.Miscellaneous matters

66Vehicle excise duty: late renewal supplementsE+W+S+N.I.

(1)VERA 1994 is amended as follows.

(2)Section 7A (supplement payable on late renewal of vehicle licence) is amended as follows.

(3)In subsection (1) (cases in which regulations may provide for supplement to be payable), for the words from “in prescribed cases” to the end substitute where—

(a)a vehicle has ceased to be appropriately covered,

(b)the vehicle is not, before the end of the relevant prescribed period, appropriately covered as mentioned in paragraph (a) or (b) of subsection (1A) below with effect from the time immediately after it so ceased or appropriately covered as mentioned in paragraph (d) of that subsection, and

(c)the circumstances are not such as may be prescribed.

(4)After that subsection insert—

(1A)For the purposes of this section and section 7B a vehicle is appropriately covered if (and only if)—

(a)a vehicle licence or trade licence is in force for or in respect of the vehicle,

(b)the vehicle is an exempt vehicle in respect of which regulations under this Act require a nil licence to be in force and a nil licence is in force in respect of it,

(c)the vehicle is an exempt vehicle that is not one in respect of which regulations under this Act require a nil licence to be in force, or

(d)the vehicle is neither kept nor used on a public road and the declarations and particulars required to be delivered by regulations under section 22(1D) have been delivered in relation to it in accordance with the regulations within the immediately preceding period of 12 months.

(1B)Where a vehicle for or in respect of which a vehicle licence is in force is transferred by the holder of the vehicle licence to another person, the vehicle licence is to be treated for the purposes of subsection (1A) as no longer in force unless it is delivered to the other person with the vehicle.

(1C)Where—

(a)an application is made for a vehicle licence for any period, and

(b)a temporary licence is issued pursuant to the application,

subsection (1B) does not apply to the licence applied for if, on a transfer of the vehicle during the currency of the temporary licence, the temporary licence is delivered with the vehicle to the transferee.

(1D)In subsection (1)(b) “the relevant prescribed period” means such period beginning with the date on which the vehicle ceased to be appropriately covered as is prescribed.

(5)In subsection (2)(c) (amount of supplement variable according to length of period between expiry of licence and payment of supplement or renewal of licence), for sub-paragraphs (i) and (ii) substitute—

(i)the time of a notification (in accordance with regulations under section 7B(1)) to, or in relation to, a person by whom it is payable, and

(ii)the time at which it is paid.

(6)In subsection (3)(b) (supplement not to cease to be payable by reason of taking out of vehicle licence), for “a vehicle licence being taken out for the vehicle” substitute “ the vehicle being again appropriately covered ”.

(7)Omit subsection (4)(a)(definition of “expiry of a vehicle licence”).

(8)In the heading, for “late renewal of vehicle licence” substitute “ vehicle ceasing to be appropriately covered ”.

(9)Section 7B (late-renewal supplements: further provisions) is amended as follows.

(10)In subsection (1) (notification of person in whose name vehicle is registered)—

(a)for “on non-renewal of a vehicle licence for” substitute “ in relation to ”, and

(b)for “failure to renew a vehicle licence” substitute “ the vehicle ceasing to be appropriately covered ”.

(11)In the heading, for “Late-renewal” substitute “ Section 7A ”.

67Reorganisation of water and sewerage services in Northern IrelandE+W+S+N.I.

(1)In this section “relevant transfer” means a transfer of property, rights or liabilities where—

(a)the transfer is of property, rights or liabilities which—

(i)are specified or described in or determined in accordance with a scheme, and

(ii)consist of or include relevant property, rights or liabilities,

(b)the transfer is from a Northern Ireland department or persons which include a Northern Ireland department to a company or companies specified in the scheme (“transferee company”), and

(c)the transfer is effected by or under an enactment which—

(i)is made after the coming into force of this section, and

(ii)relates to the provision of water or sewerage services in Northern Ireland.

(2)In this section “relevant property, rights or liabilities” means property, rights or liabilities connected with the provision of any water or sewerage services.

(3)The Treasury may by regulations make provision for or in connection with varying the way in which a relevant tax or duty would, apart from the regulations, have effect in relation to, or in connection with, any of the following—

(a)anything done for the purpose of, or under or in consequence of, a relevant transfer of relevant property, rights or liabilities from a Northern Ireland department to a transferee company;

(b)any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company;

(c)any relevant property, rights or liabilities of a transferee company.

(4)The provision that may be made by the regulations includes provision for or in connection with any of the following—

(a)a tax provision not to apply or to apply with modifications in prescribed cases or circumstances;

(b)anything done to have or not to have a specified consequence for the purposes of a tax provision in prescribed cases or circumstances;

(c)any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company to be treated in a specified way for the purposes of a tax provision in prescribed cases or circumstances;

(d)the withdrawal of relief (whether or not granted by virtue of the regulations), and the charging of tax, in prescribed cases or circumstances;

(e)requiring or enabling the Secretary of State, with the consent of the Treasury, to determine or to specify the method to be used for determining anything (including amounts or values, or times or periods of time) which needs to be determined for the purposes of any tax provision (whether or not modified by the regulations) as it applies in relation to, or in connection with,—

(i)anything done for the purpose of, or under or in consequence of, a relevant transfer of relevant property, rights or liabilities from a Northern Ireland department to a transferee company, or

(ii)any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company.

(5)A provision of regulations made by virtue only of subsection (3)(c) (“a subsection (3)(c) provision”) (whether or not also by virtue of subsection (4)) shall not have effect for an accounting period of a transferee company unless the company is wholly owned by the Crown during the whole of that accounting period.

(6)Regulations under this section may provide that, for the purposes of a subsection (3)(c) provision, an accounting period of a transferee company shall be taken to have ended on the company ceasing to be wholly owned by the Crown.

(7)For the purposes of this section, a company shall be regarded as wholly owned by the Crown at any time when each of the issued shares in the company is held by, or by a nominee of,—

(a)the Treasury,

(b)the Secretary of State,

(c)a Northern Ireland department, or

(d)another company which is wholly owned by the Crown.

(8)In this section—

  • enactment” includes a provision comprised in—

    (a)

    Northern Ireland legislation, or

    (b)

    an instrument made under an enactment;

  • prescribed” means prescribed by or determined in accordance with regulations under this section;

  • relevant tax or duty” means income tax, corporation tax, capital gains tax, stamp duty or stamp duty reserve tax;

  • tax provision” means a provision of an enactment about a relevant tax or duty.

(9)Any power to make regulations under this section is exercisable by statutory instrument.

(10)A statutory instrument containing regulations under this section shall be subject to annulment in pursuance of a resolution of the House of Commons.

(11)Any power to make regulations under this section includes power—

(a)to make different provision for different cases or circumstances;

(b)to make incidental, supplemental, consequential or transitional provision or savings.

F5968EU Mutual Assistance Directive: notificationsE+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

69Abolition of statutory adjudicator for National Savings and InvestmentsE+W+S+N.I.

(1)After the coming into force of this section, no further disputes shall be referred to a person appointed under section 84 of the Friendly Societies Act 1992 (c. 40) (adjudicator for disputes under the National Savings Bank Act 1971 and the National Debt Act 1972).

(2)This section comes into force on 1st September 2005.

Part 6 E+W+S+N.I.Supplementary provisions

70RepealsE+W+S+N.I.

(1)The enactments mentioned in Schedule 11 (which include provisions that are spent or of no practical utility) are repealed to the extent specified.

(2)The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.

71InterpretationE+W+S+N.I.

In this Act—

  • CAA 2001” means the Capital Allowances Act 2001 (c. 2);

  • [F60CTA 2009” means the Corporation Tax Act 2009;]

  • FA”, followed by a year, means the Finance Act of that year;

  • ICTA” means the Income and Corporation Taxes Act 1988 (c. 1);

  • [F61ITA 2007 ” means the Income Tax Act 2007; ]

  • ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1);

  • ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5);

  • TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12);

  • VATA 1994” means the Value Added Tax Act 1994 (c. 23);

  • VERA 1994” means the Vehicle Excise and Registration Act 1994 (c. 22).

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F60Definition "CTA 2009" in s. 71 inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 672 (with Sch. 2 Pts. 1, 2)

F61Definition "ITA 2007" in s. 71 inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 606 (with Sch. 2)

72Short titleE+W+S+N.I.

This Act may be cited as the Finance (No. 2) Act 2005.

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