Finance Act 2008

Other business and investment measures

34 Tax credits for certain foreign distributions

(1) Schedule 12 contains provision about tax credits for certain foreign distributions.

(2) The amendments made by that Schedule have effect for the tax year 2008-09 and subsequent tax years.

35 Small companies' relief: associated companies

(1) Section 13 of ICTA (small companies' relief) is amended as follows.

(2) In the second sentence of subsection (4) (meaning of “control” for purposes of definition of “associated company”), insert at the end “except that, in the application of subsection (6) of that section in relation to the company (“the taxpayer company”) and another company or companies for the purposes of this section, the references to an associate of a person (“P”) include a partner of the person only if the condition in subsection (4A) below is met.”

(3) After that subsection insert—

“(4A) The condition referred to in subsection (4) above is that relevant tax planning arrangements have at any time had effect in relation to the taxpayer company (whether in connection with its formation or otherwise).

(4B) In subsection (4A) above “relevant tax planning arrangements” means arrangements which—

(a) involve P and the partner, and

(b) secure a relevant tax advantage.

(4C) In subsection (4B) above—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), other than any guarantee, security or charge given to or taken by a bank, and

• “relevant tax advantage” means a reduction of the taxpayer company’s liability to corporation tax by virtue of an increase in relief under this section.”

(4) The amendments made by this section are treated as having come into force on 1 April 2008.

36 Company gains from investment life insurance contracts etc

(1) Schedule 13 contains provisions about company gains from investment life insurance contracts.

(2) Schedule 14 contains amendments and repeals consequential on that Schedule etc.

37 Trade profits: changes in trading stock

(1) Schedule 15 contains provision about the effect of certain changes in trading stock on the calculation of profits of trades for the purposes of income tax or corporation tax.

(2) The amendments made by that Schedule have effect in relation to changes in trading stock occurring on or after 12 March 2008.

(3) In subsection (2) “change in trading stock” means—

(a) in relation to new section 172B of ITTOIA 2005, or paragraph 6 of Schedule 15, an appropriation of trading stock,

(b) in relation to new section 172C of ITTOIA 2005, or paragraph 7 of Schedule 15, a thing becoming trading stock,

(c) in relation to new section 172D of ITTOIA 2005, or paragraph 8 of Schedule 15, a disposal of trading stock, and

(d) in relation to new section 172E of ITTOIA 2005, or paragraph 9 of Schedule 15, an acquisition of trading stock.

38 Non-residents: investment managers

Schedule 16 contains provision about—

(a) the eligibility of an investment manager to be the UK representative of a non-resident, or an agent of independent status in relation to a non-resident, and

(b) profits or income of non-residents that are to be disregarded if derived from certain investment transactions carried out by investment managers.

39 Dormant bank and building society accounts

(1) The Commissioners for Her Majesty’s Revenue and Customs may by regulations—

(a) modify section 17 of TMA 1970 (banks etc required to report interest payments) in relation to interest paid or credited in respect of a relevant dormant account,

(b) modify Chapters 2 and 3 of Part 15 of ITA 2007 (deduction of income tax on interest payments at source) in relation to such interest, and

(c) provide that, for the purposes of Chapter 2 of Part 4 of ITTOIA 2005 (charge to income tax on interest), such interest is to be treated as not being paid until the time (if any) at which the balance of the dormant account is paid out following a claim made by virtue of section 1(2)(b) or 2(2)(b) of the 2008 Act.

(2) A relevant dormant account is a dormant account the balance of which is to be, or has been, transferred—

(a) to an authorised reclaim fund, with the result that section 1 of the 2008 Act will apply, or applies, in relation to the account, or

(b) to an authorised reclaim fund and one or more charities, with the result that section 2 of the 2008 Act will apply, or applies, in relation to the account.

(3) Interest paid or credited in respect of a relevant dormant account includes interest paid or credited by a person who administers the account on behalf of an authorised reclaim fund after the balance has been transferred.

(4) “The 2008 Act” means the Dormant Bank and Building Society Accounts Act 2008; and terms used in this section and in that Act have the same meaning in this section as in that Act.

(5) Regulations under subsection (1) are to be made by statutory instrument.

(6) A statutory instrument containing regulations under that subsection is subject to annulment in pursuance of a resolution of the House of Commons.

(7) In TCGA 1992, after section 26 insert—

“26A Transfer of dormant bank or building society account

(1) This section applies where the balance of a dormant account held by a person with a bank or building society is transferred—

(a) to an authorised reclaim fund, with the result that section 1 of the Dormant Bank and Building Society Accounts Act 2008 applies in relation to the account, or

(b) to an authorised reclaim fund and one or more charities, with the result that section 2 of that Act applies in relation to the account.

(2) For the purposes of this Act—

(a) the transfer is not to be treated as involving any acquisition or disposal of an asset, and

(b) the person’s rights under Part 1 of that Act are to be treated as the same asset as the original rights, acquired as the original rights were acquired and having the same characteristics as those rights.

(3) “The original rights” are the person’s rights against the bank or building society immediately before the transfer.

(4) Terms used in this section and in the Dormant Bank and Building Society Accounts Act 2008 have the same meaning in this section as in that Act.”

(8) Subsection (7) comes into force in accordance with provision made by order made by the Treasury.

40 Individual investment plan regulations

In section 701 of ITTOIA 2005 (investment plan regulations: general and supplementary), insert at the end—

“(4) They may include provision having effect in relation to times before they are made if the provision does not impose or increase any liability to tax.

(5) They may make different provision for different cases or circumstances.”