Part 1: Double taxation relief
Section 12B of TMA: Records to be kept for purposes of returns
1398.Section 12B(4A)(c)(ii) of TMA refers to “a relief to which section 788(5) of [ICTA] applies”. This is rewritten in new section 12B(4B) of TMA, which reflects the interpretation of that expression adopted in the rewrite of section 790(10A)(d) of ICTA. See the commentary on section 17.
Section 24 of TMA: Power to obtain information as to income from securities
1399.This Schedule inserts section 24(3ZA) and (3ZB) of TMA. These subsections restrict the right of banks under section 24(3) not to disclose certain information about income from securities, when the beneficial owner of the income is non-UK resident and protected by a DTA. They are based on section 816(3) of ICTA. Section 816(3) of ICTA is not relevant to capital gains tax or to PRT.
Section 43D of TMA: Claims for double taxation relief in relation to petroleum revenue tax
1400.This section concerns claims for DTR in relation to PRT. It is based on section 194(4) of FA 1993, which refers to sections 42 and 43 of TMA. But the effect of section 194(4) of FA 1993 is to apply only certain elements of sections 42 and 43 of TMA. It is those elements, as applied by section 194(4) of FA 1993, which are rewritten to the new section 43D of TMA.
1401.The first limb of section 42(8) of TMA says that a claim may be made on behalf of an incapacitated person by the person’s trustee, guardian, tutor or curator. Yet it may be the case that the terms under which the trustee etc is appointed confer power on the trustee etc to make a claim on the incapacitated person’s behalf. If they do, section 42(8) is merely declaratory. If they do not, section 42(8) would not be interpreted as overriding the limitations on their powers, given that those powers arise under carefully constructed statutory codes for the protection of persons without capacity.
1402.It is in any case extremely unlikely that a claim for DTR in relation to PRT would fall to be made by or on behalf of an individual, even if the individual had legal capacity. In addition, with the exception of guardians in Scotland, statutory representatives of incapacitated persons no longer include trustees, guardians, tutors or curators. The first limb of section 42(8) of TMA is therefore not rewritten in this section.
1403.The second limb of section 42(8) of TMA is also not rewritten in this section. It has no application to claims under section 194(4) of FA 1993, because it is about persons charged under Part 8 of TMA. Part 8 of TMA did not extend to PRT and has been repealed.
1404.Subsection (4) modifies the application of paragraph 2A(4) of Schedule 1A to TMA.
Section 790 of ICTA: Unilateral relief
1405.Section 790(5)(c)(iii) of ICTA is spent, because it refers to section 802(1) of that Act, which has been repealed. It is repealed without replacement.
Sections 806A to 806K of ICTA: Foreign dividends: onshore pooling, utilisation of eligible unrelieved foreign tax and branches or agencies in the United Kingdom of persons resident elsewhere
1406.Paragraph 9 of Schedule 14 to FA 2009 repealed sections 806A to 806K of ICTA with effect in relation to distributions paid on or after 1 July 2009. Sections 806A to 806J of ICTA apply solely for corporation tax purposes. Sections 806A to 806J apply in relation to distributions paid before 1 July 2009 in accounting periods which begin before that date and end on or after 1 April 2010. This Act has effect, for corporation tax purposes, for such accounting periods. Accordingly, this Schedule amends sections 806A to 806J of ICTA as appropriate.
1407.Section 806K of ICTA applies for income tax purposes and (if section 277(1) of TCGA had any practical application to section 806K) for capital gains tax purposes, and section 806K(1) also applies for corporation tax purposes. Section 806K therefore does not apply for income tax purposes or capital gains tax purposes to any tax years for which this Act has effect. Although, as explained in the previous paragraph, section 806K(1) of ICTA applies for corporation tax purposes for certain accounting periods for which this Act has effect, there is no need for this Schedule to amend that subsection. Accordingly, this Schedule does not amend section 806K of ICTA.
Section 807 of ICTA: Sale of securities with or without accrued interest
1408.Following section 679(3) of ITA, section 807(3) of ICTA is redundant. It is repealed without replacement.
Sections 812 to 814 of ICTA: Withdrawal of right to tax credit of certain non-resident companies connected with unitary states
1409.Sections 812 to 814 of ICTA are not rewritten, as they are obsolete. This Schedule consequentially amends them, because their repeal would be outside the scope of this Act. HMRC will refer sections 812 to 814 of ICTA to the Law Commission for inclusion in a future Statute Law (Repeals) Bill.
Section 816 of ICTA: Disclosure of information
1410.Section 816(4) of ICTA is repealed without replacement, as it is spent.
Schedule 26 to ICTA: Controlled foreign companies: reliefs against liability for tax in respect of chargeable profits
1411.Paragraph 4 of Schedule 26 to ICTA is concerned with the charge on UK resident companies under section 747(4)(a) of ICTA. This Schedule substitutes, in paragraph 4(4) of that Schedule, references to sections 36, 40 and 42 of this Act. These sections limit DTR by way of credit against, respectively, income tax, capital gains tax and corporation tax.
1412.The reference to section 36 (which is based on section 796 of ICTA) is needed because the calculations under paragraph 4 of Schedule 26 to ICTA take account of participators in the controlled foreign company who are income tax payers.
1413.The reference to section 40 reflects the application of section 277(1) of TCGA to section 796 of ICTA. If this reference is needed, its omission would change the law to the taxpayer’s disadvantage. This reference is therefore included out of caution.
Section 194 of FA 1993: DTR in relation to PRT
1414.Section 194(2) of FA 1993 is a spent transitional. It is repealed without replacement.
Schedule 18 to FA 1998: Company tax returns, assessments and related matters
1415.Paragraph 22(3)(c)(ii) of Schedule 18 to FA 1998 refers to “a relief to which section 788(5) of [ICTA] applies”. This is rewritten in new paragraph 22(4) of that Schedule, which reflects the interpretation of that expression adopted in the rewrite of section 790(10A)(d) of ICTA. See the commentary on section 17.
Section 115 of FA 2004: Supplementary
1416.This Act repeals section 115(4) of FA 2004 without replacement. This provision is redundant since paragraph 3 of Schedule 4 to CRCA removed from section 10 of the Exchequer and Audit Department Act 1866 the rule that allowed HMRC to deduct money for tax repayments etc before paying their receipts into the Consolidated Fund. That rule is now to be found in section 44 of CRCA and is in sufficiently general terms to cover repayments under Part 3 of this Act (double taxation relief for special withholding tax).
Section 527 of ITA: charitable trusts: exemption from charges under provisions to which section 1016 of ITA applies
1417.Section 527(2)(b) of ITA refers to section 804 of ICTA. It is drafted on the basis that section 804(5B)(a) of ICTA refers to an amount which is chargeable to income tax. But, following its amendment by ITA, section 804(5B)(a) of ICTA does not refer to an amount which is chargeable to income tax.
1418.Section 527(2)(b) of ITA purports to remove section 804 of ICTA from the scope of section 527(1) of ITA. But section 804 of ICTA is no longer within the scope of section 527(1) in the first place. Section 527(2)(b) is therefore otiose. It is repealed without replacement.
Section 1026 of ITA: meaning of “non-qualifying income” for the purposes of section 1025 of ITA (meaning of “modified net income”)
1419.Section 1026(g) of ITA refers to section 804 of ICTA. It is drafted on the basis that section 804(5B)(a) of ICTA deems a person to receive an amount. But, following its amendment by ITA, section 804(5B)(a) does not deem a person to receive an amount.
1420.Also, section 1026(g) of ITA is drafted on the basis that the income tax liability calculated under section 23 of ITA includes the income tax liability under section 804(5B)(a) of ICTA. But that is not the case. The liability under section 804(5B)(a) is mentioned in section 32 of ITA and is therefore (by virtue of section 22(2) of that Act) outside section 23 of that Act.
1421.Section 1026(g) is therefore otiose. It is repealed without replacement.
Section 793 of CTA 2009: Intangible fixed assets: reallocation of degrouping charge within group and recovery: further requirements about elections under section 793
1422.Section 793(3) of CTA 2009 stipulates that an election under section 792 of that Act can only be made if at the relevant time (a) company B carried on a trade in the United Kingdom through a permanent establishment, and (b) it was not exempt from corporation tax in respect of the income or chargeable gains of that permanent establishment because of arrangements under Part 18 of ICTA (DTR).
1423.Section 790(3) of ICTA (unilateral relief), in Part 18 of that Act, hypothesises notional arrangements for DTR. But section 790(3) of ICTA refers specifically to relief by way of credit under Chapter 2 of Part 18 of that Act, and section 793(3) of CTA 2009 refers specifically to exemption from corporation tax. Accordingly, section 793(3) of CTA 2009 does not refer by implication to section 790(3) of ICTA. For the sake of precision, therefore, this Schedule, in amending section 793(3) of CTA 2009, substitutes a reference to arrangements that have effect under section 2(1) (double taxation arrangements).
Section 931H of CTA 2009: Dividends derived from transactions not designed to reduce taxSection 931J of CTA 2009: Schemes involving manipulation of controlled company rules
1424.This Schedule amends sections 931H(5) and 931J(7) of CTA 2009 by replacing the reference to Part 18 of ICTA with a reference to Part 2 of this Act. Sections 812 to 814 in Part 18 of ICTA have never been brought into force and are neither rewritten nor repealed. If those sections were in force, it is possible that dividends to which they would apply might have been deemed by section 931H(5) or 931J(7) of CTA 2009 to have been split into two separate dividends. As sections 812 to 814 of ICTA would, if in force, operate by restricting the benefits of tax credits given in respect of dividends, it makes no difference whether they would operate on the actual dividend or the two deemed dividends: either way, the total tax credit affected would be the same. Accordingly, no change results from sections 931H(5) and 931J(7) of CTA 2009 no longer potentially applying for the purposes of the uncommenced sections 812 to 814 of ICTA.