Schedule 8: Minor and consequential amendments
Overview
1396.This Schedule makes minor and consequential amendments.
1397.The commentary on this Schedule makes specific points about certain of the amendments made.
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.
Part 9: Sale and lease‑back etc
Sections 779(13)(f), 781(4)(e), 781(5)(a) and 785 of ICTA: References to “woodlands”
1425.Following the repeal of Schedule B in 1988, the references to woodlands in sections 779(13)(f), 781(4)(e), 781(5)(a) and 785 of ICTA are obsolete. They are repealed without replacement.
Section 781(5) of ICTA: Assets leased to traders and others: cessation of trade
1426.Following the introduction of Income Tax Self Assessment, section 781(5) of ICTA is spent. It catered for cases in which, under the superseded rules about a trade ceasing, there could be periods whose profits were not brought into account in assessing the amounts on which income tax was charged. It is repealed without replacement.
Broadcasting Act 1996, Greater London Authority Act 1999 and Transport Act 2000
1427.Schedule 7 to the Broadcasting Act 1996 contains taxation provisions relating to transfer schemes under section 131 of that Act. Paragraphs 22 to 24 of that Schedule relate to the sale and lease-back provisions of ICTA which are rewritten for corporation tax purposes in Part 19 of CTA 2010 and for income tax purposes in Part 12A of ITA by Schedule 4 to this Act. Although it appears that paragraphs 22 to 24 primarily relate to the sale and lease-back provisions as applying for corporation tax purposes, they are not expressly limited to corporation tax.
1428.As a result, and because Schedule 6 to the Broadcasting Act 1996 authorises the inclusion in a transfer scheme of a range of provision so wide as to make it difficult to conclude that paragraphs 22 to 24 could never be relevant for income tax purposes, this Part of this Schedule inserts into paragraphs 22 to 24 references to the sale and lease-back provisions as rewritten for income tax purposes in Part 12A of ITA by Schedule 4 to this Act. This complements the insertion of references to Part 19 of CTA 2010 by Schedule 1 to that Act and, although it may represent an unnecessarily cautious approach, has the merit of ensuring that taxpayers within the charge to income tax are not unintentionally disadvantaged.
1429.The position may be similar for the amendments made by this Part of this Schedule in the Greater London Authority Act 1999 and the Transport 2000, but those amendments give rise to no initial surprise since there is nothing in the statutory text to suggest that the provisions being amended may be limited to corporation tax.
Part 10: Factoring of income etc
Section 281A of ITTOIA: Sums to which sections 277 to 281 do not apply
1430.Section 774G(7) of ICTA provides, to summarise, that if section 774A or 774C of that Act applies then sections 277 to 281 of ITTOIA and sections 217 to 221 of CTA 2009 (lease premiums) do not. In consequence of the rewrite of sections 774A to 774G of ICTA for income tax purposes in this Act, section 774G(7) of ICTA is rewritten for income tax purposes as new section 281A of ITTOIA, which disapplies sections 277 to 281 of that Act.
Part 11: UK representatives of non-UK residents
Section 817 of ITA: The independent broker conditions
1431.The words “by the broker” in subsection (3) are omitted as otiose. This amendment conforms the wording of section 817(3) with that of section 835L(3). Like section 835L (inserted in ITA by Part 1 of Schedule 6 to this Act), section 817 is based on section 127(2) of FA 1995.
Section 824 of ITA: Application of 20% rule to collective investment schemes
1432.This amendment adds words at the end of subsection (2) to provide clarification that the amounts in subsection (1) arise or accrue from the transaction referred to in subsection (2). These are the same words as are included in section 835Q(2) of ITA inserted by Part 1 of Schedule 6 to this Act (see the commentary on that Schedule).
Part 12: Amendments for purposes connected with other tax law rewrite Acts
Section 59(3) of ICTA: Persons chargeable: markets, fairs, fisheries, tolls etc
1433.Section 59(3) of ICTA has been repealed and not rewritten as it is unnecessary. See Change 15 in Annex 1.
Greater London Authority Act 1999
1434.This Part of this Schedule amends paragraph 7 of Schedule 33 to the Greater London Authority Act 1999 by replacing references to Case I of Schedule D with references to Part 3 of CTA 2009. Schedule D, which was set out in section 18 of ICTA, was repealed and rewritten for corporation tax purposes by CTA 2009. Paragraph 7 could have been, but was not, amended consequentially by CTA 2009. These references to provisions of Schedule D have in the meantime been translated, by paragraph 5 of Schedule 2 to CTA 2009, so as to be references to the corresponding provisions of CTA 2009.
1435.The amendments substitute references to Part 3 of CTA 2009 even though that Part applies to all trades and Case I of Schedule D did not apply to wholly-foreign trades. Wholly foreign trades were taxed under Case V of Schedule D, but profits of such trades were calculated in accordance with Case I principles. As the references to Case I of Schedule D that are contained in paragraph 7 are about what is to be deducted or brought into account in calculating profits, there is nothing to suggest that paragraph 7 is intended to produce anything but the same result in the somewhat unlikely event of the trade concerned being wholly foreign.
Section 48B(6) to (8) of FA 2005: Alternative finance arrangements: alternative finance investment bond: effects
1436.Section 48B(6) to (8) of FA 2005 were rewritten for corporation tax purposes by section 519 of CTA 2009. It has subsequently been realised that they do not need to be rewritten for income tax and, accordingly, they are repealed by this Act.
Paragraph 75 of Schedule 2 to CTA 2009: Investment bond arrangements entered into before 1 April 2007
1437.Sections 48A and 48B of FA 2005 apply for corporation tax purposes to alternative finance investment bond arrangements entered into on or after 1 April 2007 and apply for income tax purposes to alternative finance investment bond arrangements entered into on or after 6 April 2007; and apply to alternative finance return paid on or after those dates in respect of existing arrangements. If, however, an arrangement is disposed of after 6 April 2007, the alternative finance rules are treated as having applied throughout the life of the arrangement for the purposes of income tax and capital gains tax in relation to the disposal.
1438.This additional provision would normally have no effect on the alternative finance provisions rewritten for corporation tax in Chapter 6 of Part 6 of CTA 2009. However, section 48B(7) of FA 2005, rewritten in section 519(2) of CTA 2009, affects the close company rules, which in turn could affect an individual’s tax position. Section 519(2) of CTA 2009 does not need to be repeated for income tax or capital gains tax, but the special commencement rule in section 53(14)(a) of FA 2007 does need to be applied to it.