Finance Act 2022

Charge on value of assets held for qualifying purposes

1 (1) Where—

(a) a person (“P”) takes disqualifying steps in relation to an asset in disqualifying circumstances, and

(b) the £100 million threshold condition is met in relation to the person (whether before, at the same time as or after those steps were taken),

P is liable to pay a tax equal to 75% of the asset’s adjusted value (see paragraph 3).

(2) The tax is to be known as public interest business protection tax and the Commissioners for Her Majesty’s Revenue and Customs are responsible for its collection and management.

(3) P takes disqualifying steps in relation to an asset in disqualifying circumstances if—

(a) it is reasonable to conclude that the asset was held by P wholly or partly for the purposes of it being used or being available for use for the benefit of a public interest business carried on by P or by a person connected to P,

(b) steps are taken by P, or by P together with others, that result in the asset not being used to some extent, or being no longer available for use to some extent, for the benefit of the business,

(c) the business becomes subject to special measures (whether before, at the same time as, or after those steps were taken),

(d) the taking of those steps materially contributes to—

(i) the business becoming subject to special measures, or

(ii) a significant increase in the costs of carrying on the business, and

(e) P was aware, or ought reasonably to have been aware, that the asset not being used, or being available for use, by the business would have the effect mentioned in paragraph (d)(i) or (ii).

(4) In this Schedule—

(a) “qualifying purposes” means the purposes described in sub-paragraph (3)(a), and

(b) “disqualifying steps” means steps described in sub-paragraph (3)(b), and steps may fall within that description whether or not—

(i) P or any other person receives any consideration in connection with, or otherwise in consequence of, the taking of the steps, or

(ii) P directly participates in all of the steps.

(5) Disqualifying steps include (for example)—

(a) one or more steps that result in the disposal of the asset where some or all of the proceeds of that disposal are (to any extent) not applied for the benefit of the public interest business (including where some of those proceeds are so applied for a time, but subsequently cease to be);

(b) one or more steps that result in the public interest business being deprived in substance of the benefit of the asset to some extent (including where the benefit of the asset is provided to the business at a greater cost to the business than would have reasonably been expected);

(c) one or more steps that facilitate a person benefiting from the asset or its disposal to the detriment of the public interest business;

(d) entering into arrangements which result in the asset no longer being held, or which result in it being held to a lesser extent, for qualifying purposes in relation to the public interest business (including arrangements that include transactions to which the person is not party);

(e) directing, encouraging or causing another person to do something which results in the asset no longer being held, or which result in it being held to a lesser extent, for qualifying purposes in relation to the public interest business.

(6) Steps taken in contemplation of the taking of disqualifying steps (which might include steps taken in relation to the residence of P) are to be treated as disqualifying steps.

(7) Where the taking of a disqualifying step was delayed by the action of a public authority, that step is to be treated as having been taken at the time at which it would, but for that action, have been taken.

(8) In determining, for the purposes of sub-paragraph (3)(d)(ii) whether there has been an increase in the costs of carrying on the public interest business—

(a) those costs are to be taken to include the costs of any person who, as a result of the special measures, takes over (in substance) the carrying on of any of the activities comprised in the carrying on of the business (such as the costs of a person to whom the customers of the business are transferred), and

(b) whether costs have increased is to be determined by reference to what the costs of carrying on the activities comprised in the carrying on of the business would have been—

(i) had those activities all been carried on by the business, and

(ii) had the asset been available for use (including its being used to avoid or offset a cost) in connection with the carrying on of those activities on the same basis it had been available before the taking of the first disqualifying step.

(9) The £100 million threshold condition is met in relation to P if the combined underlying value (as determined in accordance with paragraph 3(2) and (3)) of all assets in respect of which disqualifying steps were taken in disqualifying circumstances by P and by any person who is connected to P exceeds £100 million.

(10) In this Schedule—

• “asset” includes a part of an asset;

• “disposal” includes anything which would be a disposal for the purposes of TCGA 1992.