Finance (No. 2) Act 2017

PART 4 Supplementary provision

Duty to provide loan balance information to B

36 (1) This paragraph applies where—

(a) a person (“P”) has made a loan, or a quasi-loan, to a relevant person,

(b) the loan or quasi-loan was made on or after 6 April 1999, and

(c) an amount of the loan or quasi-loan is outstanding at any time—

(i) on or after 17 March 2016, and

(ii) before the end of 5 April 2019.

(2) Each of A and P must ensure that the loan balance information in relation to the loan or quasi-loan is provided to B before the end of the period of 10 days beginning with the day after the loan charge date.

(3) The “loan balance information” is—

(a) the information that is necessary for B to ascertain the amount of the loan or quasi-loan concerned that is outstanding immediately before the end of the loan charge date, and

(b) such other information about the loan or quasi-loan as B may reasonably require for the purpose of compliance with B’s obligations under PAYE regulations.

(4) In this paragraph “loan charge date” means—

(a) the approved repayment date, if the loan is an approved fixed term loan on 5 April 2019, or

(b) 5 April 2019, in any other case.

(5) If, despite taking reasonable steps, A and P have failed to contact B to provide the loan balance information, each of them is responsible for ensuring that the Commissioners for Her Majesty’s Revenue and Customs are notified of that fact.

(6) A notification under sub-paragraph (5) must be made in such form and manner, and contain such information, as may be specified by, or on behalf of, the Commissioners for Her Majesty’s Revenue and Customs.

(7) “Loan”, “quasi-loan” and “outstanding” have the same meaning for the purposes of this paragraph as they have for the purposes of paragraph 1.

Double taxation

37 (1) Sub-paragraph (2) applies where—

(a) P is treated as taking a relevant step by paragraph 1 by reason of a loan made to a relevant person, and

(b) the loan is an employment-related loan (within the meaning of Chapter 7 of Part 3 of ITEPA 2003).

(2) The effect of section 554Z2(2)(a) of ITEPA 2003 (value of relevant step to count as employment income: application of Part 7A instead of the benefits code) is that the loan is not be treated as a taxable cheap loan for the purposes of Chapter 7 of Part 3 of that Act for—

(a) the tax year in which the relevant step is treated as being taken, and

(b) any subsequent tax year.

38 In section 554Z2 of ITEPA 2003, at the end insert—

“(4) See paragraph 37 of Schedule 11 to F(No. 2)A 2017 for provision about the effect of subsection (2)(a) in a case in which the relevant step is within paragraph 1 of that Schedule.”

Remittance basis

39 Part 7A of ITEPA 2003 is amended as follows.

40 (1) Section 554Z9 (remittance basis: A does not meet section 26A requirement) is amended in accordance with this paragraph.

(2) In subsection (1), for “Subsection (2) applies” substitute “Subsections (2) and (2A) apply”.

(3) In subsection (1A), for “subsection (2) does not apply” substitute “subsections (2) and (2A) do not apply”.

(4) At the beginning of subsection (2) insert “Except in a case within subsection (2A),”.

(5) After subsection (2) insert—

“(2A) Where the relevant step is within paragraph 1 of Schedule 11 to F(No. 2)A 2017, A’s employment income by virtue of section 554Z2(1), or the relevant part of it, is “taxable specific income” in the tax year in which the relevant step is treated as being taken so far as the income is remitted to the United Kingdom in that tax year or in any previous tax year.”

(6) In subsection (3) for “this purpose” substitute “the purposes of subsections (2) and (2A)”.

(7) In subsection (5)—

(a) in the words before paragraph (a), for “subsection (2)” substitute “subsection (2) or (2A)”;

(b) in the words after paragraph (d)—

(i) for “subsection (2)” substitute “subsection (2) or (2A)”;

(ii) for “that subsection” substitute “subsection (2) or (2A) (as the case may be)”.

41 (1) Section 554Z10 (remittance basis: A meets section 26A requirement) is amended in accordance with this paragraph.

(2) In subsection (1) for “Subsection (2) applies” substitute “Subsections (2) and (2A) apply”.

(3) At the beginning of subsection (2) insert “Except in a case within subsection (2AA),”.

(4) After subsection (2) insert—

“(2AA) Where the relevant step is within paragraph 1 of Schedule 11 to F(No. 2)A 2017, the overseas portion of (as the case may be)—

(a) A’s employment income by virtue of section 554Z2(1), or

(b) the relevant part of A’s employment income by virtue of that section,

is “taxable specific income” in the tax year in which the relevant step is treated as being taken so far as the overseas portion is remitted to the United Kingdom in that tax year or in any previous tax year.”

42 (1) Section 554Z11 (remittance basis: supplementary) is amended in accordance with this paragraph.

(2) In subsection (4), for “554Z9(2) or 554Z10(2)” substitute “554Z9(2) or (2A) or 554Z10(2) or (2AA)”.

(3) In subsection (5), for “554Z9(2) or 554Z10(2)” substitute “554Z9(2) or (2A) or 554Z10(2) or (2AA)”.

(4) In subsection (6), for “554Z9(2) or 554Z10(2)” substitute “554Z9(2) or (2A) or 554Z10(2) or (2AA)”.

43 (1) Section 554Z11A (temporary non-residents) is amended in accordance with this paragraph.

(2) In subsection (2)—

(a) after “554Z9(2)” insert “or (2A)”;

(b) after “554Z10(2)” insert “or (2AA)”.

(3) In subsection (3)(d)(i), for “554Z9(2) or 554Z10(2)” substitute “554Z9(2) or (2A) or 554Z10(2) or (2AA)”.

Interpretation

44 (1) In this Schedule, “tax avoidance arrangement” has the same meaning as it has for the purposes of Part 7A of ITEPA 2003 (see section 554Z(13) to (15) of that Act).

(2) Section 554Z(16) (determining whether a step is connected with a tax avoidance arrangement) applies for the purposes of this Schedule as it applies for the purposes of Part 7A of ITEPA 2003.

45 See section 554A(1)(a) of ITEPA 2003 for the meaning of “A” and “B”.