Finance Act 2004

(4A) (1) This paragraph applies where under a shared ownership lease— (a) the lessee or lessees have the right, on the payment of a sum, to require the terms of the lease to be altered so that the rent payable under it is reduced, and (b) by exercising that right the lessee or lessees acquire an interest, additional to one already held, calculated by reference to the market value of the dwelling and expressed as a percentage of the dwelling or its value (a “share of the dwelling”). (2) Such an acquisition is exempt from charge if— (a) an election was made for tax to be charged in accordance with paragraph 2 or, as the case may be, paragraph 4 and any tax chargeable in respect of the grant of the lease has been paid, or (b) immediately after the acquisition the total share of the dwelling held by the lessee or lessees does not exceed 80%. (3) In this paragraph “shared ownership lease” means a lease granted— (a) by a qualifying body, or (b) in pursuance of the preserved right to buy, in relation to which the conditions in paragraph 2(2) or 4(2) are met. (4) Section 118 (meaning of “market value”) does not apply in relation to the references in this paragraph to the market value of the dwelling.

.

• (2) In sub-paragraph (1) of paragraph 5 of that Schedule (meaning of “qualifying body” and “preserved right to buy”) for “2 and 4” substitute “ 2, 4 and 4A ”.

• (3) In Schedule 19 to that Act (stamp duty land tax: commencement and transitional provisions), in paragraph 7 (earlier related transactions under stamp duty), for sub-paragraph (2) substitute—

(2) In paragraph 3 of Schedule 9 (relief for transfer of reversion under shared ownership lease where election made for market value treatment) and paragraph 4A of that Schedule (shared ownership lease: treatment of staircasing transaction) as they apply in a case where the original lease was granted before the implementation date— (a) a reference to a lease to which paragraph 2 of that Schedule applies shall be read as a reference to a lease to which section 97 of the Finance Act 1980 applied (which made provision for stamp duty corresponding to that paragraph), and (b) a reference to an election having been made for tax to be charged in accordance with paragraph 2 or 4 of that Schedule shall be read as a reference to the lease having contained a statement of the parties' intention such as is mentioned in section 97(2)(d) of the Finance Act 1980 or, as the case may be, paragraph (d) of section 108(5) of the Finance Act 1981 (which made provision for stamp duty corresponding to paragraph 4).

.

• (4) Subsections (1) and (2) apply in relation to an acquisition after 17th March 2004.

• (5) Subsection (3) is deemed to have come into force on 1st December 2003.

Application to certain partnership transactions

304

Schedule 41 to this Act (which makes provision with respect to the application of stamp duty land tax to certain transactions involving partnerships) has effect.

Liability of partners

305

In paragraph 7 of Schedule 15 to the Finance Act 2003 (c. 14) (stamp duty land tax: joint and several liability of responsible partners) after sub-paragraph (1) insert—

(1A) No amount may be recovered by virtue of sub-paragraph (1)(a) or (b) from a person who did not become a responsible partner until after the effective date of the transaction in respect of which the tax is payable.

Part 7 — Disclosure of tax avoidance schemes

Meaning of “notifiable arrangements” and “notifiable proposal”

306

• (1) In this Part “notifiable arrangements” means any arrangements which—

• (a) fall within any description prescribed by the Treasury by regulations,

• (b) enable, or might be expected to enable, any person to obtain an advantage in relation to any tax that is so prescribed in relation to arrangements of that description, and

• (c) are such that the main benefit, or one of the main benefits, that might be expected to arise from the arrangements is the obtaining of that advantage.

• (2) In this Part “notifiable proposal” means a proposal for arrangements which, if entered into, would be notifiable arrangements (whether the proposal relates to a particular person or to any person who may seek to take advantage of it).

Meaning of “promoter”

307

• (1) For the purposes of this Part a person is a promoter—

• (a) in relation to a notifiable proposal, if, in the course of a relevant business, the person (“P”)—

• (i) is to any extent responsible for the design of the proposed arrangements,

• (ii) makes a firm approach to another person (“C”) in relation to the notifiable proposal with a view to P making the notifiable proposal available for implementation by C or any other person, or

• (iii) makes the notifiable proposal available for implementation by other persons, and

• (b) in relation to notifiable arrangements, if he is by virtue of paragraph (a)(ii) or (iii) a promoter in relation to a notifiable proposal which is implemented by those arrangements or if, in the course of a relevant business, he is to any extent responsible for—

• (i) the design of the arrangements, or

• (ii) the organisation or management of the arrangements.

• (1A) For the purposes of this Part a person is an introducer in relation to a notifiable proposal if the person makes a marketing contact with another person in relation to the notifiable proposal.

• (2) In this section “relevant business” means any trade, profession or business which—

• (a) involves the provision to other persons of services relating to taxation, or

• (b) is carried on by a bank, as defined by section 1120 of the Corporation Tax Act 2010 , or by a securities house, as defined by section 1009(3) of that Act.

• (3) For the purposes of this section anything done by a company is to be taken to be done in the course of a relevant business if it is done for the purposes of a relevant business falling within subsection (2)(b) carried on by another company which is a member of the same group.

• (4) Section 170 of the Taxation of Chargeable Gains Act 1992 (c. 12) has effect for determining for the purposes of subsection (3) whether two companies are members of the same group, but as if in that section—

• (a) for each of the references to a 75 per cent subsidiary there were substituted a reference to a 51 per cent subsidiary, and

• (b) subsection (3)(b) and subsections (6) to (8) were omitted.

• (4A) For the purposes of this Part a person makes a firm approach to another person in relation to a ... proposal if the person makes a marketing contact with the other person in relation to the ... proposal at a time when the proposed arrangements have been substantially designed.

• (4B) For the purposes of this Part a person makes a marketing contact with another person in relation to a notifiable proposal if—

• (a) the person communicates information about the notifiable proposal to the other person,

• (b) the communication is made with a view to that other person, or any other person, entering into transactions forming part of the proposed arrangements, and

• (c) the information communicated includes an explanation of the advantage in relation to any tax that might be expected to be obtained from the proposed arrangements.

• (4C) For the purposes of subsection (4A) proposed arrangements have been substantially designed at any time if by that time the nature of the transactions to form part of them has been sufficiently developed for it to be reasonable to believe that a person who wished to obtain the advantage mentioned in subsection (4B)(c) might enter into—

• (a) transactions of the nature developed, or

• (b) transactions not substantially different from transactions of that nature.

• (5) A person is not to be treated as a promoter or introducer for the purposes of this Part by reason of anything done in prescribed circumstances.

• (6) In the application of this Part to a proposal or arrangements which are not notifiable, a reference to a promoter or introducer is a reference to a person who would be a promoter or introducer under subsections (1) to (5) if the proposal or arrangements were notifiable.

Duties of promoter

308

• (1) A person who is a promoter in relation to a notifiable proposal must, within the prescribed period after the relevant date, provide the Board with prescribed information relating to the notifiable proposal.

• (2) In subsection (1) “the relevant date” means the earliest of the following—

• (za) the date on which the promoter first makes a firm approach to another person in relation to a notifiable proposal,

• (a) the date on which the promoter makes the notifiable proposal available for implementation by any other person, or

• (b) the date on which the promoter first becomes aware of any transaction forming part of notifiable arrangements implementing the notifiable proposal.

• (3) A person who is a promoter in relation to notifiable arrangements must, within the prescribed period after the date on which he first becomes aware of any transaction forming part of the notifiable arrangements, provide the Board with prescribed information relating to those arrangements, unless those arrangements implement a proposal in respect of which notice has been given under subsection (1).

• (4) Subsection (4A) applies where a person complies with subsection (1) in relation to a notifiable proposal for arrangements and another person is—

• (a) also a promoter in relation to the notifiable proposal or is a promoter in relation to a notifiable proposal for arrangements which are substantially the same as the proposed arrangements (whether they relate to the same or different parties), or

• (b) a promoter in relation to notifiable arrangements implementing the notifiable proposal or notifiable arrangements which are substantially the same as notifiable arrangements implementing the notifiable proposal (whether they relate to the same or different parties).

• (4A) Any duty of the other person under subsection (1) or (3) in relation to the notifiable proposal or notifiable arrangements is discharged if—

• (a) the person who complied with subsection (1) has notified the identity and address of the other person to HMRC or the other person holds the reference number allocated to the proposed notifiable arrangements under section 311, and

• (b) the other person holds the information provided to HMRC in compliance with subsection (1).

• (4B) Subsection (4C) applies where a person complies with subsection (3) in relation to notifiable arrangements and another person is—

• (a) a promoter in relation to a notifiable proposal for arrangements which are substantially the same as the notifiable arrangements (whether they relate to the same or different parties), or

• (b) also a promoter in relation to the notifiable arrangements or notifiable arrangements which are substantially the same (whether they relate to the same or different parties).

• (4C) Any duty of the other person under subsection (1) or (3) in relation to the notifiable proposal or notifiable arrangements is discharged if—

• (a) the person who complied with subsection (3) has notified the identity and address of the other person to HMRC or the other person holds the reference number allocated to the notifiable arrangements under section 311, and

• (b) the other person holds the information provided to HMRC in compliance with subsection (3).

• (5) Where a person is a promoter in relation to two or more notifiable proposals or sets of notifiable arrangements which are substantially the same (whether they relate to the same parties or different parties), he need not provide information under subsection (1) or (3) if he has already provided information under either of those subsections in relation to any of the other proposals or arrangements.

• (6) The Treasury may by regulations provide for this section to apply with modifications in relation to proposals or arrangements that—

• (a) enable, or might be expected to enable, a person to obtain an advantage in relation to stamp duty land tax, and

• (b) are of a description specified in the regulations.

Duty of person dealing with promoter outside United Kingdom

309

• (1) Any person (“the client”) who enters into any transaction forming part of any notifiable arrangements in relation to which—

• (a) a promoter is resident outside the United Kingdom, and

• (b) no promoter is resident in the United Kingdom,

must, within the prescribed period after doing so, provide the Board with prescribed information relating to the notifiable arrangements.

• (2) Compliance with section 308(1) by any promoter in relation to the notifiable arrangements discharges the duty of the client under subsection (1).

Duty of parties to notifiable arrangements not involving promoter

310

Any person who enters into any transaction forming part of notifiable arrangements as respects which neither he nor any other person in the United Kingdom is liable to comply with section 308 (duties of promoter) or section 309 (duty of person dealing with promoter outside the United Kingdom) must at the prescribed time provide the Board with prescribed information relating to the notifiable arrangements.

Arrangements to be given reference number

311

• (1) This section applies in—

• (a) a subsection (2) case, or

• (b) a subsection (3) case.

• (2) A “subsection (2) case” is a case where a person complies, or purports to comply, with section 308(1) or (3), 309(1) or 310 in relation to a notifiable proposal or notifiable arrangements.

• (3) A “subsection (3) case” is a case where—

• (a) notice in relation to arrangements or a proposal has been issued in accordance with section 310D (notice of potential allocation of reference number),

• (b) the notice period has expired, and

• (c) the person to whom the notice was given has failed to satisfy HMRC, before the expiry of the notice period, that the arrangements are not notifiable or (as the case may be) that the proposal is not notifiable.

• (4) “The notice period” means—

• (a) the period of 30 days beginning with the day on which the notice under section 310D is issued, or

• (b) such longer period as HMRC may direct.

• (5) HMRC may allocate a reference number to the arrangements or, in the case of a proposal, the proposed arrangements, subject to subsection (6).

• (6) HMRC may not allocate a reference number to arrangements or proposed arrangements after the time limit for doing so.

• (7) The time limit for allocating a reference number is—

• (a) in a subsection (2) case, the end of the period of 90 days beginning with the compliance, or purported compliance, with section 308(1) or (3), 309(1) or 310, as the case may be;

• (b) in a subsection (3) case, the end of the period of one year beginning with the day after the end of the notice period (see subsection (4)).

• (8) HMRC may at any time withdraw a reference number allocated to arrangements in a subsection (3) case.

• (9) The allocation of a reference number to arrangements or proposed arrangements is not to be regarded as constituting an indication by HMRC that the arrangements could as a matter of law result in the obtaining by any person of a tax advantage.

Duty of promoter to notify client of number

312

• (1) This section applies where a person who is a promoter in relation to notifiable arrangements is providing (or has provided) services to any person (“the client”) in connection with the notifiable arrangements.

• (2) The promoter must, within 30 days after the relevant date, provide the client with prescribed information relating to any reference number allocated in a case within section 311(2) (or, if more than one, any one such reference number) that has been notified to the promoter (whether by HMRC or any other person) in relation to—

• (a) the notifiable arrangements, or

• (b) any arrangements substantially the same as the notifiable arrangements (whether involving the same or different parties).

• (3) In subsection (2) “the relevant date” means the later of—

• (a) the date on which the promoter becomes aware of any transaction which forms part of the notifiable arrangements, and

• (b) the date on which the reference number is notified to the promoter.

• (4) But where the conditions in subsection (5) are met the duty imposed on the promoter under subsection (2) to provide the client with information in relation to notifiable arrangements is discharged.

• (5) Those conditions are that —

• (a) the promoter is also a promoter in relation to a notifiable proposal and provides services to the client in connection with them both,

• (b) the notifiable proposal and the notifiable arrangements are substantially the same, and

• (c) the promoter has provided to the client, in a form and manner specified by HMRC, prescribed information relating to the reference number that has been notified to the promoter in relation to the proposed notifiable arrangements.

• (6) HMRC may give notice that, in relation to notifiable arrangements specified in the notice, promoters are not under the duty under subsection (2) after the date specified in the notice.

Duty of parties to notifiable arrangements to notify Board of number, etc.

313

• (1) Any person who is a party to any ... arrangements must provide the Board with prescribed information relating to—

• (a) any reference number notified to him ..., and

• (b) the time when he obtains or expects to obtain by virtue of the arrangements an advantage in relation to any relevant tax.

• (2) For the purposes of subsection (1) a tax is a “relevant tax” in relation to arrangements of any description if it is prescribed in relation to arrangements of that description by regulations under section 306.

• (3) Regulations made by HMRC may—

• (a) in prescribed cases, require the information prescribed under subsection (1) to be included in any return or account which the person is required by or under any enactment to deliver to the Board, and

• (b) in prescribed cases, require the information prescribed under subsection (1) and such other information as is prescribed to be provided separately to the Board at the prescribed time or times.

• (4) A person is not liable to a penalty under—

• (a) any provision relating to incorrect or uncorrected returns made under section 98 of the Finance Act 1986 (administration of stamp duty reserve tax),

• (b) Schedule 24 to the Finance Act 2007 (penalties for errors), or

• (c) any other prescribed provision,

by reason of any failure to include in any return or account any reference number or other information required by virtue of subsection (3)(a) (but see section 98C of the Taxes Management Act 1970 for the penalty for failure to comply with this section).

• (5) HMRC may give notice that, in relation to ... arrangements specified in the notice, persons are not under the duty under subsection (1) after the date specified in the notice.

• (6) The duty under subsection (1) does not apply in prescribed circumstances.

Legal professional privilege

314

• (1) Nothing in this Part requires any person to disclose to the Board any privileged information.

• (2) In this Part “privileged information” means information with respect to which a claim to legal professional privilege, or, in Scotland, to confidentiality of communications, could be maintained in legal proceedings.

Penalties

315

• (1) After section 98B of the Taxes Management Act 1970 insert—

(98C) (1) A person who fails to comply with any of the provisions of Part 7 of the Finance Act 2004 (disclosure of tax avoidance schemes) mentioned in subsection (2) below shall be liable— (a) to a penalty not exceeding £5,000, and (b) if the failure continues after a penalty is imposed under paragraph (a) above, to a further penalty or penalties not exceeding £600 for each day on which the failure continues after the day on which the penalty under paragraph (a) was imposed (but excluding any day for which a penalty under this paragraph has already been imposed). (2) Those provisions are— (a) section 308(1) and (3) (duty of promoter in relation to notifiable proposals and notifiable arrangements), (b) section 309(1) (duty of person dealing with promoter outside United Kingdom), (c) section 310 (duty of parties to notifiable arrangements not involving promoter), or (d) section 312(1) (duty of promoter to notify client of reference number). (3) A person who fails to comply with section 313(1) of the Finance Act 2004 (duties of parties to notifiable arrangements to notify Board of reference number, etc.) shall be liable to a penalty of the relevant sum. (4) In subsection (3) above “the relevant sum” means— (a) in relation to a person not falling within paragraph (b) or (c) below, £100 in respect of each scheme to which the failure relates, (b) in relation to a person who has previously failed to comply with section 313(1) on one (and only one) occasion during the period of 36 months ending with the date on which the current failure to comply with that provision began, £500 in respect of each scheme to which the current failure relates (whether or not the same as the scheme to which the previous failure relates), or (c) in relation to a person who has previously failed to comply with section 313(1) on two or more occasions during the period of 36 months ending with the date on which the current failure to comply with that provision began, £1,000 in respect of each scheme to which the current failure relates (whether or not the same as the schemes to which any of the previous failures relates). (5) In subsection (4) above “scheme” means any notifiable arrangements within the meaning of Part 7 of the Finance Act 2004.

• (2) In section 100 of that Act (determination of penalties by officer of Board) at the end of subsection (2) (penalties to which subsection (1) of the section does not apply) insert

, or (f) section 98C(1)(a) above.

• (3) In section 100C of that Act (penalty proceedings before Commissioners) after subsection (1) insert—

(1A) In its application to a penalty under section 98C(1)(a) above, subsection (1) above has effect with the omission of the words “General or”.

Information to be provided in form and manner specified by Board

316

• (1) HMRC may specify the form and manner in which information required to be provided by any of the information provisions must be provided if the provision is to be complied with.

• (2) The “information provisions” are sections 308(1) and (3), 309(1), 310, 310A, 310C, 311C, 312(2), 312ZA(2), 312A(2) and (2A), 313(1) and (3), 313ZA(3) and 313ZC(5) .

Regulations under Part 7

317

• (1) Any power of the Treasury or the Board to make regulations under this Part is exercisable by statutory instrument.

• (2) Regulations made by the Treasury or the Board under this Part may make different provision for different cases and may contain transitional provisions and savings.

• (3) A statutory instrument containing regulations made by the Treasury or the Board under any provision of this Part is subject to annulment in pursuance of a resolution of the House of Commons.

Interpretation of Part 7

318

• (1) In this Part—

• “advantage”, in relation to any tax, means—relief or increased relief from, or repayment or increased repayment of, that tax, or the avoidance or reduction of a charge to that tax or an assessment to that tax or the avoidance of a possible assessment to that tax,the deferral of any payment of tax or the advancement of any repayment of tax, orthe avoidance of any obligation to deduct or account for any tax;

• “arrangements” includes any scheme, transaction or series of transactions;

• “company” has the meaning given by section 1121 of the Corporation Tax Act 2010;

• “corporation tax” includes any amount which, by virtue of any of the provisions mentioned in paragraph 1 of Schedule 18 to the Finance Act 1998 (c. 36) (company tax returns, assessments and related matters) is assessable and chargeable as if it were corporation tax;

• “HMRC” means the Commissioners for Her Majesty's Revenue and Customs;

• “introducer”, in relation to a notifiable proposal, has the meaning given by section 307;

• “make a firm approach” has the meaning given by section 307(4A);

• “make a marketing contact” has the meaning given by section 307(4B);

• “notifiable arrangements” has the meaning given by section 306(1);

• “notifiable proposal” has the meaning given by section 306(2);

• “prescribed”, except in section 306, means prescribed by regulations made by the Board;

• “promoter”, in relation to notifiable arrangements or a notifiable proposal, has the meaning given by section 307;

• “reference number” means a reference number allocated under section 311;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “tax” means—income tax,capital gains tax,corporation tax,petroleum revenue tax, apprenticeship levy, inheritance tax,stamp duty land tax, ...stamp duty reserve tax, or annual tax on enveloped dwellings.

• “trade” includes every venture in the nature of trade.

• “tribunal” means the First-tier tribunal, or where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

• “working day” means a day which is not a Saturday or a Sunday, Christmas Day, Good Friday or a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 7: commencement and savings

319

• (1) The following provisions of this Part come into force on the passing of this Act—

• sections 306 to 315, so far as is necessary for enabling the making of any regulations for which they provide, and

• sections 317 and 318 and this section.

• (2) Except as provided by subsection (1), the provisions of this Part come into force on 1st August 2004.

• (3) Section 308 does not apply to a promoter in the case of—

• (a) any notifiable proposal as respects which the relevant date, as defined by subsection (2) of that section, fell before 18th March 2004,

• (b) any notifiable arrangements which implement such a proposal, or

• (c) any notifiable arrangements which include any transaction entered into before 18th March 2004.

• (4) Sections 309 and 310 do not apply in relation to notifiable arrangements which include any transaction entered into before 23rd April 2004.

• (5) Section 313 does not apply in relation to any notifiable arrangements in respect of which, by virtue of subsection (3) or (4), none of the duties imposed by sections 308 to 310 arises.

Part 8 — Miscellaneous matters

Exclusion of extended limitation period in England, Wales and Northern Ireland

320

• (1) Section 32(1)(c) of the Limitation Act 1980 (c. 58) or, in Northern Ireland, Article 71(1)(c) of the Limitation (Northern Ireland) Order 1989 (S.I. 1989/1339 (N.I. 11)) (extended period for bringing an action in case of mistake) does not apply in relation to a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue.

This subsection has effect in relation to actions brought on or after 8th September 2003.

• (2) For the purposes of—

• (a) section 35(5)(a) of the Limitation Act 1980 or, in Northern Ireland, Article 73(4)(a) of the Limitation (Northern Ireland) Order 1989 (circumstances in which time-barred claim may be brought in course of existing action), and

• (b) rules of court or county court rules having effect for the purposes of those provisions,

as they apply to claims in respect of mistakes of the kind mentioned in subsection (1), a new claim shall not be regarded as arising out of the same facts, or substantially the same facts, if it is brought in respect of a different payment, transaction, period or other matter.

This subsection has effect in relation to claims made on or after 20th November 2003.

• (3) If before the passing of this Act—

• (a) an action is brought in relation to which a defence of limitation would have been available if subsection (1) had been in force, or

• (b) a claim is made on or after 20th November 2003 that by virtue of section 35(1)(b) of the Limitation Act 1980 (c. 58) or, in Northern Ireland, Article 73(1)(b) of the Limitation (Northern Ireland) Order 1989 (S.I. 1989/1339 (N.I. 11)) is treated as an action brought before 8th September 2003 and that claim would not have been allowed if subsections (1) and (2) above had been in force,

the action (or so much of it as relates to a cause of action in respect of which a defence of limitation would have been available or, as the case may be, a claim would not have been allowed) shall be deemed to be discontinued on the passing of this Act and any payment made by the Commissioners in or towards meeting their liability in the action (or so much of the action as so relates) may be recovered by them (with interest from the date of the payment).

• (4) Nothing in this section affects a claim made before 20th November 2003 that by virtue of section 35(1)(b) of the Limitation Act 1980 or, in Northern Ireland, Article 73(1)(b) of the Limitation (Northern Ireland) Order 1989 is treated as an action brought before 8th September 2003.

• (5) For the purposes of this section a claim is treated as made before 20th November 2003 if—

• (a) the Commissioners have before that date consented in writing to the making of the claim; or

• (b) immediately before that date—

• (i) the consent of the Commissioners has been sought and has not been refused, or

• (ii) an application to the court for permission to make the claim has been made and has not been refused.

• (6) The provisions of this section apply to any action or claim for relief from the consequences of a mistake of law, whether expressed to be brought on the ground of mistake or on some other ground (such as unlawful demand or ultra vires act).

• (7) This section shall be construed as one with the Limitation Act 1980 or, in Northern Ireland, the Limitation (Northern Ireland) Order 1989.

Exclusion of extended prescriptive period in Scotland

321

• (1) Section 6(4)(a)(ii) of the Prescription and Limitation (Scotland) Act 1973 (c. 52) (extinction of obligations by prescriptive period: exclusion of period during which creditor induced by error to refrain from making claim) does not apply in relation to an obligation based on redress of unjustified enrichment arising from an error of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue.

• (2) Subsection (1) has effect in relation to an obligation in respect of which no relevant claim has been made before 8th September 2003.

• (3) In the case of a relevant claim made on or after that date and before the passing of this Act relating to an obligation that would have been extinguished if subsections (1) and (2) had been in force—

• (a) proceedings on the claim (or so much of the proceedings as relates to such an obligation) shall be deemed to be discontinued on the passing of this Act, and

• (b) any payment made by the Commissioners in or towards meeting their liability on the claim (or so much of it as so relates) may be recovered by them (with interest from the date of the payment).

• (4) The provisions of this section apply in relation to any relevant claim for redress of unjustified enrichment arising from an error of law, whether expressed to be made on the ground of error or on some other ground.

• (5) In this section “relevant claim” has the same meaning as in section 6 of the Prescription and Limitation (Scotland) Act 1973.

Mutual assistance: customs union with the Principality of Andorra

322

• (1) The UK mutual assistance provisions have effect for the purposes of giving effect to the EC-Andorra Mutual Assistance Recovery Decision as they have effect for the purposes of giving effect to the Mutual Assistance Recovery Directive.

• (2) In this section—

• “the EC-Andorra Mutual Assistance Recovery Decision” means Chapter 2 of Title 1 of, and Annex 1 to, Decision No 1/2003 of the EC-Andorra Joint Committee of 3 September 2003 (on the laws, regulations and administrative provisions necessary for the proper functioning of the Customs Union between the European Union and the Principality of Andorra);

• “the Mutual Assistance Recovery Directive” has the same meaning as MARD has in the UK mutual assistance provisions;

• “the UK mutual assistance provisions” means the provisions of section 87 of the Finance Act 2011 (mutual assistance for recovery of taxes etc) and Schedule 25 to that Act.

• (3) In the UK mutual assistance provisions as they have effect in accordance with subsection (1)—

• (a) references (except for the one in paragraph 1 of Schedule 25) to MARD are to be read as references to the EC-Andorra Mutual Assistance Recovery Decision,

• (b) references to another member State are to be read as references to the Principality of Andorra,

• (c) references to an applicant authority of another member State are to be read as references to the competent authority of the Principality of Andorra,

• (d) references to a MARD-related instrument are to be disregarded, and

• (e) paragraph 10 of Schedule 25 (power to make further provision) is to be treated as omitted.

• (4) The powers in section 87(2) of the Finance Act 2011 and paragraph 9 of Schedule 25 to that Act may be exercised so as to make provision for the purposes of giving effect to the EC-Andorra Mutual Assistance Recovery Decision (or amendments of the Decision) which is different to that made for the purposes of giving effect to the Mutual Assistance Recovery Directive (or amendments of the Directive).

Ending of shipbuilders' relief

323

• (1) Relief under section 2 of the Finance Act 1966 (c. 18) (relief for shipbuilders in respect of certain taxes and duties) is not available, and shall be regarded as never having been available, in any case where the contract mentioned in subsection (2) of that section is—

• (a) a contract made on or after 1st January 2001 relating to a self-propelled sea-going commercial vessel, within the meaning of the 1998 Regulation, or

• (b) in a case not falling within paragraph (a), a contract made on or after 13th January 2004.

• (2) In this section “the 1998 Regulation” means Council Regulation (EC) No 1540/ 98 of 29 June 1998 establishing new rules on aid to shipbuilding (under which operating aid for shipbuilding ended on 31st December 2000).

Government borrowing: preparations for possible adoption of Euro

324

• (1) The Treasury may incur expenditure with a view to securing that they would be able to exercise their functions under sections 12 to 20A of (and Schedule 5A to) the National Loans Act 1968 (c. 13) (national debt and government accounting) if the United Kingdom were to adopt the single currency in accordance with the Treaty on the Functioning of the European Union.

• (2) The Director of Savings may incur expenditure with a view to securing that he would be able to exercise his functions if the United Kingdom were to adopt the single currency in accordance with the Treaty on the Functioning of the European Union.

Premium bonds

325

Regulations under section 11 of the National Debt Act 1972 (c. 65) (power of Treasury to make regulations as to raising of money under auspices of Director of Savings) may repeal any provision contained in section 54 of, or Schedule 18 to, the Finance Act 1968 (c. 44) (terms of issue of premium savings bonds).

Part 9 — Supplementary provisions

Repeals

326

• (1) The enactments mentioned in Schedule 42 to this Act (which include provisions that are spent or of no practical utility) are repealed to the extent specified.

• (2) The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.

Interpretation

327

In this Act “the Taxes Act 1988” means the Income and Corporation Taxes Act 1988 (c. 1).

Short title

328

This Act may be cited as the Finance Act 2004.

SCHEDULE 1

The Schedule inserted before Schedule 3 to the Alcoholic Liquor Duties Act 1979 (c. 4) is as follows—

SCHEDULE 2

Part 1 — Principal amendments of Value Added Tax Act 1994

1

After section 58 of the Value Added Tax Act 1994 (c. 23) insert—

(58A) Schedule 11A (which imposes disclosure requirements relating to the use of schemes for avoiding VAT) shall have effect.

.

2

After Schedule 11 to that Act insert—

SCHEDULE 11A (1) In this Schedule— - “designated scheme” has the meaning given by paragraph 3(4); - “notifiable scheme” has the meaning given by paragraph 5(1); - “scheme” includes any arrangements, transaction or series of transactions; - “tax advantage” is to be read in accordance with paragraph 2. (2) (1) For the purposes of this Schedule, a person obtains a tax advantage if— (a) in any prescribed accounting period, the amount by which the output tax accounted for by him exceeds the input tax deducted by him is less than it otherwise would be, or (b) he obtains a VAT credit when he would not otherwise do so, or obtains a larger VAT credit or obtains a VAT credit earlier than would otherwise be the case. (2) A person also obtains a tax advantage for the purposes of this Schedule if, in a case where he recovers input tax as a recipient of a supply before the supplier accounts for the output tax, the period between the time when the input tax is recovered and the time when the output tax is accounted for is greater than would otherwise be the case. (3) (1) If it appears to the Treasury— (a) that a scheme of a particular description has been, or might be, entered into for the purpose of enabling any person to obtain a tax advantage, and (b) that it is unlikely that persons would enter into a scheme of that description unless the main purpose, or one of the main purposes, of doing so was the obtaining by any person of a tax advantage, the Treasury may by order designate that scheme for the purposes of this paragraph. (2) A scheme may be designated for the purposes of this paragraph even though the Treasury are of the opinion that no scheme of that description could as a matter of law result in the obtaining by any person of a tax advantage. (3) The order must allocate a reference number to each scheme. (4) In this Schedule “designated scheme” means a scheme of a description designated for the purposes of this paragraph. (4) (1) If it appears to the Treasury that a provision of a particular description is, or is likely to be, included in or associated with schemes that are entered into for the purpose of enabling any person to obtain a tax advantage, the Treasury may by order designate that provision for the purposes of this paragraph. (2) A provision may be designated under this paragraph even though it also appears to the Treasury that the provision is, or is likely to be, included in or associated with schemes that are not entered into for the purpose of obtaining a tax advantage. (3) In this paragraph “provision” includes any agreement, transaction, act or course of conduct. (5) (1) For the purposes of this Schedule, a scheme is a “notifiable scheme”if— (a) it is a designated scheme, or (b) although it is not a designated scheme, conditions A and B below are met in relation to it. (2) Condition A is that the scheme includes, or is associated with, a provision of a description designated under paragraph 4. (3) Condition B is that the scheme has as its main purpose, or one of its main purposes, the obtaining of a tax advantage by any person. (6) (1) This paragraph applies in relation to a taxable person where— (a) the amount of VAT shown in a return in respect of a prescribed accounting period as payable by or to him is less than or greater than it would be but for any notifiable scheme to which he is party, or (b) he makes a claim for the repayment of output tax or an increase in credit for input tax in respect of any prescribed accounting period in respect of which he has previously delivered a return and the amount claimed is greater than it would be but for such a scheme. (2) Where the scheme is a designated scheme, the taxable person must notify the Commissioners within the prescribed time, and in such form and manner as may be required by or under regulations, of the reference number allocated to the scheme under paragraph 3(3). (3) Where the scheme is not a designated scheme, the taxable person must, subject to sub-paragraph (4), provide the Commissioners within the prescribed time, and in such form and manner as may be required by or under regulations, with prescribed information relating to the scheme. (4) Sub-paragraph (3) does not apply where the scheme is one in respect of which any person has previously— (a) provided the Commissioners with prescribed information under paragraph 9, and (b) provided the taxable person with a reference number notified to him by the Commissioners under paragraph 9(2)(b). (5) The taxable person is not obliged to comply with sub-paragraph (2) or (3) in relation to any scheme if he has on a previous occasion complied with that sub-paragraph in relation to that scheme. (6) This paragraph has effect subject to paragraph 7. (7) (1) Paragraph 6 does not apply to a taxable person in relation to a scheme— (a) where the taxable person is not a group undertaking in relation to any other undertaking and conditions A and B below, as they have effect in relation to the scheme, are met in relation to the taxable person, or (b) where the taxable person is a group undertaking in relation to any other undertaking and conditions A and B below, as they have effect in relation to the scheme, are met in relation to the taxable person and every other group undertaking. (2) Condition A is that the total value of the person’s taxable supplies and exempt supplies in the period of twelve months ending immediately before the beginning of the relevant period is less than the minimum turnover. (3) Condition B is that the total value of the person’s taxable supplies and exempt supplies in the prescribed accounting period immediately preceding the relevant period is less than the appropriate proportion of the minimum turnover. (4) In sub-paragraphs (2) and (3) “the minimum turnover” means— (a) in relation to a designated scheme, £600,000, and (b) in relation to any other notifiable scheme, £10,000,000. (5) In sub-paragraph (3) “the appropriate proportion” means the proportion which the length of the prescribed accounting period bears to twelve months. (6) The value of a supply of goods or services shall be determined for the purposes of this paragraph on the basis that no VAT is chargeable on the supply. (7) The Treasury may by order substitute for the sum for the time being specified in sub-paragraph (4)(a) or (b) such other sum as they think fit. (8) This paragraph has effect subject to paragraph 8. (9) In this paragraph— - “relevant period” means the prescribed accounting period referred to in paragraph 6(1)(a) or (b); - “undertaking” and “group undertaking” have the same meanings as in Part 7 of the Companies Act 1985. (8) (1) The purpose of this paragraph is to prevent the maintenance or creation of any artificial separation of business activities carried on by two or more persons from resulting in an avoidance of the obligations imposed by paragraph 6. (2) In determining for the purposes of sub-paragraph (1) whether any separation of business activities is artificial, regard shall be had to the extent to which the different persons carrying on those activities are closely bound to one another by financial, economic and organisational links. (3) If the Commissioners make a direction under this section— (a) the persons named in the direction shall be treated for the purposes of paragraph 7 as a single taxable person carrying on the activities of a business described in the direction with effect from the date of the direction or, if the direction so provides, from such later date as may be specified in the direction, and (b) if paragraph 7 would not exclude the application of paragraph 6, in respect of any notifiable scheme, to that single taxable person, it shall not exclude the application of paragraph 6, in respect of that scheme, to the persons named in the direction. (4) The Commissioners shall not make a direction under this section naming any person unless they are satisfied— (a) that he is making or has made taxable or exempt supplies, (b) that the activities in the course of which he makes those supplies form only part of certain activities, the other activities being carried on concurrently or previously (or both) by one or more other persons, and (c) that, if all the taxable and exempt supplies of the business described in the direction were taken into account, conditions A and B in paragraph 7(2) and (3), as those conditions have effect in relation to designated schemes, would not be met in relation to that business. (5) A direction under this paragraph shall be served on each of the persons named in it. (6) A direction under this paragraph remains in force until it is revoked or replaced by a further direction. (9) (1) Any person may, at any time, provide the Commissioners with prescribed information relating to a scheme or proposed scheme of a particular description which is (or, if implemented, would be) a notifiable scheme by virtue of paragraph 5(1)(b). (2) On receiving the prescribed information, the Commissioners may— (a) allocate a reference number to the scheme (if they have not previously done so under this paragraph), and (b) notify the person who provided the information of the number allocated. (10) (1) A person who fails to comply with paragraph 6 shall be liable, subject to sub-paragraphs (2) and (3), to a penalty of an amount determined under paragraph 11. (2) Conduct falling within sub-paragraph (1) shall not give rise to liability to a penalty under this paragraph if the person concerned satisfies the Commissioners or, on appeal, a tribunal that there is a reasonable excuse for the failure. (3) Where, by reason of conduct falling within sub-paragraph (1)— (a) a person is convicted of an offence (whether under this Act or otherwise), or (b) a person is assessed to a penalty under section 60, that conduct shall not give rise to a penalty under this paragraph. (11) (1) Where the failure mentioned in paragraph 10(1) relates to a notifiable scheme that is not a designated scheme, the amount of the penalty is £5,000. (2) Where the failure mentioned in paragraph 10(1) relates to a designated scheme, the amount of the penalty is 15 per cent. of the VAT saving (as determined under sub-paragraph (3)). (3) For this purpose the VAT saving is— (a) to the extent that the case falls within paragraph 6(1)(a), the aggregate of— (i) the amount by which the amount of VAT that would, but for the scheme, have been shown in returns in respect of the relevant periods as payable by the taxable person exceeds the amount of VAT that was shown in those returns as payable by him, and (ii) the amount by which the amount of VAT that was shown in such returns as payable to the taxable person exceeds the amount of VAT that would, but for the scheme, have been shown in those returns as payable to him, and (b) to the extent that the case falls within paragraph 6(1)(b), the amount by which the amount claimed exceeds the amount which the taxable person would, but for the scheme, have claimed. (4) In sub-paragraph (3)(a) “the relevant periods” means the prescribed accounting periods beginning with that in respect of which the duty to comply with paragraph 6 first arose and ending with the earlier of the following— (a) the prescribed accounting period in which the taxable person complied with that paragraph, and (b) the prescribed accounting period immediately preceding the notification by the Commissioners of the penalty assessment. (12) (1) Where any person is liable under paragraph 10 to a penalty of an amount determined under paragraph 11, the Commissioners may, subject to sub-paragraph (3), assess the amount due by way of penalty and notify it to him accordingly. (2) The fact that any conduct giving rise to a penalty under paragraph 10 may have ceased before an assessment is made under this paragraph shall not affect the power of the Commissioners to make such an assessment. (3) In a case where the penalty falls to be calculated by reference to the VAT saving as determined under paragraph 11(3) and the VAT that would, but for the scheme, have been shown in returns as payable by or to the taxable person cannot be readily attributed to any one or more prescribed accounting periods, it shall be treated for the purposes of this Schedule as VAT that would, but for the scheme, have been shown as payable by or to the taxable person in returns for such period or periods as the Commissioners may determine to the best of their judgment and notify to the person liable for the penalty. (4) No assessment to a penalty under this paragraph shall be made more than two years from the time when facts sufficient, in the opinion of the Commissioners, to indicate that there has been a failure to comply with paragraph 6 in relation to a notifiable scheme came to the Commissioners' knowledge. (5) Where the Commissioners notify a person of a penalty in accordance with sub-paragraph (1), the notice of assessment shall specify— (a) the amount of the penalty, (b) the reasons for the imposition of the penalty, (c) how the penalty has been calculated, and (d) any reduction of the penalty in accordance with section 70. (6) Where a person is assessed under this paragraph to an amount due by way of penalty and is also assessed under section 73(1), (2), (7), (7A) or (7B) for any of the prescribed accounting periods to which the assessment under this paragraph relates, the assessments may be combined and notified to him as one assessment, but the amount of the penalty shall be separately identified in the notice. (7) If an amount is assessed and notified to any person under this paragraph, then unless, or except to the extent that, the assessment is withdrawn or reduced, that amount shall be recoverable as if it were VAT due from him. (8) Subsection (10) of section 76 (notification to certain persons acting for others) applies for the purposes of this paragraph as it applies for the purposes of that section. (13) Regulations under this Schedule— (a) may make different provision for different circumstances, and (b) may include transitional provisions or savings.

.

Part 2 — Consequential amendments

3

In section 70 of the Value Added Tax Act 1994 (c. 23) (mitigation of penalties), in subsection (1) after “69A” insert “ or under paragraph 10 of Schedule 11A ”.

4

In section 83 of that Act (appeals) after paragraph (z) insert—

(za) a direction under paragraph 8 of Schedule 11A, (zb) any liability to a penalty under paragraph 10(1) of Schedule 11A, any assessment under paragraph 12(1) of that Schedule or the amount of such an assessment;

.

5

• (1) Section 84 of that Act (further provisions relating to appeals) is amended as follows.

• (2) In subsection (3), for “or (ra)” substitute “ , (ra) or (zb) ”.

• (3) After subsection (6) insert—

(6A) Without prejudice to section 70, nothing in section 83(zb) shall be taken to confer on a tribunal any power to vary an amount assessed by way of penalty except in so far as it is necessary to reduce it to the amount which is appropriate under paragraph 11 of Schedule 11A.

.

6

In section 97 of that Act (orders, rules and regulations) in subsection (4) (which lists powers exercisable subject to affirmative procedure in the House of Commons) after paragraph (f) insert—

(g) an order under paragraph 3 or 4 of Schedule 11A.

.

SCHEDULE 3

Part 1 — General provisions

Introduction

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “non-corporate distribution”

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of company’s “underlying rate of corporation tax”

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matching: distributions not exceeding basic profits

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matching: distributions exceeding basic profits

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 2 — Allocation of excess NCDs to other companies

Allocation of excess NCDs to other companies

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of excess NCDs to other group companies

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of excess NCDs: period or periods to which amount to be allocated

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of excess NCDs: degrouping

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of excess NCDs: procedure

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of excess NCDs: amounts proving to be excessive

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of excess NCDs to companies not resident in the United Kingdom

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 3 — Other supplementary provisions

Carry forward of excess NCDs

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definition of a group

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounting period treated as ending if company ceases to be a member of a group

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of distributions made otherwise than in an accounting period

16

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Holding companies treated as carrying on a business

17

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 4

Sums paid to settlor otherwise than as income

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees chargeable to income tax at 30 per cent in certain cases

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 5

Taxes Management Act 1970

Notice of enquiry

1

• (1) Section 9A of the Taxes Management Act 1970 (c. 9) is amended as follows.

• (2) For subsection (4) (scope of inquiry) substitute—

(4) An enquiry extends to— (a) anything contained in the return, or required to be contained in the return, including any claim or election included in the return, (b) consideration of whether to give the taxpayer a transfer pricing notice under paragraph 5C of Schedule 28AA to the principal Act (provision not at arm’s length: medium-sized enterprise), but this is subject to the following limitation.

.

Income and Corporation Taxes Act 1988

Valuation of trading stock at discontinuance of trade

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Petroleum extraction activities: ring fence trade: charges on income

3

• (1) Section 494 of the Taxes Act 1988 (charges on income) is amended as follows.

• (2) In subsection (2) (which restricts the loan relationship debits that may be brought into account in a manner resulting in reduction of ring fence profits)—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) omit paragraph (d) (which imposes a restriction by reference to a reasonable commercial rate of return and is superseded by the application of paragraphs 1A and 1B of Schedule 28AA to the Taxes Act 1988 by virtue of paragraph 11 of that Schedule);

• (c) omit the third sentence (which defines “net debit” for the purposes of paragraph (d)).

• (3) Omit subsection (2B) (which relates to the net debit within the meaning of subsection (2)(d)).

Assumptions for calculating chargeable profits etc: transfer pricing

4

In Schedule 24 to the Taxes Act 1988, paragraph 20 shall cease to have effect.

Finance Act 1996

Loan relationships: introductory

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions not at arm’s length

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Continuity of treatment: groups etc.

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amounts imputed under Schedule 28AA to the Taxes Act 1988

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Finance Act 1998

Introductory

9

The Finance Act 1998 (c. 36) is amended as follows.

Scope of enquiry

10

• (1) In Schedule 18 (company tax returns, assessments and related matters) paragraph 25 is amended as follows.

• (2) In sub-paragraph (1), for the words following paragraph (b) substitute— “ and also extends to consideration of whether to give the company a transfer pricing notice under paragraph 5C of Schedule 28AA to the Taxes Act 1988 (provision not at arm’s length: medium-sized enterprise). But this is subject to the following limitation. ”.

Finance Act 2000

Introductory: tonnage tax: transactions not at arm’s length

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions between tonnage tax company and another person

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions between tonnage tax trade and other activities of same company

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Finance Act 2002

Introductory

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Derivative contracts

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible fixed assets

16

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 6

Income and Corporation Taxes Act 1988

Levies and repayments under Financial Services and Markets Act 2000: investment companies

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Incidental costs of obtaining loan finance

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in ownership of investment company: deductions generally.

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deductions: assets transferred within group

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in ownership of company carrying on property business

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in ownership of company with unused non-trading loss on intangible fixed assets

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Finance Act 1989

Charge of certain receipts of basic life assurance business

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Spreading of relief for acquisition expenses

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Finance Act 1996

Loan relationships: special provisions for insurers: treatment of deficit

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 7

Transfers of business

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chargeable gains

6

• (1) In section 210A(10) of the Taxation of Chargeable Gains Act 1992 (c. 12) (ring-fencing of losses: policy holders' share of chargeable gains or losses), in paragraph (b) (case where policy holders' share of relevant profits does not exceed BLAGAB profits), for “of the company for the accounting period bears to those relevant profits” substitute “ for the accounting period bears to those BLAGAB profits ”.

• (2) Sub-paragraph (1) has effect in relation to accounting periods beginning on or after 17th March 2004.

Double taxation

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “referable”

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In the following provisions of the Taxation of Chargeable Gains Act 1992 (c. 12)—

• (a) the definitions of “BLAGAB allowable losses” and “BLAGAB chargeable gains” in section 210A(13) (ring-fencing of losses),

• (b) section 211ZA(10) (transfers of business: transfer of unused losses), and

• (c) section 213(1A)(a) (spreading of gains and losses under section 212), after “referable” insert “ (in accordance with section 432A of the Taxes Act) ”.

SCHEDULE 8

Introductory

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Late interest: close companies where limited partnership is collective investment scheme etc

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bad debts etc: release of amount where creditor is subject to insolvency proceedings

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bad debt etc: parties having connection and creditor in insolvent administrative receivership

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed assignment of assets and liabilities on company ceasing to be resident in UK etc

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discounted securities of close companies: limited partnership collective investment scheme etc

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of references to major interest

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 9

Introductory

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to amend provisions of Schedule 26

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed assignment of derivative contracts on company ceasing to be resident in UK etc

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Derivative contracts for unallowable purposes

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Open-ended investment companies: capital profits and losses

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 10

Part 1 — Loan relationships

Main computational provisions

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

In section 88 of that Act (exemption from section 87 in certain cases), omit subsection (2)(b) and subsection (3)(b).

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

Omit section 90 of that Act (changes of accounting method).

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Where at the relevant time a company holds an asset to which section 92 applies—

• (a) section 92(7) (deemed disposal and re-acquisition) shall have effect as if the asset had ceased at that time to be an asset to which that section applied (but without ceasing to represent a creditor relationship of the company), and

• (b) any amount falling to be brought into account under the Taxation of Chargeable Gains Act 1992 (c. 12) shall be brought into account in accordance with section 92(4) accordingly.

• (3) The relevant time for this purpose is immediately before the end of the last period of account before that in relation to which sub-paragraph (1) has effect (see section 52(3) of this Act).

10

Omit section 92A of that Act (convertible securities etc.: debtor relationships).

11

• (1) Omit sections 93, 93A and 93B of that Act (relationships linked to the value of chargeable assets).

• (2) Where at the relevant time a company holds an asset to which section 93 applies—

• (a) section 93B (deemed disposal and re-acquisition) shall have effect as if the asset had ceased at that time to be an asset to which section 93 applied (but without ceasing to represent a creditor relationship of the company), and

• (b) any amount falling to be brought into account under the Taxation of Chargeable Gains Act 1992 (c. 12) shall be brought into account in accordance with section 93(4) accordingly.

• (3) The relevant time for this purpose is immediately before the end of the last period of account before that in relation to which sub-paragraph (1) has effect (see section 52(3) of this Act).

12

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13

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14

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15

In section 96 of that Act (special rules for certain other gilts), omit subsection (3).

16

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17

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Special computational provisions

18

Schedule 9 to the Finance Act 1996 (c. 8) (loan relationships: special computational provisions) is amended as follows.

19

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20

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21

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22

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23

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24

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25

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26

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27

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28

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29

In paragraph 10A (deemed disposal on company ceasing to be resident in UK etc.), omit sub-paragraph (5).

30

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31

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32

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33

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34

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35

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36

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Collective investment schemes etc.

37

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38

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39

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40

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41

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42

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Consequential amendments

43

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44

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45

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46

In paragraph 7(3) of Schedule 26 to the Transport Act 2000 (c. 38) (transfers under that Act), for “an authorised accounting method” substitute “ a basis of accounting ”.

Part 2 — Derivative contracts

Method of taxation

47

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48

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Accounting methods

49

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50

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51

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Special provision for bad debt etc.

52

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53

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Special computational provisions

54

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55

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56

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57

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58

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Collective investment schemes

59

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60