Legalize / United Kingdom / Public General Act

Finance Act 2006

Type Public General Act

Publication 2006-07-19

Last updated 2020-12-31

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

notwithstanding that the period in question has begun or ended before the making of the regulations.

(8) Any regulations made by virtue of subsection (7) must be made before 31st December 2006.

Attribution of blended crude oil

Crude oil: power to make regulations

148

(1) In section 2(5) of OTA 1975 (profits from oil field) for “subsection (5A)” substitute “ subsections (5A) and (5B) ”.

(2) After section 2(5A) of that Act insert—

(5B) The Board may by regulations make provision for the purposes of subsection (5)(a) to (c) for determining to which fields and in what proportions blended oil to which subsection (5C) applies is attributable. (5C) This subsection applies to blended oil within the meaning of section 63(1A) of the Finance Act 1987 (other than light gases) which— (a) is not gaseous at a temperature of 15 degrees Centigrade and a pressure of one atmosphere, and (b) is not normally disposed of crude by deliveries in quantities of 25,000 metric tonnes or less. (5D) Regulations under subsection (5B)— (a) may apply generally or only to specified cases or circumstances, (b) may make different provision for different cases or circumstances, (c) may make incidental, consequential, or transitional provision, (d) shall be made by statutory instrument, and (e) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

(3) Regulations under section 2(5B) of OTA 1975 (inserted by subsection (2) above) may have effect for the purpose of calculating profits in relation to a chargeable period ending at any time on or after 1st July 2006.

Nomination scheme

149

(1) Section 61 of FA 1987 (oil taxation: nominations) shall be amended as follows.

(2) In subsection (1) omit “, supplies and appropriations”.

(3) For subsections (3) and (4) substitute—

(3) If the market value of a relevant delivery ascertained in accordance with Schedule 3 to the principal Act exceeds a participator's delivery proceeds of a relevant delivery (within the meaning given by Schedule 10), the excess shall be brought into account by him in accordance with section 2(5)(e) of the principal Act. (4) If a relevant delivery is a delivery of blended oil within the meaning of section 63, regulations under section 2(5B) of the principal Act shall apply for the purposes of determining the proportion of the excess attributable to a field. (4A) For each month in which a participator makes a relevant delivery, his monthly excess is the sum of his excesses (if any) calculated in accordance with subsection (3). (4B) For each chargeable period of an oil field “the excess of nominated proceeds for the period” means, in relation to a participator in the oil field, that proportion of the sum of his monthly excesses for the chargeable period (if any) which is attributable to the field.

(4) Subsections (6) and (7) shall cease to have effect.

(5) In subsection (8) for “9th February 1987” substitute “ 1st July 2006 ”.

(6) In subsection (9)—

(a) omit “subsection (7) or”, and

(b) after “shall” insert “ (unless otherwise expressly provided) ”.

(7) This section shall have effect in relation to chargeable periods ending on or after 1st July 2006.

Amendment of Schedule 10 to FA 1987

150

(1) Schedule 10 to FA 1987 (oil taxation: nominations) shall be amended as follows.

(2) In paragraph 1—

(a) in sub-paragraph (1)—

(i) omit “, “proposed supply” and “proposed appropriation””,

(ii) for “paragraph 3 below” substitute “ paragraph 12A below ”, and

(iii) for “paragraphs (a) to (c)” substitute “ paragraph (a) ”, and

(b) omit sub-paragraph (2).

(3) In paragraph 2 omit—

(a) sub-paragraph (1)(b), (c) and (d), and

(b) the words following sub-paragraph (1)(d).

(4) Omit paragraph 3.

(5) In paragraph 4—

(a) for sub-paragraph (1) substitute—

(1) If a nomination is made during business hours it shall be effective only if— (a) it is made within the period of two hours beginning with the transaction base time, and (b) it satisfies the requirements of paragraph 5. (1A) If a nomination is made outside business hours it shall be effective only if— (a) it is made within the period of two hours beginning with the transaction base time, and (b) it satisfies the requirements of paragraph 5 or 5A. (1B) For the purposes of this paragraph— (a) the transaction base time of a proposed transaction is such time on such date as the Board shall prescribe by regulations, and (b) “business hours” means the period beginning with 09.00 and ending with 17.00 (UK time) on a business day (within the meaning of the Bills of Exchange Act 1882 (c. 61)).

(b) omit sub-paragraphs (2) and (2A),

(i) for “transaction base date” substitute “ transaction base time ”, and

(ii) for “date” in each place substitute “ time ”, and

(d) omit sub-paragraph (4).

(6) In paragraph 5—

(a) in sub-paragraph (1) for “A nomination of a proposed transaction shall not be effective unless it specifies, in respect to that transaction” substitute “ The requirements of this paragraph for a nomination in respect of a proposed transaction are ”,

(b) in sub-paragraph (1)(b) omit “in the case of a proposed sale”,

(d) in sub-paragraph (1)(d) for “supplied” substitute “ delivered ”,

(e) for sub-paragraph (1)(g) substitute—

(g) the transaction base time; and

(f) in sub-paragraph (2) after “A nomination” insert “ made under this paragraph ”, and

(g) in sub-paragraph (3) after “a nomination” insert “ made under this paragraph ”.

(7) After paragraph 5 insert—

(5A) (1) The requirements of this paragraph for a nomination in respect of a proposed transaction are— (a) the name of the participator or of the group of which the participator is a member; (b) the name of the person to whom the oil is to be sold, or the name of the group of which that person is a member; (c) the blend or grade of oil to be delivered; (d) the nominated price of the oil to be delivered; (e) the nominal volume of the oil; (f) the proposed delivery month; (g) the transaction base time; and (h) such other information as may be prescribed by the Board. (2) In sub-paragraph (1) “group” has the meaning given by section 53 of the Companies Act 1989. (5B) (1) A nomination of a transaction shall not be effective unless oil is delivered pursuant to a contract at arm's length the terms of which incorporate the information specified in the nomination in accordance with paragraph 5(1) or 5A(1). (2) But— (a) a contract need not refer to the transaction base time, and (b) the nomination shall be effective whether or not delivery takes place in the proposed delivery month specified in the nomination and the contract.

(8) In paragraph 6—

(a) in sub-paragraph (1) omit “Subject to sub-paragraph (3) below,”, and

(b) omit sub-paragraphs (2) and (3).

(9) Omit paragraph 7(2) and (5).

(10) After paragraph 7(5) insert—

(6) The Board may by regulations prescribe that in specified circumstances the nominal volume in relation to a delivery shall be treated as greater or less than the nominal volume ascertained in accordance with the preceding provisions of this paragraph. (7) Regulations under sub-paragraph (6)— (a) shall be made by statutory instrument, and (b) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

(11) Omit paragraphs 8 to 11.

(12) In paragraph 12(1) omit “, supply or appropriation”.

(13) After paragraph 12 insert—

(12A) For the purposes of section 61 and this Schedule— (a) a reference to the proposed delivery month in relation to a proposed transaction is a reference to the month in which delivery is to take place, (b) “relevant delivery” means a delivery of oil under a contract made at arm's length in respect of which there has been no effective nomination, and (c) “delivery proceeds” means the price received for a relevant delivery.

(14) This section shall have effect in relation to a transaction whenever proposed, but shall not have effect in relation to a proposed transaction with a transaction base date (within the meaning given by regulations under paragraph 4 of Schedule 10 to FA 1987) on or before 30th June 2006.

(15) Regulations under paragraph 4(1B) of Schedule 10 to FA 1987 (inserted by subsection (5) above) may have retrospective effect.

Nomination excesses and corporation tax

151

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Ring fence trades

Increase in rate of supplementary charge

152

(1) In section 501A of ICTA (supplementary charge in respect of ring fence trades), in subsection (1) (charge of 10 per cent on adjusted ring fence profits), for “10 per cent” substitute “ 20 per cent ”.

(2) The amendment made by subsection (1) has effect in relation to any accounting period beginning on or after 1st January 2006 (but see also subsection (3)).

(3) For the purpose of calculating the amount of the supplementary charge on a company for an accounting period (a “straddling period”) beginning before 1st January 2006 and ending on or after that date—

(a) so much of the straddling period as falls before 1st January 2006, and so much of the straddling period as falls on or after that date, are treated as separate accounting periods, and

(b) the company's adjusted ring fence profits for the straddling period are apportioned to the two separate accounting periods in proportion to the number of days in those periods.

(4) The amount of the supplementary charge on the company for the straddling period is the sum of the amounts of supplementary charge that would, in accordance with subsection (3), be chargeable on the company for those separate accounting periods.

(5) In the case of a company's straddling period—

(a) the Instalment Payments Regulations apply as if the amendment made by subsection (1) had not been made, but

(b) those Regulations also apply separately, in accordance with the following subsection, in relation to the increase in the amount of any supplementary charge on the company for that period that arises as a result of that amendment.

(6) In that separate application of those Regulations as mentioned in subsection (5)(b), those Regulations have effect as if, for the purposes of those Regulations,—

(a) the straddling period were an accounting period beginning on 1st January 2006,

(b) supplementary charge were chargeable on the company for that period, and

(c) the amount of that charge were equal to the increase in the amount of the supplementary charge for the straddling period that arises as a result of the amendment made by subsection (1).

(7) Any reference in the Instalment Payments Regulations to the total liability of a company is, accordingly, to be read—

(a) in their application as a result of subsection (5)(a), as a reference to the amount that would be the company's total liability for the straddling period if the amendment made by subsection (1) had not been made, and

(b) in their application as a result of subsection (5)(b), as a reference to the amount of the supplementary charge on the company for the deemed accounting period under subsection (6)(a).

(8) For the purposes of the Instalment Payments Regulations—

(a) a company is to be regarded as a large company as respects the deemed accounting period under subsection (6)(a) if (and only if) it is a large company for those purposes as respects the straddling period, and

(b) any question whether a company is a large company as respects the straddling period is to be determined as it would have been determined if the amendment made by subsection (1) had not been made.

(9) If the Instalment Payments Regulations—

(a) apply in relation to a company's liability to supplementary charge for the deemed accounting period under subsection (6)(a), and

(b) would (but for this subsection) treat any instalment payment in respect of that liability as being due and payable on a date falling on or before 22nd March 2006,

those Regulations have effect as if the payment were due and payable instead at the end of the period of 14 days beginning with that date.

(10) In this section—

“adjusted ring fence profits” has the meaning given by section 501A of ICTA,

“the Instalment Payments Regulations” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/ 3175),

“supplementary charge” means any sum chargeable under section 501A(1) of ICTA as if it were an amount of corporation tax.

Election to defer capital allowances

153

(1) This section applies if—

(a) a company carries on a ring fence trade in an accounting period beginning on or after 1st January 2006,

(b) relevant expenditure is incurred for the purposes of or in relation to the ring fence trade (see subsections (4) to (7)), and

(c) the relevant expenditure would (but for this section) be treated as incurred for the purposes of CAA 2001 in the period of 12 months ending with 31st December 2005.

(2) The company may elect for the relevant expenditure to be treated instead as if it were incurred on the first day of the company's first accounting period beginning on or after 1st January 2006.

(3) The election—

(a) has effect for the purposes of CAA 2001 other than those of section 45G (expenditure not first-year qualifying expenditure under section 45F if plant or machinery used for less than 5 years in a ring fence trade), and

(b) must be made by notice given to an officer of Revenue and Customs on or before 31st December 2007.

(4) Expenditure is relevant expenditure if it falls within any of Cases A to C.

(5) Expenditure falls within Case A if—

(a) it is first-year qualifying expenditure on the provision of plant or machinery under section 45F of CAA 2001 (expenditure on plant and machinery for use wholly in a ring fence trade), and

(b) no disposal event (see subsection (8)) in relation to the plant or machinery occurs in the relevant period.

(6) Expenditure falls within Case B—

(a) if it is first-year qualifying expenditure under section 416B of CAA 2001 (mineral extraction allowances: expenditure incurred by a company for purposes of a ring fence trade),

(b) if no disposal event in relation to any asset representing the expenditure occurs in the relevant period,

(c) if (or so far as) it is expenditure to which no part of any capital sum received by the company in the relevant period is reasonably attributable under section 425(2) of CAA 2001, and

(d) if no entitlement to a balancing allowance for a chargeable period in respect of the expenditure arises under any of sections 426 to 431 of CAA 2001 as a result of an event that occurs in the relevant period (as well as in that chargeable period).

The reference in paragraph (b) to any asset representing the expenditure is to be read in accordance with section 416B(4) of CAA 2001.

(7) Expenditure falls within Case C if—

(a) it is qualifying expenditure on research and development under Part 6 of CAA 2001 where the ring fence trade is the trade by reference to which the expenditure is qualifying expenditure, and

(b) no disposal event in relation to any asset representing the expenditure occurs in the relevant period.

(8) In this section—

“disposal event”—in relation to first-year qualifying expenditure under section 45F of CAA 2001, means an event of a kind that requires a disposal value to be brought into account under Part 2 of that Act (whether under section 61(1) or otherwise),in relation to first-year qualifying expenditure under section 416B of CAA 2001, means an event of a kind that requires a disposal value to be brought into account under section 421 or 422 of that Act,in relation to qualifying expenditure on research and development under Part 6 of CAA 2001, means an event of a kind that requires a disposal value to be brought into account under section 443(1) of that Act,

“the relevant period”, in relation to any expenditure for the purposes of or in relation to a company's ring fence trade, means the period—beginning with the day on which the expenditure would (but for this section) be treated as incurred for the purposes of CAA 2001, andending with the first day of the company's first accounting period beginning on or after 1st January 2006,

“ring fence trade” means a ring fence trade in respect of which tax is chargeable under section 501A of ICTA (supplementary charge in respect of ring fence trades).

Ring fence expenditure supplement

154

(1) Chapter 5 of Part 12 of ICTA (petroleum extraction activities) is amended as follows.

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

(3) Schedule 19B (petroleum extraction activities: exploration expenditure supplement) is amended as follows.

(4) In paragraph 1 (about the Schedule)—

(a) in sub-paragraph (1) (entitlement of company to supplement), in the opening words, after “2004” insert “ but before 1st January 2006 ”,

(b) in sub-paragraph (2) (condition that expenditure incurred on or after 1st January 2004), after “2004” insert “ but before 1st January 2006 ”.

(5) In paragraph 3 (accounting periods)—

(a) in sub-paragraph (1), in the definition of “post-commencement period”, after “2004” insert “ but before 1st January 2006 ”,

(b) in sub-paragraph (1), in the definition of “pre-commencement period”, after “2004” insert “ but before 1st January 2006 ”,

(3) In the case of an accounting period (a “straddling period”) of any qualifying company beginning before 1st January 2006 and ending on or after that date— (a) so much of the straddling period as falls before 1st January 2006, and (b) so much of the straddling period as falls on or after that date, are treated as separate accounting periods for the purposes of this Schedule. (4) Special provision is made elsewhere in this Schedule in relation to straddling periods (see paragraphs 16, 18A and 22).

(6) In paragraph 6 (qualifying E&A expenditure), in sub-paragraph (2) (condition that expenditure incurred on or after 1st January 2004), after “2004” insert “ but before 1st January 2006 ”.

(7) In paragraph 15 (supplement in respect of a post-commencement period), in sub-paragraph (2) (supplement to be treated as a loss for the purposes of Corporation Tax Acts), for “this Schedule)” substitute “ this Schedule or Part 4 of Schedule 19C) ”.

(8) In paragraph 16 (amount of post-commencement supplement for a post-commencement period), after sub-paragraph (2) (proportionate reduction of supplement if post-commencement period less than 12 months) insert—

(2A) But, if the post-commencement period is the deemed accounting period under paragraph 3(3) ending before 1st January 2006, sub-paragraph (2) has no effect in relation to the amount of the supplement for that period.

(9) After paragraph 18 (ring fence losses and non-qualifying losses) insert—

(18A) (1) This paragraph applies in any case where the period of the loss in which a ring fence loss is incurred is the deemed accounting period under paragraph 3(3) ending before 1st January 2006. (2) The following assumption shall be made for the purpose of calculating the amount of the qualifying E&A loss and the amount of the non-qualifying loss. (3) The assumption is that the loss made in the trade is taken to be the loss incurred in the accounting period beginning before 1st January 2006 and ending on or after that date (disregarding paragraph 3(3)). (4) The amount of the non-qualifying loss (found in accordance with that assumption) is then reduced (but not below nil) by the following amount. (5) The amount is the amount of the ring fence loss in the deemed accounting period beginning on 1st January 2006 determined under paragraph 18 of Schedule 19C for the purposes of Part 4 of that Schedule.

(10) In paragraph 22 (reductions in respect of utilised ring fence profits), at the end insert—

(4) If the post-commencement period is the deemed accounting period under paragraph 3(3) ending before 1st January 2006 (“the deemed accounting period”), the amount of the profits of the deemed accounting period is determined as follows. (5) The amount of the profits of the straddling period is apportioned to the deemed accounting period in proportion to the number of days in the deemed accounting period that fall in the straddling period. (6) The apportioned amount is taken for the purposes of this paragraph to be the amount of the profits of the deemed accounting period. (7) In this paragraph “the straddling period”, in relation to a qualifying company, means an accounting period of the company beginning before 1st January 2006 and ending on or after that date (disregarding paragraph 3(3)).

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 6 — Inheritance tax

Future rates and bands

Rates and rate bands for 2008-09 and 2009-10

155

(1) For the Table in Schedule 1 to IHTA 1984 (rates and rate bands), as it has effect in relation to chargeable transfers made on or after 6th April 2008, there shall be successively substituted—

(a) the 2008-09 Table, which shall apply to any chargeable transfer made on or after 6th April 2008 (but before 6th April 2009), and

(b) the 2009-10 Table, which shall apply to any chargeable transfer made on or after 6th April 2009.

(2) Subsection (1)(b) is without prejudice to the application of section 8 of IHTA 1984 (indexation) by virtue of the difference between the retail prices index for the month of September in 2008 or any later year and that for the month of September in the following year.

(3) The 2008-09 Table is—

Portion of value	Portion of value	Rate of tax
Lower limit (£)	Upper limit (£)	Per cent.
0	312,000	Nil
312,000		40

(4) The 2009-10 Table is—

Portion of value	Portion of value	Rate of tax
Lower limit (£)	Upper limit (£)	Per cent.
0	325,000	Nil
325,000		40

(5) Section 8(1) of IHTA 1984 (indexation of rate bands) shall not have effect as respects any difference between the retail prices index—

(a) for the month of September 2006 and that for the month of September 2007, or

(b) for the month of September 2007 and that for the month of September 2008.

Trusts

Rules for trusts etc

156

(1) Schedule 20 contains—

(a) amendments of provisions of IHTA 1984 relating to settled property,

(b) amendments of provisions relating to property that, for purposes of that Act, is property subject to a reservation, and

(2) Those amendments have effect as mentioned in that Schedule.

Purchase of interests in foreign trusts

157

(1) Section 48 of IHTA 1984 (settled property: excluded property) is amended as follows.

(2) In subsection (3) (circumstances in which settled property situated outside the United Kingdom is excluded property), after paragraph (b) insert— “ ; but this subsection is subject to subsection (3B) below. ”.

(3) In subsection (3A) (circumstances in which a holding in an authorised unit trust or a share in an open-ended investment company comprised in settled property is excluded property), after paragraph (b) insert— “ ; but this subsection is subject to subsection (3B) below. ”.

(4) After subsection (3A) insert—

(3B) Property is not excluded property by virtue of subsection (3) or (3A) above if— (a) a person is, or has been, beneficially entitled to an interest in possession in the property at any time, (b) the person is, or was, at that time an individual domiciled in the United Kingdom, and (c) the entitlement arose directly or indirectly as a result of a disposition made on or after 5th December 2005 for a consideration in money or money's worth. (3C) For the purposes of subsection (3B) above— (a) it is immaterial whether the consideration was given by the person or by anyone else, and (b) the cases in which an entitlement arose indirectly as a result of a disposition include any case where the entitlement arose under a will or the law relating to intestacy.

(5) If, in consequence of the amendments made by this section, an amount of inheritance tax would (but for this subsection) fall due before the day on which this Act is passed, that amount is to be treated instead as falling due at the end of the period of 14 days beginning with that day.

(6) This section is deemed to have come into force on 5th December 2005.

Part 7 — Pensions

Taxable property held by investment-regulated pension schemes

158

(1) Schedule 21 (taxable property held by investment-regulated pension schemes) has effect.

(2) This section and that Schedule are deemed to have come into force on 6th April 2006.

Recycling of lump sums

159

(1) In Schedule 29 to FA 2004 (authorised lump sums), after paragraph 3 insert—

(3A) (1) Where this paragraph applies in relation to a pension commencement lump sum paid to the member, the pension scheme is to be treated as making to the member an unauthorised payment of the appropriate amount. (2) Subject to sub-paragraphs (3) and (4), this paragraph applies in relation to a pension commencement lump sum if— (a) because of the lump sum, the amount of the contributions paid by or on behalf of, or in respect of, the member to the pension scheme, or to any other registered pension scheme, is significantly greater than it otherwise would be, and (b) the member envisaged at the relevant time that that would be so. (3) This paragraph does not apply in relation to any lump sum paid to the member on any day if the amount of the lump sum, when added to any other pension commencement lump sum paid to the member within the period of 12 months ending with that day, does not exceed 1% of the standard lifetime allowance on that day. (4) This paragraph does not apply if the amount by which the contributions paid as mentioned in sub-paragraph (2)(a) is greater than it otherwise would be because of the lump sum does not exceed 30% of the amount of the lump sum. (5) “The appropriate amount” is so much of— (a) the amount crystallised by the benefit crystallisation event constituted by the payment of the lump sum, as does not exceed (b) the amount of the member's lifetime allowance which is available on it. (6) “The relevant time” is— (a) if paragraph (a) of sub-paragraph (2) is satisfied before the lump sum is paid, the time when that paragraph is first satisfied, and (b) otherwise, the time when the lump sum is paid.

(2) This section is deemed to have come into force on 6th April 2006.

Inheritance tax

160

(1) Schedule 22 (provisions about inheritance tax in relation to registered pension schemes) has effect.

(2) This section and that Schedule are deemed to have come into force on 6th April 2006.

Miscellaneous

161

(1) Schedule 23 (miscellaneous amendments relating to pension schemes etc) has effect.

(2) This section and that Schedule are deemed to have come into force on 6th April 2006.

Part 8 — Stamp taxes

Stamp duty and stamp duty land tax: thresholds

Raising of thresholds

162

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

(2) In Schedule 5 to FA 2003 (stamp duty land tax: amount of tax chargeable: rent), in paragraph 2(3) (calculation of tax chargeable in respect of rent), in Table A (bands and percentages for residential property), for “£120,000”, in both places, substitute “ £125,000 ”.

(3) In Schedule 13 to FA 1999 (stamp duty: instruments chargeable and rates of duty), in paragraph 4 (bands and percentages for conveyance or transfer on sale of property other than stock or marketable securities), for “£120,000”, in both places, substitute “ £125,000 ”.

(4) The amendments made by subsections (1) and (2) have effect in relation to any transaction of which the effective date (within the meaning of Part 4 of FA 2003) is after 22nd March 2006.

(5) The amendment made by subsection (3) has effect in relation to instruments executed after 22nd March 2006.

Stamp duty land tax

Partnerships

163

Schedule 24 (amendments of Schedule 15 to FA 2003) has effect.

Leases

164

(1) In section 77 of FA 2003 (notifiable transactions), for subsection (2A) substitute—

(2A) The assignment of a lease is notifiable if there is chargeable consideration for the assignment and either— (a) the lease is for a term of seven years or more, or (b) the consideration for the assignment is chargeable at a rate of 1% or higher, or would be so chargeable but for a relief.

(2) In Schedule 5 to FA 2003 (amount of tax chargeable: rent), in paragraph 3 (net present value of rent payable over term of lease), for “in year i” substitute “ in respect of year i ”.

(3) Subsection (1) has effect in relation to any assignment of which the effective date (within the meaning of Part 4 of FA 2003) is on or after the day on which this Act is passed.

(4) Subsection (2) has effect in relation to any lease granted or treated as granted on or after that day.

(5) Schedule 25 (amendments of Schedule 17A to FA 2003) has effect.

Reallocation of trust property as between beneficiaries

165

(1) In Schedule 16 to FA 2003 (trusts and powers), after paragraph 7 insert—

(8) Where— (a) the trustees of a settlement reallocate trust property in such a way that a beneficiary acquires an interest in certain trust property and ceases to have an interest in other trust property, and (b) the beneficiary consents to ceasing to have an interest in that other property, the fact that he gives consent does not mean that there is chargeable consideration for the acquisition.

(2) Subsection (1) has effect in relation to any acquisition of which the effective date (within the meaning of Part 4 of FA 2003) is on or after the day on which this Act is passed.

Unit trust schemes

166

(1) Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

(2) Omit section 64A (initial transfer of assets to trustees of unit trust scheme).

(3) In section 101 (unit trust schemes)—

(a) in subsection (1) (application of Part (except for provisions mentioned in subsection (7)) to unit trust schemes) for “provisions” substitute “ provision ”, and

(b) in subsection (7) (provisions for the purposes of which unit trust schemes not to be treated as companies) omit from “section 53” to “companies), or”.

(4) This section has effect in relation to any land transaction of which the effective date is, or is after, 22nd March 2006 (but see subsections (5) and (6)).

(5) This section does not have effect in relation to—

(a) any land transaction which is effected in pursuance of a contract entered into and substantially performed before 2 p.m. on 22nd March 2006 (“the relevant time”), or

(b) any other land transaction which is effected in pursuance of a contract entered into before the relevant time and which is not an excluded transaction.

(6) For this purpose, a land transaction effected in pursuance of a contract is an excluded transaction if—

(a) any provision of the contract has effect by reference to a unit trust scheme and the scheme is not established before the relevant time,

(b) at or after the relevant time the contract is varied in a way that significantly affects the land transaction (see subsection (7)),

(c) the subject-matter of the land transaction is not identified in the contract in a way that would have enabled its acquisition before the relevant time,

(d) rights under the contract are assigned at or after the relevant time,

(e) the land transaction is effected in consequence of the exercise, at or after the relevant time, of any option, right of pre-emption or similar right, or

(f) at or after the relevant time there is an assignment, subsale or other transaction (relating to the whole or part of the contract's subject-matter) as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance to him.

(7) For the purposes of subsection (6)(b) the contract is varied in a way that significantly affects the land transaction if (and only if)—

(a) it is varied so as to substitute a different purchaser in relation to the land transaction,

(b) it is varied so as to alter the subject-matter of the land transaction, or

(8) Expressions which are used in Part 4 of FA 2003 and in this section have the same meaning in this section as in that Part.

Demutualisation of insurance companies

167

(1) Schedule 7 to FA 2003 (stamp duty land tax: group relief etc) is amended as follows.

(2) In paragraph 2 (restrictions on availability of group relief) in sub-paragraph (1) (no relief if arrangements by virtue of which a person has or could have control of purchaser but not vendor) at the end insert— “ For another exception to this, see sub-paragraph (3A). ”.

(3) In that paragraph after sub-paragraph (3) (arrangements which are within sub-paragraph (2)(a)) insert—

(3A) Sub-paragraphs (1) and (2)(b) do not apply to arrangements in so far as they are for the purpose of facilitating a transfer of the whole or part of the business of a company to another company in relation to which— (a) section 96 of the Finance Act 1997 is intended to apply (stamp duty relief: demutualisation of insurance companies), and (b) the conditions for relief under that section are intended to be met.

(4) In paragraph 4 (cases in which group relief not withdrawn under paragraph 3)—

(a) after sub-paragraph (6) (the third case where the relief not withdrawn) insert—

(6A) The fourth case is where— (a) the purchaser ceases to be a member of the same group as the vendor as a result of the transfer of the whole or part of the vendor's business to another company (“the acquiring company”) in relation to which— (i) section 96 of the Finance Act 1997 applies (stamp duty relief: demutualisation of insurance companies), and (ii) the conditions for relief under that section are met, and (b) the purchaser is immediately after that transfer a member of the same group as the acquiring company.

, and

(b) in sub-paragraph (7) (re-imposition of the withdrawal of the relief), in the opening words, after “in a case within sub-paragraph (6)” insert “ or (6A) ”.

(5) The amendments made by this section have effect in relation to any transfer which takes place, or is intended to take place, after 22nd March 2006.

Alternative finance

168

(1) In sections 71A to 73 of FA 2003 (alternative property finance) for “individual” substitute “ person ” (and for “an individual” substitute “ a person ”).

(2) Sections 71A(6), 72(6), 72A(6) and 73(4) shall cease to have effect.

(3) In section 73(3) after “chargeable” insert “ on a chargeable consideration that is not less than the market value of the interest and, in the case of the grant of a lease at a rent, the rent. ”

(4) After section 73 insert—

(73A) Sections 71A to 73 do not apply to arrangements in which the first transaction is exempt from charge by virtue of Schedule 7.

(5) This section shall have effect in relation to arrangements in which the effective date of the first transaction (within the meaning of sections 71A to 73 of FA 2003) is on or after the date on which this Act is passed; and section 119(1) of FA 2003 shall have effect for determining the effective date for the purposes of this subsection.

Stamp duty

Reliefs for certain company acquisitions

169

(1) Part 3 of FA 1986 (stamp duty) is amended as follows.

(2) In section 75 (relief for acquisition of target company's undertaking in pursuance of reconstruction scheme)—

(a) in subsection (4) (condition as to registered office etc) omit “that the registered office of the acquiring company is in the United Kingdom and”, and

(b) in subsection (5)(c) (condition that any shareholder holds the same proportion of shares in the companies) after “the same” insert “ , or as nearly as may be the same, ”.

(3) In section 76 (other relief for acquisition of target company's undertaking), in subsection (3) (condition as to registered office etc) omit “that the registered office of the acquiring company is in the United Kingdom and”.

(4) In section 77 (relief for acquisition of target company's share capital), in subsection (3) (conditions for relief),—

(a) omit paragraph (a) (condition as to registered office),

(b) in paragraph (g) (condition that the number of shares of any particular class bear to all the shares the same proportion) after “the same proportion” insert “ , or as nearly as may be the same proportion, ”, and

(c) in paragraph (h) (condition that proportion of shares of any particular class held by any shareholder be the same) after “the same” insert “ , or as nearly as may be the same, ”.

(5) The amendments made by this section have effect in relation to instruments executed after the day on which this Act is passed.

Part 9 — Miscellaneous provisions

Landfill tax

Rate of landfill tax

170

(1) In section 42 of FA 1996 (amount of landfill tax) for the amount specified in subsection (1)(a), and the corresponding amount specified in subsection (2), substitute “ £21 ”.

(2) The amendments made by this section have effect in relation to taxable disposals made, or treated as made, on or after 1st April 2006.

Climate change levy

Climate change levy: rates

171

(1) In Schedule 6 to FA 2000 (climate change levy) for the Table in paragraph 42(1) (amount payable by way of levy) substitute—

Taxable commodity supplied	Rate at which levy payable if supply is neither a half-rate supply nor a reduced-rate supply
Electricity	£0.00441 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00154 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.00985 per kilogram
Any other taxable commodity	£0.01201 per kilogram

(2) This section has effect in relation to supplies treated as taking place on or after 1st April 2007.

Abolition of half-rate supplies etc

172

(1) For the purposes of climate change levy, no supply made on or after 1st April 2006 is a half-rate supply.

(2) Subsections (3) to (6) have effect for determining when a supply is to be regarded as made for the purposes of subsection (1).

(3) A supply—

(a) of electricity, or

(b) of gas that is in a gaseous state and is of a kind supplied by a gas utility,

is to be regarded as made at the time when the electricity or gas is actually supplied.

(4) In the case of a supply of a taxable commodity not falling within subsection (3) by a person who is resident in the United Kingdom—

(a) if the commodity is to be removed, the supply is to be regarded as made at the time of the removal,

(b) if the commodity is not to be removed, the supply is to be regarded as made when the commodity is made available to the person to whom it is supplied.

This subsection does not apply if subsection (6) (deemed self-supply) applies in the case of the supply.

(5) In the case of a supply of a taxable commodity not falling within subsection (3) by a person who is not resident in the United Kingdom, the supply is to be regarded as made—

(a) when the commodity is delivered to the person to whom it is supplied, or

(b) if earlier, when it is made available in the United Kingdom to that person.

This subsection does not apply if subsection (6) (deemed self-supply) applies in the case of the supply.

(6) In any case where, by virtue of paragraph 23(3) of Schedule 6 to FA 2000, a person is, for the purposes of that Schedule, deemed to make a supply to himself of a quantity of a taxable commodity—

(a) which he has produced, and

(b) which does not fall within subsection (3),

the supply is to be regarded as made at the time when he produced that particular quantity of the taxable commodity.

(7) In paragraph 34 of Schedule 6 to FA 2000 (deemed supplies of commodities other than electricity and certain gas), in sub-paragraph (2) omit the words “(or, in the case of electricity, consumed)” (which are unnecessary, because the paragraph does not apply in the case of electricity).

(8) In consequence of subsection (1), Schedule 6 to FA 2000 (climate change levy) is amended as follows.

(9) In paragraph 37 (supplies of electricity or gas spanning change of rate etc) in sub-paragraph (1)(c) omit “half-rate supplies or”.

(10) In paragraph 38 (other supplies spanning change of rate etc) in sub-paragraph (1)(c) omit “half-rate supplies or”.

(11) In paragraph 42(1) (amount payable by way of levy)—

(a) in paragraph (a), for “neither a half-rate supply nor” substitute “ not ”;

(b) omit paragraph (b);

(d) in the Table (and in the Table substituted for it by section 171 of this Act), in the heading to column (2), for “neither a half-rate supply nor” substitute “ not ”.

(12) Paragraph 43 (half-rate for supplies to horticultural producers) shall cease to have effect.

(13) In paragraph 62 (tax credits) in subsection (1)—

(a) in paragraph (c)—

(i) for “neither a half-rate supply nor” substitute “ not ”;

(ii) omit “half-rate or”;

(b) omit paragraph (d).

(14) In paragraph 101 (civil penalties: incorrect notifications) in sub-paragraph (2)(a)—

(a) at the end of sub-paragraph (ii) insert “ or ”;

(b) omit sub-paragraph (iii).

(15) In paragraph 147 (interpretation: general) omit the definition of “half-rate supply”.

(16) Subsections (8) to (15) come into force on such day as the Treasury may by order made by statutory instrument appoint.

(17) The power to make an order under subsection (16)—

(a) may be exercised so as to bring a provision into force only in such cases as may be described in the order,

(b) may be exercised so as to make different provision for different cases or descriptions of case,

International tax arrangements

International tax enforcement arrangements

173

(1) If Her Majesty by Order in Council declares that—

(a) arrangements relating to international tax enforcement which are specified in the Order have been made in relation to any territory or territories outside the United Kingdom, and

(b) it is expedient that those arrangements have effect,

those arrangements have effect (and do so in spite of anything in any enactment or instrument).

(2) For the purposes of subsection (1) arrangements relate to international tax enforcement if they relate to any or all of the following—

(a) the exchange of information foreseeably relevant to the administration, enforcement or recovery of any UK tax or foreign tax;

(b) the recovery of debts relating to any UK tax or foreign tax;

(3) In this section—

“UK tax” means any tax or duty imposed under the domestic law of the United Kingdom, and

“foreign tax” means any tax or duty imposed under the law of the territory, or any of the territories, in relation to which the arrangements have been made.

(4) Where any arrangements have effect by virtue of this section, no obligation of secrecy (whether imposed by statute or otherwise) prevents a public authority or anyone acting on its behalf from making a disclosure to the Commissioners for Her Majesty’s Revenue and Customs —

(a) for the purpose of giving effect, or enabling effect to be given, to the arrangements, or

(b) which is authorised in accordance with the arrangements.

(4A) Where any arrangements have effect by virtue of this section, no obligation of secrecy (whether imposed by statute or otherwise) prevents the Commissioners for Her Majesty’s Revenue and Customs or any other authorised Revenue and Customs official from making a disclosure to a person outside the United Kingdom—

(a) for the purpose of giving effect, or enabling effect to be given, to the arrangements, or

(b) which is authorised in accordance with the arrangements.

(5) But information may not be disclosed by virtue of subsection (4A) unless the person making the disclosure is satisfied that the recipient of the information—

(a) will only use the information in a manner consistent with the purposes of the arrangements, and

(b) is bound by, or has undertaken to observe, rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdom.

(6) An Order in Council made under this section revoking an earlier such Order may contain any transitional provisions that appear appropriate.

(7) An Order under this section is not to be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons.

(8) Any provisions which—

(a) are included in an Order in Council made under any of the provisions specified in subsection (10),

(b) are in force immediately before the passing of this Act, and

(c) could have been included in an Order in Council under this section had the Order in Council been made after that time,

have effect after that time as if included in an Order in Council under this section.

(9) If any such provisions relate to arrangements covering UK taxes or foreign taxes (or both) other than those in relation to which the Order in Council had effect, the provisions also have effect after the passing of this Act (by virtue of subsection (8)) in relation to those other UK taxes or foreign taxes (or both).

(10) The provisions referred to in subsection (8)(a) are—

(a) sections 788 and 815C of ICTA (international arrangements relating to income tax, corporation tax and capital gains tax and analogous foreign taxes), and

(b) sections 158 and 220A of IHTA 1984 (international arrangements relating to inheritance tax and analogous foreign taxes).

(11) In this section “Revenue and Customs official” has the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005 (c. 11) (confidentiality).

Arrangements under section 173: information powers

174

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

Arrangements under section 173: recovery of debts

175

(1) The Treasury may by regulations make provision for the recovery in the United Kingdom of debts relating to any relevant foreign tax pursuant to arrangements having effect by virtue of section 173.

(2) “Relevant foreign tax” means any tax or duty—

(a) imposed under the law of a territory in relation to which such arrangements have been made, and

(b) covered by the arrangements.

(3) Regulations under this section may make provision for the taking of action to recover debts relating to any relevant foreign tax by way of legal proceedings, distress, diligence or otherwise.

(4) Such provision may in particular be made by applying, with any appropriate modifications, any enactment or rule of law that applies in relation to the recovery of any tax or duty imposed under the domestic law of the United Kingdom (including any enactment relating to penalties or interest on unpaid amounts).

(5) The power to make regulations under this section is exercisable by statutory instrument.

(6) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

Double taxation agreements: procedure

176

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

Disclosure of information

177

(1) After section 352 of the Gambling Act 2005 (c. 19) (disclosure of information: data protection) insert—

(352A) (1) Where the Commissioners for Her Majesty's Revenue and Customs provide information to a person under this Act, section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) shall apply to the disclosure of the information by the person as it applies to the disclosure of information in contravention of a provision of that Act. (2) But section 19 shall not apply to disclosure— (a) in accordance with this Act, (b) in accordance with another enactment, or (c) in circumstances specified in section 18(2)(c), (d), (e) or (h) of that Act. (3) In subsection (1)— (a) information provided to a person shall be treated as being provided both to him and to any person on whose behalf he acts or by whom he is employed, and (b) the reference to disclosure by the person to whom information was provided includes a reference to disclosure by any person acting on behalf of, or employed by, the person to whom the information was provided (or a person to whom it is treated as being provided by virtue of paragraph (a)). (4) In the application of section 18(2)(c) and (d) of that Act by virtue of subsection (2)(c) above a reference to functions of the Revenue and Customs shall be taken as a reference to functions of the person making the disclosure. (5) In the application of section 19 of that Act by virtue of subsection (1) above “revenue and customs information” means information provided by the Commissioners (but subject to the express exclusion in section 19(2)). (6) Section 19 of that Act shall, in so far as it applies by virtue of this section, be treated for the purposes of section 28 of this Act as an offence under this Act.

(2) Section 352A of the Gambling Act 2005 (c. 19) as inserted by subsection (1) above shall come into force on the passing of this Act.

Part 10 — Supplementary provisions

Repeals

178

(1) The enactments mentioned in Schedule 26 (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

179

In this Act—

“ALDA 1979” means the Alcoholic Liquor Duties Act 1979 (c. 4);

“CAA 2001” means the Capital Allowances Act 2001 (c. 2);

"CTA 2009” means the Corporation Tax Act 2009;

“FA”, followed by a year, means the Finance Act of that year;

“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year;

“HODA 1979” means the Hydrocarbon Oil Duties Act 1979 (c. 5);

“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1);

“IHTA 1984” means the Inheritance Tax Act 1984 (c. 51);

“ITA 2007” means the Income Tax Act 2007;

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1);

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5);

“OTA 1975” means the Oil Taxation Act 1975 (c. 22);

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12);

“TMA 1970” means the Taxes Management Act 1970 (c. 9);

“VATA 1994” means the Value Added Tax Act 1994 (c. 23);

“VERA 1994” means the Vehicle Excise and Registration Act 1994 (c. 22).

Short title

180

This Act may be cited as the Finance Act 2006.

SCHEDULE 1

Part 1 — Amendments of Chapter 4 of Part 10 of ICTA

Availability of relief

1

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

Limits on group relief

2

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

Relief for or in respect of non-resident companies within the charge to corporation tax

3

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

Relief in respect of overseas losses of non-resident companies

4

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

Interpretation of Chapter 4 of Part 10 of ICTA

5

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

Group relief: equity holders and profits or assets available for distribution

6

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

Meaning of conditions in section 403F etc

7

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

Part 2 — Amendments of other enactments

Claims for group relief

8

After paragraph 77 of Schedule 18 to FA 1998 (joint amended returns) insert—

(77A) (1) This paragraph applies if a claim for group relief is made in respect of any loss or other amount as a result of the condition in section 402(2A) of the Taxes Act 1988 being satisfied (relief in respect of overseas losses of non-resident companies). (2) In relation to the surrendering company, this Part of this Schedule applies as if— (a) references to the relief being surrendered were to the EEA amount and to the relief being claimed, and (b) references to its accounting period were to its deemed accounting period under Part 2 of Schedule 18A to the Taxes Act 1988. (3) Notice of consent of the surrendering company— (a) is to be given to the officer of the Board under paragraph 70(3)(b) by the claimant company (and not by the surrendering company), and (b) is to be given to the officer to whom the claimant company makes its company tax returns. (4) If the surrendering company is not within the charge to income or corporation tax, the requirement under paragraph 71(1)(e) for notice of consent by the surrendering company to contain details of its tax district reference is not to apply. (5) If notice of consent is withdrawn under paragraph 71, the notice of the withdrawal is to be given to the officer of the Board by the claimant company (and not by the surrendering company). (6) If notice of consent is withdrawn under paragraph 75— (a) the notice of withdrawal, and any copy of any new notice of consent, is to be sent to an officer of Revenue and Customs by the claimant company (and not by the surrendering company), and (b) any notice containing directions by an officer of Revenue and Customs under sub-paragraph (4) of that paragraph is to be given to the claimant company (and not to the surrendering company). (7) The remaining provisions of that paragraph, and the rest of this Part of this Schedule, are, accordingly, to be read with the appropriate modifications (so that, in particular, it is the claimant company (and not the surrendering company) which can bring an appeal under paragraph 75(7)). (8) A notice under paragraph 27 (notice to produce documents etc for purposes of an enquiry) given to the claimant company may require the claimant company— (a) to explain why the EEA amount meets the conditions mentioned in subsection (2)(a) to (d) of section 403F of the Taxes Act 1988 and is not prevented from being surrendered by section 403G of that Act, and (b) to provide details of the recalculation required under Part 2 of Schedule 18A to that Act in relation to the EEA amount. (9) Except where expressly indicated, requirements imposed under this paragraph are in addition to those imposed apart from this paragraph. (10) In this paragraph “the EEA amount” has the same meaning as in Part 2 of Schedule 18A to the Taxes Act 1988.

Part 3 — Commencement

Commencement

9

(1) The amendments made by this Schedule, other than those made by paragraphs 4(2) and 5, have effect—

(a) in relation to any accounting period of a claimant company beginning on or after 1st April 2006, and

(b) in relation to any period (“the loss period”) beginning on or after 1st April 2006 in which any loss or other amount arises to a non-resident company.

(2) If an accounting period (a “straddling period”) of a claimant company begins before 1st April 2006 and ends on or after that date—

(a) so much of the straddling period as falls before 1st April 2006, and

(b) so much of the straddling period as falls on or after that date,

are to be treated as separate accounting periods for the purposes of the amendments made by this Schedule other than those made by paragraphs 4(2) and 5.

(3) The amount of the claimant company's profits for the straddling period is to be attributed, on an apportionment in accordance with this paragraph, to those separate accounting periods.

(4) If the loss period of the non-resident company begins before 1st April 2006 and ends on or after that date—

(a) so much of the loss period as falls before 1st April 2006, and

(b) so much of the loss period as falls on or after that date,

are to be treated as separate periods for the purposes of the amendments made by this Schedule other than those made by paragraphs 4(2) and 5.

(5) The amount of the loss or other amount of the non-resident company for the loss period is to be attributed, on an apportionment in accordance with this paragraph, to those separate periods.

(6) Any apportionment under this paragraph is to be made on a just and reasonable basis.

SCHEDULE 2

Amendments to Schedule 20 to FA 2000

1

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

Amendments to Schedule 12 to FA 2002

2

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

Amendments to Schedule 13 to FA 2002

3

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

SCHEDULE 3

Introductory

1

Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

Claims to be included in return

2

(1) Paragraph 10 (other claims and elections to be included in return) is amended as follows.

(2) In sub-paragraph (2) (claims to which Part 8, 9 or 9A of Schedule 18 applies) for “R&D tax credit” substitute “ R&D tax relief ”.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claims for R&D tax relief

3

In paragraph 83A (Part 9A: introduction) for “claims for R&D tax credits” substitute “ claims for R&D tax relief ”.

4

In each of the following provisions for “claim for an R&D tax credit” substitute “ claim to which this Part of this Schedule applies ”

(a) paragraph 83B(1) (claim to be included in company tax return);

(b) paragraph 83C (content of claim);

(d) paragraph 83E(1) (time limit for claims).

5

In the title of Part 9A, “R&D tax credit” becomes “ R&D tax relief ”.

Claims for relief under Schedule 12 to FA 2002

6

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

Claims for relief under Schedule 13 to FA 2002

7

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

8

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

9

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

Commencement and transitional provision

10

The amendments made by paragraphs 2 to 9 have effect in relation to accounting periods ending on or after 31st March 2006.

11

(1) This paragraph applies where a company is entitled to relief under Schedule 20 to FA 2000 or Schedule 12 or 13 to FA 2002 for any accounting period of the company falling within sub-paragraph (2).

(2) An accounting period of a company falls within this sub-paragraph if it ends on a day falling after 31st March 2002 but before 31st March 2006.

(3) Sub-paragraphs (4) and (5) apply to any claim by the company for such relief for an accounting period falling within sub-paragraph (2), other than a claim by the company for—

(a) an R&D tax credit under Schedule 20 to FA 2000, or

(b) a tax credit under Schedule 13 to FA 2002.

(4) A claim to which this sub-paragraph applies may be made, amended or withdrawn by the company at any time up to and including 31st March 2008.

(5) A claim to which this sub-paragraph applies may be made, amended or withdrawn by the company at a later date if an officer of Revenue and Customs allows it.

SCHEDULE 4

Films to which this Schedule applies

1

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

Activities treated as separate trade

2

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

When the trade begins

3

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

Pre-trading expenditure

4

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

Costs of the film

5

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

Income from the film

6

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

Calculation of profit or loss

7

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

Estimates

8

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

When costs are taken to be incurred

9

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

Exclusion of expenditure relieved under other provisions

10

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

SCHEDULE 5

...

Introduction

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

Additional deduction in computing profits of trade

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

Qualifying expenditure

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

Amount of additional deduction

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

Rate of enhancement

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

Film tax credits

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

Amount of credit

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

Payable credit rate

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

Payment in respect of film tax credit

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

Payment in respect of film tax credit not income

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

Trading loss reduced by amount surrendered for film tax credit

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

No account to be taken of amounts if unpaid

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

Artificially inflated claims for deduction or film tax credit

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

Interpretation

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

Part 2 — Certification of British films for purposes of film tax relief

15

For section 6 of the Films Act 1985 (c. 21) (certification of master negatives, tapes and discs for purposes of section 72 of FA 1982) substitute)—

(6) Schedule 1 to this Act has effect with respect to the certification by the Secretary of State of a film as a British film for the purposes of film tax relief.

16

For the heading to Schedule 1 to that Act substitute “ Certification of British films for purposes of film tax relief ”.

17

For paragraph 1 of that Schedule substitute—

(1) (1) In this Schedule— - “film” includes any record, however made, of a sequence of visual images that is capable of being used as a means of showing that sequence as a moving picture; - “film production company” has the same meaning as in Chapter 3 of Part 3 of the Finance Act 2006 (see section 32 of that Act). (2) For the purposes of this Schedule each part of a series of films is treated as a separate film, unless— (a) the films form a series with not more than 26 parts, (b) the combined playing time is not more than 26 hours, and (c) the series constitutes a self-contained work or is a series of documentaries with a common theme, in which case the films are treated as a single film. (3) References in this Schedule to a film include the film soundtrack. (4) For the purposes of this Schedule a film is completed when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public.

18

For paragraph 2 of that Schedule substitute—

(2) (1) The film production company may apply to the Secretary of State for the certification of a film as a British film. (2) The application may be for an interim or final certificate. (3) An interim certificate is a certificate granted before the film is completed that the film, if completed in accordance with the proposals set out in the application, will be a British film. (4) A final certificate is a certificate granted after the film is completed that the film is a British film. (5) The applicant must— (a) produce to the Secretary of State such books or other documents relating to the application, and (b) provide the Secretary of State with such other information with respect to it, as the Secretary of State may require for the purposes of determining the application. (6) The Secretary of State may require information provided for the purposes of the application to be accompanied by a statutory declaration, by the person providing it, as to the truth of the information.

19

For paragraph 3 of that Schedule substitute—

(3) (1) If the Secretary of State is satisfied that the requirements are met for interim or final certification of a film as a British film, he shall certify the film accordingly. (2) If the Secretary of State is not satisfied that those requirements are met, he shall refuse the application. (3) An interim certificate— (a) may be given subject to conditions, and (unless the Secretary of State directs otherwise) is of no effect if the conditions are not met; (b) may be expressed to expire after a specified period, and (unless the Secretary of State directs otherwise) ceases to have effect at the end of that period; and (c) ceases to have effect when a final certificate is issued. (4) If it appears to the Secretary of State that a film certified by him under this Schedule ought not to have been certified, he shall revoke its certification. Unless the Secretary of State directs otherwise, a certificate that is revoked is treated as never having had effect.

20

In paragraph 4 of that Schedule (British films for purposes of the Schedule), for sub-paragraphs (1) to (3) substitute—

(1) A film is a British film for the purposes of this Schedule if it passes the relevant cultural test (see paragraph 4A, 4B or 4C).

21

(1) Paragraph 5 of that Schedule (excluded films) is amended as follows.

(2) For sub-paragraph (1) substitute—

(1) A film must not be certified as a British film for the purposes of this Schedule if parts of the film whose playing time exceeds 10% of the total playing time of the film are derived from a previous film, unless— (a) the two films have the same film production company or producer, and (b) the previous film has not been certified under this Schedule.

(3) After sub-paragraph (2) insert—

(3) For the purposes of this paragraph— (a) the film soundtrack shall be left out of account; (b) “producer” means the person by whom the arrangements necessary for the making of the film are undertaken; (c) in relation to certification before the commencement of Chapter 3 of Part 3 of the Finance Act 2006, references to certification of a film shall be read as references to certification of the master negative, tape or disc of the film.

22

In paragraph 9 of that Schedule (determination of disputes) for the words from “any decision of the Secretary of State” to “may” substitute “ any decision of the Secretary of State under paragraph 3 may ”.

23

In paragraph 10 of that Schedule (regulations and orders)—

(a) in sub-paragraph (1)(c), for “2(4)” substitute “ 2(6); ”

(b) in sub-paragraph (2), for “4 to 8” substitute “ 4 to 5 ”.

Confidentiality of information

24

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

Wrongful disclosure

25

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

Part 3 — Consequential amendments

Interest

26

(1) Section 826 of ICTA (interest on tax overpaid etc) is amended as follows.

(2) In subsection (1) (payments that carry interest) after paragraph (e) insert—

; or (f) a payment of film tax credit falls to be made to a company.

(3) After subsection (3B) insert—

(3C) In relation to a payment of film tax credit the material date is whichever is the later of— (a) the filing date for the company's company tax return for the accounting period for which the tax credit is payable, and (b) the date on which the company tax return or amended company tax return containing the claim for payment is delivered to an officer of Revenue and Customs. For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the Finance Act 1998.

(4) In subsection (8A) (recovery of overpaid amounts)—

(a) in paragraph (a), for “or (e)” substitute “ , (e) or (f) ”;

(b) in paragraph (b)(ii) after “life assurance company tax credit” insert “ or film tax credit ”.

(5) In subsection (8B) after “life assurance company tax credit” (twice) insert “ or film tax credit ”.

Claim to be made in tax return

27

In Schedule 18 to FA 1998 (company tax returns), in paragraph 10 (other claims etc to be included in return), after sub-paragraph (3) insert—

(4) A claim to which Part 9D of this Schedule applies (claims for film tax relief) can only be made by being included in a company tax return (see paragraph 83T).

Recovery of excessive film tax credit

28

In paragraph 52 of that Schedule (recovery of excessive repayments etc)—

(a) in sub-paragraph (2) (excessive repayments etc to which paragraphs 41 to 48 apply), after paragraph (bc) insert—

(bd) film tax credit,

;

(b) in sub-paragraph (5) (connection of assessment for excessive payment to an accounting period), after paragraph (ad) insert—

(ae) an amount of film tax credit paid to a company for an accounting period,

;

Claims for film tax credits

29

After Part 9C of that Schedule insert—

(83S) This Part of this Schedule applies to claims for film tax relief. (83T) (1) A claim to which this Part of this Schedule applies must be made by being included in the claimant company's tax return for the accounting period for which the claim is made. (2) It may be included in the return originally made or by amendment. (83U) A claim to which this Part of this Schedule applies must specify the amount of the relief claimed, which must be an amount quantified at the time the claim is made. (83V) A claim to which this Part of this Schedule applies may be amended or withdrawn by the claimant company only by amending its company tax return. (83W) (1) A claim to which this part of this Schedule applies may be made, amended or withdrawn at any time up to the first anniversary of the filing date for the company tax return of the claimant company for the accounting period for which the claim is made. (2) The claim may be made, amended or withdrawn at a later date if an officer of Revenue and Customs allows it. (83X) (3) The company is liable to a penalty where it— (a) fraudulently or negligently makes a claim for a film tax credit that is incorrect, or (b) discovers that a claim for a film tax credit made by it (neither fraudulently nor negligently) is incorrect and does not remedy the error without unreasonable delay. (4) The penalty is an amount not exceeding the excess film tax credit claimed, that is, the difference between— (a) the amount (if any) of the film tax credit to which the company is entitled for the accounting period to which the claim relates, and (b) the amount of the film tax credit claimed by the company for that period.

...

Introduction

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

Certification as a British film

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

The UK expenditure condition

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

Whether film a limited-budget film

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

Time limit for amendments and assessments

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

SCHEDULE 6

Repeal of rent factoring provisions

1

(1) Sections 43A to 43G of ICTA (rent factoring) shall cease to have effect.

(2) The amendment made by this paragraph has effect in relation to transactions entered into on or after 6th June 2006.

Dividend stripping: subsequent sales etc of rights to receive dividends etc

2

(1) Section 730 of ICTA (transfers of rights to receive distributions in respect of shares) is amended as follows.

(2) Omit subsection (3) (proceeds of subsequent sales etc of rights to receive distributions not to be regarded as income of the seller etc).

(3) The amendment made by this paragraph has effect in relation to sales or other realisations on or after 20th January 2006.

Deemed interest: cash collateral under stock lending arrangements

3

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

Quasi-stock lending arrangements and quasi-cash collateral

4

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

Multiple holders of securities subject to sale and repurchase agreement: no relief for deemed manufactured payments

5

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

Structured finance arrangements: factoring of income receipts etc

6

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

Rent factoring of leases of plant or machinery

7

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

Transactions associated with loans or credit

8

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

Structured finance arrangements: chargeable gains treatment of acquisitions and disposals

9

(1) After section 263D of TCGA 1992 (gains accruing to persons paying manufactured dividends) insert—

(263E) (1) This section applies if— (a) section 774B of the Taxes Act (disregard of intended effects of arrangement involving disposals of assets) applies in relation to a structured finance arrangement, (b) the borrower or a person connected with the borrower makes a disposal of any security at any time under the arrangement to or for the benefit of the lender or a person connected with the lender, and (c) condition A or B is met. (2) Condition A is that the person making the disposal subsequently acquires under the arrangement the asset disposed of by that disposal. (3) Condition B is that— (a) the asset disposed of by that disposal subsequently ceases to exist at any time, and (b) that asset was held by the lender, or a person connected with the lender, from the time of the disposal until that time. (4) The disposal of the security by the borrower or a person connected with the borrower is to be disregarded for the purposes of this Act. (5) Any subsequent acquisition by the person making the disposal of the asset disposed of by that disposal is to be disregarded for the purposes of this Act. (6) In this section— - “the borrower”, in relation to a structured finance arrangement, means the person who is the borrower under the arrangement for the purposes of section 774A of the Taxes Act, - “the lender”, in relation to a structured finance arrangement, means the person who is the lender under the arrangement for the purposes of that section, - “security” means any such asset as is mentioned in subsection (2)(c) and (d) of that section. (7) For the purposes of this section— (a) references to a person connected with the borrower do not include the lender, and (b) references to a person connected with the lender do not include the borrower.

(2) The amendment made by this paragraph has effect in relation to disposals made on or after 6th June 2006.

(3) The amendment made by this paragraph also has effect in relation to any disposal made by a person before that date if the person makes a claim to that effect under this sub-paragraph.

Loan relationships: mandatory convertibles

10

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

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

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) The following provisions of this paragraph apply for the purposes of TCGA 1992 if—

(a) a company is a party to a relationship on 22nd March 2006,

(b) the relationship becomes a loan relationship on that date for the purposes of Chapter 2 of Part 4 of FA 1996 as a result of the amendments made by this paragraph,

(d) immediately before that date the asset representing the relationship was a chargeable asset in relation to the company.

(5) The company is treated as if—

(a) it had made a disposal of the asset representing the relationship immediately before 22nd March 2006, and

(b) the disposal had been for a consideration equal to the fair value of the asset at that time (within the meaning given by section 103(1) of FA 1996).

(6) Any chargeable gain or loss accruing to the company on the disposal is treated as accruing to the company when it ceases to be a party to the relationship.

(7) For the purposes of this paragraph an asset is a chargeable asset in relation to the company at any time if any gain accruing to it on the disposal of the asset at that time would be a chargeable gain for the purposes of TCGA 1992.

Loan relationships: computation in accordance with generally accepted accounting practice

11

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

Loan relationships: amounts not fully recognised for accounting purposes

12

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

Shares treated as loan relationships: shares subject to outstanding third party obligations

13

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

Shares treated as loan relationships: application of rules to non-qualifying shares

14

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

Shares treated as loan relationships: redeemable shares

15

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

Creditor relationships and benefit derived by connected persons

16

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

Loan relationships: money debts etc not arising from the lending of money

17

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

Loan relationships: meaning of “fair value” in Chapter 2 of Part 4 of FA 1996

18

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

Loan relationships: continuity of treatment of groups etc

19

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

Loan relationships: repo and stock-lending arrangements

20

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

Derivative contracts: computation in accordance with generally accepted accounting practice

21

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

Derivative contracts: transactions within groups

22

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

Derivative contracts: transactions within groups (fair value accounting)

23

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

Derivative contracts: meaning of “fair value” in Schedule 26 to FA 2002

24

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

SCHEDULE 7

Income and Corporation Taxes Act 1988

Amendments of ICTA: introductory

1

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

Section 741: application subject to sections 741B and 741C

2

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

Exemption from sections 739 and 740: new provision

3

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

Application of sections 741 and 741A

4

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

Just and reasonable apportionment in certain cases

5

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

Section 742: interpretation of the Chapter

6

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

ITTOIA 2005

Gains from contracts for life insurance etc

7

(1) In ITTOIA 2005, section 468 (gains from contracts of life insurance etc: non-UK resident trustees and foreign institutions) is amended as follows.

(2) In subsection (2) (section 740 of ICTA to apply with the modifications in subsection (3) or (4))—

(a) for “Section 740” substitute “ Sections 739 and 740 ”,

(b) for “prevents” substitute “ prevent ”,

(3) In subsection (3) (cases within subsection (1)(a)) for “section 740 applies” substitute “ sections 739 and 740 apply ”.

(4) In subsection (4) (cases within subsection (1)(b)) for “section 740 applies” substitute “ sections 739 and 740 apply ”.

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