Finance Act 2009

• (3) Relevant additional voluntary contributions are additional voluntary contributions paid—

• (a) in pursuance of an agreement which was made before noon on 22 April 2009 or made pursuant to a written application received by or on behalf of the scheme administrator of the pension scheme before that time,

• (b) on a quarterly or more frequent basis during the period beginning with that date or (if later) when they first became payable and ending with the relevant end date without any failure to pay contributions payable during that period on more than an insignificant number of occasions, and

• (c) at a rate which has not increased during that period otherwise than in accordance with an agreement made before noon on 22 April 2009 or made pursuant to a written application received by or on behalf of the scheme administrator of the pension scheme before that time.

• (4) To the extent that the amount arrived at under paragraph 3(2) in relation to the arrangement is attributable otherwise than to the paying of relevant additional voluntary contributions it is a protected pension input amount if the conditions set out in sub-paragraph (4A) or (4B) are met.

• (4A) The conditions in this sub-paragraph are that—

• (a) benefits have been accruing to or in respect of the individual under the arrangement since before 22 April 2009 and until the relevant end date, and

• (b) there is no material change in the rules of the pension scheme under which benefits to or in respect of the individual are calculated under the arrangement in the period beginning with 22 April 2009 and ending with the relevant end date.

• (4B) The conditions in this sub-paragraph are that—

• (a) benefits began accruing to or in respect of the individual under the arrangement on or after 22 April 2009 but before the relevant end date and continued until that date,

• (b) the arrangement was made in accordance with the terms of a written agreement between the individual and the employer made not later than 22 April 2009, and

• (c) there is no material change in the rules of the pension scheme under which benefits to or in respect of the individual are calculated under the arrangement in the period beginning with the date on which benefits began accruing under that arrangement and ending with the relevant end date.

• (4C) If the conditions in sub-paragraph (4D) are met, the amount arrived at under paragraph 3(2) in relation to the arrangement which is attributable otherwise than to the paying of relevant additional voluntary contributions is a protected pension input amount to the extent specified in sub-paragraph (4E).

• (4D) The conditions in this sub-paragraph are that—

• (a) the arrangement was made no later than the end of the period of 3 months beginning with the date on which the individual ceased being an active member of a pension scheme other than that under which it is an arrangement (“the cessation date”),

• (b) the cessation date was on or after 22 April 2009,

• (c) the arrangement under that other pension scheme by reference to which the individual was an active member of that pension scheme (“the old arrangement”) was one in the case of which some or all of the benefits accruing under the arrangement were accruing in circumstances in which the amount arrived at under paragraph 3(2) in relation to the old arrangement was to any extent a protected pension input amount by virtue of this paragraph,

• (d) the individual does not make more than one arrangement under a pension scheme other than that under which the old arrangement was an arrangement in the period of 3 months beginning with the cessation date,

• (e) the individual made the arrangement for one of the reasons set out in paragraph 8(4E),

• (f) the old arrangement has not been re-activated within the meaning of paragraph 13(7) on or after the cessation date,

• (g) there is no material difference between the rules of the pension scheme under which benefits to or in respect of the individual are calculated under the arrangement and the rules of the pension scheme under which such benefits were calculated under the old arrangement, and

• (h) there is no material change in the rules of the pension scheme under which benefits to or in respect of the individual are calculated under the arrangement in the period beginning with the date on which benefits started accruing under the arrangement and ending with the relevant end date.

• (4E) The amount arrived at under paragraph 3(2) is a protected pension input amount to the extent that it does not exceed the amount which would have been a protected pension input amount in respect of the old arrangement for the accrual period had the old arrangement continued during that period.

• (4F) For the purposes of sub-paragraph (4E) the accrual period has the meaning set out in paragraph 8(4G).

• (5) If—

• (a) there is a material change in the rules of a pension scheme under which benefits are calculated under an arrangement during a period referred to in sub-paragraph (4A)(b), (4B)(c) or (4D)(h), and

• (b) the amount arrived at under paragraph 3(2) in relation to the arrangement would have been a protected pension input amount under sub-paragraph (4) or (4C) had it not been for the material change,

the amount so arrived at, to the extent that it is attributable otherwise than to the paying of relevant additional voluntary contributions, is a protected pension input amount to the extent that it is not attributable to that change.

• (6) But even in that case the whole of the amount so arrived at, to the extent that it is so attributable, is a protected pension input amount if the material change affects at least 50 active members of the pension scheme.

• (7) In this paragraph “the relevant end date” means the end of the tax year or, if earlier, the time when benefits cease to accrue to or in respect of the individual under the arrangement.

Protected pension input amounts: other existing money purchase arrangements under occupational and public service pension schemes

10

• (1) This paragraph applies in respect of a money purchase arrangement, other than a cash balance arrangement, if the arrangement is under an occupational pension scheme or a public service pension scheme or forms part of a group personal pension scheme.

• (2) If the individual pays relevant additional voluntary contributions under the arrangement in the tax year, the amount arrived at under paragraph 3(2) in relation to the arrangement is a protected pension input amount to the extent that it is attributable to those contributions.

• (3) Relevant additional voluntary contributions are additional voluntary contributions paid—

• (a) in pursuance of an agreement which was made before noon on 22 April 2009 or made pursuant to a written application received by or on behalf of the scheme administrator of the pension scheme before that time,

• (b) on a quarterly or more frequent basis during the period beginning with that date of (if later) when they first became payable and ending with the relevant end date without any failure to pay contributions payable during that period on more than an insignificant number of occasions, and

• (c) at a rate which has not increased during that period otherwise than in accordance with an agreement made before noon on 22 April 2009 or made pursuant to a written application received by or on behalf of the scheme administrator of the pension scheme before that time.

• (4) To the extent that the amount arrived at under paragraph 3(2) in relation to the arrangement is attributable to contributions other than relevant additional voluntary contributions it is a protected pension input amount to the extent specified in—

• (a) sub-paragraph (5) if the individual has been an active member of the pension scheme by reference to the arrangement since before 22 April 2009 and until the relevant end date, or

• (b) sub-paragraph (5A) if the individual has been an active member of the pension scheme by reference to the arrangement since on or after 22 April 2009 (“the joining date”) and until the relevant end date and the arrangement was entered into in accordance with the terms of a written agreement between the individual and the employer made not later than 22 April 2009.

• (5) That amount is a protected pension input amount to the extent that it is attributable to contributions paid—

• (a) on a quarterly or more frequent basis since before 22 April 2009 without any failure to pay contributions payable on or after that date on more than an insignificant number of occasions, and

• (b) at a rate which has not increased during the period beginning with that date and ending with the relevant end date otherwise than in accordance with an agreement made before noon on 22 April 2009 or made pursuant to a written application received by or on behalf of the scheme administrator of the pension scheme before that time.

• (5A) That amount is a protected pension input amount to the extent that it is attributable to contributions paid—

• (a) on a quarterly or more frequent basis without any failure to pay contributions on or after the joining date on more than an insignificant number of occasions, and

• (b) at a rate which has not increased during the period beginning with the joining date and ending with the relevant end date otherwise than in accordance with the agreement referred to in sub-paragraph (4)(b).

• (5B) To the extent that the amount arrived at under paragraph 3(2) in relation to the arrangement is attributable to contributions other than relevant additional voluntary contributions it is a protected pension input amount to the extent specified in sub-paragraph (5C) if—

• (a) the arrangement was made no later than the end of the period of 3 months beginning with the date on which the individual ceased being an active member of a pension scheme other than that under which it is an arrangement (“the cessation date”),

• (b) the cessation date was on or after 22 April 2009,

• (c) the arrangement under that other pension scheme by reference to which the individual was an active member of that pension scheme (“the old arrangement”) was one in the case of which the amount arrived at under paragraph 3(2) in relation to the old arrangement was to any extent a protected pension input amount by virtue of this paragraph,

• (d) the individual did not make more than one such new arrangement in the period of one month beginning with the cessation date,

• (e) the individual made the new arrangement for one of the reasons set out in paragraph 8(4E), and

• (f) the old arrangement has not been re-activated within the meaning of paragraph 13(7) on or after the cessation date.

• (5C) The amount is a protected pension input amount to the extent that it is attributable to contributions paid under the arrangement which—

• (a) do not exceed the amount which would have been a protected pension input amount as a result of contributions made under the old arrangement for the accrual period had that arrangement continued during that period,

• (b) are paid on a quarterly or more frequent basis from the date (“the joining date”) on which the individual became an active member of the pension scheme by reference to the arrangement without any failure to pay contributions payable on or after that date on more than an insignificant number of occasions, and

• (c) are paid at a rate which is no higher than the rate at which the contributions under the old arrangement were paid and which has not increased during the period from the joining date and ending with the relevant end date.

• (5D) For the purposes of sub-paragraph (5C) the accrual period has the meaning set out in paragraph 8(4G).

• (6) In this paragraph “the relevant end date” means the end of the tax year or, if earlier, the time when the individual ceases to be an active member of the pension scheme by reference to the arrangement.

Protected pension input amounts: other existing money purchase arrangements under other pension schemes

11

• (1) Sub-paragraph (2) applies in respect of a money purchase arrangement, other than a cash balance arrangement, if—

• (a) the arrangement is under a scheme other than an occupational pension scheme or a public service pension scheme and does not form part of a group personal pension scheme, and

• (b) the individual has been an active member of the pension scheme by reference to the arrangement since before 22 April 2009 and until the relevant end date.

• (2) The amount arrived at under paragraph 3(2) in relation to the arrangement is a protected pension input amount to the extent that it is attributable to contributions paid—

• (a) on a quarterly or more frequent basis since before 22 April 2009 without any failure to pay contributions payable on or after that date on more than an insignificant number of occasions, and

• (b) at a rate which has not increased during the period beginning with that date and ending with the relevant end date otherwise than in accordance with an agreement made before that date.

• (3) If the individual—

• (a) was not an active member of the pension scheme by reference to the arrangement immediately before 22 April 2009, but

• (b) a written application to become such an active member was received by or on behalf of the scheme administrator of the pension scheme before noon on 22 April,

the references to before 22 April 2009 (and to that date) in sub-paragraphs (1)(b) and (2) are to the date on which the individual became such an active member pursuant to the application.

• (3A) If the individual—

• (a) has been an active member of a pension scheme by reference to an arrangement (“the old arrangement”) in circumstances in which the amount arrived at under paragraph 3(2) in relation to the arrangement has been to any extent a protected pension input amount by virtue of this paragraph, and

• (b) no later than the end of the period of 3 months beginning with the date on which the individual ceased being an active member of the pension scheme by reference to the old arrangement, made an arrangement (“the new arrangement”) which is a money purchase arrangement other than a cash balance arrangement under a different pension scheme which is neither an occupational pension scheme nor a public service pension scheme and does not form part of a group personal pension scheme,

the amount arrived at under paragraph 3(2) in relation to the new arrangement is a protected pension input amount to the extent specified in sub-paragraph (3B).

• (3B) The amount is a protected pension input amount to the extent that it is attributable to contributions paid under the new arrangement which—

• (a) are paid on a quarterly or more frequent basis from the date (“the joining date”) on which the individual became an active member of the pension scheme by reference to the new arrangement without any failure to pay contributions payable on or after that date on more than an insignificant number of occasions, and

• (b) are paid at a rate which is no higher than the rate at which contributions under the old arrangement were paid and which has not increased during the period beginning with the joining date and ending with the relevant end date.

• (3C) Sub-paragraph (3B) does not apply in relation to any contributions made under the new arrangement if—

• (a) the old arrangement has been re-activated within the meaning of paragraph 13(7) on or after the joining date, or

• (b) the individual has made more than one new arrangement on or after the joining date.

• (4) In this paragraph “the relevant end date” means the end of the tax year or, if earlier, the time when the individual ceases to be an active member of the pension scheme by reference to the arrangement.

Protected pension input amounts: existing hybrid arrangements

12

• (1) This paragraph applies in respect of a hybrid arrangement under a pension scheme if any one or more of paragraphs 8 to 11 would be applicable in relation to it.

• (2) The amount arrived at under paragraph 3(2) in relation to the arrangement is a protected pension input amount if and to the extent of the greater or greatest amount that it would be if the arrangement were an arrangement under whichever (if any) of paragraphs 8 to 11 are applicable in relation to it.

• (3) Paragraph 8 is applicable in relation to it as in relation to a defined benefits arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under it are defined benefits.

• (4) Paragraph 9 is applicable in relation to it as in relation to a cash balance arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under it are cash balance benefits.

• (5) Paragraph 10 or 11 is applicable in relation to it as in relation to a money purchase arrangement other than a cash balance arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under it are other money purchase benefits.

Protected pension input amounts: new and re-activated arrangements

13

• (1) This paragraph applies in respect of an arrangement if—

• (a) the arrangement is made or re-activated on or after 22 April 2009,

• (b) the arrangement—

• (i) is under an occupational pension scheme or forms part of a group personal pension scheme and (in either case) relates to an employment of the individual, or

• (ii) is a public service pension scheme,

• (c) there is no material change in the rules of the pension scheme under which benefits are calculated under the arrangement in the relevant period or any such material change in the relevant period affects at least 50 active members of the pension scheme, and

• (d) throughout the relevant period there are at least 20 persons in respect of whom arrangements subsist under the pension scheme under which benefits are accruing on the same basis as those under the arrangement.

• (2) If the arrangement falls within sub-paragraph (1)(b)(i), this paragraph does not apply in respect of it if—

• (a) the provision of benefits under it is not part of the normal pattern of pension provision made by the person who is the employer in relation to the employment of the individual for the employees of the employer generally, or

• (b) the persons mentioned in sub-paragraph (1)(d) are not employees of that person.

• (3) “The relevant period” is the period—

• (a) beginning when the arrangement is made or re-activated, and

• (b) ending at the same time as the tax year or, if earlier, the time when the individual ceases to be an active member of the pension scheme by reference to the arrangement.

• (4) The amount arrived at under paragraph 3(2) in relation to the arrangement is a protected pension input amount except to the extent that it is attributable to the payment of added years contributions or additional voluntary contributions.

• (5) “Added years contributions” are contributions paid with a view to securing that the calculation of benefits under the arrangement is by reference to a period of service in excess of pensionable service by the individual.

• (6) An arrangement relates to an employment of the individual if—

• (a) the earnings by reference to which benefits under the arrangement are calculated are earnings from the employment, or

• (b) the person who is the employer in relation to the employment pays contributions under the arrangement in respect of the individual.

• (7) An arrangement is “re-activated” if the individual, having ceased to be an active member of the pension scheme by reference to the arrangement, again becomes such a member.

Protected pension input amounts: anti-avoidance

14

No amount is a protected pension input amount by virtue of any of paragraphs 8 to 13A if the individual is during the tax year a party to a scheme the main purpose, or one of the main purposes, of which is to avoid or reduce liability to the special annual allowance charge, the annual allowance charge or the lifetime allowance charge.

Relevant refunded amounts

15

• (1) The amount arrived at under paragraph 3(2) in relation to an arrangement is a relevant refunded amount to the extent that it does not exceed the amount of a contributions refund lump sum paid to the individual (or the personal representatives of the individual).

• (2) A lump sum is a contributions refund lump sum if—

• (a) it is paid to the individual by a pension scheme in respect of an arrangement,

• (b) it is not a lump sum of any of the descriptions listed in section 166(1) of FA 2004,

• (c) it is paid during the period of one year beginning immediately after the end of the tax year,

• (d) its amount does not exceed the adjusted contributions amount for the tax year, and

• (e) the individual is a high-income individual for the tax year.

• (3) The adjusted contributions amount for the tax year is the amount of any relevant relievable pension contributions less any relevant deductions.

• (4) “Relevant relievable pension contributions” are contributions which—

• (a) are relievable pension contributions in relation to the individual, and

• (b) are paid to the pension scheme under the arrangement in the tax year,

but subject as follows.

• (5) If the pension scheme is an occupational pension scheme or a public service pension scheme or forms part of a group personal pension scheme, contributions are relevant relievable pension contributions only if they—

• (a) are additional voluntary contributions, and

• (b) are not relevant additional voluntary contributions within the meaning of paragraph 9(3) or 10(3).

• (6) If the pension scheme is not an occupational pension scheme or a public service pension scheme and does not form part of a group personal pension scheme—

• (a) contributions are not relevant relievable pension contributions if they fall within paragraph 11(2), and

• (b) if the tax year is the tax year 2009-10, contributions paid before 22 April 2009 are not relevant relievable pension contributions if they were paid pursuant to an agreement for the payment of contributions on a quarterly or more frequent basis.

• (7) “Relevant deductions” are—

• (a) the amount of any previous contributions refund lump sum previously paid by the pension scheme since the end of the tax year in respect of the arrangement,

• (b) the amount of any pension debit to which the rights of the individual under the arrangement became subject in the tax year,

• (c) where during the tax year there was a transfer relating to the individual of any sums or assets held for the purposes of, or representing accrued rights under, the arrangement so as to become held for the purposes of, or to represent rights under any other pension scheme that is a registered pension scheme or a qualifying recognised overseas pension scheme, the amount of any sums, and the market value of any assets, transferred, and

• (d) the amount crystallised by any benefit crystallisation events which occurred in relation to the individual and the arrangement in the tax year.

Pre-22 April 2009 pension input amount

16

• (1) This paragraph makes provision for the extent (if any) to which the amount arrived at under paragraph 3(2) in relation to an arrangement is a pre-22 April 2009 pension input amount.

• (2) In relation to a defined benefits arrangement or cash balance arrangement, a pre-22 April 2009 pension input amount is such proportion of what would otherwise be the amount arrived at under paragraph 3(2) as, on a just and reasonable apportionment, relates to the period beginning with 6 April 2009 and ending with 21 April 2009.

• (3) In relation to a money purchase arrangement that is not a cash balance arrangement, a pre-22 April 2009 pension input amount is so much of the amount of the contributions within section 233 of FA 2004 as are paid in the period beginning with 6 April 2009 and ending with 22 April 2009, other than any contributions paid pursuant to an agreement for the payment of contributions on a quarterly or more frequent basis.

• (4) In relation to a hybrid arrangement, a pre-22 April 2009 pension input amount is the greater or greatest of the amounts under the sub-paragraph or sub-paragraphs applicable in relation to it.

• (5) For this purpose—

• (a) sub-paragraph (2) is applicable in relation to the arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under it are defined benefits or cash balance benefits, and

• (b) sub-paragraph (3) is applicable in relation to the arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under it are other money purchase benefits.

Increased special annual allowance

17

• (1) This paragraph has effect where the mean of the infrequent money purchase contributions amount for the tax years 2006-07, 2007-08 and 2008-09 (“the relevant mean”) exceeds £20,000.

• (2) Where the relevant mean is less than £30,000, this Schedule has effect as if the references in paragraph 1(4) and (5) to £20,000 were instead to the relevant mean.

• (3) Where the relevant mean is £30,000 or more, this Schedule has effect as if those references were instead to £30,000.

• (4) The “infrequent money purchase contributions amount” for a tax year is the aggregate of any relevant contributions paid in the tax year—

• (a) under money purchase arrangements, other than cash balance arrangements, under registered pension schemes, and

• (b) less frequently than on a quarterly basis;

(and so is nil if no such contributions were so paid).

• (5) But if the infrequent money purchase contributions amount for a tax year would otherwise be greater than the annual allowance for the tax year, it is to be taken to be the annual allowance for the tax year.

• (6) “Relevant contributions” means contributions which are—

• (a) relievable pension contributions by or on behalf of the individual, or

• (b) contributions paid by an employer of the individual in respect of the individual.

Taxation of contributions refund lump sums

18

Part 4 of FA 2004 applies in relation to a contributions refund lump sum as if it were a short service refund lump sum in excess of the limit specified in section 205(4)(a) of that Act (so that it is not an unauthorised payment and is liable to tax at the rate chargeable on a short service refund lump sum).

Power to amend

19

• (1) The Treasury may by order made by statutory instrument amend paragraph 1(8) so as to vary the rate of the special annual allowance charge.

• (2) An order under sub-paragraph (1) may make provision for there to be different rates in different circumstances.

• (3) The Treasury may by order made by statutory instrument amend paragraphs 2 to 18.

• (4) An order under sub-paragraph (3) may make provision having effect in relation to times before it is made if it does not increase any person's liability to tax.

• (5) No order may be made under sub-paragraph (1) unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, the House of Commons.

• (6) A statutory instrument containing an order under sub-paragraph (3) is subject to annulment in pursuance of a resolution of the House of Commons.

Currently-relieved non-UK pension schemes

20

• (1) The Treasury may by order made by statutory instrument make provision for this Schedule to apply in relation to individuals who—

• (a) are or have been members of currently-relieved non-UK pension schemes, or

• (b) have been members of overseas pension schemes that were not currently-relieved non-UK pension schemes,

subject to such modifications as are specified in the order.

• (2) An order under sub-paragraph (1) may—

• (a) include provision having effect in relation to times before it is made,

• (b) confer discretion on the Commissioners for Her Majesty's Revenue and Customs or officers of Revenue and Customs, and

• (c) make different provision for different cases.

• (3) A statutory instrument containing an order under sub-paragraph (1) is subject to annulment in pursuance of a resolution of the House of Commons.

Tax years to which Schedule applies

21

• (1) This Schedule has effect for the tax year 2009-10 and subsequent tax years (with the result that paragraph 18 has effect for the tax year 2010-11 and subsequent tax years).

• (2) But the Treasury may by order make provision for this Schedule to cease to have effect after the tax year specified in the order (but so that paragraph 18 continues to have effect for the following tax year).

Minor amendment

22

In paragraph 49 of Schedule 36 to FA 2004 (annual allowance charge: enhanced protection), insert at the end—

(3) This paragraph does not apply for the purposes of the special annual allowance charge.

Interpretation

23

• (1) In this Schedule—

• “group personal pension scheme” means arrangements administered on a group basis under a personal pension scheme which are available to employees of the same employer or of employers which are members of the same group of companies;

• “personal pension scheme” means a pension scheme that is neither an occupational pension scheme nor a public service pension scheme;

• “scheme” (otherwise than in the expression “pension scheme”) includes any arrangement, agreement, understanding, transaction or series of transactions (whether or not legally enforceable).

• (2) For the purposes of the definition of “group personal pension scheme” a company and all of its 75% subsidiaries form a group; and if any of those subsidiaries have 75% subsidiaries the group includes them and their 75% subsidiaries, and so on; and for this purpose “75% subsidiary” has the meaning given by section 838 of ICTA.

• (3) Expressions used in this Schedule and in any provisions of Part 4 of FA 2004 have the same meaning in this Schedule as they have in the provisions of that Part in which they are used.

SCHEDULE 36

Part 1 — Amendments coming into force in 2010

1

VATA 1994 is amended as follows.

2

In section 6(14A) (time of supply), omit “In relation to any services of a description specified in an order under section 7(11),”.

3

• (1) Section 7 (place of supply) is amended as follows.

• (2) In subsection (1), omit “or services”.

• (3) Omit subsection (10).

• (4) In subsection (11), omit “or services” (in each place).

• (5) In the heading, insert at the end “ of goods ”.

4

After that section insert—

(7A) (1) This section applies for determining, for the purposes of this Act, the country in which services are supplied. (2) A supply of services is to be treated as made— (a) in a case in which the person to whom the services are supplied is a relevant business person, in the country in which the recipient belongs, and (b) otherwise, in the country in which the supplier belongs. (3) The place of supply of a right to services is the same as that in which the supply of the services would be treated as made if made by the supplier of the right to the recipient of the right (whether or not the right is exercised); and for this purpose a right to services includes any right, option or priority with respect to the supply of services and an interest deriving from a right to services. (4) For the purposes of this Act a person is a relevant business person in relation to a supply of services if the person— (a) is a taxable person within the meaning of Article 9 of Council Directive 2006/112/EC, (b) is registered under this Act, (c) is identified for the purposes of VAT in accordance with the law of a member State other than the United Kingdom, or (d) is registered under an Act of Tynwald for the purposes of any tax imposed by or under an Act of Tynwald which corresponds to value added tax, and the services are received by the person otherwise than wholly for private purposes. (5) Subsection (2) has effect subject to Schedule 4A. (6) The Treasury may by order— (a) amend subsection (4), (b) amend Schedule 4A, or (c) otherwise make provision for exceptions from either or both of the paragraphs of subsection (2). (7) An order under subsection (6) may include incidental, supplemental, consequential and transitional provision.

5

• (1) Section 8 (reverse charge on supplies received from abroad) is amended as follows.

• (2) For subsections (1) and (2) substitute—

(1) Where services are supplied by a person who belongs in a country other than the United Kingdom in circumstances in which this subsection applies, this Act has effect as if (instead of there being a supply of the services by that person)— (a) there were a supply of the services by the recipient in the United Kingdom in the course or furtherance of a business carried on by the recipient, and (b) that supply were a taxable supply. (2) Subsection (1) above applies if— (a) the recipient is a relevant business person who belongs in the United Kingdom, and (b) the place of supply of the services is inside the United Kingdom, and, where the supply of the services is one to which any paragraph of Part 1 or 2 of Schedule 4A applies, the recipient is registered under this Act.

• (3) After subsection (4) insert—

(4A) Subsection (1) does not apply to services of any of the descriptions specified in Schedule 9.

• (4) In subsection (5), for “add to, or vary, Schedule 5” substitute “ amend subsection (4A) by altering the descriptions of services specified in that subsection ”.

• (5) Omit subsection (6).

• (6) In subsection (7)—

• (a) for “add to or vary Schedule 5” substitute “ amend subsection (4A) ”, and

• (b) for “addition to or variation of that Schedule” substitute “ amendment of that subsection ”.

• (7) In subsection (8)—

• (a) for “addition to or variation of that Schedule” substitute “ amendment of subsection (4A) ”, and

• (b) for “the Schedule” substitute “ that subsection ”.

6

For section 9 substitute—

(9) (1) This section has effect for determining for the purposes of section 7A (or Schedule 4A) or section 8, in relation to any supply of services, whether a person who is the supplier or recipient belongs in one country or another. (2) A person who is a relevant business person is to be treated as belonging in the relevant country. (3) In subsection (2) “the relevant country” means— (a) if the person has a business establishment, or some other fixed establishment, in a country (and none in any other country), that country, (b) if the person has a business establishment, or some other fixed establishment or establishments, in more than one country, the country in which the relevant establishment is, and (c) otherwise, the country in which the person's usual place of residence is. (4) In subsection (3)(b) “relevant establishment” means whichever of the person's business establishment, or other fixed establishments, is most directly concerned with the supply. (5) A person who is not a relevant business person is to be treated as belonging in the country in which the person's usual place of residence is. (6) In this section “usual place of residence”, in relation to a body corporate, means the place where it is legally constituted.

7

• (1) Section 43 (groups of companies) is amended as follows.

• (2) In subsection (2A)—

• (a) in paragraph (a), for “falling within Schedule 5” substitute “ to which section 7A(2)(a) applies made ”, and

• (b) in paragraph (c)—

• (i) omit “falling within paragraphs 1 to 8 of Schedule 5”, and

• (ii) insert at the end “and section 7A(2)(a) applied to the supply”.

• (3) In subsection (2D)—

• (a) in paragraph (c)—

• (i) omit “falling within paragraphs 1 to 8 of Schedule 5”, and

• (ii) insert at the end “ and section 7A(2)(a) applied to the supply ”, and

• (b) in the words after the paragraphs, for “falling within that Schedule,” substitute “ to which section 7A(2)(a) applies, ”.

• (4) In subsection (2E)(b), for “there are services falling within paragraphs 1 to 8 of Schedule 5 which, if used by the transferor for making supplies falling within that Schedule,” substitute “ there is a supply to which section 7A(2)(a) applies of services which, if used by the transferor for making such a supply, ”.

8

• (1) Section 96 (interpretation) is amended as follows.

• (2) In subsection (1), after the definition of “regulations” insert—

“relevant business person” has the meaning given by section 7A(4);

.

• (3) In subsection (8), omit “(subject to any provision made under section 8(6))”.

9

Section 97(4)(a) (orders subject to requirement of Parliamentary approval after making), after “5(4)” insert “ , 7A(6) ”.

10

Section 97A(1) (place of supply orders: transitional provision), for “on or after 17th March 1998 under section 7(11)” substitute “ under section 7A(6) ”.

11

After Schedule 4 insert—

SCHEDULE 4A (1) (1) A supply of services to which this paragraph applies is to be treated as made in the country in which the land in connection with which the supply is made is situated. (2) This paragraph applies to— (a) the grant, assignment or surrender of any interest in or right over land, (b) the grant, assignment or surrender of a personal right to call for or be granted any interest in or right over land, (c) the grant, assignment or surrender of a licence to occupy land or any other contractual right exercisable over or in relation to land (including the provision of holiday accommodation, seasonal pitches for caravans and facilities at caravan parks for persons for whom such pitches are provided and pitches for tents and camping facilities), (d) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering, (e) any works of construction, demolition, conversion, reconstruction, alteration, enlargement, repair or maintenance of a building or civil engineering work, and (f) services such as are supplied by estate agents, auctioneers, architects, surveyors, engineers and others involved in matters relating to land. (3) In sub-paragraph (2)(c) “holiday accommodation” includes any accommodation in a building, hut (including a beach hut or chalet), caravan, houseboat or tent which is advertised or held out as holiday accommodation or as suitable for holiday or leisure use. (4) In sub-paragraph (2)(d) “similar establishment” includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by, or held out as being suitable for use by, visitors or travellers. (2) (1) A supply of services consisting of the transportation of passengers (or of any luggage or motor vehicles accompanying passengers) is to be treated as made in the country in which the transportation takes place, and (in a case where it takes place in more than one country) in proportion to the distances covered in each. (2) For the purposes of sub-paragraph (1) transportation which takes place partly outside the territorial jurisdiction of a country is to be treated as taking place wholly in the country if— (a) it takes place in the course of a journey between two points in the country (whether or not as part of a longer journey involving travel to or from another country), and (b) the means of transport used does not (except in an emergency or involuntarily) stop, put in or land in another country in the course of the journey between those two points. (3) For the purposes of sub-paragraph (1) a pleasure cruise is to be regarded as the transportation of passengers (so that services provided as part of a pleasure cruise are to be treated as supplied in the same place as the transportation of the passengers). (4) In sub-paragraph (3) “pleasure cruise” includes a cruise wholly or partly for education or training. (3) (1) A supply of services consisting of the short-term hiring of a means of transport is to be treated as made in the country in which the means of transport is actually put at the disposal of the person by whom it is hired. But this is subject to sub-paragraphs (3) and (4). (2) For the purposes of this Schedule the hiring of a means of transport is “short-term” if it is hired for a continuous period not exceeding— (a) if the means of transport is a vessel, 90 days, and (b) otherwise, 30 days. (3) Where— (a) a supply of services consisting of the hiring of a means of transport would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (4) Where— (a) a supply of services consisting of the hiring of a means of transport would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (4) (1) A supply of services to which this paragraph applies is to be treated as made in the country in which the services are physically carried out. (2) This paragraph applies to the provision of— (a) services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities (including fairs and exhibitions), and (b) ancillary services relating to such activities, including services of organisers of such activities. (5) (1) A supply of services to which this paragraph applies is to be treated as made in the country in which the services are physically carried out. (2) This paragraph applies to the provision of restaurant services and the provision of catering services, other than the provision of services to which paragraph 6 applies. (6) (1) A supply of services consisting of (a) the provision of restaurant services, or (b) the provision of catering services, on board a ship, aircraft or train in connection with the transportation of passengers during an intra-EC passenger transport operation is to be treated as made in the country in which the relevant point of departure is located. (2) An intra-EC passenger transport operation is a passenger transport operation which, or so much of a passenger transport operation as,— (a) has as the first place at which passengers can embark a place which is within the European Union , (b) has as the last place at which passengers who embarked in a member State can disembark a place which is within the the European Union , and (c) does not include a stop at a place which is not within the European Union and at which passengers can embark or passengers who embarked in a member State can disembark. (3) “Relevant point of departure”, in relation to an intra-EC passenger transport operation, is the first place in the intra-EC passenger transport operation at which passengers can embark. (4) A place is within the the European Union if it is within any member State. (5) For the purposes of this paragraph the return stage of a return passenger transport operation is to be regarded as a separate passenger transport operation; and for this purpose— (a) a return passenger transport operation is one which takes place in more than one country but is expected to end in the country in which it begins, and (b) the return stage of a return passenger transport operation is the part of it which ends in the country in which it began and begins with the last stop at a place at which there has not been a previous stop during it. (7) (1) Where— (a) a supply of services consisting of the hiring of any goods other than a means of transport would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (2) Where— (a) a supply of services consisting of the hiring of any goods other than a means of transport would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (8) (1) This paragraph applies to a supply of services consisting of the provision of— (a) telecommunication services, or (b) radio or television broadcasting services. (2) In this Schedule “telecommunication services” means services relating to the transmission, emission or reception of signals, writing, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including— (a) the related transfer or assignment of the right to use capacity for such transmission, emission or reception, and (b) the provision of access to global information networks. (3) Where— (a) a supply of services to which this paragraph applies would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (4) Where— (a) a supply of services to which this paragraph applies would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (9) (1) Where— (a) a supply of services consisting of the provision of electronically supplied services to a relevant business person would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (2) Where— (a) a supply of services consisting of the provision of electronically supplied services to a relevant business person would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (3) Examples of what are electronically supplied services for the purposes of this Schedule include— (a) website supply, web-hosting and distance maintenance of programmes and equipment, (b) the supply of software and the updating of software, (c) the supply of images, text and information, and the making available of databases, (d) the supply of music, films and games (including games of chance and gambling games), (e) the supply of political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts (including broadcasts of events), and (f) the supply of distance teaching. (4) But where the supplier of a service and the supplier's customer communicate via electronic mail, this does not of itself mean that the service provided is an electronically supplied service for the purposes of this Schedule. (10) (1) A supply of services to which this paragraph applies is to be treated as made in the same country as the supply to which it relates. (2) This paragraph applies to a supply to a person who is not a relevant business person consisting of the making of arrangements for a supply by or to another person or of any other activity intended to facilitate the making of such a supply. (11) (1) A supply of services to a person who is not a relevant business person consisting of the transportation of goods is to be treated as made in the country in which the transportation takes place, and (in a case where it takes place in more than one country) in proportion to the distances covered in each. (2) For the purposes of sub-paragraph (1) transportation which takes place partly outside the territorial jurisdiction of a country is to be treated as taking place wholly in the country if— (a) it takes place in the course of a journey between two points in the country (whether or not as part of a longer journey involving travel to or from another country), and (b) the means of transport used does not (except in an emergency or involuntarily) stop, put in or land in another country in the course of the journey between those two points. (3) This paragraph does not apply to a transportation of goods beginning in one member State and ending in another (see paragraph 12). (12) A supply of services to a person who is not a relevant business person consisting of the transportation of goods which begins in one member State and ends in another is to be treated as made in the member State in which the transportation begins. (13) (1) A supply to a person who is not a relevant business person of ancillary transport services is to be treated as made where the services are physically performed. (2) “Ancillary transport services” means loading, unloading handling and similar activities. (14) A supply to a person who is not a relevant business person of services consisting of the valuation of, or carrying out of work on, goods is to be treated as made where the services are physically performed. (15) A supply consisting of the provision by a person who belongs in a country which is not a member State (other than the Isle of Man) of electronically supplied services (as to the meaning of which see paragraph 9(3) and (4)) to a person (“the recipient”) who— (a) is not a relevant business person, and (b) belongs in a member State, is to be treated as made in the country in which the recipient belongs. (16) (1) A supply consisting of the provision to a person (“the recipient”) who— (a) is not a relevant business person, and (b) belongs in a country which is not a member State (other than the Isle of Man), of services to which this paragraph applies is to be treated as made in the country in which the recipient belongs. (2) This paragraph applies to— (a) transfers and assignments of copyright, patents, licences, trademarks and similar rights, (b) the acceptance of any obligation to refrain from pursuing or exercising (in whole or in part) any business activity or any rights within paragraph (a), (c) advertising services, (d) services of consultants, engineers, consultancy bureaux, lawyers, accountants, and similar services, data processing and provision of information, other than any services relating to land, (e) banking, financial and insurance services (including reinsurance), other than the provision of safe deposit facilities, (f) the provision of access to, and of transport or transmission through, natural gas and electricity distribution systems and the provision of other directly linked services, (g) the supply of staff, (h) the letting on hire of goods other than means of transport, (i) telecommunication services (as to the meaning of which see paragraph 8(2)), (j) radio and television broadcasting services, and (k) electronically supplied services (as to the meaning of which see paragraph 9(3) and (4)).

12

Omit Schedule 5 (services supplied where received).

13

In Article 5 of the Value Added Tax (Tour Operators) Order 1987 (S.I. 1987/1806)—

• (a) omit paragraph (1), and

• (b) in paragraph (2) after “treated” insert “ for the purposes of this Act ”,

and treat that article as made under section 7A(6)(c) of VATA 1994 (inserted by paragraph 4).

14

• (1) The powers contained in section 7A(6) of VATA 1994 (inserted by paragraph 4) may be exercised at any time on or after the day on which this Act is passed.

• (2) The amendments made by paragraph 7 come into force on 1 January 2010; but the references in section 43 of VATA 1994 (as amended by that paragraph) to a supply to which section 7A(2) of that Act applies includes a supply of services falling within paragraphs 1 to 8 of Schedule 5 made before that date.

• (3) Subject to that, the amendments made by this Part have effect in relation to supplies made on or after 1 January 2010.

Part 2 — Amendments coming into force in 2011

Admission to cultural, educational and entertainment activities etc

15

• (1) Schedule 4A to VATA 1994 (inserted by paragraph 11) is amended as follows.

• (2) Omit paragraph 4.

• (3) After paragraph 9 insert—

(9A) (1) A supply to a relevant business person of services to which this paragraph applies is to be treated as made in the country in which the events in question actually take place. (2) This paragraph applies to the provision of— (a) services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events (including fairs and exhibitions), and (b) ancillary services relating to admission to such events.

• (4) After paragraph 14 insert—

(14A) (1) A supply to a person who is not a relevant business person of services to which this paragraph applies is to be treated as made in the country in which the activities concerned actually take place. (2) This paragraph applies to the provision of— (a) services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities (including fairs and exhibitions), and (b) ancillary services relating to such activities, including services of organisers of such activities.

16

The amendments made by this Part have effect in relation to supplies made on or after 1 January 2011.

Part 3 — Amendments coming into force in 2013

17

In Schedule 4A to VATA 1994 (inserted by paragraph 11), after paragraph 13 insert—

(13A) (1) A supply to a person who is not a relevant business person (“the recipient”) of services consisting of the long-term hiring of a means of transport is to be treated as made in the country in which the recipient belongs. But this is subject to sub-paragraph (2) and paragraph 3(3) and (4). (2) A supply to a person who is not a relevant business person (“the recipient”) of services consisting of the long-term hiring of a pleasure boat which is actually put at the disposal of the recipient at the supplier's business establishment, or some other fixed establishment of the supplier, is to be treated as made in the country where the pleasure boat is actually put at the disposal of the recipient. (3) For the purposes of this Schedule, the hiring of a means of transport is “long-term” if it is not short-term (as to the meaning of which see paragraph 3(2)).

18

The amendment made by this Part has effect in relation to supplies made on or after 1 January 2013.

Part 4 — Transitional provisions

19

• (1) This paragraph applies where—

• (a) amendments made by this Schedule provide for a supply of services to be treated as made in the United Kingdom,

• (b) the supply would not have fallen to be so treated apart from the amendments, and

• (c) the services are treated under the law of a member State other than the United Kingdom as supplied in that member State before the commencement date.

• (2) The supply is not to be treated as made in the United Kingdom.

• (3) “The commencement date” means the date specified by this Schedule as that on or after which a supply must be made if it is to be treated as made in the United Kingdom by virtue of the amendments.

SCHEDULE 37

Part 1 — Stamp duty

1

FA 1986 is amended as follows.

2

In Part 3 (stamp duty), after section 80C insert—

(80D) (1) This section applies where— (a) A and B have entered into an arrangement falling within section 80C(1), (b) the conditions in subsection (2A) or (3) of that section are met, (c) stock is transferred to A or A's nominee, and (d) the conditions in subsection (2) below are met. (2) The conditions in this subsection are that— (a) A and B are not connected persons within the meaning of section 839 of the Taxes Act 1988, (b) after B has transferred stock under the arrangement, A or B becomes insolvent, (c) it becomes apparent (whether before or after the insolvency occurs) that, as a result of the insolvency, stock will not be transferred to B or B's nominee in accordance with the arrangement, (d) the party who does not become insolvent (“the solvent party”) or the solvent party's nominee acquires replacement stock, and (e) the replacement stock is acquired before the end of the period of 30 days beginning with the day on which the insolvency occurs (“the insolvency date”). (3) Where collateral is provided under the arrangement (or under arrangements of which that arrangement forms part), stamp duty is not chargeable on any instrument transferring to the solvent party or the solvent party's nominee— (a) replacement stock acquired using the collateral (whether directly or indirectly), or (b) where the solvent party uses the whole of the value of the collateral to acquire replacement stock, any further replacement stock. (4) Where no collateral is provided as mentioned in subsection (3), stamp duty is not chargeable on any instrument transferring replacement stock to the solvent party or the solvent party's nominee. (5) Subsections (3) and (4) may apply as regards more than one instrument (and where those subsections apply as regards more than one instrument, the instruments may be executed by different persons). (6) But those subsections apply only as regards replacement stock up to the amount of stock which will not be transferred as a result of the insolvency. (7) An instrument on which stamp duty is not chargeable by virtue only of subsection (3) or (4) is not to be deemed to be duly stamped unless it has been stamped with a stamp denoting that it is not chargeable with any duty. (8) Despite section 122(1) of the Stamp Act 1891, the stamp mentioned in subsection (7) may be a stamp of such kind as the Commissioners for Her Majesty's Revenue and Customs may prescribe. (9) For the purposes of this section a person becomes insolvent— (a) if a company voluntary arrangement takes effect under Part 1 of the Insolvency Act 1986, (b) if an administration application (within the meaning of Schedule B1 to that Act) is made or a receiver or manager, or an administrative receiver, is appointed, (c) on the commencement of a creditor's voluntary winding up (within the meaning of Part 4 of that Act) or a winding up by the court under Chapter 6 of that Part, (d) if an individual voluntary arrangement takes effect under Part 8 of that Act, (e) on the presentation of a bankruptcy petition (within the meaning of Part 9 of that Act), (f) if a compromise or arrangement takes effect under Part 26 of the Companies Act 2006, (g) if a bank insolvency order takes effect under Part 2 of the Banking Act 2009, (h) if a bank administration order takes effect under Part 3 of that Act, or (i) on the occurrence of any corresponding event which has effect under or as a result of the law of Scotland or Northern Ireland or a country or territory outside the United Kingdom. (10) In this section— - “collateral” means an amount of money or other property which is payable to, or made available for the benefit of, a party to an arrangement or that party's nominee for the purpose of securing the discharge of the requirement to transfer stock to that party or the nominee; - “replacement stock”, in the event of a party to an arrangement becoming insolvent, is stock of the same kind as the stock which will not be transferred to the other party or that party's nominee as a result of the insolvency.

3

• (1) In consequence of the amendment made by paragraph 2, section 88(1C) (disregard of certain instruments falling within section 80C(1)) is amended as follows.

• (2) At the beginning of the words after paragraph (c) insert “ then, if section 80D does not apply, ”.

Part 2 — Stamp duty reserve tax

4

Part 4 of FA 1986 (stamp duty reserve tax) is amended as follows.

5

After section 89AA insert—

(89AB) (1) This section applies where— (a) P and Q have entered into an arrangement falling within section 89AA(1), (b) the only reason that the conditions in subsection (2A) or (3) of that section are not met is that chargeable securities of the same kind and amount as those transferred to P or P's nominee are not transferred to Q or Q's nominee, and (c) the conditions in subsection (2) below are met. (2) The conditions in this subsection are that— (a) P and Q are not connected persons within the meaning of section 839 of the Taxes Act 1988, (b) after Q has transferred securities under the arrangement, either P or Q becomes insolvent, (c) it becomes apparent (whether before or after the insolvency occurs) that, as a result of the insolvency, securities will not be transferred to Q or Q's nominee in accordance with the arrangement. (3) Section 87 does not apply as regards an agreement to transfer chargeable securities to P or P's nominee, or Q or Q's nominee, in accordance with the arrangement. (4) Subsections (5) and (6) apply if— (a) the party who does not become insolvent (“the solvent party”) or the solvent party's nominee acquires replacement securities, and (b) the replacement securities are acquired before the end of the period of 30 days beginning with the day on which the insolvency occurs (“the insolvency date”). (5) Where collateral is provided under the arrangement (or under arrangements of which that arrangement forms part), section 87 does not apply as regards any agreement to transfer to the solvent party or the solvent party's nominee— (a) replacement securities acquired using the collateral (whether directly or indirectly), or (b) where the solvent party uses the whole of the value of the collateral to acquire replacement securities, any further replacement securities. (6) Where no collateral is provided as mentioned in subsection (5), section 87 does not apply as regards any agreement to transfer replacement securities to the solvent party or the solvent party's nominee. (7) Subsections (5) and (6) may apply as regards more than one agreement (and where those subsections apply as regards more than one agreement, the agreements may be with different persons). (8) But those subsections apply only as regards replacement securities up to the amount of securities which will not be transferred as a result of the insolvency. (9) For the purposes of this section a person becomes insolvent— (a) if a company voluntary arrangement takes effect under Part 1 of the Insolvency Act 1986, (b) if an administration application (within the meaning of Schedule B1 to that Act) is made or a receiver or manager, or an administrative receiver, is appointed, (c) on the commencement of a creditor's voluntary winding up (within the meaning of Part 4 of that Act) or a winding up by the court under Chapter 6 of that Part, (d) if an individual voluntary arrangement takes effect under Part 8 of that Act, (e) on the presentation of a bankruptcy petition (within the meaning of Part 9 of that Act), (f) if a compromise or arrangement takes effect under Part 26 of the Companies Act 2006, (g) if a bank insolvency order takes effect under Part 2 of the Banking Act 2009, (h) if a bank administration order takes effect under Part 3 of that Act, or (i) on the occurrence of any corresponding event which has effect under or as a result of the law of Scotland or Northern Ireland or a country or territory outside the United Kingdom. (10) In this section— - “collateral” means an amount of money or other property which is payable to, or made available for the benefit of, a party to an arrangement or that party's nominee for the purpose of securing the discharge of the requirement to transfer securities to that party or the nominee; - “replacement securities”, in the event of a party to an arrangement becoming insolvent, are chargeable securities of the same kind as the securities which will not be transferred to the other party or that party's nominee as a result of the insolvency.

SCHEDULE 38

1

CAA 2001 is amended as follows.

2

• (1) Section 163 (meaning of “general decommissioning expenditure”) is amended as follows.

• (2) In subsection (1), for “(3) and (4)” substitute “ (3) to (4) ”.

• (3) After subsection (3) insert—

(3A) The expenditure must have been incurred wholly or substantially in complying with— (a) an approved abandonment programme, (b) a condition to which the approval of an abandonment programme is subject, or (c) a condition imposed by the Secretary of State, or an agreement made with the Secretary of State— (i) before the approval of an abandonment programme, and (ii) in relation to the decommissioning of the plant or machinery.

• (4) In subsection (5)(b), insert at the beginning “ “abandonment programme”, “approval” and “approved” (in relation to an abandonment programme),”.

3

• (1) Section 164 (general decommissioning expenditure incurred before cessation of ring fence trade) is amended as follows.

• (2) For subsection (1) substitute—

(1) A person (“R”) carrying on a ring fence trade may elect to have a special allowance made to R for a chargeable period (the “relevant chargeable period”) if conditions A and B are met. (1A) Condition A is that one or more of these paragraphs applies— (a) R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning carried out in that period; (b) R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning carried out in a previous chargeable period; (c) R incurred general decommissioning expenditure in a previous chargeable period in respect of decommissioning that has not been carried out until the relevant chargeable period. (1B) Condition B is that the plant or machinery concerned has been brought into use for the purposes of the ring fence trade.

• (3) In subsection (2)(a), for the words from “the chargeable period” to the end substitute “ the relevant chargeable period, and ”.

• (4) In subsection (3)—

• (a) in paragraph (a), omit the “and” at the end, and

• (b) after that paragraph insert—

(aa) the chargeable period in which the expenditure was incurred, (ab) the decommissioning to which the expenditure relates, (ac) the chargeable period in which the decommissioning was carried out, and

.

• (5) In subsection (4)(a), for the words from “the chargeable period” to the end substitute “ the relevant chargeable period, and ”.

• (6) In subsection (5), for the words from “a chargeable period” to the end substitute “ the relevant chargeable period is equal to the amount of the general decommissioning expenditure to which the election relates. ”

• (7) After that subsection insert—

(5A) But subsection (5) is subject to subsections (5B) and (6). (5B) If an amount of general decommissioning expenditure to which the election relates is disproportionate to the relevant decommissioning carried out in the specified decommissioning period then, for the purposes of this section, the election is to be taken to specify only the allowable expenditure. (5C) The application of subsection (5B) to an amount of general decommissioning expenditure does not prevent a person from making an election under this section for a subsequent chargeable period specifying the non-allowable expenditure. (5D) In subsections (5B) and (5C)— - “allowable expenditure”, in relation to general decommissioning expenditure, means the amount of the expenditure that is proportionate to the relevant decommissioning carried out in the specified decommissioning period; - “non-allowable expenditure”, in relation to general decommissioning expenditure, means so much of that expenditure as is not allowable expenditure; - “relevant decommissioning”, in relation to general decommissioning expenditure, means the decommissioning to which the expenditure relates; - “specified decommissioning period”, in relation to relevant decommissioning, means the chargeable period specified in the election as the period in which the decommissioning was carried out; - “specified expenditure period”, in relation to general decommissioning expenditure, means the chargeable period specified in the election as the period in which the expenditure was incurred.

4

• (1) Section 165 (general decommissioning expenditure after ceasing ring fence trade) is amended as follows.

• (2) In subsection (1), for paragraph (b) substitute—

(b) the decommissioning condition is met in relation to a notional accounting period, and

.

• (3) After that subsection insert—