Finance (No. 3) Act 2010

(1027A) (1) This section applies for the purpose of determining whether a distribution is treated as a repayment of share capital for the purposes of this Chapter. (2) A distribution made out of a reserve arising from a reduction of share capital is to be treated as if it were made out of profits available for distribution otherwise than by virtue of the reduction. (3) The reference in subsection (2) to share capital includes, in the case of share capital issued at a premium representing new consideration, the amount of the premium. (4) The reference in subsection (2) to a reduction of share capital is— (a) in the case of a limited company incorporated in a territory outside the United Kingdom, to a reduction under any provision of the law of that territory corresponding to Chapter 10 of Part 17 of the Companies Act 2006, and (b) in the case of an unlimited company incorporated in a territory outside the United Kingdom, to a reduction under any provision of the law of that territory corresponding to any rule of law of any part of the United Kingdom under which an unlimited company may reduce its share capital. (5) This section does not apply for the purposes of any provision to the extent that the provision relates to income tax.

Meaning of “distribution” in Income Tax Acts

2

In section 989 of ITA 2007 (definitions for the purposes of the Income Tax Acts), in the definition of “distribution”, after “Chapters 2 to 5 of Part 23 of CTA 2010” insert “ , disregarding section 1027A of that Act ”.

Distributions subject to the charge to corporation tax on income

3

• (1) Part 9A of CTA 2009 (company distributions) is amended as follows.

• (2) In section 931A (charge to tax), omit subsection (2) and for subsection (3) substitute—

(3) A distribution is exempt for the purposes of this Part if it is exempt under— (a) Chapter 2 (distributions received by small companies), or (b) Chapter 3 (distributions received by companies that are not small).

• (3) In section 931H (dividends derived from transactions not designed to reduce tax)—

• (a) in the heading, for “Dividends” substitute “ Distributions ”,

• (b) in subsection (1)—

• (i) after “dividend” insert “ or other distribution ”, and

• (ii) for “paid” substitute “ made ”,

• (c) in subsection (2), for “dividend is paid” substitute “ distribution is made ”,

• (d) in subsections (3) and (4)—

• (i) for “dividend” substitute “ distribution ”, and

• (ii) for “paid” substitute “ made ”, and

• (e) in subsection (5)—

• (i) for “dividend” substitute “ distribution ”,

• (ii) for “paid” (in both places) substitute “ made ”, and

• (iii) for “dividends” substitute “ distributions ”.

• (4) After section 931R insert—

(931RA) The fact that a dividend or other distribution is exempt does not prevent it from being taken into account in the calculation of chargeable gains.

Distributions giving rise to deemed disposals

4

• (1) TCGA 1992 is amended as follows.

• (2) In section 22 (disposal where capital sums derived from assets), after subsection (3), insert—

(4) Subsection (1) does not apply where a company receives, or becomes entitled to receive— (a) a capital distribution within the meaning of section 122 (see instead subsection (1) of that section), or (b) a distribution to which the charge to corporation tax on income under Part 9A of CTA 2009 (company distributions) applies or would apply were the distribution not exempt for the purposes of that Part.

• (3) In section 122 (deemed disposal on receipt of certain distributions), after subsection (5) insert—

(6) The reference in subsection (5)(b) to a distribution which in the hands of the recipient constitutes income for the purposes of income tax includes, where the recipient is a company, a distribution to which the charge to corporation tax on income under Part 9A of CTA 2009 (company distributions) would apply were the distribution not exempt for the purposes of that Part.

Commencement

5

• (1) The amendments made by this Schedule have effect in relation to distributions made on or after 1 July 2009.

• (2) An amendment corresponding to that made by paragraph 1, having effect in relation to distributions made on or after 1 July 2009, is to be treated as having been made in section 211 of ICTA.

Treatment of distributions of UK resident companies made before 1 July 2009

6

• (1) Section 1285 of CTA 2009 (UK company distributions exempt from corporation tax) and section 208 of ICTA (which was the predecessor of section 1285 of CTA 2009) are to be treated as always having had effect (before their repeal) as if references in them to a distribution included a distribution to which sub-paragraph (2) applies.

• (2) This sub-paragraph applies to a distribution that—

• (a) falls within the meaning of Chapters 2 to 5 of Part 23 of CTA 2010, as amended by paragraph 1, but

• (b) does not fall within that meaning disregarding that amendment.

• (3) Section 22 of TCGA 1992 (disposal where capital sums derived from assets) is to be treated as always having had effect as if subsection (1) of that section did not apply where a company receives, or becomes entitled to receive—

• (a) a capital distribution within the meaning of section 122 of that Act made before 1 July 2009, or

• (b) a distribution that is exempt from corporation tax under section 1285 of CTA 2009 or section 208 of ICTA, as modified by sub-paragraph (1).

• (4) Section 122 of that Act (deemed disposal on receipt of certain distributions) is to be treated as always having had effect as if references in it to a capital distribution did not include a distribution that is exempt from corporation tax under section 1285 of CTA 2009 or section 208 of ICTA, as modified by sub-paragraph (1).

Election to opt out of effect of Schedule in relation to a distribution made before 22 June 2010

7

• (1) If a company so elects, this Schedule has effect in relation to a relevant distribution received by the company as if—

• (a) the amendments made by paragraphs 1 to 4 were of no effect, and

• (b) paragraphs 5(2) and 6 were of no effect.

• (2) An election under this paragraph has effect only in relation to such distributions as are specified in the election.

• (3) In this paragraph “relevant distribution” means a distribution made before 22 June 2010.

SCHEDULE 4

Amendment of TCGA 1992

1

After section 142 of TCGA 1992 (capital gains on stock dividends) insert—

(142A) (1) This section applies if share capital issued in lieu of a cash dividend by— (a) a company UK REIT, or (b) the principal company of a group UK REIT, is attributed as mentioned in section 550(2)(a), (c) or (d) of CTA 2010 (attribution of distributions). (2) The case shall not constitute a reorganisation of the company's share capital for the purposes of sections 126 to 128. (3) The person who acquires the share capital by means of its issue shall (notwithstanding section 17(1)) be treated for the purposes of section 38(1)(a) as having acquired that asset for a consideration equal to the cash equivalent of the share capital. (4) Section 414A(2) to (4) of ITTOIA 2005 (meaning of “share capital issued in lieu of a cash dividend”) applies for the purposes of this section as it applies for the purposes of Chapter 5 of Part 4 of that Act. (5) Section 412(1), (2), (4) and (5) of that Act (meaning of “cash equivalent of share capital”) applies for the purposes of this section as it applies in relation to share capital issued as mentioned in section 410(1)(a) of that Act. (6) In this section “company UK REIT” and “principal company of a group UK REIT” are to be read in accordance with Part 12 of CTA 2010 (Real Estate Investment Trusts).

Amendment of ITA 2007

2

In section 973 of ITA 2007 (REITs: income tax due in respect of distributions), after subsection (3) insert—

(3A) In this section, section 974 and any regulations under this section, “distribution” is to be read in accordance with section 554A of CTA 2010 (meaning of “distribution”). (3B) Section 599A of CTA 2010 (amount of distribution consisting of share capital issued in lieu of cash dividend) applies for the purposes of this section, section 974 and any regulations under this section as it applies for the purposes of Part 12 of that Act (Real Estate Investment Trusts).

Amendment of CTA 2010

3

Part 12 of CTA 2010 (Real Estate Investment Trusts) is amended as follows.

4

• (1) Section 530 (condition as to distribution of profits) is amended as follows.

• (2) In subsection (1), omit paragraph (b) (but not the word “and” at the end of it).

• (3) In subsection (4), omit paragraph (a) (including the word “and” at the end of it).

• (4) After subsection (6) insert—

(6A) In this section, references (however expressed) to a distribution are to either or both of the following— (a) a dividend in cash, and (b) share capital issued in lieu of a cash dividend. (6B) Section 1051(2) to (4) (meaning of “share capital issued in lieu of a cash dividend”) applies for the purposes of subsection (6A) as it applies for the purposes of section 1049(1)(a). (6C) Subsection (6D) applies if— (a) (apart from that subsection) there would be a a failure to meet the condition in this section in relation to an accounting period, and (b) that failure would arise solely by reason of the operation, by virtue of section 599A(2), of section 412(2) of ITTOIA 2005 (substitution of market value) in relation to any distributions within subsection (6A)(b). (6D) Subsection (1) or (4) (as the case may be) is to have effect in relation to that accounting period as if for the words “on or before” there were substituted “before the end of the period of three months beginning with”.

5

In section 549 (distributions: supplementary), after subsection (2) insert—

(2A) Sections 409 to 414 of ITTOIA 2005 (stock dividend income from UK resident companies) do not apply to relevant distributions received by a shareholder.

6

In section 550 (attribution of distributions), in subsection (2)(a), for “payments” substitute “ distributions ”.

7

In section 553 (meaning of “holder of excessive rights”), in subsection (2)(a), for “dividends” substitute “ distributions ”.

8

After section 554 (regulations: distributions to holders of excessive rights) insert—

(554A) (1) In this Chapter, references (however expressed) to a distribution include share capital issued in lieu of a cash dividend. (2) Section 1051(2) to (4) (meaning of “share capital issued in lieu of a cash dividend”) applies for the purposes of this section as it applies for the purposes of section 1049(1)(a).

9

• (1) Section 564 (breach of condition as to distribution of profits) is amended as follows.

• (2) In subsection (5)(a), omit “by way of dividend”.

• (3) After subsection (9) insert—

(10) In this section and section 565, “distribution” is to be read in accordance with section 530(6A) and (6B).

10

After section 599 (calculation of profits) insert—

(599A) (1) For the purposes of this Part, the amount of a distribution, so far as it consists of share capital issued in lieu of a cash dividend, is the cash equivalent of the share capital. (2) Section 412(1), (2), (4) and (5) of ITTOIA 2005 (meaning of “cash equivalent of share capital”) applies for the purposes of this section as it applies in relation to share capital issued as mentioned in section 410(1)(a) of that Act.

11

In section 605 (property rental business: exclusion of business producing listed income), after subsection (2) insert—

(2A) The reference in class 7 of the table in subsection (2) to dividends from shares includes share capital issued in lieu of a cash dividend (and the reference in subsection (1) to income is to be read accordingly). (2B) Section 1051(2) to (4) (meaning of “share capital issued in lieu of a cash dividend”) applies for the purposes of subsection (2A) as it applies for the purposes of section 1049(1)(a).

Commencement

12

The amendments made by this Schedule have effect in relation to distributions made on or after the day on which this Act is passed.

SCHEDULE 5

Introduction

1

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Amendment of Chapter 1 (introduction)

2

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Amendments of Chapter 2 (application of Part)

3

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4

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5

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6

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7

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8

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9

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10

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11

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12

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Amendments of Chapter 3 (disallowance of deductions)

13

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14

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15

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16

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Amendment of Chapter 4 (exemption of financing income)

17

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Amendments of Chapter 5 (intra-group financing income where payer denied deduction)

18

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Amendments of Chapter 7 (“financing expense amount” and “financing income amount”)

19

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20

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21

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22

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23

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24

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Amendment of Chapter 8 (the “tested expense amount” and “tested income amount”)

25

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Amendments of Chapter 9 (the “available amount”)

26

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27

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28

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Amendments of Chapter 10 (other interpretative provisions)

29

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30

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31

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32

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33

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Amendment of transitional provision

34

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Amendments of index of defined expressions

35

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Commencement

36

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Election to defer the application of some of the amendments made by this Schedule

37

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SCHEDULE 6

Introductory

1

Chapter 4 of Part 5 of CTA 2010 (claims for group relief) is amended as follows.

Ability to claim group relief where link company established in the EEA

2

In section 129 (overview of Chapter), in subsection (2), for “Sections 130 to 134” substitute “ Sections 130 to 134A ”.

3

In section 130(2) (group relief claims on amounts surrenderable under Chapter 2), in Requirement 3—

• (a) in paragraph (c), for “section 133(1), (3) and (4)” substitute “ section 133(1) and (3) to (8) ”, and

• (b) in paragraph (d), for “section 133(2), (3) and (4)” substitute “ section 133(2) to (8) ”.

4

• (1) Section 133 (conditions to be met for consortium claims for group relief) is amended as follows.

• (2) In subsection (1)—

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

• (b) for paragraph (f) substitute—

(f) the surrendering company and the claimant company are both UK related, and (g) the link company is UK related or established in the EEA.

• (3) In subsection (2)—

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

• (b) for paragraph (f) substitute—

(f) the surrendering company and the claimant company are both UK related, and (g) the link company is UK related or established in the EEA.

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

5

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6

• (1) Section 146 (maximum amount of group relief in consortium claims) is amended as follows.

• (2) In subsection (3)—

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

• (b) after that paragraph insert—

(aa) assuming that the link company was UK related, and

.

• (3) In subsection (6), at the end insert “ , assuming that the link company was UK related. ”

• (4) In subsection (8)—

• (a) omit the “and” at the end of the definition of “consortium claim”, and

• (b) at the end insert

, and UK related”, in relation to a company, has the meaning given by section 134.

Limitations on group relief based on proportion of voting power held by company

7

• (1) Section 143 (which makes provision limiting the amount of group relief that is available in cases where the surrendering company is owned by a consortium) is amended as follows.

• (2) In subsection (3)—

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

• (b) at the end of paragraph (c) insert

, and (d) the proportion of the voting power in the surrendering company that is directly possessed by the claimant company.

• (3) In subsection (4)(a), for “paragraphs (a) to (c)” substitute “ paragraphs (a) to (d) ”.

8

• (1) Section 144 (which makes provision limiting the amount of group relief that is available in cases where the claimant company is owned by a consortium) is amended as follows.

• (2) In subsection (3)—

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

• (b) at the end of paragraph (c) insert

, and (d) the proportion of the voting power in the claimant company that is directly possessed by the surrendering company.

• (3) In subsection (4)(a), for “paragraphs (a) to (c)” substitute “ paragraphs (a) to (d) ”.

Limitations on group relief where arrangements preventing control are in place

9

After section 146 insert—

(146A) (1) This section applies if— (a) the claimant company makes a claim for group relief based on consortium condition 1, (b) it is the surrendering company that is owned by the consortium, and (c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the claimant company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company. (2) This section also applies if— (a) the claimant company makes a claim for group relief based on consortium condition 2, and (b) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company. (3) Arrangements are within this subsection if— (a) the company, either alone or together with one or more other companies that are members of the consortium, would control the surrendering company, but for the existence of the arrangements, and (b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter. (4) The group relief to be given on the claim is to be determined as if the surrenderable amount for the overlapping period were 50% of what it would be but for this section (see section 139(2) to determine the surrenderable amount for the overlapping period). (5) In this section “the overlapping period” is to be read in accordance with section 142. (6) Section 1139 (“tax advantage”) applies for the purposes of this section. (146B) (1) This section applies if— (a) the claimant company makes a claim for group relief based on consortium condition 1, (b) it is the claimant company that is owned by the consortium, and (c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the surrendering company, either alone or together with one or more other companies that are members of the consortium, from controlling the claimant company. (2) This section also applies if— (a) the claimant company makes a claim for group relief based on consortium condition 3, and (b) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the claimant company. (3) Arrangements are within this subsection if— (a) the company, either alone or together with one or more other companies that are members of the consortium, would control the claimant company, but for the existence of the arrangements, and (b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter. (4) The group relief to be given on the claim is to be determined as if the claimant company's total profits for the overlapping period were 50% of what they would be but for this section (see section 140(2) to determine the total profits for the overlapping period). (5) In this section “the overlapping period” is to be read in accordance with section 142. (6) Section 1139 (“tax advantage”) applies for the purposes of this section.

Commencement

10

The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 12 July 2010.

SCHEDULE 7

1

CAA 2001 is amended as follows.

2

In section 39 (first-year allowances available for certain types of qualifying expenditure only), at the appropriate place in the list insert—

section 45DA	expenditure on zero-emission goods vehicles,

.

3

After section 45D insert—

(45DA) (1) Expenditure is first-year qualifying expenditure if— (a) it is incurred in the period of 5 years beginning with the relevant date, (b) it is incurred on the provision of a zero-emission goods vehicle, (c) the vehicle is unused and not second-hand, (d) the vehicle is registered, and (e) the expenditure is not excluded by section 46 (general exclusions). (2) For the purposes of subsection (1)(d) it does not matter whether the vehicle is first registered before or after the expenditure is incurred. (3) In this section— - “goods vehicle” means a mechanically propelled road vehicle which is of a design primarily suited for the conveyance of goods or burden of any description; - “the relevant date” means— 1. in the case of expenditure incurred by a person within the charge to corporation tax, 1 April 2010, and 2. in the case of expenditure incurred by a person within the charge to income tax, 6 April 2010; - “zero-emission goods vehicle” means a goods vehicle which cannot in any circumstances emit CO₂ by being driven. (4) The Treasury may by order amend this Chapter so as to provide for specified descriptions of vehicles to be treated, or not to be treated, as goods vehicles for the purposes of this section. (5) This section is subject to section 45DB. (45DB) (1) Expenditure incurred by a person is not first-year qualifying expenditure under section 45DA if it is within subsection (2), (4) or (6). (2) Expenditure is within this subsection if, at the time a claim is made under section 3 for a section 45DA allowance in respect of the expenditure, the person who incurred the expenditure is, or forms part of, an undertaking within subsection (3). (3) An undertaking is within this subsection if one or both of the following conditions are met— (a) it is reasonable to assume that the undertaking would be regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02); (b) the undertaking is subject to an outstanding recovery order made by virtue of Article 108(2) of the Treaty on the Functioning of the European Union (Commission Decision declaring aid illegal and incompatible with the common market). (4) Expenditure is within this subsection if it is incurred for the purposes of a qualifying activity— (a) in the fishery or aquaculture sector, as covered by Council Regulation (EC) No 104/2000, or (b) relating to the management of waste of undertakings. (5) In subsection (4)(b) the reference to waste of undertakings does not include waste of the person who incurred the expenditure or of any other person forming part of the same undertaking as that person. (6) Expenditure is within this subsection to the extent that it is taken into account for the purposes of a relevant grant, or relevant payment, made towards that expenditure. (7) A grant or payment is relevant if it is— (a) a notified State aid, other than an allowance under this Part, or (b) a grant or subsidy, other than a notified State aid, which the Treasury by order declares to be relevant for the purposes of the withholding of a section 45DA allowance. (8) If a relevant grant or relevant payment towards the expenditure is made after the making of a section 45DA allowance, the allowance is to be withdrawn to that extent. (9) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (8). (10) Any such assessment or adjustment is not out of time if it is made within 3 years of the end of the chargeable period in which the grant or payment was made. (11) In this section— - “General Block Exemption Regulation” means Commission Regulation (EC) No. 800/2008 (General block exemption Regulation); - “management” and “waste” have the meaning given by Article 1 of Directive 2006/12/EC of the European Parliament and of the Council; - “notified State aid” means a State aid notified to and approved by the European Commission; - “section 45DA allowance” means a first year allowance in respect of expenditure that is first-year qualifying expenditure under section 45DA; - “undertaking” means— 1. an autonomous enterprise, or 2. an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any), (12) The Treasury may by order make such provision amending this section as appears to them appropriate for the purpose of giving effect to any future amendments of or instrument replacing— (a) the General Block Exemption Regulation, (b) the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02), (c) Council Regulation (EC) No 104/2000, (d) Directive 2006/12/EC of the European Parliament and of the Council, or (e) the Treaty on the Functioning of the European Union.

4

In section 46 (general exclusions applying to first-year qualifying expenditure), in subsection (1), at the appropriate place in the list insert—

section 45DA	(expenditure on zero-emission goods vehicles),

.

5

• (1) Section 52 (first-year allowances) is amended as follows.

• (2) In subsection (3), at the appropriate place in the Table insert—

Expenditure qualifying under section 45DA (expenditure on zero-emission goods vehicles)	100%

• (3) In subsection (5)—

• (a) omit the “and” at the end of the entry for section 210, and

• (b) after that entry insert—

section 212T (cap on first-year allowances: zero-emission goods vehicles), and

.

6

After section 212S insert—

(212T) (1) A section 45DA allowance is not available in respect of expenditure (“the current expenditure”) incurred by a person (“the investor”)— (a) if section 45DA allowances have previously been made in respect of undertaking expenditure of 85 million euros, or (b) (where paragraph (a) does not apply) if, and to the extent that, the aggregate of— (i) the undertaking expenditure in respect of which section 45DA allowances have previously been made, and (ii) the current expenditure, exceeds 85 million euros. (2) “Undertaking expenditure” means— (a) expenditure incurred by the investor, (b) if the investor is a partnership, expenditure incurred (at any time) by a person who is a partner enterprise forming part of the investor at the time the current expenditure is incurred, and (c) if the investor and one or more other persons together form, or have at any time formed, an undertaking, expenditure which is— (i) incurred by that undertaking, or (ii) incurred by any of those other persons at a relevant time. (3) Expenditure is incurred by a person at a “relevant time” if it is incurred— (a) at a time when the investor and the person are part of the same undertaking, or (b) at a time before the investor and the person became part of the same undertaking (or, if they became part of the same undertaking on more than one occasion, before the last time). (4) For the purposes of subsection (1), expenditure incurred in a currency other than the euro is to be converted into its equivalent in euros using the spot rate of exchange for the day on which the expenditure is incurred. (5) The Treasury may by regulations increase the amount specified in subsection (1)(a) and (b). (6) In this section— - “section 45DA allowance” means a first-year allowance in respect of expenditure that is first-year qualifying expenditure under section 45DA; - “undertaking” means— 1. an autonomous enterprise, or 2. an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any), and “enterprise”, “autonomous enterprise”, “partner enterprise” and “linked enterprise” have the meaning given by Annex 1 to the Commission Regulation (EC) No. 800/2008 (General block exemption Regulation).

7

The amendments made by this Schedule have effect—

• (a) for the purposes of corporation tax, for chargeable periods ending on or after 1 April 2010, and

• (b) for the purposes of income tax, for chargeable periods ending on or after 6 April 2010.

SCHEDULE 8

Input tax

1

• (1) Section 24 of VATA 1994 (input tax and output tax) is amended as follows.

• (2) Omit subsection (3) (accommodation used for domestic purposes by company director etc).

• (3) In subsection (5) (goods or services used partly for business purposes), for the words after “other purposes” substitute

— (a) VAT on supplies, acquisitions and importations shall be apportioned so that so much as is referable to the taxable person's business purposes is counted as that person's input tax, and (b) the remainder of that VAT (“the non-business VAT”) shall count as that person's input tax only to the extent (if any) provided for by regulations under subsection (6)(e).

• (4) After that subsection insert—

(5A) For the purposes of subsections (1) and (5), a relevant asset held for the purposes of a business carried on or to be carried on by a taxable person is not, in any circumstances, to be regarded as used or to be used for the purposes of the business if, and to the extent that, it is used or to be used for that person's private use or the private use of that person's staff. (5B) In subsection (5A) “relevant asset” means— (a) any interest in land, (b) any building or part of a building, (c) any civil engineering work or part of such a work, (d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise), (e) any ship, boat or other vessel, or (f) any aircraft.

• (5) In subsection (6) (powers to make regulations), after paragraph (d) insert—

(e) in cases where an apportionment is made under subsection (5), for the non-business VAT to be counted as the taxable person's input tax for the purposes of any provision made by or under section 26 in such circumstances, to such extent and subject to such conditions as may be prescribed.

• (6) After that subsection insert—

(6A) Regulations under subsection (6) may contain such supplementary, incidental, consequential and transitional provisions as appear to the Commissioners to be necessary or expedient.

• (7) Omit subsection (7) (definition of “director” etc).

• (8) The amendments made by sub-paragraphs (2), (4) and (7) come into force on 1 January 2011 and apply in relation to VAT incurred by a taxable person on or after that date.

• (9) For the purposes of sub-paragraph (8), the VAT “incurred” by a person in respect of an asset is—

• (a) VAT on the supply to the person of the asset,

• (b) VAT on the supply to the person of any goods or services the expenditure on which constitutes expenditure related to the asset,

• (c) VAT on the acquisition by the person from another member State of the asset or anything comprised in it, and

• (d) VAT paid or payable by the person on the importation of the asset or anything comprised in it from a place outside the member States;

and VAT within paragraphs (a) to (d) is incurred at the time of the supply, acquisition or importation in question.

2

In section 26 of VATA 1994 (input tax allowable under section 25), in subsection (4) for “and supplementary” substitute “ , supplementary, consequential and transitional ”.

Non-business use of certain assets not to be treated as supply of services

3

• (1) In paragraph 5 of Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services), after sub-paragraph (4) (non-business use of business asset treated as supply of services) insert—

(4A) Sub-paragraph (4) does not apply (despite paragraph 9(1)) to— (a) any interest in land, (b) any building or part of a building, (c) any civil engineering work or part of such a work, (d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise), (e) any ship, boat or other vessel, or (f) any aircraft.

• (2) This paragraph comes into force on 1 January 2011.

• (3) This paragraph does not apply in relation to an asset in respect of which the person in question or any of that person's predecessors incurred VAT before 1 January 2011.

• (4) But, where VAT is incurred by such a person before that date in respect of the asset, VAT incurred by such a person on or after that date in respect of the asset is not to be treated as referable to that person's business purposes by virtue of paragraph 5(4) and (6) of Schedule 4 to VATA 1994 if, and to the extent that, the asset is used or to be used for that person's private use or the private use of that person's staff, or more generally for purposes other than those of that person's business.

• (5) For the purposes of this paragraph—

• “asset” means anything falling within any of paragraphs (a) to (f) of paragraph 5(4A) of Schedule 4 to VATA 1994 (as inserted by sub-paragraph (1) above);

• “the person in question” means the person carrying on the business referred to in paragraph 5(4) of that Schedule;

• “predecessor” has the same meaning as in paragraph 5 of that Schedule;

and references to the VAT “incurred” by a person in respect of an asset are to be construed in accordance with paragraph 1(9).

Output tax charge where credit attributable to purported paragraph 5(4) supply

4

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

• (a) a person carrying on a business or any of that person's predecessors has been allowed credit under sections 25 and 26 of VATA 1994 for input tax on the basis that the input tax is attributable to a thing done or to be done which is or would be a paragraph 5(4) supply,

• (b) some or all of that credit was allowed before 22 January 2010,

• (c) disregarding sub-paragraph (2), the thing done or to be done is not or would not be a paragraph 5(4) supply, and

• (d) the credit allowed as mentioned in paragraph (a) is not reversed in full.

• (2) The thing done or to be done is to be treated for the purposes of VATA 1994 as if it were or would be a paragraph 5(4) supply.

• (3) But sub-paragraph (2) does not confer on the person allowed credit as mentioned in sub-paragraph (1)(a) any entitlement to that credit under sections 25 and 26 of that Act.

• (4) For the purposes of sub-paragraph (1) credit for input tax is “allowed” under sections 25 and 26 of VATA 1994 to the extent that the credit is claimed, and the claim is satisfied by one or more of the following—

• (a) the deduction of input tax under section 25(2) of that Act from any output tax that is due to the Commissioners;

• (b) a payment by the Commissioners in respect of the credit under section 25(3) of that Act;

• (c) the setting off of the credit against a sum payable to the Commissioners, whether under section 81(3) of that Act or section 130 of FA 2008 or otherwise.

• (5) In this paragraph—

• “paragraph 5(4) supply” means a supply under paragraph 5(4) of Schedule 4 to VATA 1994 (goods held or used for the purposes of a business which are put to private use etc);

• “predecessor” has the same meaning as in paragraph 5 of that Schedule.

• (6) This paragraph is to be treated as having always had effect.

SCHEDULE 9

Part 1 — Corporation tax

Amendments of sections 101 to 104

1

FA 2009 is amended as follows.

2

In section 101 (late payment interest on sums due to HMRC), omit subsection (2)(a).

3

• (1) Section 102 (repayment interest on sums to be paid by HMRC) is amended as follows.

• (2) Omit subsection (2)(a).

• (3) In subsection (4), before paragraph (a) insert—

(za) Part A1 makes special provision as to the amount of corporation tax on which repayment interest is calculated,

.

4

After section 103 insert—

(103A) Schedule 54A makes special provision as to certain amounts of late payment interest and repayment interest.

5

In section 104(1), for “103” substitute “ 103A (and Schedules 53 to 54A) ”.

Amendments of Schedule 53

6

Schedule 53 to FA 2009 (late payment interest) is amended as follows.

7

In Part 1 (special provision as to amount carrying late payment interest), after paragraph 2 insert—

(2A) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) there is for a later accounting period (“the later period”) a non-trading deficit on the company's loan relationships, (c) as a result of a claim under section 389(1) or 459(1)(b) of CTA 2009, the whole or part of the deficit for the later period is set off against the profits of the earlier period, and (d) if the claim had not been made, there would be an amount or an additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(d) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period. (2B) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the earlier period, (d) the earlier period does not fall wholly within the period of 12 months immediately preceding the later period, and (e) if the claim had not been made, there would be an amount or additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(e) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period. (2C) (1) This paragraph applies where— (a) a company is liable to corporation tax for an accounting period (“the earlier period”), (b) in a later accounting period of the company (“the later period”), an excess arises as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (c) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of the earlier period, and (d) if the claim had not been made, there would be an amount or additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(d) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period. (4) This paragraph does not apply where paragraph 2D applies. (2D) (1) This paragraph applies where— (a) a company carrying on a trade has profits (of whatever description) arising in an accounting period (“the middle period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the middle period, (d) the middle period does not fall wholly within the period of 12 months immediately preceding the later period, (e) as a result of the claim under section 37, an excess or increased excess arises in the middle period as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (f) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of an accounting period before the middle period (“the earlier period”), and (g) if the claim had not been made, there would be an amount or additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(g) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period.

8

In Part 2 (special provision as to late payment interest start date), after paragraph 6 insert—

(6A) (1) This paragraph applies to any amount of corporation tax assessed or treated as assessed by virtue of any of the following provisions (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances)— (a) section 137(4), 139(7) or 190 of TCGA 1992, (b) paragraph 75A(2) of Schedule 18 to FA 1998, (c) section 795(2) of CTA 2009, and (d) Chapter 7 of Part 22 of CTA 2010. (2) The late payment interest start date in respect of that amount is the date when it became due and payable by the company.

Amendments of Schedule 54

9

Schedule 54 to FA 2009 (repayment interest) is amended as follows.

10

Insert at the beginning—

(A1) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) there is for a later accounting period (“the later period”) a non-trading deficit on the company's loan relationships, (c) as a result of a claim under section 389(1) , 459(1)(b) or 463B(1)(b) of CTA 2009, the whole or part of the deficit for the later period is set off against the profits of the earlier period, and (d) a repayment falls to be made of corporation tax for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(d) as falls to be made as a result of the claim under section 389(1) , 459(1)(b) or 463B(1)(b) does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A2) (1) This paragraph applies where— (a) a company carrying on a trade has profits (of whatever description) arising in an accounting period (“the earlier period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the earlier period, (d) the earlier period does not fall wholly within the period of 12 months immediately preceding the later period, and (e) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(e) as falls to be made as a result of the claim under section 37 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A2A) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) the company ceases to carry on a trade in a later accounting period (“the later period”), (c) on a claim under section 45F of CTA 2010 (terminal losses), the whole or any part of a loss incurred in the trade has been set off for the purposes of corporation tax against the profits of the earlier period, (d) the earlier period does not fall wholly within the period of 12 months immediately preceding the later period, and (e) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(e) as falls to be made as a result of the claim under section 45F does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A3) (1) This paragraph applies where— (a) a company is liable to corporation tax for an accounting period (“the earlier period”), (b) in a later accounting period of the company (“the later period”), an excess arises as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (c) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of the earlier period, and (d) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(d) as falls to be made as a result of the claim under section 77 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (4) This paragraph does not apply where paragraph A4 or A5 applies. (A4) (1) This paragraph applies where— (a) a company carrying on a trade has profits (of whatever description) arising in an accounting period (“the middle period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the middle period, (d) the middle period does not fall wholly within the period of 12 months immediately preceding the later period, (e) as a result of the claim under section 37, an excess or increased excess arises in the middle period as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (f) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of an accounting period before the middle period (“the earlier period”), and (g) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(g) as falls to be made as a result of the claim under section 77 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A5) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the middle period”), (b) the company ceases to carry on a trade in a later accounting period (“the later period”), (c) on a claim under section 45F of CTA 2010 (terminal losses), the whole or any part of a loss incurred in the trade has been set off for the purposes of corporation tax against the profits of the middle period, (d) the middle period does not fall wholly within the period of 12 months immediately preceding the later period, (e) as a result of the claim under section 45F, an excess or increased excess arises in the middle period as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (f) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of an accounting period before the middle period (“the earlier period”) and, (g) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(g) as falls to be made as a result of the claim under section 77 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period.

11

In Part 2 (special provision as to repayment interest start date), after paragraph 9A insert—

(9B) (1) This paragraph applies to— (a) a repayment of income tax which falls to be made in respect of a payment received by a company in an accounting period, and (b) a payment of the whole or part of the tax credit comprised in any franked investment income received by a company in an accounting period. (2) In the case of a repayment or payment to which this paragraph applies, the repayment interest start date is the day after the end of the accounting period in which the payment mentioned in sub-paragraph (1)(a) or the franked investment income mentioned in sub-paragraph (1)(b) was received by the company. (9C) (1) In the case of a repayment of tax made on a claim under section 458(3) of CTA 2010 (relief on repayment of loan made by close company to participator), the repayment interest start date is the later of dates A and B. (2) Date A is— (a) where the loan repayment date is on or after the tax due date, the date 9 months after the end of the accounting period in which the loan repayment date falls, and (b) in any other case, the date 9 months after the end of the accounting period in which the loan date falls. (3) Date B is the date on which the tax which is to be repaid was paid to HMRC. (4) In this paragraph, in relation to a claim under section 458(3) of CTA 2010— - “the loan date” is the date on which the loan or advance giving rise to the charge to tax under section 455 of that Act is made; - “the tax due date” is the date on which tax under that section becomes due (in accordance with subsection (3) of that section) in relation to that loan or advance; - “the loan repayment date” is the date on which the whole or any part of the loan or advance is repaid, released or written off.

New Schedule

12

After Schedule 54 to FA 2009 insert—

Schedule 54A (1) Where each of conditions A to D (see paragraph 2) is met, an amount of repayment interest that— (a) has been paid to a company, but (b) ought not to have been paid (see condition D), may be recovered from the company as if it were late payment interest. (2) (1) This paragraph applies for the purposes of paragraph 1. (2) Condition A is that repayment interest has been paid to the company on— (a) a repayment of corporation tax paid by the company for an accounting period, (b) a payment of first-year tax credit under Schedule A1 to CAA 2001 for an accounting period, (c) a payment of R&D tax credit under Chapter 2 or 7 of Part 13 of CTA 2009 for an accounting period, (d) a payment of land remediation tax credit or life assurance company tax credit under Part 14 of CTA 2009 for an accounting period, or (e) a payment of film tax credit under Chapter 3 of Part 15 of CTA 2009 for an accounting period. (3) Condition B, in a case falling within sub-paragraph (2)(a), is that (whether or not any previous assessment or determination has been made)— (a) an assessment, or an amendment of an assessment, of the amount of corporation tax payable by the company for the accounting period is made, or (b) a determination of that amount is made under paragraph 36 or 37 of Schedule 18 to FA 1998 (which until superseded by a self-assessment under that Schedule has effect as if it were one). (4) Condition B, in a case falling within sub-paragraph (2)(b) to (e), is that an assessment, or an amendment of an assessment, is made to recover an amount of the tax credit in question paid to the company for that accounting period. (5) Condition C is that the change (as a result of condition B being met) in— (a) the company's assessed liability to corporation tax, or (b) the amount of tax credit payable, is not one which in whole or in part corrects an error made by HMRC. (6) In sub-paragraph (5) “error” includes— (a) any computational error, and (b) the allowance of a claim or election which ought not to have been allowed. (7) Condition D is that as a result only of that change (and, in particular, not as a result of any error in the calculation of the interest), it appears to HMRC that some or all of the repayment interest ought not to have been paid. (3) (1) This paragraph applies where— (a) there is a common period in relation to a company (see sub-paragraph (2)), and (b) each of conditions A to C (see paragraph 4) is met. (2) A common period in relation to a company is any period during which— (a) an amount of corporation tax is due and payable by the company in accordance with section 59D of TMA 1970 or regulations made under section 59E of that Act (“the overdue payment”), and (b) an amount which has been paid on account of corporation tax is repayable to the company (“the repayment”). (3) During the common period— (a) the overdue payment does not carry late payment interest or interest under regulations made by virtue of section 59E(2)(g) of TMA 1970 (interest payable to HMRC on amounts of corporation tax due and payable under regulations under that section), and (b) the repayment does not carry repayment interest or interest under regulations made by virtue of section 59E(2)(i) of TMA 1970 (interest payable by HMRC on amounts paid or repaid under regulations under that section). (4) (1) This paragraph applies for the purposes of paragraph 3. (2) Condition A is that the overdue payment and the repayment are in respect of different accounting periods. (3) Condition B is that the overdue payment would (apart from paragraph 3) carry— (a) late payment interest, or (b) interest under regulations made by virtue of section 59E(2)(g) of TMA 1970. (4) Condition C is that the repayment would (apart from paragraph 3) carry— (a) repayment interest, or (b) interest under regulations made by virtue of section 59E(2)(i) of TMA 1970.

Part 2 — Petroleum revenue tax

13

FA 2009 is amended as follows.

14

In section 101 (late payment interest on sums due to HMRC), omit subsection (2)(b).

15

In section 102 (repayment interest on sums to be paid by HMRC), omit subsection (2)(b).

16

Schedule 53 (late payment interest) is amended as follows.

17

After paragraph 11 insert—

(11A) The late payment interest start date in respect of an instalment of petroleum revenue tax payable under paragraph 2 of Schedule 19 to FA 1982 (payment for tax) is the last day of the month in which that instalment is payable. (11B) The late payment interest start date in respect of any other amount of petroleum revenue tax is the date falling two months after the end of the chargeable period in respect of which the amount is due.

18

After paragraph 14 insert—

(14A) (1) An instalment of petroleum revenue tax payable under paragraph 2 of Schedule 19 to FA 1982 (payment for tax) carries late payment interest until the earlier of— (a) the date on which the instalment is paid, and (b) the date falling two months after the end of the chargeable period in respect of which the instalment is due. (2) An instalment which remains unpaid after the date mentioned in sub-paragraph (1)(b) carries interest as an amount payable on account under section 1 of PRTA 1980. (3) For the purposes of determining the date on which an overdue instalment is paid, a payment on account of one or more such instalments is to be attributed, so far as possible, to the earliest month for which an instalment is overdue.

19

In Schedule 54 (repayment interest), after paragraph 12 insert—

(12A) (1) The repayment interest start date in respect of any amount of petroleum revenue tax is the later of— (a) the date falling two months after the end of the chargeable period in respect of which the amount was paid, and (b) the date on which the amount was paid. (2) Sub-paragraph (1) is subject to paragraph 12B (limit on amount of repayment interest carried by certain repayments generated by carry back reliefs). (3) For the purposes of this paragraph any instalment or part of an instalment that becomes repayable is to be regarded, so far as possible, as consisting of the instalment most recently paid. (12B) (1) This paragraph applies where— (a) an assessment for a chargeable period (“the earlier period”) gives effect to relief under section 7(2) or (3) of OTA 1975 for one or more allowable losses accruing in a later chargeable period, and (b) by virtue of that assessment, an amount of tax becomes repayable to the participator in question (whether wholly or partly by reason of giving effect to that relief). (2) The amount of repayment interest carried by the appropriate repayment is not to exceed the difference between— (a) 60% of the amount of the allowable loss or losses which is treated as reducing the assessable profit of the earlier period, and (b) the amount of the appropriate repayment. (3) In this paragraph “the appropriate repayment” means so much of the repayment as is attributable to giving effect to the relief (but this is subject to sub-paragraphs (4) and (5)). (4) Sub-paragraph (5) applies where the assessment (as well as giving effect to the relief mentioned in sub-paragraph (1)) takes account of any other matter, whether a relief or not, which goes— (a) to reduce the assessable profit of the earlier period, or (b) otherwise to reduce the tax payable for that period. (5) The appropriate repayment is to be taken to be the difference between— (a) the total amount of tax repayable by virtue of the assessment, and (b) the amount of tax (if any) which would have been repayable if no account had been taken of that relief. (6) If the earlier period ends on or before 30 June 1993, sub-paragraph (2) has effect as if the percentage specified in paragraph (a) were 85%. (7) In this paragraph references to an assessment include an amendment of an assessment.

SCHEDULE 10

1

Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended as follows.

2

• (1) Paragraph 1 (penalty for failure) is amended as follows.

• (2) In sub-paragraph (2), for “13” substitute “ 13J ”.

• (2A) In sub-paragraph (4), in the definition of “filing date”, at the end insert “ (or, in the case of a return mentioned in item 7AA or 7AB of the Table, to the tax authorities to whom the return is required to be delivered) ”.

• (3) The Table is amended as follows.

• (4) After item 7 insert—

7A	Value added tax	Return under regulations under paragraph 2 of Schedule 11 to VATA 1994
7B	Insurance premium tax	Return under regulations under section 54 of FA 1994
7AA	Value added tax	Relevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994)
7AB	Value added tax	Relevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994)

.

• (5) Insert at the end—

14	Aggregates levy	Return under regulations under section 25 of FA 2001
15	Climate change levy	Return under regulations under paragraph 41 of Schedule 6 to FA 2000
16	Landfill tax	Return under regulations under section 49 of FA 1996
17	Air passenger duty	Return under regulations under section 38 of FA 1994
18	Alcoholic liquor duties	Return under regulations under section 13, 49, 56 or 62 of ALDA 1979
19	Tobacco products duty	Return under regulations under section 7 of TPDA 1979
20	Hydrocarbon oil duties	Return under regulations under section 21 of HODA 1979
21	Excise duties	Return under regulations under section 93 of the Customs and Excise Management Act 1979
22	Excise duties	Return under regulations under section 100G or 100H of the Customs and Excise Management Act 1979
23	General betting duty	Return under regulations under paragraph 2 of Schedule 1 to BGDA 1981
24	Pool betting duty	Return under regulations under paragraph 2A of Schedule 1 to BGDA 1981
25	Bingo duty	Return under regulations under paragraph 9 of Schedule 3 to BGDA 1981
26	Lottery duty	Return under regulations under section 28(2) of FA 1993
27	Gaming duty	Return under directions under paragraph 10 of Schedule 1 to FA 1997
28	Remote gaming duty	Return under regulations under section 26K of BGDA 1981

.

3

For paragraph 2 (amount of penalty for occasional or annual returns) and the italic heading preceding it substitute—

(2) (1) Paragraphs 3 to 6 apply in the case of— (a) a return falling within any of items 1 to 5, 7 and 8 to 13 in the Table, (b) a return falling within any of items 7A, 7B and 14 to 28 which relates to a period of 6 months or more, and (c) a return falling within item 7A which relates to a transitional period for the purposes of the annual accounting scheme. (2) In sub-paragraph (1)(c), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which— (a) ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or (b) begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.

4

• (1) Paragraph 6 (amount of penalty for occasional returns and annual returns) is amended as follows.

• (2) In sub-paragraph (2), after “P” in the first place it occurs insert “ deliberately ”.

• (3) In sub-paragraph (5), for “any other case” substitute “ any case not falling within sub-paragraph (2) ”.

5

• (1) Paragraph 11 (amount of penalty for certain CIS returns after 12 months) is amended as follows.

• (2) In sub-paragraph (2), after “P” in the first place it occurs insert “ deliberately ”.

• (3) In sub-paragraph (5), for “any other case” substitute “ any case not falling within sub-paragraph (2) ”.

6

• (1) Paragraph 12 (amount of penalty for other CIS returns after 12 months) is amended as follows.

• (2) In sub-paragraph (2), after “P” insert “ deliberately ”.

7

After paragraph 13 insert—