Finance Act 2012

PART 2 — Foreign permanent establishments

Main provision

2

Chapter 3A of Part 2 of CTA 2009 (foreign permanent establishments of UK resident companies) is amended as follows.

3

In section 18A(1) omit “UK resident”.

4

After section 18C insert—

(18CA) The references in section 18A(6) to profits which would be taken to be attributable to the permanent establishment of a company in a territory include any income arising from immovable property which has been used for the purposes of the business carried on by the company through the permanent establishment in the territory (to such extent as is appropriate having regard to the extent to which it has been so used); and the references to losses in section 18A(7) are to be construed accordingly. (18CB) (1) In determining any relevant profits amount or relevant losses amount under section 18A(6) or (7) in relation to a company, there are to be left out of account any profits or losses of any part of the company's business which consists of the making of investments. (2) Subsection (1) does not apply to profits or losses arising from assets so far as the assets are effectively connected with any part of the permanent establishment through which a trade or overseas property business of the company is carried on in the territory. (3) In subsection (2) “effectively connected” is to be given the same meaning as it would be given for the purposes of the OECD model were subsection (2) contained in the OECD model.

5

• (1) Section 18F is amended as follows.

• (2) In subsection (1)(a) for “subsection (6)” substitute “ subsections (6) to (8) ”.

• (3) For subsection (2) substitute—

(2) The relevant day”, in relation to an election made by a UK resident company, means— (a) the day on which, at the time of the election, the company's accounting period following that in which the election is made is expected to begin, or (b) if the election is made before the company's first accounting period, the day on which that accounting period begins. (2A) “The relevant day”, in relation to an election made by a non-UK resident company, means the day on which the company becomes UK resident.

• (4) In subsection (6) for “The election can be revoked” substitute “ An election can be revoked by the company which made it ”.

• (5) After subsection (6) insert—

(7) An election made by a UK resident company is revoked if the company ceases to be UK resident. (8) An election made by a non-UK resident company is revoked if, having become UK resident, the company ceases to be UK resident.

6

For sections 18G to 18I substitute—

(18G) (1) This section applies for the purposes of this Chapter for any relevant accounting period (“period X”) of a company (“company X”) in relation to a territory outside the United Kingdom (“territory X”) if— (a) there is an adjusted relevant profits amount in relation to territory X for period X, (b) the adjusted relevant profits amount includes diverted profits (see section 18H), and (c) none of the exemptions mentioned in section 18I applies for period X. (2) The diverted profits are to be left out of the adjusted relevant profits amount. (3) For the purposes of this Chapter “adjusted”, in relation to a relevant profits amount, is what the relevant profits amount would be if it were determined without reference to gains or losses which are chargeable gains or allowable losses for corporation tax purposes. (18H) (1) In section 18G(1)(b) “diverted profits” means so much of company X's total profits of period X as pass through the diverted profits gateway. (2) To determine the extent to which company X's total profits of period X pass through the diverted profits gateway, apply— (a) section 371BB of TIOPA 2010 (controlled foreign companies: the CFC charge gateway), and (b) except Chapter 8 of Part 9A of that Act, the other provisions referred to in that section, as if references to the CFC charge gateway were references to the diverted profits gateway. (3) In applying section 371BB of TIOPA 2010 and the other provisions referred to in it assume— (a) that company X is a CFC resident in territory X, (b) that period X is the CFC's accounting period, and (c) that company X's total profits of period X are the CFC's assumed total profits for the accounting period. (4) Subsection (3)(a) does not require it to be assumed that there is any change in the place or places at which company X carries on its activities. (5) Section 371BB of TIOPA 2010 and the other provisions referred to in it are also to be applied subject to sections 18HA to 18HE below. (6) In this section— (a) references to company X's total profits of period X are to those profits ignoring this Chapter and step 2 in section 4(3) of CTA 2010, and (b) references to section 371BB of TIOPA 2010 are to that section omitting subsection (2)(b). (18HA) Chapter 3 of Part 9A of TIOPA 2010 (the CFC charge gateway: determining which of Chapters 4 to 8 applies) applies for the purposes of section 18H(2) with the omission of— (a) section 371CA(10)(a), (b) in section 371CB(2), the words “or Chapter 8 (solo consolidation)”, (c) section 371CC(1)(b), (3)(b) and (c), (4) to (7), (9) and (10), (d) section 371CD, (e) section 371CE(2) to (9), and (f) section 371CG. (18HB) (1) Chapter 4 of Part 9A of TIOPA 2010 (the CFC charge gateway: profits attributable to UK activities) applies for the purposes of section 18H(2) with the following modifications. (2) The modifications are— (a) section 371DA(3)(g)(i) is to be omitted, and (b) in section 371DH(4), after “the accounting period”, in the second place it occurs, there is to be inserted “ or the United Kingdom ”. (3) Section 371VF(3) of TIOPA 2010 (definition of “related” person) is to be applied as relevant with the omission of paragraphs (b) and (c). (18HC) Chapter 5 of Part 9A of TIOPA 2010 (the CFC charge gateway: non-trading finance profits) applies for the purposes of section 18H(2) with the omission of— (a) in section 371EA(1), the words from “so far as” to the end, and (b) sections 371EB to 371EE. (18HD) Chapter 7 of Part 9A of TIOPA 2010 (the CFC charge gateway: captive insurance business) applies for the purposes of section 18H(2) with the omission of section 371GA(6)(b). (18HE) (1) Chapter 9 of Part 9A of TIOPA 2010 (exemptions for profits from qualifying loan relationships) applies for the purposes of section 18H(2) with the following modifications. (2) In section 371IA(2) and (11) the reference to a chargeable company is to be read as a reference to company X (as is the reference in section 371CB(8)); and references elsewhere in Chapter 9 to company C are to be read as references to company X. (3) For section 371IA(5) there is to be substituted— (5) 75% of the profits of each qualifying loan relationship are “exempt” under this Chapter. (4) In section 371IA(9)(a) the words “or Chapter 8 (solo consolidation)” are to be omitted. (5) Sections 371IB to 371IE are to be omitted. (6) Section 371IH(11)(a) is to be read ignoring the modification in section 18HC(b) above. (7) In section 371IJ references to the relevant corporation tax accounting period are to be read as references to period X and subsection (6) is to be omitted. (18I) (1) The exemptions referred to in section 18G(1)(c) are the exemptions set out in Chapters 11 to 14 of Part 9A of TIOPA 2010 (controlled foreign companies: exemptions from the CFC charge). (2) In applying those Chapters for the purposes of section 18G(1)(c)— (a) references to section 371BA(2)(b) of TIOPA 2010 are to be read as references to section 18G(1)(c), (b) the assumptions set out in subsection (3) are to be made, and (c) section 371VF(3) of TIOPA 2010 (definition of “related” person) is to be read with the omission of paragraphs (b) and (c). (3) For the purposes of subsection (2)(b), assume— (a) that the permanent establishment which company X has in territory X is a separate company from company X, (b) that the separate company is a CFC resident in territory X, (c) that period X and company X's other accounting periods for corporation tax purposes are accounting periods of the CFC for the purposes of Part 9A of TIOPA 2010, (d) that the CFC's assumed total profits for period X are the adjusted relevant profits amount, (e) that the CFC's assumed taxable total profits for period X are the same as the CFC's assumed total profits for period X, (f) that the CFC is connected with company X and is also connected or associated with any person with whom company X is connected or associated, and (g) that any person who has an interest in company X also has an interest in the CFC. (4) Chapters 11 to 14 of Part 9A of TIOPA 2010 are also to be applied subject to sections 18IA to 18ID below. (18IA) (1) Chapter 11 of Part 9A of TIOPA 2010 (controlled foreign companies: the excluded territories exemption) applies for the purposes of section 18G(1)(c) with the following modifications. (2) Sections 371KB(1)(b)(iii) and 371KH are to be omitted. (3) Section 371KC is to be omitted and the assumption set out in section 18I(3)(b) above in relation to the CFC's residence is to be applied instead; and references to “the CFC's territory” are to be read accordingly. (4) Section 371KD(3) is to be omitted and references to a CFC's accounting profits for an accounting period are to be read as references to the adjusted relevant profits amount. (5) Section 371KE(2)(b) is to be omitted. (6) Section 371KF is to be omitted. (7) In section 371KG(3) the reference to the CFC's equity or debt is to be read as a reference to company X's equity or debt (ignoring the assumption in section 18I(3)(a) above). (8) Section 371KI(2) and (3) is to be omitted. (9) In section 371KJ— (a) in subsection (2)(a), the reference to intellectual property held by the CFC is to be read as a reference to intellectual property held by company X (ignoring the assumption in section 18I(3)(a) above), and (b) in subsections (2)(b) and (c) and (4), references to the CFC are to be read as references to company X (ignoring that assumption). (18IB) Chapter 12 of Part 9A of TIOPA 2010 (controlled foreign companies: the low profits exemption) applies for the purposes of section 18G(1)(c) with the omission of section 371LB(2) and (4) and section 371LC(5) and (6). (18IC) (1) Chapter 13 of Part 9A of TIOPA 2010 (controlled foreign companies: the low profit margin exemption) applies for the purposes of section 18G(1)(c) with the following modifications. (2) In section 371MB— (a) subsection (2) is to be omitted, and (b) references to the CFC's accounting profits for an accounting period are to be read as references to the adjusted relevant profits amount determined before any deduction for interest. (18ID) (1) Chapter 14 of Part 9A of TIOPA 2010 (controlled foreign companies: the tax exemption) applies for the purposes of section 18G(1)(c) with the following modifications. (2) At step 1 in section 371NB(1)— (a) in the first paragraph, the reference to section 371TB of TIOPA 2010 is to be read as a reference to the assumption in section 18I(3)(b) above relating to the CFC's residence, and (b) the second paragraph is to be omitted. (3) References to the CFC's local chargeable profits arising in the accounting period are to be read as references to the adjusted relevant profits amount and, accordingly, sections 371NB(4) and 371NC(2) to (4) are to be omitted. (4) For the purposes of step 3 in section 371NB(1) the amount of the corresponding UK tax for the accounting period is to be determined in accordance with subsection (5) below; and section 371NE is to be omitted accordingly. (5) “The corresponding UK tax” is the amount of corporation tax which would be payable in respect of the adjusted relevant profits amount if it were subject in full to corporation tax, ignoring any credit which would be allowed against it under section 18(3) of TIOPA 2010 and assuming, where there is more than one rate of corporation tax applicable to period X, that it were chargeable at the average rate over period X.

7

After section 18P(2) insert—

(3) Subsection (2) does not apply in relation to— (a) a chargeable gain accruing on the disposal of an asset used, and used only, for the purposes of a trade so far as carried on by the company in the relevant foreign territory through the company's permanent establishment there, or (b) a chargeable gain accruing on the disposal of currency or of a debt within section 252(1) of TCGA 1992 where the currency or debt is or represents money in use for the purposes of a trade so far as carried on by the company in the relevant foreign territory through the company's permanent establishment there.

Lloyd’s underwriters

8

In Chapter 5 of Part 4 of FA 1994 (Lloyd's underwriters) after section 227B insert—

(227C) (1) This section applies for the purposes of section 18A(6) and (7) of the Corporation Tax Act 2009 (exemption for profits or losses of foreign permanent establishments: “relevant profits amount” and “relevant losses amount”). (2) Any regulations made under section 229(1)(d) below are to be ignored. (3) Profits or losses which are taken to arise to a corporate member in an underwriting year from its membership of one or more syndicates are to be left out of account in relation to any relevant accounting period so far as they are profits or losses of a previous underwriting year which began before the relevant day (as defined in section 18F of the 2009 Act (effect of election under section 18A)). (4) Profits or losses arising to a corporate member from assets forming part of a premium trust fund which are taken to be profits or losses of an underwriting year are to be left out of account in relation to any relevant accounting period so far as they are allocated under the rules or practice of Lloyds to a previous underwriting year which began before the relevant day (as defined in section 18F of the 2009 Act).

Plant and machinery allowances

9

In section 15 of CAA 2001 (plant and machinery allowances: qualifying activities) after subsection (2A) insert—

(2B) Subsection (2A) does not apply to the business so far as it consists of a plant or machinery lease under which the company is a lessor if any profits or losses arising from the lease are to be left out of account as mentioned in section 18C(3) of CTA 2009.

PART 3 — Other amendments

TMA 1970

10

TMA 1970 is amended as follows.

11

In section 55 (recovery of tax not postponed) in subsection (1) omit paragraph (d).

12

In section 59E (provision about when corporation tax due and payable) in subsection (11) for paragraph (b) substitute—

(b) to any sum charged on a company at step 5 in section 371BC(1) of TIOPA 2010 (controlled foreign companies) as if it were an amount of corporation tax;

.

13

In section 59F (arrangements for paying tax on behalf of group members) in subsection (6) for paragraph (b) and the “and” after it substitute—

(b) a sum charged on a company at step 5 in section 371BC(1) of TIOPA 2010 (controlled foreign companies) as if it were an amount of corporation tax, and

.

ICTA

14

In ICTA omit Chapter 4 of Part 17 (controlled foreign companies).

FA 1998

15

FA 1998 is amended as follows.

16

In section 32 (unrelieved surplus advance corporation tax) for subsection (5) substitute—

(5) The provision which may be made by regulations under this section includes provision for or in connection with enabling unrelieved surplus advance corporation tax to be set against liability to a sum charged at step 5 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies) as if it were an amount of corporation tax for an accounting period.

17

• (1) Schedule 18 (company tax returns) is amended as follows.

• (2) In paragraph 1 for “section 747(4)(a) of the Taxes Act 1988 (tax on profits of controlled foreign company)” substitute “ step 5 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies) ”.

• (3) In paragraph 8(1), in the third step, for paragraph 2 substitute—

(2) Any sum charged at step 5 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies).

FA 2000

18

Schedule 22 to FA 2000 (tonnage tax) is amended as follows.

19

• (1) Paragraph 54 is amended as follows.

• (2) In sub-paragraph (1)—

• (a) for “under section 747 of the Taxes Act 1988” substitute “ at step 5 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 (“TIOPA 2010”) ”,

• (b) for “controlled foreign company” (in both places) substitute “ CFC ”, and

• (c) at the end insert “ ; and, accordingly, the tonnage tax company is not to be a chargeable company for the purposes of Part 9A of TIOPA 2010 in relation to the CFC's accounting period in question. ”

• (3) For sub-paragraphs (2) to (5) substitute—

(2) In relation to a CFC which— (a) is a member of a tonnage tax group, and (b) is a tonnage tax company by virtue of the group's tonnage tax election, or would be if it were within the charge to corporation tax, the corporation tax assumptions within the meaning of Part 9A of TIOPA 2010 are to be taken to include the following assumption. (3) The CFC is to be assumed to be a single company that is a tonnage tax company. (4) Nothing in section 371SL(1) of TIOPA 2010 affects sub-paragraphs (2) and (3) above. (5) In this paragraph “CFC” has the same meaning as in Part 9A of TIOPA 2010.

20

• (1) Paragraph 57 is amended as follows.

• (2) In sub-paragraph (1)(b) for the words from “controlled” to the end substitute “ CFC apportioned to the company at step 3 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010. ”

• (3) For sub-paragraph (4) substitute—

(4) For the purposes of sub-paragraph (1)(b)— (a) “tonnage profits” means so much of the CFC's chargeable profits for its accounting period in question as, applying the corporation tax assumptions, are calculated in accordance with paragraph 4 of this Schedule; and (b) so much of those chargeable profits as are tonnage profits shall be treated as apportioned at step 3 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 in the same proportions as those profits (taken generally) are apportioned. (4A) In sub-paragraphs (1)(b) and (4) terms defined in Part 9A of the Taxation (International and Other Provisions) Act 2010 have the same meaning as in that Part.

FA 2002

21

In FA 2002 omit section 90 (controlled foreign companies and treaty non-resident companies).

ITA 2007

22

• (1) Section 725 of ITA 2007 (transfer of assets abroad: reduction in amount charged where controlled foreign company involved) is amended as follows.

• (2) For subsection (1) substitute—

(1) This section applies if— (a) under Part 9A of TIOPA 2010 (controlled foreign companies), the CFC charge is charged in relation to a CFC's accounting period, and (b) apart from this section, the amount of income treated as arising to an individual under section 721 for a tax year would be or include a sum forming part of the CFC's chargeable profits for that accounting period.

• (3) In subsection (2)—

• (a) for “controlled foreign company's” (in both places) substitute “CFC's”, and

• (b) in the definition of “CA” for “chargeable amount” substitute “ CFC's chargeable profits for that accounting period so far as apportioned to chargeable companies at step 3 in section 371BC(1) of TIOPA 2010 ”.

• (4) For subsection (3) substitute—

(3) Terms used in this section which are defined in Part 9A of TIOPA 2010 have the same meaning as in that Part.

FA 2007

23

• (1) Paragraph 3 of Schedule 11 to FA 2007 (technical provision made by insurers) is amended as follows.

• (2) In sub-paragraph (1) for paragraph (b) and the “or” after it substitute—

(b) a CFC (within the meaning of Part 9A of the Taxation (International and Other Provisions) Act 2010) which carries on general business, or

.

• (3) In sub-paragraph (2) for paragraph (b) substitute—

(b) a company which for the purposes of Part 9A of the Taxation (International and Other Provisions) Act 2010 has an interest in a CFC (within the meaning of that Part) which carries on general business.

CTA 2009

24

CTA 2009 is amended as follows.

25

In section A1 (overview of the Corporation Tax Acts) in subsection (2)—

• (a) omit paragraph (b), and

• (b) before paragraph (k) (as inserted by paragraph 136 of Schedule 16 to this Act) insert—

(ja) Part 9A of that Act (controlled foreign companies),

.

26

In section 486D (disguised interest: arrangement with no tax avoidance purpose) omit subsections (5) and (6).

27

• (1) Section 486E (disguised interest: excluded shares) is amended as follows.

• (2) In subsection (7)(c) for “relevant controlled foreign company” substitute “ CFC within the meaning of Part 9A of TIOPA 2010 ”.

• (3) For subsections (9) and (10) substitute—

(9) For the purposes of subsection (7)(b) a company (“C”) is a relevant joint venture company if— (a) the holding company is one of two persons who, taken together, control C, (b) the holding company has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C, and (c) the second person has interests, rights and powers representing— (i) at least 40%, but (ii) no more than 55%, of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C. (10) For the purposes of subsection (9)— (a) section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purpose of determining if two persons, taken together, control a company, and (b) section 371RD of that Act applies for the purpose of determining if the requirements of paragraphs (b) and (c) are met in any case.

• (4) Omit subsection (11).

28

In section 521E (unallowable purpose) omit subsections (5) and (6).

29

Omit section 870 (intangible fixed assets: assumptions to be made in the case of a controlled foreign company) and the cross-heading before it.

30

In Chapter 2 of Part 9A (exemption of distributions received by small companies) after section 931C insert—

(931CA) (1) Subsection (2) applies if— (a) under Part 9A of TIOPA 2010 (controlled foreign companies), the CFC charge is charged in relation to a CFC's accounting period, (b) a dividend or other distribution of the CFC is received in an accounting period (for corporation tax purposes) of the recipient in which the recipient is a small company, (c) the whole or a part of the distribution is paid in respect of profits which are chargeable profits of the CFC for its accounting period mentioned in paragraph (a), and (d) the requirements of section 931B(b) to (d) are met in relation to the distribution. (2) The distribution is exempt. (3) If part of the distribution is not paid in respect of chargeable profits— (a) for the purposes of this Part and Part 2 of TIOPA 2010 that part of the distribution is treated as a separate distribution, and (b) subsection (2) does not apply to that separate distribution. (4) In this section references to chargeable profits of the CFC are limited to chargeable profits so far as apportioned to chargeable companies at step 3 in section 371BC(1) of TIOPA 2010.

31

In section 931E (distributions from controlled companies) for subsections (3) to (5) substitute—

(3) Condition B is that— (a) the recipient is one of two persons who, taken together, control the payer, (b) the recipient has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer, and (c) the second person has interests, rights and powers representing— (i) at least 40%, but (ii) no more than 55%, of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer. (4) Section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purposes of this section. (5) Section 371RD of TIOPA 2010 applies for the purpose of determining if the requirements of subsection (3)(b) and (c) are met in any case. (6) In subsections (4) and (5) references to section 371RD of TIOPA 2010 are to that section omitting subsection (3)(c) and (d).

FA 2009

32

Part 2 of Schedule 16 to FA 2009 (amendment of exempt activities exemption) is amended as follows.

33

In paragraph 12—

• (a) in sub-paragraph (2) omit paragraph (b) and the “and” before it, and

• (b) after sub-paragraph (2) insert—

(3) The amendments made by this Part have no effect in relation to a qualifying holding company.

34

Omit paragraph 15.

35

In paragraph 16—

• (a) in paragraph (a) after “2009” insert “ but before 1 January 2013 ”, and

• (b) omit paragraph (b) and the “and” before it.

36

In the cross-heading before paragraph 17 for “during three years before 1 July 2012” substitute “ from 1 July 2009 ”.

CTA 2010

37

CTA 2010 is amended as follows.

38

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

39

• (1) Section 938M (group mismatch schemes: controlled foreign companies) is amended as follows.

• (2) In subsection (1) for the words from the beginning to “company” substitute “ Section 371SL(1) of TIOPA 2010 (assumption that a CFC ”.

• (3) In subsection (2)—

• (a) for “chargeable profits” substitute “ assumed taxable total profits ”, and

• (b) for “Chapter 4 of Part 17 of ICTA” substitute “ Part 9A of TIOPA 2010 ”.

40

In section 1139 (definition of “tax advantage”) in subsection (2) —

• (a) omit the “or” after paragraph (d), and

• (b) after paragraph (d) insert—

(da) the avoidance or reduction of a charge or assessment to a charge under Part 9A of TIOPA 2010 (controlled foreign companies), or

.

TIOPA 2010

41

TIOPA 2010 is amended as follows.

42

• (1) Section 179 (compensating payment if advantaged person is controlled foreign company) is amended as follows.

• (2) For subsection (1) substitute—

(1) Subsection (2) applies if— (a) the actual provision is provision made or imposed in relation to a CFC, (b) for the purpose of determining the CFC's assumed taxable total profits for an accounting period, the CFC's profits and losses are to be calculated in accordance with section 147(3) or (5) in the case of that provision, (c) in relation to the accounting period, sums are charged on chargeable companies at step 5 in section 371BC(1), and (d) in consequence of the application of section 147(3) or (5) as mentioned in paragraph (b), the total of those sums is more than it would otherwise be.

• (3) In subsection (2) for “controlled foreign company” substitute “ CFC ”.

• (4) In subsection (3)—

• (a) in paragraph (a) for “companies mentioned in subsection (1)(c)” substitute “ chargeable companies on which a sum is charged ”, and

• (b) in paragraph (b) for “tax chargeable under section 747(4) of ICTA” substitute “ the CFC charge ”.

• (5) For subsection (4) substitute—

(4) In this section terms which are defined in Part 9A have the same meaning as they have in that Part. (5) For the purposes of subsections (1)(c) and (d) and (3)(a) assume that any claims made under Chapter 9 of Part 9A for the accounting period were not made.

43

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

44

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

45

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

Insurance Companies (Reserve) (Tax) Regulations 1996 (S.I. 1996/2991)

46

The Insurance Companies (Reserve) (Tax) Regulations 1996 (S.I. 1996/2991) are amended as follows.

47

• (1) Regulation 8A is amended as follows.

• (2) In paragraph (1)—

• (a) in sub-paragraph (a) for “controlled foreign company” substitute “ CFC (within the meaning of Part 9A of the Taxation (International and Other Provisions) Act 2010) ”, and

• (b) in sub-paragraph (b) for “controlled foreign company” substitute “ CFC ”.

• (3) In paragraph (4)—

• (a) for “controlled foreign company's” substitute “CFC's”, and

• (b) for “the company” substitute “ the CFC ”.

48

In regulation 8B for “controlled foreign company” substitute “ CFC (within the meaning of Part 9A of the Taxation (International and Other Provisions) Act 2010) ”.

PART 4 — Commencement provision

Commencement provision relating to controlled foreign companies etc

49

• (1) The CFC charge is charged in relation to accounting periods of CFCs beginning on or after 1 January 2013.

• (2) The first accounting period of a company which is a CFC at the beginning of 1 January 2013 begins at that time.

• (3) Sub-paragraph (2) is subject to paragraph 50 below.

• (4) This paragraph is to be read as if contained in Part 9A of TIOPA 2010.

50

• (1) The repeal of Chapter 4 of Part 17 of ICTA by paragraph 14 above has no effect for accounting periods within the meaning of that Chapter (see section 751) beginning before 1 January 2013.

• (2) Sub-paragraphs (3) and (4) apply to a company which—

• (a) has an accounting period within the meaning of Chapter 4 of Part 17 of ICTA beginning before 1 January 2013 but ending on or after that date, and

• (b) is not, at the end of 31 December 2012, a life assurance subsidiary.

• (3) The company is not to have an accounting period within the meaning of Part 9A of TIOPA 2010 before its accounting period mentioned in sub-paragraph (2)(a) ends.

• (4) If the company is a CFC immediately after the end of its accounting period mentioned in sub-paragraph (2)(a), its first accounting period within the meaning of Part 9A of TIOPA 2010 begins at that time.

• (5) Sub-paragraph (6) applies to a company which—

• (a) apart from sub-paragraph (6), would have an accounting period within the meaning of Chapter 4 of Part 17 of ICTA beginning before 1 January 2013 but ending on or after that date, and

• (b) is, at the end of 31 December 2012, a life assurance subsidiary.

• (6) The company's accounting period mentioned in sub-paragraph (5)(a) ends at the end of 31 December 2012 (and, accordingly, paragraph 49(2) above applies in relation to the company if it is a CFC at the beginning of 1 January 2013).

• (7) “Life assurance subsidiary” means a company in which a life assurance company has a relevant interest as determined in accordance with Chapter 15 of Part 9A of TIOPA 2010.

• (8) “Life assurance company” means a company carrying on life assurance business within the meaning of Part 2 of this Act (see section 56).

• (9) The amendments made by paragraphs 11, 12, 13, 16, 17, 19, 20, 21, 22, 23, 25, 26, 27(2) and (4), 28, 29, 38, 39, 42, 47 and 48 above are to be ignored so far as appropriate in consequence of the sub-paragraphs above.

51

The amendment made by paragraph 27(3) above has no effect for relevant periods beginning before 1 January 2013 (and the relevant provisions of Chapter 4 of Part 17 of ICTA continue to have effect accordingly notwithstanding the repeal of that Chapter by paragraph 14 above).

52

The amendment made by paragraph 30 above has no effect in relation to dividends or other distributions received before 1 January 2013.

53

The amendment made by paragraph 31 above has no effect in relation to dividends or other distributions received before 1 January 2013 (and the relevant provisions of Chapter 4 of Part 17 of ICTA continue to have effect accordingly notwithstanding the repeal of that Chapter by paragraph 14 above).

54

The amendments made by paragraphs 33 to 36 above are treated as having come into force on 30 June 2012.

Commencement provision relating to foreign permanent establishments

55

• (1) The amendments made by paragraphs 3, 5 and 9 above come into force on 1 January 2013; but the amendment made by paragraph 5(3) above has no effect in relation to elections made before that date.

• (2) The amendments made by paragraphs 4 and 6 to 8 above have effect for relevant accounting periods beginning on or after 1 January 2013.

PART 5 — Transitional provision

First accounting periods

56

• (1) This paragraph applies in relation to a CFC the first accounting period of which is determined in accordance with paragraph 49(2) or 50(4) above.

• (2) For the purposes of sections 371SD(6), 371SK(3) and 371SM(3) of TIOPA 2010, assume that the CFC became a CFC at the time mentioned in paragraph 49(2) or 50(4) (as the case may be).

Elections under section 9A of CTA 2010

57

• (1) This paragraph applies if—

• (a) during a company's accounting period within the meaning of Chapter 4 of Part 17 of ICTA a notice is given in relation to the company under paragraph 4(2C) of Schedule 24 to ICTA,

• (b) as a result of that, the company is to be assumed under paragraph 4(2C) of Schedule 24 to ICTA to have made an election under section 9A of CTA 2010,

• (c) the assumed election—

• (i) does not cease to have effect before the end of the company's last accounting period within the meaning of Chapter 4 of Part 17 of ICTA to begin before 1 January 2013, and

• (ii) apart from the repeal of that Chapter by paragraph 14 above, would not have ceased to have effect at the end of that period, and

• (d) the company is a CFC immediately after the end of its last accounting period mentioned in paragraph (c) and its first accounting period within the meaning of Part 9A of TIOPA 2010 begins at that time accordingly.

• (2) In the application of Part 9A of TIOPA 2010 in relation to the company as a CFC, the assumption mentioned in sub-paragraph (1)(b) is to continue to be made as if it were required to be made by section 371SH(2) of TIOPA 2010.

Exempt periods

58

• (1) This paragraph applies if—

• (a) there is an exempt period in relation to a company under Part 3A of Schedule 25 to ICTA (cases in which section 747(3) of ICTA does not apply) which begins before 1 January 2013,

• (b) the exempt period—

• (i) does not end before the end of the company's last accounting period within the meaning of Chapter 4 of Part 17 of ICTA to begin before 1 January 2013, and

• (ii) apart from the repeal of that Chapter by paragraph 14 above, would not have ended at the end of that period, and

• (c) the company is a CFC immediately after the end of its last accounting period mentioned in paragraph (b) and its first accounting period within the meaning of Part 9A of TIOPA 2010 begins at that time accordingly.

• (2) The remainder of the exempt period is to be treated as an exempt period of the company for the purposes of Chapter 10 of Part 9A of TIOPA 2010.

• (3) The remainder of the exempt period is to be determined in accordance with paragraph 15F of Schedule 25 to ICTA and, for this purpose, assume that Chapter 4 of Part 17 of ICTA continues to apply in relation to the company as if that Chapter had not been repealed by paragraph 14 above; and section 371JD of TIOPA 2010 is to be ignored accordingly.

• (4) Section 371JB of TIOPA 2010 applies in relation to the exempt period as if subsection (1)(b) and (c) were omitted.

• (5) Section 371JE of TIOPA 2010 applies in relation to the exempt period as if subsection (1)(b) were omitted.

• (6) Section 371JF of TIOPA 2010 does not affect the application of the exempt period exemption or section 371JE of TIOPA 2010 by virtue of this paragraph.

Designer rate tax provisions

59

• (1) The Controlled Foreign Companies (Designer Rate Tax Provisions) Regulations 2000 (S.I. 2000/3158) are to have effect for the purposes of section 371ND of TIOPA 2010 as if they had been made by the HMRC Commissioners under that section.

• (2) The power of the HMRC Commissioners to make regulations under that section includes power to revoke or amend the 2000 Regulations for the purposes of that section.

SCHEDULE 21

Restriction of relief available in respect of decommissioning expenditure

1

Part 8 of CTA 2010 (oil activities) is amended as follows.

2

In section 330 (supplementary charge in respect of ring fence trades), at the end of subsection (2) insert—

See also sections 330A and 330B (which provide for the amount of adjusted ring fence profits to be further adjusted where decommissioning expenditure has been taken into account).

3

After section 330 insert—

(330A) (1) This section applies where— (a) any decommissioning expenditure is taken into account in calculating the amount mentioned in paragraph (a) of subsection (3) of section 330 or the amount mentioned in paragraph (b) of that subsection, and (b) if that expenditure were not so taken into account, the amount of the adjusted ring fence profits of the company for the accounting period would be greater than nil. (2) In calculating for the purposes of section 330(1) the amount of the adjusted ring fence profits of the company for the accounting period, there is to be added an amount equal to the appropriate fraction of the used-up amount of that expenditure. (3) For the purposes of this section— - “the appropriate fraction” is$SC – 20 % SC$where SC is the percentage specified in section 330(1) for the accounting period, and - “the used-up amount”, in relation to any expenditure, is the difference between— 1. the adjusted ring fence profits of the company for the accounting period determined in the absence of this section (which may be nil), and 2. what the adjusted ring fence profits of the company for that accounting period would be if that expenditure were not taken into account as mentioned in subsection (1). (4) In determining for the purposes of this section whether, and to what extent, any losses which have been taken into account as mentioned in subsection (1) are attributable to decommissioning expenditure— (a) assume that any amounts of any other expenditure which could be taken into account in calculating those losses are taken into account before any amounts of decommissioning expenditure, and (b) where any losses have been surrendered in accordance with Part 5, the company must specify, in accordance with a basis determined jointly by the company, the surrendering company (if different) and any other claimant company, whether any of those losses is attributable to decommissioning expenditure. (5) But if paragraph (a) of subsection (4) would work unfavourably in the company's case, the company may elect for that paragraph not to apply in relation to it and for any amounts of expenditure which could be taken into account in calculating those losses instead to be taken into account in the order specified in the election. (6) In determining for the purposes of this section the used-up amount of decommissioning expenditure, assume that any other amounts that could be deducted in calculating the adjusted ring fence profits of the company for the accounting period have already been so deducted. (7) But if subsection (6) would work unfavourably in the company's case, the company may elect for that subsection not to apply in relation to it and for any amounts that could be deducted in calculating those adjusted ring fence profits instead to be deducted in the order specified in the election. (8) For the purposes of this section, any deduction made under section 330B is to be disregarded. (9) This section does not apply in relation to any accounting period for which the percentage specified in section 330(1) is less than or equal to 20% (including any accounting period beginning before 24 March 2011 and ending on or after that date). (10) In this section— - “claimant company” and “surrendering company” are to be read in accordance with Part 5 (see section 188), and - “decommissioning expenditure” has the meaning given by section 330C. (330B) (1) This section applies where— (a) any decommissioning expenditure is taken into account in calculating the assessable profit accruing to a participator in any chargeable period from an oil field, and (b) if that expenditure were not so taken into account, the amount of petroleum revenue tax with which the participator would be chargeable in respect of the field for the chargeable period would be greater than nil. (2) In calculating for the purposes of section 330(1) the amount of the participator's adjusted ring fence profits for the relevant accounting period, there is to be deducted an amount equal to the appropriate fraction of the PRT difference. (3) For the purposes of this section— - “the appropriate fraction” is$SC – 20 % SC$where SC is the percentage specified in section 330(1) for the relevant accounting period, and - “the PRT difference” is the difference between— 1. the amount of petroleum revenue tax with which the participator is chargeable for the chargeable period (which may be nil), and 2. the amount of petroleum revenue tax with which the participator would be chargeable for that chargeable period if the decommissioning expenditure were not taken into account as mentioned in subsection (1). (4) In determining for the purposes of this section whether, and to what extent, any allowable losses which have been taken into account as mentioned in subsection (1) are attributable to decommissioning expenditure, assume that any amounts of any other expenditure which could be taken into account in calculating those losses are taken into account before any amounts of decommissioning expenditure. (5) But if subsection (4) would work unfavourably in the participator's case, the participator may elect for that subsection not to apply in relation to it and for any amounts of expenditure which could be taken into account in calculating those losses instead to be taken into account in the order specified in the election. (6) This section does not apply in relation to any accounting period for which the percentage specified in section 330(1) is less than or equal to 20% (including any accounting period beginning before 24 March 2011 and ending on or after that date). (7) In this section— - “assessable profit” and “allowable loss” have the same meaning as in Part 1 of OTA 1975 (see section 2 of that Act), - “decommissioning expenditure” has the meaning given by section 330C, and - “the relevant accounting period”— 1. in a case where section 301 applies, is to be construed in accordance with subsection (7) of that section, and 2. in any other case, means the accounting period for which a deduction in respect of any petroleum revenue tax with which the participator may be chargeable for the chargeable period mentioned in subsection (1) would be made under section 299(2) (deduction of PRT in calculating income for corporation tax purposes). (330C) (1) In sections 330A and 330B “decommissioning expenditure” means expenditure incurred in connection with— (a) demolishing any plant or machinery, (b) preserving any plant or machinery pending its reuse or demolition, (c) preparing any plant or machinery for reuse, (d) arranging for the reuse of any plant or machinery, or (e) the restoration of any land. (2) It is immaterial for the purposes of subsection (1)(b) whether the plant or machinery is reused, is demolished or is partly reused and partly demolished. (3) It is immaterial for the purposes of subsection (1)(c) and (d) whether the plant or machinery is in fact reused. (4) In subsection (1)(e) “restoration” includes landscaping. (5) The Treasury may by order amend this section. (6) An order under subsection (5) may include transitional provision and savings.

4

In section 7 of FA 2011 (increase in rate of supplementary charge), in subsection (6), at the end insert—

See also sections 330A and 330B of CTA 2010 (which have effect in relation to the separate accounting period consisting of so much of the straddling period as falls on or after 24 March 2011).

Extension of loss relief available in respect of decommissioning expenditure

5

• (1) In Chapter 2 of Part 4 of CTA 2010 (relief for trade losses), section 40 (ring fence trades: extension of periods for which relief may be given) is amended as follows.

• (2) In subsection (1)(b), for the words from “for which” to the end substitute “ for which any allowances under section 164 or 403 of CAA 2001 are made to the company in respect of decommissioning expenditure ”.

• (3) In subsection (3)—

• (a) for “the allowance” substitute “ the sum of the allowances ”, and

• (b) for “that allowance” substitute “ that amount ”.

• (4) After that subsection insert—

(3A) In this section “decommissioning expenditure” has the meaning given by section 330C.

Application

6

• (1) The amendments made by this Schedule have effect in relation to expenditure incurred in connection with decommissioning carried out on or after 21 March 2012.

• (2) In sub-paragraph (1) “decommissioning” means anything falling within any of paragraphs (a) to (e) of section 330C(1) of CTA 2010 (as inserted by this Schedule).

SCHEDULE 22

Amendments of Chapter 7 of Part 8 of CTA 2010

1

In Part 8 of CTA 2010 (oil activities), Chapter 7 (reduction of supplementary charge for certain new oil fields) is amended as follows.

2

In section 334 (company's pool of field allowances), for “new oil fields” substitute “ eligible oil fields ”.

3

• (1) Section 337 (initial licensee to hold a field allowance) is amended as follows.

• (2) In subsection (1)—

• (a) for “an initial licensee in a new oil field” substitute “ a licensee in an additionally-developed oil field or a new oil field (an “eligible oil field”) on the authorisation day ”, and

• (b) at the end insert “ (and accordingly may hold more than one field allowance for the field at the same time) ”.

• (3) In subsection (2), omit “initial”.

• (4) The heading of that section becomes “ Licensee to hold field allowance ”.

4

In section 338 (holding a field allowance on acquisition of equity share), for “a new oil field” substitute “ an eligible oil field ”.

5

In section 339 (unactivated amount of field allowance), in subsections (1) and (3), for “a new oil field” substitute “ an eligible oil field ”.

6

• (1) Section 340 (introduction to section 341) is amended as follows.

• (2) In subsection (1), for “a new oil field” substitute “ an eligible oil field ”.

• (3) In subsection (5), for “the new oil field” substitute “ the field ”.

7

• (1) Section 341 (activation of field allowance) is amended as follows.

• (2) In subsection (1), for “the new oil field” substitute “ the eligible oil field ”.

• (3) After subsection (3) insert—

(4) Subsection (5) applies for the purpose of determining the amount of a company's field allowance for an eligible oil field (“the relevant field allowance”) to be activated in a case where— (a) the company holds one or more other field allowances for the field, and (b) at the time when the company began to hold the relevant field allowance, the company already held one or more of those other field allowances (an “earlier field allowance”). (5) The amount of the company's relevant income from the field in the accounting period is to be reduced (but not to below nil) by the amount of any earlier field allowance activated in respect of the accounting period. (6) In a case where the company began to hold two or more field allowances at the same time, the company may determine the order in which the company is to be regarded for the purposes of this section as having begun to hold them.

8

In section 342 (introduction to sections 343 and 344), in subsections (1) and (6), for “a new oil field” substitute “ an eligible oil field ”.

9

In section 343 (reference periods), in subsection (3), for “the new oil field” substitute “ the eligible oil field ”.

10

• (1) Section 344 (activation of field allowance) is amended as follows.

• (2) In subsection (1), for “the new oil field” substitute “ the eligible oil field ”.

• (3) In subsection (4), for “the new oil field” substitute “ the field ”.

• (4) After that subsection insert—

(5) Subsection (6) applies for the purpose of determining the amount of a company's field allowance for an eligible oil field (“the relevant field allowance”) to be activated in a case where— (a) the company holds one or more other field allowances for the field, and (b) at the time when the company began to hold the relevant field allowance, the company already held one or more of those other field allowances (an “earlier field allowance”). (6) The amount of the company's relevant income from the field in the reference period is to be reduced (but not to below nil) by the amount of any earlier field allowance activated in respect of the reference period. (7) In a case where the company began to hold two or more field allowances at the same time, the company may determine the order in which the company is to be regarded for the purposes of this section as having begun to hold them.

11

• (1) Section 345 (introduction to sections 346 and 347) is amended as follows.

• (2) In subsection (2)—

• (a) for “a new oil field” substitute “ an eligible oil field ”, and

• (b) for “the new oil field” substitute “ the field ”.

• (3) In subsections (3) and (4), for “the new oil field” substitute “ the field ”.

• (4) In subsection (6), for “a new oil field” substitute “ an eligible oil field ”.

12

• (1) Section 346 (reduction of field allowance if equity disposed of) is amended as follows.

• (2) In subsection (1), for “the new oil field” (in the first place it occurs) substitute “ the eligible oil field ”.

• (3) In the definitions of “E1” and “E2”, for “the new oil field” substitute “ the field ”.

13

• (1) Section 347 (acquisition of field allowance if equity acquired) is amended as follows.

• (2) In subsection (1), for “the new oil field” substitute “ the eligible oil field ”.

• (3) In subsection (2)—

• (a) for “the new oil field” (in the first place it occurs) substitute “ the eligible oil field ”, and

• (b) for “the new oil field” (in the second place it occurs) substitute “ the field ”.

• (4) In subsection (4), for “the new oil field” substitute “ the field ”.

14

• (1) Section 349 (orders) is amended as follows.

• (2) In subsection (1), before “qualifying oil fields” insert “ additionally-developed oil fields or ”.

• (3) In subsection (2), for “new oil field” (in both places) substitute “ eligible oil field ”.

• (4) After subsection (2) insert—

(2A) The Commissioners for Her Majesty's Revenue and Customs may by order make provision about the meaning of any term used in this Chapter.

• (5) For subsection (3) substitute—

(3) The provision that may be made by an order under this section includes— (a) provision amending this Chapter, (b) provision that has effect in relation to times before the order is made and does not increase any person's liability to tax, and (c) incidental, supplemental, consequential, transitional or saving provision, including provision amending, repealing or revoking any provision made by or under this Act.

15

Before section 350 insert—

(349A) (1) In this Chapter an oil field is an “additionally-developed oil field” if— (a) a national authority has authorised a project described in an addendum to the consent for development for the oil field, and (b) the project meets such conditions as may be specified in an order made by the Commissioners for Her Majesty's Revenue and Customs. (2) In this section— - “consent for development”, in relation to an oil field, does not include consent which is limited to the purpose of testing the characteristics of an oil-bearing area, - “development”, in relation to an oil field, means winning oil from the field otherwise than in the course of searching for oil or drilling wells, and - “national authority” means— 1. the Secretary of State, or 2. a Northern Ireland department. (3) An order under this section may include provision having effect in relation to times before it is made, provided that it does not increase any person's liability to tax. (4) No order may be made under this section unless a draft of the statutory instrument containing it has been laid before and approved by a resolution of the House of Commons.

16

• (1) Section 357 (other definitions) is amended as follows.

• (2) For the definition of “authorisation day” substitute—

“authorisation day” means— (a) in relation to an additionally-developed oil field, the day when the project mentioned in section 349A(1) is authorised, and (b) in relation to a new oil field, the day when development of the field is authorised as mentioned in section 350(1)(b),

.

• (3) After that definition insert—

• “eligible oil field” means an oil field which is an additionally-developed oil field or a new oil field,

.

• (4) Omit the definition of “initial licensee”.

• (5) In the definition of “relevant income”, for “a new oil field” substitute “ an eligible oil field ”.

17

The heading of the Chapter becomes “ REDUCTION OF SUPPLEMENTARY CHARGE FOR ELIGIBLE OIL FIELDS ”.

Consequential amendments

18

• (1) Part 8 of CTA 2010 (oil activities) is amended as follows.

• (2) In section 270 (overview of Part)—

• (a) in subsection (7), for “certain new oil fields” substitute “ eligible oil fields ”, and

• (b) in subsection (8), for paragraph (c) substitute—

(c) eligible oil field”, see section 357.

• (3) In section 330 (supplementary charge in respect of ring fence trades), in subsection (5), for “certain new oil fields” substitute “ eligible oil fields ”.

19

• (1) Schedule 4 to CTA 2010 (index of defined expressions) is amended as follows.

• (2) At the appropriate place insert—

eligible oil field (in Chapter 7 of Part 8)	section 357

;

“additionally-developed oil field (in Chapter 7 of Part 8)	section 349A

.

• (3) Omit the entry relating to “initial licensee (in Chapter 7 of Part 8)”.

20

In section 63 of FA 2011 (reduction of supplementary charge for new oil fields), omit subsection (3).

Commencement

21

• (1) The amendments made by paragraphs 14, 15 and 16(3) come into force on the day on which this Act is passed.

• (2) The other amendments made by this Schedule come into force in accordance with provision contained in an order made by the Treasury.

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

• (a) make different provision for different purposes;

• (b) provide for such amendments to have effect in relation to times before the order is made.

22

• (1) The Commissioners for Her Majesty's Revenue and Customs may by order make any incidental, supplemental, consequential, transitional or saving provision in consequence of the amendments made by this Schedule.

• (2) An order under this paragraph may—

• (a) amend, repeal or revoke any provision made by or under CTA 2010;

• (b) include provision having effect in relation to times before it is made, provided that it does not increase any person's liability to tax.

SCHEDULE 23

PART 1 — Northern Ireland long haul rates of duty from 1 November 2011 to 31 March 2012

1

In section 30 of FA 1994 (air passenger duty: rates of duty) after subsection (4A) insert—

(4B) Subsection (4C) applies if— (a) the passenger's journey is a relevant Northern Ireland journey, and (b) apart from subsection (4C), subsection (2) would not apply to the journey. (4C) The applicable rate in subsection (2) applies to the journey instead of the applicable rate in subsection (3), (4) or (4A) (as the case may be). (4D) A passenger's journey is a “relevant Northern Ireland journey”— (a) in the case of a journey which has only one flight, if the flight begins in Northern Ireland, and (b) in any other case, if the first flight of the journey— (i) begins in Northern Ireland, and (ii) is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.

2

In article 3 of the Air Passenger Duty (Connected Flights) Order 1994 (S.I. 1994/1821) for “section 30(6), or section 31(3),” substitute “ Chapter 4 of Part 1 ”.

3

The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 November 2011 but before 1 April 2012.

PART 2 — Rates of duty from 1 April 2012

4

• (1) Section 30 of FA 1994 (air passenger duty: rates of duty) is amended as follows.

• (2) In subsection (2)—

• (a) in paragraph (a) for “£12” substitute “ £13 ”, and

• (b) in paragraph (b) for “£24” substitute “ £26 ”.

• (3) In subsection (3)—

• (a) in paragraph (a) for “£60” substitute “ £65 ”, and

• (b) in paragraph (b) for “£120” substitute “ £130 ”.

• (4) In subsection (4)—

• (a) in paragraph (a) for “£75” substitute “ £81 ”, and

• (b) in paragraph (b) for “£150” substitute “ £162 ”.

• (5) In subsection (4A)—

• (a) in paragraph (a) for “£85” substitute “ £92 ”, and

• (b) in paragraph (b) for “£170” substitute “ £184 ”.

• (6) After subsection (4A) insert—

(4B) Subsection (4C) applies if— (a) the passenger's journey is a relevant Northern Ireland journey, and (b) apart from subsection (4C), subsection (2) would not apply to the journey. (4C) The applicable rate in subsection (2) applies to the journey instead of the applicable rate in subsection (3), (4) or (4A) (as the case may be). (4D) A passenger's journey is a “relevant Northern Ireland journey”— (a) in the case of a journey which has only one flight, if the flight begins in Northern Ireland, and (b) in any other case, if the first flight of the journey— (i) begins in Northern Ireland, and (ii) is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.

5

In article 3 of the Air Passenger Duty (Connected Flights) Order 1994 (S.I. 1994/1821) for “section 30(6), or section 31(3),” substitute “ Chapter 4 of Part 1 ”.

6

The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2012.

PART 3 — Devolution of Northern Ireland long haul rates of duty

7

Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

8

• (1) Section 30 (rates of duty) is amended as follows.

• (2) After subsection (1) insert—

(1A) Subsection (1) does not apply to the carriage of a chargeable passenger to which section 30A below (Northern Ireland long haul rates of duty) applies.

• (3) Omit subsections (4B) to (4D) (as inserted by paragraph 4(6) above).

• (4) The amendments made by this paragraph have effect in relation to the carriage of passengers beginning on or after the relevant day as defined in section 30A of FA 1994 (as inserted by paragraph 9 below).

9

After section 30 insert—

(30A) (1) This section applies to the carriage of a chargeable passenger if— (a) the carriage begins on or after the relevant day, (b) the only flight, or the first flight, of the passenger's journey begins at a place in Northern Ireland, (c) the passenger's journey does not end at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A, and (d) if the passenger's journey has more than one flight, the first flight is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A. (2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate determined as follows. (3) If the passenger's journey ends at a place in a territory specified in Part 2 of Schedule 5A— (a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, and (b) in any other case, the rate is the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph. (4) If the passenger's journey ends at a place in a territory specified in Part 3 of Schedule 5A— (a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, and (b) in any other case, the rate is the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph. (5) If the passenger's journey ends at any other place— (a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, and (b) in any other case, the rate is the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph. (6) The rate of £0 may be set for the purposes of any paragraph. (7) The same rate may be set for the purposes of two or more paragraphs. (8) Subsections (5) to (7) and (10) to (12) of section 30 apply for the purposes of this section as they apply for the purposes of that section. (9) “The relevant day” means the day appointed as such by an order. (10) Section 42(4) and (5) does not apply to an order under subsection (9). (11) None of the following applies to any matter in respect of which this section authorises provision to be made by an Act of the Northern Ireland Assembly— (a) any paragraph of Schedule 2 or 3 to the Northern Ireland Act 1998 (excepted and reserved matters); (b) section 63 of that Act (financial acts of the Assembly). (12) A Bill containing provision authorised by this section may not be passed by the Northern Ireland Assembly except in pursuance of a recommendation which— (a) is made by the Minister of Finance and Personnel, and (b) is signified to the Assembly by the Minister or on the Minister's behalf. (13) A Bill containing provision authorised by this section may not be passed by the Northern Ireland Assembly without cross-community support (as defined in section 4(5) of the Northern Ireland Act 1998). (14) “Passed”, in relation to a Bill, means passed at the final stage (at which the Bill can be passed or rejected but not amended). (15) Duty paid to the Commissioners in respect of the carriage of chargeable passengers to which this section applies must be paid by the Commissioners into the Consolidated Fund of Northern Ireland.

10

• (1) Section 33 (registration of aircraft operators) is amended as follows.

• (2) After subsection (2) insert—

(2A) If the Commissioners decide to keep a register under section 33A below, an operator of a chargeable aircraft does not become liable to be registered under this section just because the aircraft is used for the carriage of chargeable passengers to which section 30A above applies.

• (3) In subsection (3)(b) after “passengers” insert “ or, if the Commissioners have decided to keep a register under section 33A below, that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers apart from the carriage of chargeable passengers to which section 30A above applies ”.

• (4) In subsection (4) after “registered” (in both places) insert “ under this section ”.

• (5) In subsection (7) after “section” insert “ or section 33A below ”.

11

After section 33 insert—

(33A) (1) The Commissioners may under this section keep a register of aircraft operators. (2) If the Commissioners decide to keep a register under this section, the operator of a chargeable aircraft becomes liable to be registered under this section if the aircraft is used for the carriage of chargeable passengers to which section 30A above applies. (3) A person who has become liable to be registered under this section ceases to be so liable if the Commissioners are satisfied at any time— (a) that he no longer operates any chargeable aircraft, or (b) that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers to which section 30A above applies. (4) A person who is not registered under this section and has not given notice under this subsection shall, if he becomes liable to be registered under this section at any time, give written notice of that fact to the Commissioners not later than the end of the prescribed period beginning with that time. (5) Notice under subsection (4) above shall be in such form, be given in such manner and contain such information as the Commissioners may direct.

12

In section 34 (fiscal representatives) in subsection (5)—

• (a) omit “under section 33 above”, and

• (b) in paragraph (a) for “that section” substitute “ section 33 or 33A above ”.

13

After section 41 insert—

(41A) (1) An officer of Revenue and Customs may disclose to the Secretary of State, the Treasury or the Department of Finance and Personnel in Northern Ireland any information for purposes connected with the setting of rates of duty under section 30A above, including (in particular) to enable the setting of rates under that section to be taken into account for the purposes of section 58 of the Northern Ireland Act 1998 (payments by Secretary of State into Consolidated Fund of Northern Ireland). (2) Information disclosed under subsection (1) above may not be further disclosed without the consent of the Commissioners (which may be general or specific). (3) In section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) references to section 18(1) of that Act are to be read as including a reference to subsection (2) above.

14

In section 44 of CRCA 2005 (payment into Consolidated Fund) after subsection (2)(c) insert—

(ca) sums required by section 30A(15) of the Finance Act 1994 (air passenger duty: Northern Ireland long haul rates of duty) to be paid into the Consolidated Fund of Northern Ireland,

.

15

In column 2 of the Table in paragraph 1 of Schedule 41 to FA 2008 (penalties for failure to notify), in the entry relating to air passenger duty, after “33(4)” insert “ or 33A(4) ”.

PART 4 — Other provision

16

Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

17

In section 28 (introduction to air passenger duty) for subsection (3) substitute—

(3) Sections 29 and 29A below set out how to determine if an aircraft is a chargeable aircraft for the purposes of this Chapter.

18

• (1) Section 29 (chargeable aircraft) is amended as follows.

• (2) For subsection (1) substitute—

(1) For the purposes of this Chapter an aircraft is a chargeable aircraft if— (a) it is a fixed-wing aircraft designed or adapted to carry persons in addition to the flight crew, (b) its authorised take-off weight is not less than 5.7 tonnes, and (c) it is fuelled by kerosene (as defined in section 1(8) of the Hydrocarbon Oil Duties Act 1979).

• (3) In subsection (2) for “ten” (wherever occurring) substitute “ 5.7 ”.

• (4) Omit subsection (3).

19

After section 29 insert—

(29A) (1) This section applies for the purposes of this Chapter. (2) An aircraft is not a chargeable aircraft whenever its operation falls within an exemption set out in sub-paragraph (b), (c), (f) or (g) under the category of activity “Aviation” in Annex I to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 (as amended by Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008). (3) Those exemptions are to be read in accordance with paragraphs 2.2 to 2.5 of the Annex to Commission Decision 2009/450/EC of 8 June 2009. (4) An aircraft is not a chargeable aircraft whenever it is being operated under a public service obligation imposed under Article 16 of Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 (common rules for the operation of air services).

20

In section 30 (rate of duty) before subsection (5) insert—

(4E) In relation to the carriage of a chargeable passenger on an aircraft to which subsection (4F) applies— (a) if the rate which (apart from this subsection) would apply is the rate in subsection (2)(a) or (b), a rate equal to twice the rate in subsection (2)(b) is to apply instead, (b) if the rate which (apart from this subsection) would apply is the rate in subsection (3)(a) or (b), a rate equal to twice the rate in subsection (3)(b) is to apply instead, (c) if the rate which (apart from this subsection) would apply is the rate in subsection (4)(a) or (b), a rate equal to twice the rate in subsection (4)(b) is to apply instead, and (d) if the rate which (apart from this subsection) would apply is the rate in subsection (4A)(a) or (b), a rate equal to twice the rate in subsection (4A)(b) is to apply instead. (4F) This subsection applies to an aircraft if— (a) its authorised take-off weight is not less than 20 tonnes, but (b) it is not authorised to seat more than 18 persons (excluding members of the flight crew and cabin attendants). (4G) In subsection (4F)(a) “take-off weight” is to be read in accordance with section 29(2) but as if “20” were substituted for “ 5.7 ” wherever occurring. (4H) For the purposes of subsection (4F)(b) an aircraft is authorised to seat more than 18 persons (excluding members of the flight crew and cabin attendants) if— (a) there is a certificate of airworthiness (as defined in section 29(4)) in force in respect of the aircraft showing that the maximum number of persons who may be seated on the aircraft (excluding members of the flight crew and cabin attendants) is more than 18, or (b) the Commissioners are satisfied that the aircraft is designed or adapted to seat more than 18 persons (excluding members of the flight crew and cabin attendants) or the aircraft belongs to a class or description of aircraft in respect of which the Commissioners are so satisfied.

21

In section 30A (as inserted by paragraph 9 above) after subsection (5) insert—

(5A) In relation to the carriage of a chargeable passenger on an aircraft to which section 30(4F) applies— (a) if the rate which (apart from this subsection) would apply is the rate set for the purposes of subsection (3)(a) or (b), the following rate is to apply instead— (i) the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, or (ii) if no rate is so set for the purposes of this paragraph, a rate equal to twice the rate set for the purposes of subsection (3)(b), (b) if the rate which (apart from this subsection) would apply is the rate set for the purposes of subsection (4)(a) or (b), the following rate is to apply instead— (i) the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, or (ii) if no rate is so set for the purposes of this paragraph, a rate equal to twice the rate set for the purposes of subsection (4)(b), and (c) if the rate which (apart from this subsection) would apply is the rate set for the purposes of subsection (5)(a) or (b), the following rate is to apply instead— (i) the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, or (ii) if no rate is so set for the purposes of this paragraph, a rate equal to twice the rate set for the purposes of subsection (5)(b).

22

• (1) Section 43 (interpretation) is amended as follows.

• (2) In subsection (1) for the definition of “passenger” substitute—

“passenger”, in relation to any aircraft, means any person carried on the aircraft other than— (a) a member of the flight crew, (b) a cabin attendant, or (c) a person who is not carried for reward and who satisfies such other requirements as may be prescribed.

• (3) After subsection (1) insert—

(1A) The agreements and arrangements covered by the definition of “agreement for carriage” in subsection (1) include informal agreements or arrangements between, for example, members of a family or friends.

23

The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2013.

SCHEDULE 24

PART 1 — Imposition of duty

The duty

1

A duty of excise, to be known as machine games duty, is to be charged on the playing of dutiable machine games in the United Kingdom.

Dutiable machine games

2

• (1) A “machine game” is a game (whether of skill or chance or both) played on a machine for a prize.

• (2) A machine game is “dutiable” if—

• (a) the prize or at least one of the prizes that can be won from playing the game on the machine is or includes cash, and

• (b) the maximum amount of cash that a player can win from playing the game on the machine exceeds the lowest charge payable for playing the game on the machine.

• (3) “Cash” means money or anything that may reasonably be considered to equate to money, including—

• (a) anything that can be used in the same way as if it were money, and

• (b) anything that allows a person to obtain money on demand or otherwise represents a promise to pay a person money on demand.

• (4) The things mentioned in sub-paragraph (3) include—

• (a) anything of an intangible nature (such as points), and

• (b) anything that a person has as a result of the taking of any step by someone else (such as the crediting of an account).

• (5) If an adult would reasonably assume that a machine game satisfies the tests in sub-paragraph (2)(a) and (b) (taking into account the way in which the game is presented and all the other circumstances of the case), the game is taken to be a dutiable machine game, whether or not it does in fact satisfy those tests.

• (6) In identifying for the purposes of this paragraph the lowest charge payable for playing a game, any offer that waives or permits a player to pay less than the charge that the player would be required to pay without the offer is disregarded.

• (7) Paragraph 3 makes further provision about what counts as a dutiable machine game for the purposes of this Schedule.

3

• (1) A game that would otherwise be a dutiable machine game does not count as one if—

• (a) it involves betting on future real events,

• (b) bingo duty is charged on the playing of it,

• (c) lottery duty is charged on the taking of a ticket or chance in it, or

• (d) it is a real game of chance and playing it—

• (i) amounts to dutiable gaming for the purposes of section 10 of FA 1997, or

• (ii) would do so but for subsection (3), (3B) or (4) of that section.

• (2) A “real game of chance” is a game of chance (within the meaning of Part 3 of FA 2014) that is non-virtual.

• (3) A game consisting of several stages counts as a dutiable machine game if—

• (a) at least one stage would (if played on its own) be a dutiable machine game, or

• (b) the stages (taken together) amount to a dutiable machine game.

• (4) If more than one game can be played on a given machine, each game is to be considered separately in deciding whether it is a dutiable machine game.

4

The Treasury may by order specify criteria to be taken into account in deciding—

• (a) whether a particular game (or class of game) falls within the definitions in paragraph 2(1) and (2), and

• (b) what counts as a single go at playing a particular game (or class of game).

Types of machine

5

• (1) Machines are divided into three types for the purposes of machine games duty.

• (2) A machine is a “type 1 machine” if it can be demonstrated that—

• (a) the highest charge payable for playing a dutiable machine game on the machine does not exceed 20p, and

• (b) the maximum amount of cash that can be won from playing a dutiable machine game on the machine does not exceed £10.

• (3) A machine is a “type 2 machine” if—

• (a) it is not a type 1 machine, and

• (b) it can be demonstrated that the highest charge payable for playing a dutiable machine game on the machine does not exceed £5.

• (4) Any other machine is a “type 3 machine”.

• (5) The Treasury may by order substitute for a sum for the time being specified in sub-paragraph (2)(a) or (b) or (3)(b) such higher sum as may be specified in the order.

How the duty is charged

6

• (1) Machine games duty is charged on a taxable person's total net takings in an accounting period for each type of machine.

• (2) The amount of the duty is found by—

• (a) applying the lower rate to the person's total net takings in the accounting period for type 1 machines,

• (b) applying the standard rate to the person's total net takings in the accounting period for type 2 machines,

• (c) applying the higher rate to the person's total net takings in the accounting period for type 3 machines, and

• (d) aggregating the results.

• (3) This is subject to paragraph 10 (negative amounts of duty).

• (4) The person's “total net takings” in the accounting period for a type of machine are the sum of the person's net takings in the period for all the relevant machines of that type.

• (5) The person's “net takings” in the period for each relevant machine are determined in accordance with paragraphs 7 and 8.

• (6) If any of the relevant machines changes type during the accounting period—

• (a) the net takings in the part of the period before the change and the net takings in the part after the change are to be allocated separately in calculating the person's total net takings in the period for each type of machine, and

• (b) if it is not possible to identify the part of a period to which an amount relates, the amount is to be apportioned on a just and reasonable basis.

• (7) For the meaning of “relevant machine” in relation to a taxable person and an accounting period, see paragraph 50.

Net takings per machine

7

• (1) A taxable person's net takings in an accounting period for a relevant machine are—

• (a) the takings, less

• (b) the payouts.

• (2) The takings are the charges that become due at any material time from players for playing dutiable machine games on that machine (irrespective of when the games are played or the prizes are paid out).

• (3) The payouts are the prizes (whether cash or non-cash) that are paid out at any material time to players as a result of playing dutiable machine games on that machine (irrespective of when the games are played or the charges become due).

• (4) Sub-paragraph (3) does not include prizes paid out to—

• (a) a person who is a registrable person in respect of the premises where the machine is located,

• (b) a representative or employee of such a person at those premises, or

• (c) a person acting for or at the direction of a person within paragraph (a).

• (5) Sub-paragraph (3) does not include prizes paid out unlawfully (for example, a prize paid out to a child or young person in breach of a condition attached to an operating licence by virtue of section 83(1)(b) of the Gambling Act 2005).

• (6) If it is not reasonably practicable to attribute charges and prizes to dutiable machine games or to apportion them between dutiable machine games and other games or other activities, any attribution or apportionment is to be done on a just and reasonable basis.

• (7) “Material time” means any time in the accounting period when the person is liable for machine games duty in respect of the machine.

• (8) The Commissioners may by regulations make provision about the point in time at which a charge is taken to become due, or a prize is taken to be paid out, for the purposes of this paragraph.

• (9) If a machine game is played in pursuance of an offer that permits the player to pay nothing or less than the charge that the player would be required to pay without the offer, the charge (if any) is treated as becoming due when the player plays the game.

• (10) A prize that is paid out using a system involving redemption tickets, points or anything similar is taken to be paid out when the prize is redeemed (rather than when the means of redemption is issued or communicated to the winner).

• (11) Sub-paragraphs (9) and (10) do not limit the power in sub-paragraph (8).

8

• (1) In calculating the takings and the payouts under paragraph 7, the following amounts are to be left out of account—

• (a) amounts arising from playing dutiable machine games on a domestic occasion, and

• (b) amounts arising in any other circumstances specified by the Treasury by order.

• (2) The power in sub-paragraph (1)(b)—

• (a) may be exercised generally or in relation to particular cases or kinds of case, and

• (b) may include provision requiring specified conditions to be met before amounts are left out of account.

The rates

9

• (1) The lower rate is 5%.

• (2) The standard rate is 20%.

• (3) The higher rate is 25%.

• (4) If a rate changes during an accounting period—

• (a) the old rate is to be applied to the person's total net takings in the part of the period before the change, and

• (b) the new rate is to be applied to the person's total net takings in the part of the period after the change.

• (5) If it is not possible to identify for the purposes of sub-paragraph (4) the part of the period to which an amount relates, it is to be apportioned on a just and reasonable basis.

Negative amounts of duty

10

• (1) If the calculation of the amount of machine games duty for which a taxable person is liable for an accounting period results in a negative amount (“amount X”)—

• (a) the amount of machine games duty for which that person is liable for that period is treated as nil, and

• (b) the amount of duty for which that person is liable for the next accounting period is to be reduced by amount X.

• (2) Sub-paragraph (1) applies to an accounting period whether or not amount X results wholly or partly from the previous application of that sub-paragraph.

• (3) Subject to any reduction required by sub-paragraph (1)(b), the person is not entitled to any repayment or refund of machine games duty in respect of amount X.

Who is liable

11

• (1) A person is liable for machine games duty in respect of a machine at any time if at the time—

• (a) the person is responsible for the premises where the machine is located (see paragraph 12),

• (b) the machine is available there for use by others for playing dutiable machine games on it, and

• (c) the machine is not an excluded dual-use machine (see paragraph 13).

• (2) If, at any time, there is more than one person who satisfies sub-paragraph (1)(a) to (c) in respect of a machine, each of them is jointly and severally liable for the duty.

• (3) A person who is liable for machine games duty in accordance with this paragraph is referred to as a “taxable person”.

Responsible for premises

12

• (1) This paragraph sets out who is “responsible” for premises for the purposes of paragraph 11.

• (2) If a person is registered in respect of premises, that person is responsible for the premises.

• (3) A person is “registered” at any time in respect of premises if at the time there is an entry in force for that person in the MGD register in respect of those premises.

• (4) If no-one is registered in respect of premises, any person who is a registrable person in respect of the premises or a representative of such a person is responsible for the premises.

• (5) Paragraphs 20 to 24 make further provision about registration and registrable persons.

Excluded dual-use machines

13

• (1) A machine is an “excluded dual-use machine” if—

• (a) it is capable of being used both for playing machine games and for some other purpose that is not related to playing machine games, and

• (b) condition A or B is met.

• (2) Condition A is that the machine is not designed, adapted or presented in such a way as to—

• (a) facilitate its use for playing dutiable machine games, or

• (b) draw attention to the possibility of its use for playing such games.

• (3) Condition B is that the machine is so designed, adapted or presented but the person mentioned in paragraph 11(1) does not know, and could not reasonably be expected to know, that it is.

• (4) References to a machine being “adapted” include a machine to which anything has been done, including the installation of computer software on it.

• (5) The Commissioners may by order specify criteria to be taken into account in deciding whether a machine falls within the definition in sub-paragraph (1).

• (6) The Treasury may by order amend this paragraph.

Accounting periods

14

• (1) An accounting period for machine games duty is a period of 3 consecutive months.

• (2) The first day of an accounting period is such day as HMRC may direct.

• (3) A direction under sub-paragraph (2) may apply generally or only to a particular case or class of case.

• (4) HMRC may agree with a registered person to make either or both of the following changes for the purposes of that person's liability to machine games duty—

• (a) to treat specified periods (whether longer or shorter than 3 months) as accounting periods,

• (b) to begin accounting periods on days other than those applying by virtue of sub-paragraph (2).

• (5) HMRC may by direction make transitional arrangements for periods (whether of 3 months or otherwise) to be treated as accounting periods where—

• (a) a person becomes or ceases to be registered, or

• (b) an agreement under sub-paragraph (4) begins or ends.

• (6) If there is reason to believe that a person who is liable for machine games duty may not discharge that liability as it falls due from time to time—

• (a) HMRC may by direction specify shorter periods to be treated as accounting periods for the purposes of that person's liability to machine games duty,

• (b) any such direction continues to have effect until it is withdrawn by HMRC (unless otherwise specified in the direction), and

• (c) withdrawal of a direction does not prevent the giving of further directions in respect of the same person.

Valuing prizes

15

• (1) This paragraph applies in valuing prizes for the purposes of this Schedule (including in determining the maximum amount of cash that can be won from playing a machine game).

• (2) The value of a prize includes any portion that—

• (a) represents a refund of the charge payable for playing the game, or

• (b) is calculated by reference to the amount of any such charge.

• (3) The value of a prize in the form of something that is reasonably considered to equate to money is equal to the amount of money to which the thing is reasonably considered to equate.