Finance Act 2013

(7A) Condition C is that— (a) the assets disposed of are relevant EMI shares, (b) the option grant date is, or is before, the first date of the period of 1 year ending with the date of the disposal, and (c) throughout that period of 1 year— (i) the company is either a trading company or the holding company of a trading group, and (ii) the individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more companies which are members of the trading group. (7B) Condition D is that— (a) the assets disposed of are relevant EMI shares acquired by the individual before the cessation date, (b) the option grant date is, or is before, the first date of the period of 1 year ending with the cessation date, (c) the conditions in paragraph (c) of subsection (7A) are met throughout that period of 1 year, and (d) the cessation date is within the period of 3 years ending with the date of the disposal. (7C) In this section “relevant EMI shares” means— (a) shares of a company acquired by an individual to which subsection (7D) applies, or (b) shares of a company to which subsection (7F) applies. (7D) This subsection applies to shares of a company acquired by an individual if the individual— (a) acquires them on or after 6 April 2013, and (b) acquires them as a result of the exercise of a qualifying option within the meaning given by section 527(4) of ITEPA 2003 (enterprise management incentives) where the option is exercised on or before the tenth anniversary of the date mentioned in section 529(2) of that Act. (7E) Subsection (7D) does not apply to shares acquired as a result of the exercise of a qualifying option if— (a) a disqualifying event (see section 533 of ITEPA 2003) occurs in relation to the option before its exercise, and (b) it is exercised later than the period mentioned in section 532(1)(b) of ITEPA 2003. (7F) This subsection applies to shares of a company if— (a) the shares are the new holding in a case in which section 127 applies in relation to an individual, (b) the original shares in that case are relevant EMI shares (whether by virtue of subsection (7D) or this subsection), and (c) that case is one in which section 127 applies by virtue only of— (i) section 126, or (ii) subject to subsection (7G), section 135(3). (7G) Subsection (7F)(c)(ii) applies only if— (a) the exchange of shares in question is a qualifying exchange of shares as defined in paragraph 40 of Schedule 5 to ITEPA 2003, and (b) when the exchange occurs, the independence requirement (see paragraph 9 of Schedule 5 to ITEPA 2003) and the trading activities requirement (see paragraphs 13 and 14 of that Schedule) are met in relation to the new company (see paragraph 40(1)(a) of that Schedule). (7H) In this section “the original relevant EMI shares”, in relation to shares which are relevant EMI shares by virtue of subsection (7F), means the shares originally acquired by the individual to which subsection (7D) applied. (7I) If the shares disposed of are relevant EMI shares by virtue of subsection (7F), in relation to times before the reorganisation mentioned in section 127, in subsection (7A)(c) references to the company are to be read as references to (if different)— (a) the company whose shares are the original relevant EMI shares, or (b) if there has been more than one reorganisation since the original relevant EMI shares were acquired— (i) the company whose shares are the original relevant EMI shares, or (ii) if at the time in question the individual is holding relevant EMI shares which are shares of another company, that other company. This subsection is subject to subsection (7N). (7J) If the shares disposed of are relevant EMI shares by virtue of subsection (7F), the question of whether the requirement of subsection (7B)(a) is met is to be determined by reference to the date of the acquisition of the original relevant EMI shares. (7K) Subject to what follows, in subsections (7A)(b) and (7B)(b) “the option grant date” means the date on which the qualifying option in question was granted. (7L) Subsections (7M) and (7N) apply if the qualifying option is a replacement option for the purposes of the EMI code (see paragraph 41 of Schedule 5 to ITEPA 2003). (7M) In subsections (7A)(b) and (7B)(b) “the option grant date” means— (a) the date on which the old option was granted, or (b) if the old option was also a replacement option, the date on which the earlier old option was granted, and so on. (7N) In relation to any time during the currency of an old option taken into account under subsection (7M), in subsection (7A)(c) references to the company are to be read as references to the company whose shares were the subject of the old option. (7O) In subsection (7B) “the cessation date” means the date on which the company— (a) ceases to be a trading company without continuing to be or becoming a member of a trading group, or (b) ceases to be a member of a trading group without continuing to be or becoming a trading company. (7P) Subsections (7Q) and (7R) apply in relation to a disposal of relevant EMI shares if— (a) the shares were acquired as a result of the exercise of a qualifying option where— (i) a disqualifying event (see section 533 of ITEPA 2003) occurs in relation to the option before its exercise, but (ii) it is exercised within the period mentioned in section 532(1)(b) of ITEPA 2003, or (b) if the shares are relevant EMI shares by virtue of subsection (7F), the original relevant EMI shares were acquired as mentioned in paragraph (a). (7Q) Subsection (7A)(b) has effect as if the reference to the date of the disposal were a reference to the date of the disqualifying event. (7R) If the disqualifying event is within section 534(1)(c) of ITEPA 2003, subsection (7B)(a) has effect as if the reference to the cessation date were a reference to the first day after the period mentioned in section 532(1)(b) of that Act if that day is later than the cessation date.

Identification of shares acquired under EMI option

2

Chapter 1 of Part 4 of TCGA 1992 (general provision relating to shares etc) is amended as follows.

3

In section 105 (disposal on or before day of acquisition of shares etc) after subsection (3) insert—

(4) Subsection (5) applies if an individual— (a) acquires shares (“the relevant shares”) of the same class, on the same day and in the same capacity, and (b) some of the relevant shares are relevant EMI shares (as defined by section 169I(7C) to (7G)). (5) This section has effect as if— (a) paragraph (a) of subsection (1) required the relevant EMI shares to be treated as acquired by the individual by a single transaction separate from the remainder of the relevant shares (which are also to be treated by virtue of that paragraph as acquired by the individual by a single transaction), and (b) subsection (1) required the relevant EMI shares to be treated as disposed of after the remainder of the relevant shares.

4

• (1) Section 106A (identification of securities for capital gains tax purposes) is amended as follows.

• (2) In subsection (5)—

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

• (b) after paragraph (a) insert—

(aa) with securities acquired by him within that period which are not relevant EMI shares, rather than with securities acquired by him within that period which are relevant EMI shares; and

, and

• (c) at the beginning of paragraph (b) insert “ subject to paragraph (aa), ”.

• (3) After subsection (6) insert—

(6A) Subject to subsections (4) and (5) above, a company's shares which are disposed of shall be identified— (a) with relevant EMI shares, rather than with other shares, and (b) with relevant EMI shares acquired at an earlier time rather than with relevant EMI shares acquired at a later time. (6B) No shares identified with relevant EMI shares by virtue of subsection (6A)(a) or (b) above shall be regarded as forming part of an existing section 104 holding or as constituting a section 104 holding.

• (4) In subsection (10), before the definition of “securities”, insert—

relevant EMI shares” has the meaning given by section 169I(7C) to (7G),

.

Commencement and transitional provision

5

• (1) The amendments made by paragraphs 1 to 4 above have effect in relation to disposals of shares on or after 6 April 2013.

• (2) In the case of the amendments made by paragraphs 2 to 4 above, sub-paragraph (1) is subject to paragraph 6(4) below.

6

• (1) This paragraph applies if, during the tax year 2012-13, an individual acquires shares of a class in a company (“the relevant shares”) which would be relevant EMI shares were the reference to 6 April 2013 in section 169I(7D)(a) of TCGA 1992 (as inserted by paragraph 1 above) a reference to 6 April 2012 instead.

• (2) If the individual makes no disposals of shares of that class in that company during that tax year, the relevant shares are to be treated as if they were relevant EMI shares.

• (3) If the individual disposes of shares of that class in that company during that tax year, the individual may elect for the relevant shares to be treated as if they were relevant EMI shares.

• (4) If the individual makes an election under sub-paragraph (3)—

• (a) the amendments made by paragraphs 2 to 4 above also have effect, in the case of the individual, in relation to disposals of shares of that class in that company during that tax year, but

• (b) for this purpose, the amendment made by sub-paragraph (5) has effect instead of the amendment made by paragraph 4(3) above.

• (5) In section 106A of TCGA 1992 after subsection (6) insert—

(6A) Subject to subsections (4) and (5) above, a company's shares which are disposed of shall be identified— (a) with shares which are not relevant EMI shares, rather than with relevant EMI shares, and (b) with relevant EMI shares acquired at a later time rather than with relevant EMI shares acquired at an earlier time. (6B) No shares identified with relevant EMI shares by virtue of subsection (6A)(b) above shall be regarded as forming part of an existing section 104 holding or as constituting a section 104 holding.

• (6) An election under sub-paragraph (3) may not be made or revoked after 31 January 2014 (and paragraph 3(1)(b) of Schedule 1A to TMA 1970 does not apply in relation to such an election).

• (7) For the purposes of this paragraph shares in a company are not to be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt with on a recognised stock exchange.

• (8) “Recognised stock exchange” has the meaning given by section 1005 of ITA 2007.

SCHEDULE 25

PART 1 — Taxation of Chargeable Gains Act 1992

1

TCGA 1992 is amended as follows.

2

• (1) Section 1 (the charge to tax) is amended as follows.

• (2) In subsection (2), after “Acts” insert “ , subject to the exception in subsection (2A) ”.

• (3) After subsection (2) insert—

(2A) But companies are chargeable to capital gains tax, and not corporation tax, in respect of chargeable gains accruing to them to the extent that those gains are ATED-related gains in respect of which the companies are chargeable to capital gains tax under section 2B.

• (4) In subsection (3) for “subsection (2)” substitute “ subsections (2) and (2A) ”.

3

In section 2 (persons and gains chargeable to capital gains tax, and allowable losses), after subsection (7) insert—

(7A) Nothing in this section applies in relation to an ATED-related gain chargeable to, or an ATED-related loss allowable for the purposes of, capital gains tax by virtue of section 2B.

4

After section 2 insert—

(2B) (1) A person (other than an excluded person) (“P”) is chargeable to capital gains tax in respect of any ATED-related chargeable gain accruing to P in a tax year on a relevant high value disposal. (2) A person is “excluded” if the person is an individual, the trustees of a settlement or the personal representatives of a deceased person and— (a) the gain accrues on a disposal of any partnership assets and the person is a member of the partnership, or (b) the gain accrues on a disposal of any property held for the purposes of a relevant collective investment scheme and the person is a participant in relation to the scheme. (3) Capital gains tax is charged on the total amount of ATED-related chargeable gains accruing to P in the tax year on relevant high value disposals, after deducting ring-fenced ATED-related allowable losses in relation to that year. (4) Subsections (5) to (7) apply in relation to an ATED-related allowable loss accruing to P in a tax year on a relevant high value disposal. (5) The loss is not allowable as a deduction from ATED-related chargeable gains accruing in any earlier tax year on relevant high value disposals. (6) Relief is not to be given under this Act more than once in respect of the loss or any part of the loss. (7) Relief is not to be given under this Act in respect of the loss if, and so far as, relief has been or may be given in respect of it under the Tax Acts. (8) The only deductions which can be made from ATED-related chargeable gains are those permitted by this section. (9) See section 57A and Schedule 4ZZA for how to compute— (a) the ATED-related gain or loss accruing on a relevant high value disposal, and (b) the gain or loss accruing on a relevant high value disposal which is not ATED-related. (10) In this section— - “participant”, in relation to a relevant collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000; - “relevant collective investment scheme” means a collective investment scheme within the meaning of Part 17 of that Act (see section 235 of that Act) other than— 1. a unit trust scheme within the meaning of that Part (see section 237(1) of that Act), or 2. an open-ended investment company within the meaning of that Part (see section 236(1) of that Act); - “ring-fenced ATED-related allowable losses”, in relation to a tax year, means— 1. any ATED-related allowable losses accruing to P in the tax year on relevant high value disposals, and 2. so far as they have not been allowed as a deduction from ATED-related chargeable gains accruing in any previous tax year on relevant high value disposals, any ATED-related allowable losses accruing to P in any previous tax year (not earlier than the tax year 2013-14) on such disposals. (2C) (1) A disposal on which a gain or loss accrues to P is a “relevant high value disposal” if conditions A to D are met. (2) Condition A is that the disposal is of the whole or part of a chargeable interest (“the disposed of interest”). (3) Condition B is that the disposed of interest has, at any time during the relevant ownership period, been or formed part of a single-dwelling interest. (4) Condition C is that— (a) P, or (b) if the disposed of interest is a partnership asset, the responsible partners, or (c) if the disposed of interest is held for the purposes of a relevant collective investment scheme, the person who has day-to-day control over the management of the property subject to the scheme, has or have been within the charge to annual tax on enveloped dwellings with respect to that single-dwelling interest on one or more days in the relevant ownership period which are not relievable days in relation to the interest. (5) Condition D is that the amount or value of the consideration for the disposal exceeds the threshold amount (see section 2D). (6) In this section and section 2D— - “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act (chargeable interest)); - “dwelling” has the same meaning as in that Part (see section 112 of that Act); - “relevant collective investment scheme” has the same meaning as in section 2B; - “the relevant ownership period” means the period which begins— 1. if an election has been made under paragraph 5 of Schedule 4ZZA, with the day on which P acquired the chargeable interest or, if later, 31 March 1982, and 2. in any other case, with the day on which P acquired the chargeable interest or, if later, 6 April 2013, - “relievable day” means a day which is “relievable” by virtue of any of the provisions mentioned in section 132 of the Finance Act 2013 (ATED: effect of reliefs) and in respect of which a claim has been made under section 106(3) of that Act; - “the responsible partners” has the same meaning as in section 96 of that Act; - “single-dwelling interest” has the same meaning as in Part 3 of that Act; and a reference to being “within the charge” to annual tax on enveloped dwellings with respect to a single-dwelling interest is to be read in accordance with section 170(2) of that Act. (7) For the purposes of Condition C— (a) Part 3 of the Finance Act 2013 applies, in relation to any part of the relevant ownership period falling before 1 April 2013, as if section 94(8)(a) of that Act (first chargeable period for ATED) read “the period beginning with 31 March 1982 and ending with 31 March 1983”, and (b) when determining whether any day falling before 1 April 2013 is a relievable day, the definition of “relievable day” in subsection (6) above is to read as if the words “and in respect of which a claim has been made under section 106(3) of that Act” were omitted. (2D) (1) This section applies to determine “the threshold amount” in relation to a disposal which meets Conditions A to C in section 2C (“the current disposal”). (2) If— (a) the current disposal is not a part disposal of an asset, and (b) P has not made any relevant related disposals, the threshold amount is £2 million, subject to subsection (5) (joint interests). (3) If paragraphs (a) and (b) of subsection (2) do not both apply, the threshold amount is the relevant fraction of £2 million, subject to subsection (5) (joint interests). (4) “The relevant fraction” is— $$C TMV$where—“C” is the amount or value of the consideration for the current disposal;“TMV” is what would be the market value, at the time of the current disposal, of a notional asset comprising—the disposed of interest (see section 2C(2)),if the current disposal is a part disposal, any part of the chargeable interest held by P that remains undisposed of immediately following that part disposal,any chargeable interest (or part of a chargeable interest) which was the subject of a relevant related disposal, andany chargeable interest (or part of a chargeable interest) held by P at the time of the current disposal which, if P had disposed of it at that time, would have been the subject of a relevant related disposal.$ (5) If the disposed of interest is a share of the whole of— (a) a chargeable interest, or (b) a part of a chargeable interest, subsections (2) and (3) have effect as if the references to “£2 million” were to the joint share fraction of that amount. (6) The joint share fraction is the fraction of the whole of the chargeable interest or part represented by the disposed of interest. (7) “Relevant related disposal”, in relation to the current disposal, means any disposal by P which— (a) meets Conditions A to C in section 2C in circumstances where the single-dwelling interest referred to in Condition C is— (i) the single-dwelling interest by virtue of which Condition C is met in relation to the current disposal, or (ii) another single-dwelling interest in the same dwelling as that interest, and (b) was made in the period of 6 years ending with the day on which the current disposal occurs, but not before 6 April 2013. (2E) (1) This section applies where (ignoring this section)— (a) a disposal would be a relevant high value disposal, but for a failure to meet condition D in section 2C, (b) if it were a relevant high value disposal, an ATED-related loss would accrue to a person (other than an excluded person) in a tax year on the disposal, and (c) the total of the sums allowable as a deduction under section 38 in relation to the disposal exceeds the threshold amount in relation to the disposal. (2) For the purposes of this Act— (a) the disposal is to be treated as a relevant high value disposal (and section 57A and Schedule 4ZZA apply accordingly), and (b) the ATED-related loss which accrues on the disposal is to be restricted to the amount which would have been that loss had the consideration for the disposal been £1 greater than the threshold amount in relation to the disposal. (3) In a case where paragraph 2 of Schedule 4ZZA applies (calculation of gains or losses on disposals of assets held on 5 April 2013), the reference in subsection (1)(c) to the disposal is to be read as a reference to the notional disposal referred to in paragraph 3(2) of that Schedule (disposal on which notional post-April 2013 gain or loss accrues). (4) Nothing in subsection (2)(b) restricts any loss which is not ATED-related, or affects any gain (whether or not ATED-related), accruing on the relevant high value disposal. (5) In this section— - “excluded” has the meaning given by section 2B(2); - “the threshold amount” has the meaning given by section 2D. (2F) (1) This section applies to an ATED-related gain which accrues on a relevant high value disposal and is chargeable to capital gains tax by virtue of section 2B. (2) There is excluded from the gain so much of it as exceeds five-thirds of the difference between— (a) the amount or value of the consideration, and (b) the threshold amount (within the meaning of section 2D) in relation to the disposal. (3) But where the relevant fraction is less than 1, subsection (2) has effect as if the amount determined under that subsection were the relevant fraction of that amount. (4) “The relevant fraction”— (a) in a case where the ATED-related gain is determined in accordance with paragraph 3 of Schedule 4ZZA, has the meaning given by paragraph 3(4) of that Schedule, and (b) in a case where the ATED-related gain is determined in accordance with paragraph 6 of that Schedule, has the same meaning as in paragraph 6(5)(a) of that Schedule. (5) Nothing in this section restricts any gain which is not ATED-related, or affects any loss (whether or not ATED-related), accruing on the relevant high value disposal.

5

In section 4 (rates of capital gains tax), after subsection (3) insert—

(3A) The rate of capital gains tax in respect of gains chargeable under section 2B accruing to a person in a tax year is 28%.

6

In section 8 (company's total profits to include chargeable gains), after subsection (4) insert—

(4A) Nothing in this section applies in relation to an ATED-related gain chargeable to, or an ATED-related loss allowable for the purposes of, capital gains tax by virtue of section 2B.

7

In section 13 (attribution of gains to members of non-resident companies), after subsection (1) insert—

(1A) But this section does not apply if the gain is an ATED-related gain chargeable to capital gains tax by virtue of section 2B (capital gains tax on ATED-related gains).

8

In section 16 (computation of losses), in subsection (3) after “section” insert “ 2B, ”.

9

In Part 2, after Chapter 4 insert—

(57A) (1) Schedule 4ZZA makes provision about the computation of gains and losses on relevant high value disposals, including provision about whether a gain or loss is ATED-related or not. (2) But if the effect of Schedule 4ZZA applying in relation to a disposal would be that no ATED-related gain or loss accrues on the disposal, for the purposes of this Act the gain or loss on the disposal is to be computed ignoring that Schedule (and is not ATED-related).

10

After section 100 insert—

(100A) (1) ATED-related gains accruing on relevant high value disposals made by an EEA UCITS which is not an open-ended investment company or a unit trust scheme are not chargeable gains under section 2B. (2) In this section— - “EEAUCITS” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 237 of that Act); - “unit trust scheme” has same meaning as in that Part (see section 237(1) of that Act); - “open-ended investment company” has the same meaning as in that Part (see section 236(1) of that Act).

11

• (1) Section 161 (appropriations to and from stock) is amended as follows.

• (2) In subsection (1) for “subsection (3)” substitute “ subsections (3) to (3ZB) ”.

• (3) After subsection (3) insert—

(3ZA) But if the person— (a) meets the requirement of paragraph (a) or (b) of subsection (3), and (b) (ignoring any election under this section) would be treated under subsection (1) as making a relevant high value disposal on which an ATED-related gain chargeable to, or loss allowable for the purposes of, capital gains tax under section 2B would accrue, the person may not elect under subsection (3) but may elect for subsection (3ZB) to apply. (3ZB) Subject to subsection (4), where an election is made for this subsection to apply— (a) a gain or loss accruing on the disposal under subsection (1) which is not ATED-related is not a chargeable gain or an allowable loss, (b) the market value of the asset at the time of the appropriation is, for the purposes of computing the profits of the trade for the purposes of tax, to be treated as reduced by the amount of any gain, or increased by the amount of any loss, which would be a chargeable gain or allowable loss but for paragraph (a), and (c) the chargeable gain or allowable loss which accrues on that disposal and is ATED-related is unaffected by the election.

• (4) In subsection (3A), after “subsection (3)” insert “ or (3ZA) ”.

• (5) In subsection (4), after “subsection (3)” insert “ or (3ZA) ”.

12

In section 171 (transfers within a group: general provisions), in subsection (2), after paragraph (b) insert—

(ba) a relevant high value disposal on which (ignoring subsection (1)) there accrues to company A an ATED-related gain chargeable to, or an ATED-related loss allowable for the purposes of, capital gains tax by virtue of section 2B; or

.

13

After section 187 insert—

(187A) (1) This section applies if— (a) (ignoring subsections (2) and (3)) a gain or loss would accrue to a company on a disposal of an asset deemed to have been made by virtue of section 185(2), and (b) that gain or loss is an ATED-related gain chargeable to, or an ATED-related loss allowable for the purposes of, capital gains tax under section 2B. (2) That gain or loss does not accrue to the company on that disposal. (3) But, on a subsequent disposal of the whole or part of the asset, the whole or a corresponding part of the gain or loss— (a) is deemed to accrue to the company (in addition to any gain or loss that actually accrues on that subsequent disposal), and (b) (if that would not otherwise be the case) is to be treated as an ATED-related gain or loss accruing on a relevant high value disposal. (4) Nothing in this section affects the treatment, for the purposes of this Act, of any gain or loss which is not ATED-related and accrues on the disposal of the asset deemed to have been made by virtue of section 185(2).

14

In section 271 (miscellaneous exemptions)—

• (a) in subsection (1A), after “registered pension scheme” insert “ or an overseas pension scheme ”, and

• (b) in subsection (10), for the words after “above” substitute “—

• “investments” includes futures contracts and options contracts;

• “overseas pension scheme” has the same meaning as in Part 4 of the Finance Act 2004 (see section 150(7) of that Act).”

15

In section 288 (interpretation), in subsection (1), at the appropriate places insert—

“ATED-related”, in relation to a gain or loss, is to be construed in accordance with section 57A and Schedule 4ZZA;

;

“relevant high value disposal” has the meaning given by section 2C;

.

16

After Schedule 4 insert—

SCHEDULE 4ZZA (1) This Schedule applies for the purposes of determining in relation to a relevant high value disposal made by a person (“P”)— (a) whether a gain or loss which is ATED-related accrues to P on the disposal, and (b) whether a gain or loss which is not ATED-related accrues to P on the disposal. (2) If the interest disposed of was held by P on 5 April 2013— (a) paragraph 3 applies for the purposes of computing the gain or loss accruing to P which is ATED-related, and (b) paragraph 4 applies for the purposes of computing the gain or loss accruing to P which is not ATED-related. (3) (1) An amount equal to the relevant fraction of the notional post-April 2013 gain or loss is the ATED-related gain or loss (as the case may be). (2) “Notional post-April 2013 gain or loss” means the gain or loss which (in the absence of section 2B and this Schedule) would have accrued on the relevant high value disposal had P acquired the interest on 5 April 2013 for a consideration equal to its market value on that date. (3) For the purposes of sub-paragraph (2), the amount of the gain or loss accruing to P is to be computed (whether or not that would otherwise be the case) as if P were within the charge to capital gains tax (but not within the charge to corporation tax on chargeable gains). (4) “The relevant fraction” is— $$CD TD$where—“CD” is the number of days in the relevant ownership period which are ATED chargeable days;“TD” is the total number of days in the relevant ownership period.$ (5) “The relevant ownership period” means the period beginning with 6 April 2013 and ending with the day before the day on which the relevant high value disposal occurs. (6) “ATED chargeable day” means any day by virtue of which condition C in section 2C(4) is met in relation to the relevant high value disposal. (4) (1) The gain or loss accruing on the relevant high value disposal which is not ATED-related is computed as follows. - Step 1 Determine the amount of the notional pre-April 2013 gain or loss. - Step 2 In a case where there is a notional post-April 2013 gain— 1. determine the amount of that gain remaining after the deduction of the ATED-related gain determined under paragraph 3, and 2. adjust that remaining gain by reducing it by the notional indexation allowance. - Step 3 In a case where there is a notional post-April 2013 loss, determine the amount of that loss remaining after deduction of the ATED-related loss determined under paragraph 3. - Step 4 Add— 1. the amount of any gain or loss determined under Step 1, and 2. the amount of any adjusted gain determined under Step 2 or (as the case may be) any loss determined under Step 3, If the result is a positive amount, that amount is the gain on the relevant high value disposal which is not ATED-related. If the result is a negative amount, that amount (expressed as a positive number) is the loss on the relevant high value disposal which is not ATED-related. (2) “The notional pre-April 2013 gain or loss” means the gain or loss which would have accrued on 5 April 2013 had the interest been disposed of for a consideration equal to its market value on that date. (3) For the purposes of sub-paragraph (2), the amount of the gain or loss accruing to P is to be computed (whether or not that would otherwise be the case) as if P were within the charge to corporation tax on chargeable gains (but not within the charge to capital gains tax). (4) Paragraph 3(2) and (3) (meaning of “notional post-April 2013 gain or loss”) also applies for the purposes of this paragraph. (5) “Notional indexation allowance” means the relevant fraction of an amount equal to the difference between— (a) the indexation allowance which (in the absence of section 2B and this Schedule) would be made under Chapter 4 of Part 2 in determining the gain accruing on the relevant high value disposal were that gain being computed for corporation tax purposes, and (b) the indexation allowance which is made under Chapter 4 of Part 2 in determining the notional pre-April 2013 gain. (6) “The relevant fraction” is— $$TD – CD TD$where “CD” and “TD” have the same meaning as in paragraph 3(4).$ (5) (1) A person may make an election under this paragraph for paragraphs 2 to 4 not to apply in relation to a chargeable interest held by (or any part of which is held by) the person on 5 April 2013. (2) An election is irrevocable. (3) An election must be made by being included in a tax return under the Management Act for the tax year in which the first relevant high value disposal by the person of the chargeable interest (or any part of it) on or after 6 April 2013 occurs. (4) The reference in sub-paragraph (3) to an election being included in a return includes an election being included by virtue of an amendment of the return. (5) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election. (6) In this paragraph “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act). (6) (1) This paragraph applies if— (a) an election is made by P under paragraph 5 in respect of the chargeable interest which (or a part of which) is the subject of the relevant high value disposal, or (b) the chargeable interest (or part) disposed of by the relevant high value disposal was not held by P throughout the period beginning with 5 April 2013 and ending with the disposal. (2) The ATED-related gain or loss accruing on the relevant high value disposal is computed as follows. - Step 1 Determine the amount of the gain or loss which would accrue to P, ignoring section 2B and this Schedule (but not the remainder of this Step). For this purpose, the amount of the gain or loss is to be computed (whether or not that would otherwise be the case) as if P were within the charge to capital gains tax (but not within the charge to corporation tax on chargeable gains). - Step 2 An amount equal to the relevant fraction of that gain or loss is the ATED-related gain or loss accruing on the relevant high value disposal. (3) The gain or loss accruing on the relevant high value disposal which is not ATED-related is to be computed as follows. - Step 1 In a case where there is a gain under Step 1 of sub-paragraph (2)— 1. determine the amount of the gain remaining after the deduction of the ATED-related gain, and 2. adjust the remaining gain by reducing it by an amount equal to the notional indexation allowance. - Step 2 In a case where there is a loss under Step 1 of sub-paragraph (2), determine the amount of the loss remaining after deduction of the ATED-related loss. That remaining loss is the loss accruing on the relevant high value disposal which is not ATED-related. (4) “Notional indexation allowance” means the relevant fraction of the indexation allowance which would be made under Chapter 4 of Part 2 in determining the gain under Step 1 in sub-paragraph (2) were that gain being computed for corporation tax purposes. (5) Subject to sub-paragraph (6), “the relevant fraction”— (a) in sub-paragraph (2) has the same meaning as in paragraph 3(4), and (b) in sub-paragraph (4) has the same meaning as in paragraph 4(6). (6) For the purpose of determining the relevant fraction under sub-paragraph (5), paragraph 3(5) has effect as if the relevant ownership period began on the day on which P acquired the interest or, if later, 31 March 1982. (7) (1) This paragraph applies where, as a result of a claim under section 106(3) of the Finance Act 2013 (adjustment of chargeable amount), or an amendment of or adjustment to such a claim, there is an alteration in the number of ATED chargeable days. (2) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to any change in liability to tax as a result of that alteration.

17

In Schedule 7A (restriction on set-off of pre-entry losses), after paragraph 10 insert—

(10A) Section 161(3ZB)(a) and (b) does not apply to a loss if, in the absence of an election under section 161(3ZA), the loss would have been a pre-entry loss.

PART 2 — Other amendments

Corporation Tax Act 2009

18

In section 2 of CTA 2009 (charge to corporation tax), after subsection (2) insert—

(2A) But in subsection (2) “chargeable gains” does not include gains chargeable to capital gains tax under section 2B of TCGA 1992 (companies etc chargeable to capital gains tax on ATED-related gains on relevant high value disposals).

Corporation Tax Act 2010

19

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

PART 3 — Commencement

20

The amendments made by this Schedule have effect in relation to disposals occurring on or after 6 April 2013.

SCHEDULE 26

Introductory

1

Chapter 16A of Part 2 of CAA 2001 (avoidance involving allowance buying) is amended as follows.

Restrictions where certain conditions met

2

• (1) Section 212B (circumstances where Chapter 16A applies) is amended as follows.

• (2) For subsection (1)(d) substitute—

(d) the qualifying change meets one of the limiting conditions.

• (3) For subsection (4) substitute—

(4) Sections 212LA and 212M set out the limiting conditions and specify when those conditions are met.

3

After section 212L insert—

(212LA) (1) The qualifying change meets one of the limiting conditions if condition A, B, C or D is met. (2) Condition A is that the amount of the relevant excess of allowances is £50 million or more. (3) Condition B is that the amount of the relevant excess of allowances— (a) is £2 million or more but less than £50 million, and (b) is not insignificant as a proportion of the total amount or value of the benefits derived by any relevant person by virtue of the qualifying change or change arrangements. (4) “Relevant person” means a person who, at the end of the relevant day, is— (a) a principal company of C, (b) a person carrying on the relevant activity in partnership, or (c) a person who is connected to a person within paragraph (a) or (b) (within the meaning of section 1122 of CTA 2010). (5) Condition C is that— (a) the amount of the relevant excess of allowances is less than £2 million, and (b) the qualifying change has an unallowable purpose. See section 212M for the meaning of “unallowable purpose”. (6) Condition D is that the main purpose, or one of the main purposes, of any arrangements is to procure that condition A or B or paragraph (a) of condition C is not met. (7) In this section— - the amount of the relevant excess of allowances is the difference between RTWDV and BSV (see sections 212K and 212L); - “change arrangements” and “arrangements” have the same meaning as in section 212M.

4

In consequence of the amendments made by paragraphs 2 and 3, the heading to Chapter 16A becomes “ Restrictions on allowance buying ”.

Extension of restrictions to other qualifying activities

5

• (1) Section 212B (circumstances where Chapter 16A applies) is amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (a), for “a trade (“the relevant trade”)” substitute “ a qualifying activity (“the relevant activity”) ”, and

• (b) in paragraph (c), for “trade” (in both places) substitute “ activity ”.

• (3) In subsection (3) for “trade” substitute “ activity ”.

6

• (1) Section 212C (when there is a a qualifying change in relation to C) is amended as follows.

• (2) In subsection (4)—

• (a) after “Condition C is that” insert “ the relevant activity is a trade (within the meaning of this Part) and ”, and

• (b) for “trade”, where it appears after “the relevant” (in both places), substitute “ activity ”.

• (3) In subsection (5) for “trade” (in both places) substitute “ activity ”.

7

• (1) Section 212I (relevant percentage share) is amended as follows.

• (2) In subsections (1) and (3) for “trade” substitute “ activity ”.

• (3) In subsection (2) for “a trade” substitute “ an activity ”.

8

In section 212J(1) (relevant excess of allowances) for “trade” substitute “ activity ”.

9

In section 212K(2), (3), (4) and (5) (relevant tax written-down value) for “trade” substitute “ activity ”.

10

In section 212N(2), (3) and (4) (old and new accounting periods) for “trade” substitute “ activity ”.

11

• (1) Section 212P (effect of excess on pools) is amended as follows.

• (2) In subsection (3)—

• (a) for “a trade (or part of a trade)” substitute “ a qualifying activity (or part of a qualifying activity) ”,

• (b) for “the activities of that trade (or part of a trade)” substitute “ that activity (or that part of an activity) ”,

• (c) after “its trade” insert “ or business ”,

• (d) for “those activities” substitute “ that activity (or that part) ”, and

• (e) after “separate trade” insert “ or business ”.

• (3) In subsection (4)—

• (a) after “section 37” insert “ , 62 or 66 ”,

• (b) omit “trade”,

• (c) for “earlier” substitute “ other ”, and

• (d) after “period)” insert “ or section 259 or 260(3) of this Act (special leasing) ”.

12

• (1) Section 212Q (when there are postponed capital allowances) is amended as follows.

• (2) In subsection (3)—

• (a) for “a trade (or part of a trade)” substitute “ a qualifying activity (or part of a qualifying activity) ”,

• (b) for “the activities of that trade (or part of a trade)” substitute “ that activity (or that part of an activity) ”,

• (c) after “its trade” insert “ or business ”,

• (d) for “those activities” substitute “ that activity (or that part) ”, and

• (e) after “separate trade” insert “ or business ”.

• (3) In subsection (4)—

• (a) after “section 37” insert “ , 62 or 66 ”, and

• (b) after “CTA 2010” insert “ or section 259 or 260(3) of this Act ”.

Commencement

13

• (1) The amendments made by this Schedule have effect in relation to a qualifying change if the relevant day (within the meaning of Chapter 16A of Part 2 of CAA 2001) is on or after 20 March 2013.

• (2) But those amendments do not have effect if before that date—

• (a) the arrangements made to bring about the qualifying change were entered into, or

• (b) there was an agreement, or common understanding, between the parties to those arrangements as to the principal terms on which the qualifying change would be brought about.

SCHEDULE 27

Income tax: carry forward of relief

1

Part 7 of ITA 2007 (community investment tax relief) is amended as follows.

2

In section 335 (form and amount of CITR) in subsection (3) for “this purpose” substitute “ the purposes of this section and section 335A ”.

3

After section 335 insert—

(335A) (1) This section applies if— (a) the investor is entitled to a tax reduction for a relevant tax year under section 335 in respect of the investment, but (b) the amount of the tax reduction is not fully deducted at Step 6 for that relevant tax year. (2) The amount (“the excess amount”) not deducted is treated as follows. (3) For each subsequent relevant tax year for which the investor— (a) is entitled to a tax reduction under section 335 in respect of the investment, and (b) makes a claim under this subsection, the investor is also entitled to a tax reduction under this subsection which is given effect at Step 6. (4) The amount of the tax reduction under subsection (3) for any relevant tax year is the excess amount so far as it has not been deducted at Step 6 for any earlier relevant tax year by virtue of that subsection. (5) In this section “Step 6” means Step 6 of the calculation in section 23.

4

In section 357 (attribution of CITR) after subsection (4) insert—

(4A) In the case of CITR under section 335A, in subsection (4)(a) the reference to the year is to be read as a reference to the year mentioned in section 335A(1)(a).

5

• (1) Section 361 (disposal of securities or shares during 5 year period) is amended as follows.

• (2) For subsection (3) substitute—

(3) Subsections (3A) to (3H) apply if— (a) the disposal is a qualifying disposal, and (b) the investor has made a claim under section 335 in respect of the former investment for a tax year (“tax year X”). (3A) Subsection (3B) applies if the total of the following CITR does not exceed A— (a) any CITR attributable to the former investment in respect of tax year X given under section 335, and (b) any CITR attributable to the former investment in respect of later tax years given under section 335A where tax year X is the tax year mentioned in section 335A(1)(a). (3B) All CITR falling within subsection (3A)(a) or (b) must be withdrawn. (3C) If the total of the CITR falling within subsection (3A)(a) or (b) exceeds A, that total must be reduced by A. (3D) For the purposes of subsection (3C) CITR given in a later tax year must be reduced before CITR given in an earlier tax year. (3E) For the purposes of subsections (3A) and (3C) “A” is an amount equal to 5% of the amount or value of the consideration (if any) which the investor receives for the former investment. (3F) If— (a) the total of the CITR falling within subsection (3A)(a) or (b)(“B”) is less than (b) the amount (“C”) which is equal to 5% of the invested amount in respect of the former investment for tax year X, “A” is to be reduced by multiplying it by the fraction— $B C$ (3G) If the amount of CITR attributable to the former investment in respect of a tax year has been reduced before the CITR is obtained, the amount referred to in subsection (3F) as B is to be treated for the purposes of that subsection as the amount it would have been without the reduction. (3H) Subsection (3G) does not apply to a reduction by virtue of section 358 (attribution: bonus shares).

• (3) Omit subsections (5) to (7).

6

The amendments made by paragraphs 1 to 5 above have effect in relation to investments made on or after 6 April 2013.

Corporation tax: carry forward of relief

7

Part 7 of CTA 2010 (community investment tax relief) is amended as follows.

8

• (1) Section 220 (form and amount of CITR) is amended as follows.

• (2) For subsection (3) substitute—

(3) The amount of that reduction for the relevant accounting period is 5% of the invested amount in respect of the investment for the period.

• (3) In subsection (4) for “this purpose” substitute “ the purposes of this section and section 220A ”.

9

After section 220 insert—

(220A) (1) This section applies if— (a) the investor is entitled to a reduction in its liability for corporation tax for a relevant accounting period under section 220 in respect of the investment, but (b) the amount of the reduction is not fully deducted at Step 2 for that relevant accounting period. (2) The amount (“the excess amount”) not deducted is treated as follows. (3) For each subsequent relevant accounting period for which the investor— (a) is entitled to a reduction in its liability for corporation tax under section 220 in respect of the investment, and (b) makes a claim under this subsection, the investor is also entitled to a reduction in its liability for corporation tax under this subsection. (4) The amount of the reduction under subsection (3) for any relevant accounting period is the excess amount so far as it has not been deducted at Step 2 for any earlier relevant accounting period by virtue of that subsection. (5) In this section “Step 2” means the second step in paragraph 8(1) of Schedule 18 to FA 1998 (calculation of tax payable).

10

In section 240 (attribution of CITR) after subsection (4) insert—

(4A) In the case of CITR under section 220A, in subsection (4)(a) the reference to the period is to be read as a reference to the period mentioned in section 220A(1)(a).

11

• (1) Section 244 (disposal of securities or shares during 5 year period) is amended as follows.

• (2) For subsection (3) substitute—

(3) Subsections (3A) to (3H) apply if— (a) the disposal is a qualifying disposal, and (b) the investor has made a claim under section 220 in respect of the former investment for an accounting period (“period X”). (3A) Subsection (3B) applies if the total of the following CITR does not exceed A— (a) any CITR attributable to the former investment in respect of period X given under section 220, and (b) any CITR attributable to the former investment in respect of later accounting periods given under section 220A where period X is the accounting period mentioned in section 220A(1)(a). (3B) All CITR falling within subsection (3A)(a) or (b) must be withdrawn. (3C) If the total of the CITR falling within subsection (3A)(a) or (b) exceeds A, that total must be reduced by A. (3D) For the purposes of subsection (3C) CITR given in a later accounting period must be reduced before CITR given in an earlier accounting period. (3E) For the purposes of subsections (3A) and (3C) “A” is an amount equal to 5% of the amount or value of the consideration (if any) which the investor receives for the former investment. (3F) If— (a) the total of the CITR falling within subsection (3A)(a) or (b)(“B”) is less than (b) the amount (“C”) which is equal to 5% of the invested amount in respect of the former investment for period X, “A” is to be reduced by multiplying it by the fraction— $B C$ (3G) If the amount of CITR attributable to the former investment in respect of an accounting period has been reduced before the CITR is obtained, the amount referred to in subsection (3F) as B is to be treated for the purposes of that subsection as the amount it would have been without the reduction. (3H) Subsection (3G) does not apply to a reduction by virtue of section 241 (attribution: bonus shares).

• (3) Omit subsections (5) to (7).

12

The amendments made by paragraphs 7 to 11 above have effect in relation to investments made in accounting periods beginning on or after 1 April 2013.

Corporation tax: limit on State aid

13

• (1) In Part 7 of CTA 2010 (community investment tax relief) after section 220A (as inserted by paragraph 9 above) insert—

(220B) (1) The reductions that may be made in the amount of the investor's liability for corporation tax under section 220 or 220A for an accounting period (“the current accounting period”) are limited as follows. (2) The sum of the following amounts must not exceed [euro]200,000— (a) so far as it represents aid granted to the investor, the total amount of reductions made in the amount of the investor's liability for corporation tax under section 220 or 220A— (i) for the current accounting period, or (ii) any earlier accounting period which ends during the relevant 3-year period, and (b) the total of any de minimis aid granted to the investor during the relevant 3-year period which does not fall within paragraph (a). (3) In subsection (2) “the relevant 3-year period” means the period of 3 years ending at the end of the current accounting period. (4) Subsection (2) is to be read as if it were contained in Article 2 of Commission Regulation (EC) No. 1998/2006 (de minimis aid).

• (2) The amendment made by this paragraph has effect for the purpose of limiting CITR in respect of investments made on or after 1 April 2013.

• (3) CITR in respect of investments made before that date is to be ignored for the purposes of section 220B(2) of CTA 2010.

SCHEDULE 28

Income tax

1

ITTOIA 2005 is amended as follows.

2

In section 61 (tenants occupying land for purposes of trade treated as incurring expenses) after subsection (5) insert—

(5A) No expense is to be determined under this section by reference to the taxed receipt if section 292(4B) or (4C) applies.

3

In section 292 (tenants under taxed leases treated as incurring expenses) after subsection (4) insert—

(4A) No expense is to be determined under this section by reference to the taxed receipt if subsection (4B) or (4C) applies. (4B) This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 303 in determining the effective duration of the lease. (4C) This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 243 of CTA 2009 in determining the effective duration of the lease for the purposes of Chapter 4 of Part 4 of that Act.

4

The amendments made by paragraphs 2 and 3 above have effect in relation to leases granted on or after 6 April 2013.

Corporation tax

5

CTA 2009 is amended as follows.

6

In section 63 (tenants occupying land for purposes of trade treated as incurring expenses) after subsection (5) insert—

(5A) No expense is to be determined under this section by reference to the taxed receipt if section 232(4B) or (4C) applies.

7

In section 232 (tenants under taxed leases treated as incurring expenses) after subsection (4) insert—

(4A) No expense is to be determined under this section by reference to the taxed receipt if subsection (4B) or (4C) applies. (4B) This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 243 in determining the effective duration of the lease. (4C) This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 303 of ITTOIA 2005 in determining the effective duration of the lease for the purposes of Chapter 4 of Part 3 of that Act.

8

The amendments made by paragraphs 6 and 7 above have effect in relation to leases granted on or after 1 April 2013.

SCHEDULE 29

PART 1 — Income tax

1

Before Part 11A of ITA 2007 insert—

(614ZA) This Part deals with the application of the Income Tax Acts to manufactured payment relationships and payments representative of dividends or interest. (614ZB) (1) For the purposes of the Income Tax Acts a person has a manufactured payment relationship if conditions A to C are met. (2) Condition A is that under any arrangements— (a) an amount is payable by or to the person, or (b) any other benefit is given by or to the person (including the release of the whole or part of any liability to pay an amount). (3) Condition B is that the arrangements relate to the transfer of securities. (4) Condition C is that the amount or value of the other benefit— (a) is representative of a dividend or interest on the securities, or (b) will fall to be treated as representative of such a dividend or interest when it is paid or given. (5) In subsection (2) the reference to an amount being payable, or other benefit being given, by the person includes a reference to an amount being payable, or other benefit being given, by another person on behalf of the person in question. (6) In this Part— - “manufactured payment”, in relation to a manufactured payment relationship, means an amount, or the value of a benefit, within subsection (2), and - “securities” means— 1. shares in a company, and 2. loan stock or any similar security (whether the security is of the government of the United Kingdom, any other government, any public or local authority in the United Kingdom or elsewhere, or any other company or body). (614ZC) (1) This section applies where a person has a manufactured payment relationship under which a manufactured payment is paid by or on behalf of the person. (2) No deduction is allowed in respect of the manufactured payment in calculating any profits or other income of the person for income tax purposes (subject to subsection (3)). (3) Subsection (2) does not apply in relation to the person so far as the manufactured payment is brought into account under Part 2 of ITTOIA 2005 in calculating the profits of a trade carried on by the person. (4) But nothing in subsection (3) affects the question whether (apart from that provision) a deduction in calculating the profits of a trade carried on by the person is allowed. (614ZD) (1) Subsection (2) applies if a person has a manufactured payment relationship under which a manufactured payment is payable to the person. (2) For the purposes of the charge to income tax on the person's income, the Income Tax Acts apply to the person as if the manufactured payment were a dividend or interest on the securities (as the case may require). (3) Subsection (2) is subject to subsections (4) to (6). (4) Subsection (2) does not apply in relation to the person so far as the manufactured payment is brought into account under Part 2 of ITTOIA 2005 in calculating the profits of a trade carried on by the person. (5) Subsection (2) does not apply in relation to the person for the purposes of determining entitlement to double taxation relief in respect of any dividend or interest. (6) In a case in which the manufactured payment is treated as a dividend by virtue of subsection (2), the person is not entitled to a tax credit under Chapter 3 of Part 4 of ITTOIA 2005 (tax credits for certain recipients of distributions) in respect of the dividend. (7) For the purposes of this section “double taxation relief” means any relief given under or as a result of Part 2 of TIOPA 2010.

PART 2 — Corporation tax

2

Before Part 18 of CTA 2010 insert—

(814A) This Part deals with the application of the Corporation Tax Acts to manufactured dividend relationships and payments representative of dividends. (814B) (1) For the purposes of the Corporation Tax Acts a company has a manufactured dividend relationship if conditions A to C are met. (2) Condition A is that under any arrangements— (a) an amount is payable by or to the company, or (b) any other benefit is given by or to the company (including the release of the whole or part of any liability to pay an amount). (3) Condition B is that the arrangements relate to the transfer of shares in a company. (4) Condition C is that the amount or value of the other benefit— (a) is representative of a dividend on the shares, or (b) will fall to be treated as representative of such a dividend when it is paid or given. (5) In subsection (2) the reference to an amount being payable, or other benefit being given, by the company includes a reference to an amount being payable, or other benefit being given, by another person on behalf of the company. (6) In this Part— - “manufactured dividend”, in relation to a manufactured dividend relationship, means an amount, or the value of a benefit, within subsection (2), and - “the real dividend” means the dividend mentioned in subsection (4)(a). (814C) (1) This section applies where a company has a manufactured dividend relationship under which a manufactured dividend is paid by or on behalf of the company. (2) No deduction in calculating income for corporation tax purposes is allowed in respect of the manufactured dividend (subject to subsections (3) to (7)). (3) Subsection (2) does not apply in relation to the company so far as the manufactured dividend is brought into account under Part 3 of CTA 2009 in calculating the profits of a trade carried on by the company. (4) Subsection (5) applies if— (a) the manufactured dividend relates to investment business which the company has, (b) the company received the real dividend in the accounting period, and (c) the real dividend is taxed by virtue of section 548(5) (recipients of distributions from REITs). (5) The manufactured dividend is to be treated as expenses of management of the company's investment business for the accounting period for the purposes of Chapter 2 of Part 16 of CTA 2009. (6) Subsection (7) applies if— (a) the manufactured dividend is referable to basic life assurance and general annuity business which the company has, (b) the company received the real dividend in the accounting period, and (c) the real dividend is taxed by virtue of section 548(5) (recipients of distributions from REITs). (7) So far as the manufactured dividend is referable as mentioned in subsection (6)(a), the manufactured dividend is to be treated for the purposes of section 76 of FA 2012 as a deemed BLAGAB management expense for the accounting period. (8) Nothing in subsection (3) affects the question whether (apart from that provision) a deduction in calculating the profits of a trade carried on by the company is allowed. (9) The references in subsections (4) and (6) to the real dividend include references to a manufactured dividend which is treated as a real dividend by virtue of section 814D(2). (10) For the purposes of subsections (6) and (7), the manufactured dividend is treated as referable to basic life assurance and general annuity business so far as the real dividend is received by the company and is so referable in accordance with Chapter 4 of Part 2 of FA 2012 (apportionment rules for I-E charge). (814D) (1) Subsection (2) applies if a company has a manufactured dividend relationship under which a manufactured dividend is payable to it. (2) For the purposes of the charge to corporation tax on the income of the company, the Corporation Tax Acts apply to the company, and any company claiming title through or under the company, as if the manufactured dividend were a dividend on the shares. (3) Subsection (2) is subject to subsections (4) to (8). (4) Subsection (2) does not apply in relation to a company so far as the manufactured dividend is brought into account under Part 3 of CTA 2009 in calculating the profits of a trade carried on by the company. (5) Subsection (2) does not apply in relation to a company for the purposes of determining entitlement to double taxation relief in respect of any dividend. (6) Part 9A of CTA 2009 (company distributions), in its application in relation to a manufactured dividend as a result of subsection (2), has effect with the modification in subsection (7). (7) The modification is that— (a) references in that Part to the payer are to be treated as references to the company that pays the real dividend, and (b) the definition of “the payer” in section 931T is to be treated as omitted. (8) The company to which the manufactured dividend is payable is not entitled to a tax credit under section 1109 (tax credits for certain recipients of exempt qualifying distributions) in respect of the dividend. (9) For the purposes of subsection (5) “double taxation relief” means any relief given under or as a result of Part 2 of TIOPA 2010. (10) This section has effect regardless of section 358 of CTA 2009 (exclusion of credits on release of connected companies debts) or any other provision of Part 5 of that Act (loan relationships) which prevents a credit from being brought into account.

PART 3 — Consequential etc amendments

Introductory

3

The following amendments are in consequence of, or otherwise connected with, the amendments made by Parts 1 and 2.

TCGA 1992

4

TCGA 1992 is amended as follows.

5

In section 263B (stock lending arrangements), for subsection (7) substitute—

(7) In this section “securities” has the meaning given by section 263AA.

6

Omit section 263D (gains accruing to persons paying manufactured dividends).

7

In section 263F (power to modify repo provisions: non-standard repo cases)—

• (a) in subsection (1)—

• (i) at the end of paragraph (c) insert “ or ”, and

• (ii) omit paragraph (d) (and the word “or” at the end of it), and

• (b) in subsection (2), omit “or 263D”.

8

In section 263G (power to modify repo provisions: redemption arrangements)—

• (a) in subsection (1), omit paragraph (d) (but not the word “or” at the end of it), and

• (b) in subsection (2), omit “or 263D”.

9

In section 263H (sections 263F and 263G: supplementary provisions), in subsection (3)(b) omit “or 263D”.

10

• (1) Section 263I (powers about manufactured overseas dividend) is amended as follows.

• (2) In subsection (1), for paragraphs (a) and (b) substitute—

(a) pays or receives an amount (a “manufactured overseas dividend”) which is representative of an overseas dividend on overseas securities where the payment or receipt is required to be made under an arrangement for the transfer of the securities, or (b) is treated as doing so for any purposes of the Tax Acts.

• (3) For subsection (6) substitute—

(6) In this section— (a) “overseas securities” means shares, stock or other securities issued by— (i) a government, local authority or other public authority of a territory outside the United Kingdom, or (ii) another body of persons not resident in the United Kingdom, (b) “overseas securities” includes shares in a company which is not resident in the United Kingdom, (c) “overseas dividend” means any interest, dividend or other annual payment payable in respect of overseas securities, and (d) “securities” includes loan stock or any similar security.

FA 2004

11

In Schedule 24 to FA 2004 (manufactured dividends), omit paragraph 3(1) and (3).

ITTOIA 2005

12

ITTOIA 2005 is amended as follows.

13

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

14

In section 397A (tax credit for distributions of non-UK resident companies)—

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

• (b) omit subsection (8).

15

Omit section 397B (tax credits under section 397A: manufactured overseas dividends).

ITA 2007

16

ITA 2007 is amended as follows.

17

In section 2 (overview of Act)—

• (a) omit subsection (11), and

• (b) before subsection (11A) insert—

(11ZA) Part 11ZA is about manufactured payments.

18

Omit the following provisions (which deal with manufactured payments and repos)—

• (a) sections 565 to 595,

• (b) section 596(1) to (4), and

• (c) section 606(8).

19

In section 647 (makers of manufactured payments), for subsection (6) substitute—

(6) In this section “manufactured payments contract” means a contract under which— (a) the seller is required to pay another person an amount which is representative of a periodical payment of interest on UK securities under an arrangement between them for the transfer of the securities, or (b) the seller is required to pay another person an amount which is representative of an overseas dividend on overseas securities under an arrangement between them for the transfer of the securities. (7) In this section— (a) “overseas securities” means shares, stock or other securities issued by— (i) a government, local authority or other public authority of a territory outside the United Kingdom, or (ii) another non-UK resident body of persons, and includes shares in a non-UK resident company, (b) “overseas dividend” means any interest, dividend or other annual payment payable in respect of overseas securities, and (c) “UK securities” means securities of— (i) the government of the United Kingdom, (ii) a local authority in the United Kingdom, (iii) another public authority in the United Kingdom, or (iv) a UK resident company or other UK resident body, but does not include shares in a UK resident company.

20

In section 658 (powers to modify: supplementary), for subsection (5) substitute—

(5) Subsections (6) to (10) apply for the purposes of sections 656 and 657 and this section. (6) “UK shares” means shares in a UK resident company. (7) “UK securities” means securities of— (a) the government of the United Kingdom, (b) a local authority in the United Kingdom, (c) another public authority in the United Kingdom, or (d) a UK resident company or other UK resident body. (8) But “UK securities” does not include UK shares. (9) “Overseas securities” means shares, stock or other securities issued by— (a) a government, local authority or other public authority of a territory outside the United Kingdom, or (b) another non-UK resident body of persons. (10) “Overseas securities” includes shares in a non-UK resident company.

21

In section 918(1) (manufactured dividends on UK shares: REITs), for paragraph (a) substitute—

(a) a person pays a manufactured payment as mentioned in section 614ZC(1) and the amount payable is representative of a dividend (a “manufactured dividend”), and

.

22

In section 919 (manufactured interest on UK securities)—

• (a) for subsection (1) substitute—

(1) This section applies if— (a) a person pays a manufactured payment as mentioned in section 614ZC(1), (b) the amount payable is representative of interest on UK securities (“manufactured interest”), and (c) the person — (i) is UK resident, or (ii) pays the manufactured interest in the course of a trade carried on in the United Kingdom through a branch or agency.

,

• (b) in subsection (4), omit the words from “section 583” to “special cases)”, and

• (c) after subsection (5) insert—

(6) In subsection (1) “UK securities” means securities of— (a) the government of the United Kingdom, (b) a local authority in the United Kingdom, (c) another public authority in the United Kingdom, or (d) a UK resident company or other UK resident body. (7) But “UK securities” does not include shares in a UK resident company. (8) In this section “securities” includes loan stock or any similar security.

23

Omit section 920 (foreign payers of manufactured interest: the reverse charge).

24

In section 921 (cases where interest on underlying securities paid gross), in subsection (3), for the words from “ “securities”” to the end substitute “ “manufactured interest” has the same meaning as in section 919. ”

25

Omit sections 922 to 925 (manufactured overseas dividends).

26

In section 925A(2) (creditor repos), for “to 925” substitute “ , 919 and 921 ”.

27

Omit section 925B (debtor repos).

28

In section 925C (actual payments ignored)—

• (a) in the heading, omit “or 925B”,

• (b) omit “or 925B(2)”, and

• (c) for “to 925” substitute “ , 919 and 921 ”.

29

In section 926 (interpretation of Chapter 9 of Part 15), omit subsections (1) and (1A).

30

In Schedule 1 (minor and consequential amendments), omit paragraph 335(1) to (4) and (6) to (8).

31

In Schedule 2 (transitionals and savings), omit paragraphs 108 to 111 (and the headings “Part 12”, “Manufactured payments and repos” and “Tax credits: stock lending arrangements and repos” immediately preceding paragraph 108).

32

In Schedule 4 (index of defined expressions), omit the entries for— “ buying back securities, in the context of a repo (in Part 11) ”, “ company UK REIT (in Chapter 2 of Part 11) ”, “ gross amount (in Chapter 2 of Part 11) ”, “ group (in Chapter 2 of Part 11) ”, “ group UK REIT (in Chapter 2 of Part 11) ”, “ manufactured dividend (in Chapter 2 of Part 11) ”, “ manufactured dividend (in Chapter 3 of Part 11) ”, “ manufactured interest (in Chapter 2 of Part 11) ”, “ manufactured overseas dividend (in Chapter 2 of Part 11) ”, “ overseas dividend (in Part 11) ”, “ overseas dividend (in Chapter 9 of Part 15) ”, “ overseas securities (in Part 11) ”, “ overseas tax (in Chapter 2 of Part 11) ”, “ overseas tax (in Chapter 9 of Part 15) ”, “ overseas tax credit (in Chapter 2 of Part 11) ”, “ prescribed (in Chapter 2 of Part 11) ”, “ principal company (in Chapter 2 of Part 11) ”, “ principal company (in Chapter 9 of Part 15) ”, “ property rental business (in Chapter 2 of Part 11) ”, “ property rental business (in Chapter 9 of Part 15) ”, “ related agreements (in Part 11) ”, “ relevant withholding tax (in Chapter 2 of Part 11) ”, “ repo (in Part 11) ”, “ the rules about manufactured payments (in Chapter 4 of Part 11) ”, “ stock lending arrangement (in Part 11) ”, “ trade carried on through a branch or agency (in Chapter 2 of Part 11) ”, “ transfer (in Chapter 2 of Part 11) ”, “ UK securities (in Part 11) ”, and “ UK shares (in Part 11) ”.

FA 2008

33

• (1) FA 2008 is amended as follows.

• (2) In Schedule 12 (tax credit for certain foreign distributions), omit paragraphs 26, 27(2)(a) and (c) and (3), 28(2)(a) and (c) and (3), 29(2)(a), (c)(i) and (d) and (3) and 30.

• (3) In Schedule 23 (manufactured payments: anti avoidance), omit paragraphs 1 to 4, 6, 7 and 9 to 11.

CTA 2009

34

CTA 2009 is amended as follows.

35

In section 539 (introduction to Chapter about manufactured interest), omit subsection (7).

36

In section 540(3) (manufactured interest treated as interest under loan relationship), omit “and to section 799 of CTA 2010”.

37

In section 550 (which makes provision about the effect of the sale of securities on a borrower)—

• (a) in subsection (4), for “(6)” substitute “ (5C) ”,

• (b) after subsection (5A) insert—

(5B) Nothing in subsection (3) entitles the borrower to double taxation relief in respect of any income payable in respect of overseas securities. (5C) But nothing in subsection (3) affects the entitlement of the borrower to double taxation relief in respect of any overseas tax deducted from any amount representative of income payable in respect of overseas securities. (5D) In subsection (5C) “overseas tax” means tax under the law of a territory outside the United Kingdom.

, and

• (c) omit subsection (6).

38

In section 1221(1) (amounts treated as expenses of management), for paragraph (i) substitute—

(i) section 814C(5) of CTA 2010 (treatment of payer of manufactured dividend),

.

39

In section 1248 (expenses in connection with arrangements for securing a tax advantage)—

• (a) omit subsection (3), and

• (b) in subsection (5), omit the definition of “relevant tax relief”.

FA 2009

40

In Schedule 19 to FA 2009 (income tax credits for foreign distributions), omit paragraphs 4 and 13(b).

CTA 2010

41

CTA 2010 is amended as follows.

42

In section 1 (overview of Act), in subsection (4)—

• (a) omit paragraph (d), and

• (b) before paragraph (e) insert—

(da) manufactured dividends (see Part 17A),

.

43

Omit Part 17 (manufactured payments and repos).

44

• (1) Section 1109(5) (provisions to which section 1109 is subject) is amended as follows.

• (2) Omit paragraphs (a) to (c) (and the word “and” at the end of paragraph (c)).

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

45

In Schedule 1 (minor and consequential amendments), omit paragraphs 259, 537, 538, 539(b) and (c), 635, 636 and 689(a) and (b)(i).

46

In Schedule 2 (transitionals and savings), omit Part 17 (manufactured payments and repos).

47

In Schedule 4 (index of defined expressions), omit the entries for—

creditor quasi-repo (in Chapter 5 of Part 17)

, “ creditor repo (in Chapter 5 of Part 17) ”, “ debtor quasi-repo (in Chapter 5 of Part 17) ”, “ debtor repo (in Chapter 5 of Part 17) ”, “ manufactured dividend (in Part 17) ”, “ manufactured overseas dividend (in Part 17) ”, “ overseas dividend (in Part 17) ”, “ overseas securities (in Part 17) ”, “ overseas tax (in Part 17) ”, “ prescribed (in Chapter 4 of Part 17) ”, “ stock lending arrangement (in Chapter 5 of Part 17) ”, and “ “UK shares (in Part 17)”. ”.

TIOPA 2010

48

• (1) TIOPA 2010 is amended as follows.

• (2) In section 85A(4) (schemes involving deemed foreign tax), omit paragraph (b) of the definition of “real foreign tax”.

• (3) In Schedule 7 (miscellaneous relocations), omit paragraph 113.

• (4) In Schedule 8 (minor and consequential amendments), omit paragraph 82.

FA 2011

49

In Schedule 13 to FA 2011 (profits of foreign permanent establishments), omit paragraphs 22 to 24.

FA 2012

50

• (1) FA 2012 is amended as follows.

• (2) Omit section 22 (treatment of the receipt of manufactured overseas dividends).

• (3) In section 78(3) (amounts which are deemed BLAGAB management expense for accounting period), for “783(6), 785(4) or 791(6)” substitute “ 814C(7) ”.

• (4) In Schedule 16 (minor and consequential amendments), omit paragraphs 220 to 223.

PART 4 — Commencement

51

The amendments made by Parts 1 and 2 of this Schedule have effect in relation to any payment representative of a dividend or interest which is made on or after 1 January 2014.

52

The amendments made by Part 3 of this Schedule come into force on that date.

SCHEDULE 30

PART 1 — Amendments of Part 10 of CTA 2010

1

Part 10 of CTA 2010 (close companies) is amended as follows.

2

• (1) In section 438 (overview), after subsection (2) insert—

(2A) Chapter 3A imposes a charge to tax in connection with other arrangements involving close companies and participators. (2B) Chapter 3B makes provision about the treatment of certain repayments and return payments made in respect of loans, advances and other arrangements.

• (2) The amendment made by this paragraph is treated as having come into force on 20 March 2013.

3

• (1) In section 455 (charge to tax in case of loan to participator), for subsection (1) substitute—

(1) This section applies if a close company makes a loan or advances money to— (a) a relevant person who is a participator in the company or an associate of such a participator, (b) the trustees of a settlement one or more of the trustees or actual or potential beneficiaries of which is a participator in the company or an associate of such a participator, or (c) a limited liability partnership or other partnership one or more of the partners in which is an individual who is— (i) a participator in the company, or (ii) an associate of an individual who is such a participator.

• (2) The amendment made by this paragraph has effect in relation to a loan or advance made on or after 20 March 2013.

4

• (1) In section 459(2) (application of other provisions where loan treated as made to participator), after “458” insert “ and 464C and 464D ”.

• (2) The amendment made by this paragraph is treated as having come into force on 20 March 2013.

5

• (1) After Chapter 3 insert—

(464A) (1) This section applies if— (a) a close company is at any time a party to tax avoidance arrangements, and (b) as a result of those arrangements, a benefit is conferred (whether directly or indirectly) on an individual who is— (i) a participator in the company, or (ii) an associate of such a participator. (2) But this section does not apply if, or to the extent that, the conferral of the benefit gives rise to— (a) a charge to tax on the company under section 455, or (b) a charge to income tax on the participator or associate. (3) There is due from the company, as if it were an amount of corporation tax chargeable on the company for the accounting period in which the benefit is conferred on the participator or associate, an amount equal to 25% of the value of the benefit conferred. (4) Tax due under this section in relation to a benefit conferred on a participator or associate is due and payable in accordance with section 59D of TMA 1970 on the day following the end of the period of 9 months from the end of the accounting period in which the benefit was conferred. (5) If a company (C) controls another company (D), a participator in C is to be treated for the purposes of this section as being also a participator in D. (6) For the purposes of this section, arrangements are “tax avoidance arrangements” if the main purpose, or one of the main purposes, of the arrangements is— (a) to avoid or reduce, or obtain a relief or increased relief from, a charge to tax on the company under section 455, or (b) to obtain a tax advantage for the participator or associate. (7) In this section— - “arrangements” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions, and - “tax advantage” has the meaning given in section 1139, reading references to tax in that section as references to income tax. (464B) (1) Subsection (2) applies if a benefit has been conferred which gave rise to a charge to tax on the company under section 464A. (2) Relief is to be given from that tax, or a proportionate part of it, if— (a) a payment (“the return payment”) is made to the company in respect of the benefit, and (b) no consideration is given for the return payment. (3) Relief under this section is to be given on a claim, which must be made within 4 years from the end of the financial year in which the return payment is made to the company. (4) Subsection (5) applies if the return payment is made on or after the day on which tax under section 464A becomes due and payable in relation to the benefit. (5) Relief in respect of the return payment may not be given under this section at any time before the end of the period of 9 months from the end of the accounting period in which the return payment was made. (6) Schedule 1A to TMA 1970 (claims and elections not included in return) applies to a claim for relief under this section unless— (a) the claim is included (by amendment or otherwise) in the return for the period in which the benefit was conferred, and (b) the relief may be given at the time the claim is made.

• (2) The amendment made by this paragraph has effect in relation to arrangements to which a close company becomes a party on or after 20 March 2013.

6

• (1) After Chapter 3A insert—

(464C) (1) Where— (a) within any period of 30 days— (i) the qualifying amount of repayments made to a close company in respect of one or more chargeable payments made by the company to a person totals £5,000 or more, and (ii) the available amount of the relevant chargeable payments made by the company to the person or an associate of the person totals £5,000 or more, and (b) the relevant chargeable payments are made in an accounting period subsequent to that in which the chargeable payments mentioned in paragraph (a)(i) were made, the qualifying amount of the repayments, so far as not exceeding the available amount of the relevant chargeable payments, is to be treated for the purposes of this Chapter as a repayment of the relevant chargeable payments. (2) A chargeable payment is a relevant chargeable payment for the purposes of subsection (1) if (or to the extent that) it is not repaid within the period of 30 days mentioned in that subsection. (3) Where— (a) immediately before a repayment is made in respect of one or more chargeable payments made by a close company to a person, the total amount owed to the company by the person in respect of chargeable payments is £15,000 or more, (b) at the time the repayment is made, arrangements had been made for one or more chargeable payments to be made to replace some or all of the amount repaid, and (c) the available amount of the chargeable payments made by the company to the person or an associate of the person under the arrangements totals £5,000 or more, the qualifying amount of the repayment, so far as not exceeding the available amount of the chargeable payments mentioned in paragraph (c), is to be treated for the purposes of this Chapter as a repayment of those chargeable payments. (4) An amount contained in a chargeable payment is an available amount— (a) for the purposes of subsection (1), to the extent that no repayment has been treated as made in respect of it by the previous operation of that subsection, and (b) for the purposes of subsection (3), to the extent that no repayment has been treated as made in respect of it— (i) by the operation of subsection (1), or (ii) by the previous operation of subsection (3). (5) An amount contained in a repayment is a qualifying amount to the extent that it has not been treated by the previous operation of this section as a repayment of a chargeable payment. (6) This section does not apply in relation to a repayment which gives rise to a charge to income tax on the participator or associate by reference to whom the loan, advance or benefit was a chargeable payment. (7) The Treasury may by order vary a sum specified in subsection (1) or (3). (8) An order under subsection (7) may contain incidental, supplemental, consequential and transitional provision and savings. (464D) (1) All such assessments and adjustments of assessments are to be made as are necessary to give effect to section 464C(1) and (3). (2) If a person who has made a tax return becomes aware that, after making it, anything in it has become incorrect because of the operation of section 464C(1) or (3), the person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended. (3) The notice must be given within 3 months beginning with the day on which the person became aware that anything in the return had become incorrect because of the operation of section 464C(1) or (3). (4) In section 464C, “chargeable payment” means— (a) a loan or advance made by a close company which gives rise to a charge to tax under section 455, or (b) the conferral of a benefit on an individual in circumstances which give rise to a charge to tax under section 464A. (5) In a case within subsection (4)(b)— (a) the conferral of the benefit is to be treated for the purposes of section 464C as a loan made by the close company to the individual to the value of the benefit conferred, and (b) any payment in respect of which (apart from section 464C) relief is due to the close company under section 464B is to be treated for the purposes of section 464C as a repayment of the loan.

• (2) The amendment made by this paragraph has effect in relation to repayments and return payments made on or after 20 March 2013.

7

In section 465 (power to obtain information), after “Chapter 3” (in both places) insert “ or 3A ”.

PART 2 — Other amendments

Taxes Management Act 1970

8

TMA 1970 is amended as follows.

9

In section 59E(11)(a) (provision as to when tax is due and payable)—

• (a) after “455” insert “ or 464A ”, and

• (b) after “loan” insert “ or benefit ”.

10

In section 59F(6)(a) (arrangements for paying tax on behalf of group members)—

• (a) after “455” insert “ or 464A ”, and

• (b) after “loan” insert “ or benefit ”.

11

• (1) Section 109 (corporation tax on close company in connection with loans to participators etc) is amended as follows.

• (2) In subsection (1)—

• (a) after “459” insert “ and 464A and 464B ”, and

• (b) for “by close companies” insert “ or benefits ”.

• (3) For subsection (3) substitute—

(3) For the purposes of section 87A of this Act as applied by subsection (1) above— (a) the date when tax under section 455 of CTA 2010 became due and payable is that determined in accordance with subsection (3) of that section, and (b) the date when tax under section 464A of CTA 2010 became due and payable is that determined in accordance with subsection (4) of that section.

• (4) After subsection (3A) insert—

(3B) If there is a payment which for the purposes of section 464B of CTA 2010 is a return payment in respect of a benefit conferred, interest under section 87A of this Act on so much of the tax under section 464A of CTA 2010 as is referable to the return payment is not payable in respect of any period after the date on which the return payment was made.

• (5) In subsection (4), after “458” insert “ or 464B ”.

• (6) In subsection (5), after “459” insert “ or 464A and 464B ”.

• (7) In the heading, after “loans” insert “ or benefits ”.

12

The amendments made by paragraphs 9 to 11 are treated as having come into force on 20 March 2013.

Finance Act 1998

13

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

• (2) In paragraph 1 (meaning of “tax”), after the entry relating to section 455 of CTA 2010 insert— “ section 464A of that Act (tax on other benefit conferred on participator), ”.

• (3) In paragraph 8(1) (calculation of tax payable), in paragraph 1 of the third step—

• (a) after “455” insert “ or 464A ”, and

• (b) for “or advance made by close company” substitute “ , advance or benefit ”.

• (4) In paragraph 18 (failure to deliver return: tax-related penalty), for sub-paragraph (4) substitute—

(4) In determining that amount no account is to be taken of— (a) any relief under section 458 of the Corporation Tax Act 2010 (relief in respect of repayment, etc of loan) which is deferred under subsection (5) of that section, or (b) any relief under section 464B of that Act (relief in respect of return payment) which is deferred under subsection (5) of that section.

• (5) The amendments made by this paragraph are treated as having come into force on 20 March 2013.

Income Tax (Trading and Other Income) Act 2005

14

• (1) In section 417 of ITTOIA 2005 (person liable for charge on release of loan or advance), for subsection (1) substitute—

(1) The person liable for any tax charged under this Chapter is— (a) in the case of a loan or advance made to a partnership, any partner who is an individual, and (b) in any other case, the person to whom the loan or advance was made. (1A) If more than one person is liable in a case within subsection (1)(a), the liability is to be apportioned between them in a just and reasonable manner.

• (2) The amendment made by this paragraph has effect in relation to loans or advances made on or after 20 March 2013.

SCHEDULE 31

PART 1 — Abandonment guarantees and abandonment expenditure

Expenditure on abandonment guarantees

1