Finance Act 2015

(12ZA) (1) In sections 12ZA to 12ZN— - “advance self-assessment” is to be interpreted in accordance with section 12ZE(1); - “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1); - “filing date”, in relation to an NRCGT return, is to be interpreted in accordance with section 12ZB(8); - “interest in UK land” has the same meaning as in Schedule B1 to the 1992 Act (see paragraph 2 of that Schedule); - the “taxable person”, in relation to a non-resident CGT disposal, means the person who would be chargeable to capital gains tax in respect of any chargeable NRCGT gain (see section 57B of, and Schedule 4ZZB to, the 1992 Act) accruing on the disposal (were such a gain to accrue). (2) In those sections, references to the tax year to which an NRCGT return “relates” are to be interpreted in accordance with section 12ZB(7). (3) For the purposes of those sections the “completion” of a non-resident CGT disposal is taken to occur— (a) at the time of the disposal, or (b) if the disposal is under a contract which is completed by a conveyance, at the time when the asset is conveyed. (4) For the meaning in those sections of “non-resident CGT disposal” see section 14B of the 1992 Act (and see also section 12ZJ). (5) For the meaning of “NRCGT group” in those sections see section 288(1) of the 1992 Act. (6) In this section “conveyance” includes any instrument (and “conveyed” is to be construed accordingly). (12ZB) (1) Where a non-resident CGT disposal is made, the appropriate person must make and deliver to an officer of Revenue and Customs, on or before the filing date, a return in respect of the disposal. (2) In subsection (1) the “appropriate person” means— (a) the taxable person in relation to the disposal, or (b) if the disposal is made by a member of an NRCGT group, the relevant members of the group. (3) A return under this section is called an “NRCGT return”. (4) An NRCGT return must— (a) contain the information prescribed by HMRC, and (b) include a declaration by the person making it that the return is to the best of the person's knowledge correct and complete. (5) Subsection (1) does not apply to a non-resident CGT disposal to which section 188C of the 1992 Act applies (transfers within NRCGT group). (6) For the purposes of subsection (2)(b), the “relevant members” of the NRCGT group are— (a) the companies which are members of that group when the disposal is made, and (b) any other companies which are, at any time before the time of the disposal in the tax year to which the return relates, members of that group. (7) An NRCGT return “relates to” the tax year in which any gains on the non-resident CGT disposal would accrue. (8) The “filing date” for an NRCGT return is the 30th day following the day of the completion of the disposal to which the return relates. But see also section 12ZJ(5). (12ZC) Where— (a) a person is required to make and deliver an NRCGT return with respect to two or more non-resident CGT disposals, (b) the date of the completion of each of the disposals is the same, and (c) any gains accruing on the disposals would accrue in the same tax year, the person is to make and deliver a single return with respect to all those disposals. (12ZD) (1) This section applies where— (a) by virtue of section 144(2) of the 1992 Act, the grant of an option binding the grantor to sell an interest in UK land is, on the exercise of the option, treated as the same transaction as the sale, and (b) both the grant of the option and the transaction entered into by the grantor in fulfilment of the grantor's obligations under the option (“the sale”) would be non-resident CGT disposals (were they not treated as a single transaction). (2) On completion of the sale— (a) the grantor is to be subject to the same obligations under sections 12ZB, 12ZE and 59AA (duties relating to returns and payments on account) in relation to the grant of the option as the grantor would be subject to were the option never to be exercised, and (b) the consideration for the option is to be disregarded (despite section 144(2) of the 1992 Act) in calculating under section 12ZF the amount of capital gains tax notionally chargeable at the completion date of the single transaction mentioned in subsection (1)(a). (3) In this section “sell” is to be interpreted in accordance with section 144(6) of the 1992 Act. (12ZE) (1) An NRCGT return (“the current return”) relating to a tax year (“year Y”) which a person (“P”) is required to make in respect of one or more non-resident CGT disposals (“the current disposals”) must include an assessment (an “advance self-assessment”) of— (a) the amount notionally chargeable at the filing date for the current return (see section 12ZF), and (b) if P has made (or is to make) a prior NRCGT return, the amount of any increase in the amount notionally chargeable for year Y. But see the exceptions in section 12ZG. (2) In a case falling within subsection (1)(b)— (a) there is an “increase in the amount notionally chargeable” for year Y if the amount notionally chargeable at the filing date for the current return exceeds the corresponding amount for the prior NRCGT return (or the prior NRCGT return which has the most recent filing date, if there is more than one), and (b) the amount of that increase is the amount of the excess. (3) “Prior NRCGT return” means an NRCGT return which— (a) relates to year Y, and (b) is in respect of a non-resident CGT disposal (or disposals) the completion date of which is earlier than that of the current disposals. (12ZF) (1) The “amount notionally chargeable” at the filing date for an NRCGT return (“the current return”) is the amount of capital gains tax to which the person whose return it is (“P”) would be chargeable under section 14D or 188D of the 1992 Act for the year to which the return relates (“year Y”), as determined— (a) on the assumption in subsection (2), (b) in accordance with subsection (3), and (c) if P is an individual, on the basis of a reasonable estimate of the matters set out in subsection (4). (2) The assumption mentioned in subsection (1)(a) is that in year Y no NRCGT gain or loss accrues to P on any disposal the completion of which occurs after the day of the completion of the disposals to which the return relates (“day X”). (3) In the determination of the amount notionally chargeable— (a) all allowable losses accruing to P in year Y on disposals of assets the completion of which occurs on or before day X which are available to be deducted under paragraph (a) or (b) of section 14D(2) or (as the case may be) section 188D(2) of the 1992 Act are to be so deducted, and (b) any other relief or allowance relating to capital gains tax which is required to be given in P's case is to be taken into account, so far as the relief would be available on the assumption in subsection (2). (4) The matters mentioned in subsection (1)(c) are— (a) whether or not income tax will be chargeable at the higher rate or the dividend upper rate in respect of P's income for year Y (see section 4(4) of the 1992 Act), and (b) (if P estimates that income tax will not be chargeable as mentioned in paragraph (a)) what P's Step 3 income will be for year Y. (5) An advance self-assessment must, in particular, give particulars of any estimate made for the purposes of subsection (1)(c). (6) A reasonable estimate included in an NRCGT return in accordance with subsection (5) is not regarded as inaccurate for the purposes of Schedule 24 to the Finance Act 2007 (penalties for errors). (7) Where P is the relevant body of an NRCGT group— (a) the references to P in subsections (2) and (3)(a) are to be read as references to any member of the NRCGT group; (b) the reference to P in subsection (3)(b) is to be read as including any member of the NRCGT group. (8) For the purposes of this section— - an estimate is “reasonable” if it is made on a basis that is fair and reasonable, having regard to the circumstances in which it is made; - “Step 3 income”, in relation to an individual, has the same meaning as in section 4 of the 1992 Act. (9) In this section, references to the “relevant body” of an NRCGT group are to be interpreted in accordance with section 188D(4) of the 1992 Act. (10) Section 989 of ITA 2007 (the definitions) applies for the purposes of this section as it applies for income tax purposes. (11) For the meaning of “NRCGT gain” and “NRCGT loss” see section 57B of, and Schedule 4ZZB to, the 1992 Act. (12ZG) (1) Where a person (“P”) is required to make and deliver an NRCGT return relating to a tax year (“year Y”), section 12ZE(1) (requirement to include advance self-assessment in return) does not apply if condition A, B or C is met. (2) Condition A is that P (or, if P is the trustees of a settlement, any trustee of the settlement) has been given, on or before the day on which the NRCGT return is required to be delivered, a notice under section 8 or 8A with respect to— (a) year Y, or (b) the previous tax year, and that notice has not been withdrawn. (3) Condition B is that P has been given, on or before the day on which the NRCGT return is required to be delivered, a notice under paragraph 3 of Schedule 18 to the Finance Act 1998 (notice requiring delivery of a company tax return) specifying a period which includes the whole or part of— (a) year Y, or (b) the previous tax year, and that notice has not been withdrawn. (4) Condition C is that an annual tax on enveloped dwellings return has been delivered by P (or a representative partner acting instead of P) for the preceding chargeable period. (5) In subsection (4)— - “the preceding chargeable period” means the chargeable period (as defined in section 94(8) of the Finance Act 2013) which ends with the 31 March preceding year Y; - “representative partner” has the meaning given by section 167(6) of the Finance Act 2013. (6) The Treasury may by regulations prescribe further circumstances in which section 12ZE(1) is not to apply. (7) Regulations under subsection (6)— (a) may make different provision for different purposes; (b) may include incidental, consequential, supplementary or transitional provision. (12ZH) (1) This section applies where a person (“P”) (other than the relevant trustees of a settlement)— (a) is not required to give a notice under section 7 with respect to a tax year (“year X”), and (b) would be required to give such a notice in the absence of section 7A (which removes that duty in certain cases where the person has made an NRCGT return that includes an advance self-assessment). (2) In this section, “the relevant NRCGT return” means— (a) the NRCGT return by virtue of which P is not required to give a notice under section 7 with respect to year X, or (b) if more than one NRCGT return falls within paragraph (a), the one relating to the disposal which has the latest completion date. (3) P is treated for the purposes of the Taxes Acts as having been required to make and deliver to an officer of Revenue and Customs a return under section 8 for the purpose of establishing, with respect to year X, the matters mentioned in section 8(1). (4) For the purposes of subsection (3), section 8 is to be read as if subsections (1E) to (1G) of that section were omitted. (5) If P does not give a notice under subsection (6) before 31 January in the tax year after year X, the Taxes Acts have effect, from that date, as if the advance self-assessment contained in the relevant NRCGT return were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8 made by P and delivered on that date. (6) If P gives HMRC a notice under this subsection specifying an NRCGT return which— (a) relates to year X, and (b) contains an advance self-assessment, the Taxes Acts are to have effect, from the effective date of the notice, as if that advance self-assessment were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8 made by P and delivered on that date. (7) References in the Taxes Acts to a return under section 8 (for example, references to amending, or enquiring into, a return under that section) are to be read in accordance with subsections (5) and (6). (8) A notice under subsection (6)— (a) must be given before 31 January in the tax year after year X; (b) must state that P considers the advance self-assessment in question to be an accurate self-assessment in respect of year X for the purposes of section 9. (9) The “effective date” of a notice under subsection (6) is— (a) the day on which the NRCGT return specified in the notice is delivered, or (b) if later, the day on which the notice is given. (10) The self-assessment which subsection (5) or (6) treats as having been made by P is referred to in this section as the “section 9 self-assessment”. (11) If P— (a) gives a notice under subsection (6), and (b) makes and delivers a subsequent NRCGT return relating to year X which contains an advance self-assessment, that advance self-assessment is to be treated as amending the section 9 self-assessment. (12) For the purposes of subsection (11), an NRCGT return made and delivered by P (“return B”) is “subsequent” to an NRCGT return to which P's notice under subsection (6) relates (“the notified return”) if the day of the completion of the disposal to which return B relates is later than the day of the completion of the disposal to which the notified return relates. (12ZI) (1) This section applies where the relevant trustees of a settlement (“the trustees”)— (a) are not required to give a notice under section 7 with respect to a tax year (“year X”), and (b) would be required to give such a notice in the absence of section 7A (which removes that duty in certain cases where the person has made an NRCGT return including an advance self-assessment). (2) In this section, “the relevant NRCGT return” means— (a) the NRCGT return by virtue of which P is not required to give a notice under section 7 with respect to year X, or (b) if more than one NRCGT return falls within paragraph (a), the one relating to the disposal which has the latest completion date. (3) The trustees are treated for the purposes of the Taxes Acts as having been required to make and deliver to an officer of Revenue and Customs a return under section 8A, for the purpose of establishing, with respect to year X, the matters mentioned in section 8A(1). (4) For the purposes of subsection (3), section 8A is to be read as if— (a) in subsection (1) of that section, “, and the settlors and beneficiaries,” were omitted, and (b) subsections (1C) to (1E) of that section were omitted. (5) If the trustees do not give a notice under subsection (6) before 31 January in the tax year after year X, the Taxes Acts have effect, from that date, as if the advance self-assessment contained in the relevant NRCGT return were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8A made by the trustees and delivered on that date. (6) If the trustees give HMRC a notice under this subsection specifying an NRCGT return which— (a) relates to year X, and (b) contains an advance self-assessment, the Taxes Acts are to have effect, from the effective date of the notice, as if that advance self-assessment were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8A made by the trustees and delivered on that date. (7) References in the Taxes Acts to a return under section 8A (for example, references to amending, or enquiring into, a return under that section) are to be read in accordance with subsections (5) and (6). (8) A notice under subsection (6)— (a) must be given before 31 January in the tax year after year X; (b) must state that the trustees consider the advance self-assessment in question to be an accurate self-assessment in respect of year X for the purposes of section 9. (9) The “effective date” of a notice under subsection (6) is— (a) the day on which the NRCGT return specified in the notice is delivered, or (b) if later, the day on which the notice is given. (10) The self-assessment which subsection (5) or (6) treats as having been made by the trustees is referred to in this section as the “section 9 self-assessment”. (11) If the trustees— (a) give a notice under subsection (6), and (b) make and deliver a subsequent NRCGT return relating to year X which contains an advance self-assessment, that advance self-assessment is to be treated as amending the section 9 self-assessment. (12) For the purposes of subsection (11), an NRCGT return made and delivered by the trustees (“return B”) is “subsequent” to an NRCGT return to which the trustees' notice under subsection (6) relates (“the notified return”) if the day of the completion of the disposal to which return B relates is later than the day of the completion of the disposal to which the notified return relates. (12ZJ) (1) For the purposes of sections 12ZA to 12ZI, the question whether or not a disposal of a UK residential property interest is a non-resident CGT disposal is to be determined in accordance with subsections (2) and (3). (2) A non-residence condition is to be taken to be met in relation to a disposal of a UK residential property interest if, at the time of the completion of the disposal— (a) it is uncertain whether or not that condition will be met, but (b) it is reasonable to expect that that condition will be met. (3) If (in a case within subsection (2)) it later becomes certain that neither of the non-residence conditions is met in relation to the disposal, the disposal is treated as not being, and as never having been, a non-resident CGT disposal (and any necessary repayments or adjustments are to be made accordingly). (4) Subsection (5) applies if— (a) at the time of the completion of the disposal of a UK residential property interest it is uncertain whether or not the disposal is a non-resident CGT disposal because it is uncertain whether or not a non-residence condition will be met, but the case does not fall within subsection (2), and (b) it later becomes certain that a non-residence condition is met in relation to the disposal. (5) For the purposes of this Act, the filing date for the NRCGT return is taken to be the 30th day following the day on which it becomes certain that a non-residence condition is met in relation to the disposal. (6) In this section “a non-residence condition” means condition A or B in section 14B of the 1992 Act. (12ZK) (1) A person may, by notice to an officer of Revenue and Customs, amend the person's NRCGT return. (2) An amendment may not be made more than 12 months after 31 January of the year following the relevant tax year. (3) In subsection (2) “the relevant tax year” means the tax year in which any gains on the disposal to which the return relates would accrue. (12ZL) (1) An officer of Revenue and Customs may amend an NRCGT return so as to correct— (a) obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise), and (b) anything else in the return that the officer has reason to believe is incorrect in the light of information available to the officer. (2) A correction under this section is made by notice to the person whose return it is. (3) No such correction may be made more than 9 months after— (a) the day on which the return was delivered, or (b) if the correction is required in consequence of an amendment of the return under section 12ZK (amendment by the taxpayer), the day on which that amendment was made. (4) A correction under this section is of no effect if the person to whom the notice of correction was given gives notice rejecting the correction. (5) Notice of rejection under subsection (4) must be given— (a) to the officer of Revenue and Customs by whom the notice of correction was given, (b) before the end of the period of 30 days beginning with the date of issue of the notice of correction. (12ZM) (1) An officer of Revenue and Customs may enquire into an NRCGT return if the officer gives notice of the intention to do so (“notice of enquiry”)— (a) to the person whose return it is, (b) within the time allowed. (2) The time allowed is— (a) if the return was delivered on or before 31 January in the year following the relevant tax year (the “annual filing date”), up to the end of the period of 12 months after the day on which the return was delivered; (b) if the return was delivered after the annual filing date, up to and including the quarter day next following the first anniversary of the day on which the return was delivered; (c) if the return is amended under section 12ZL (correction by HMRC), up to and including the quarter day next following the first anniversary of the day on which the amendment was made. For this purpose the quarter days are 31 January, 30 April, 31 July and 31 October. (3) An enquiry extends to anything contained in the return, or required to be contained in the return, including any claim or election included in the return, subject to the following limitation. (4) If the notice of enquiry is given as a result of an amendment of the return under section 12ZK (amendment by taxpayer)— (a) at a time when it is no longer possible to give notice of enquiry under subsection (2)(a) or (b), or (b) after an enquiry into the return has been completed, the enquiry into the return is limited to matters to which the amendment relates or which are affected by the amendment. (5) In subsection (2) “the relevant tax year” means the tax year in which any gain on the disposal to which the return relates would accrue. (12ZN) (1) This section applies if an NRCGT return is amended under section 12ZK (amendment by taxpayer) at a time when an enquiry is in progress into the return. (2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry. (3) So far as the amendment affects the amount notionally chargeable for the purposes of the return (see section 12ZF(1)), it does not take effect while the enquiry is in progress and— (a) if the officer states in the closure notice that the officer has taken the amendment into account and that— (i) the amendment has been taken into account in formulating the amendments contained in the notice, or (ii) the officer's conclusion is that the amendment is incorrect, the amendment is not to take effect; (b) otherwise, the amendment takes effect when the closure notice is issued. (4) For the purposes of this section the period during which an enquiry is in progress is the whole of the period— (a) beginning with the day on which the notice of enquiry is given, and (b) ending with the day on which the enquiry is completed.

44

• (1) Section 28A (completion of enquiry into personal or trustee return) is amended as follows.

• (2) In subsection (1), after “9A(1)” insert “ or 12ZM ”.

• (3) In the heading, after “return” insert “ or NRCGT return ”.

45

Before section 29 insert—

(28G) (1) This section applies where it appears to an officer of Revenue and Customs that— (a) a person is required to make and deliver in respect of a non-resident CGT disposal an NRCGT return containing an advance self-assessment, and (b) the person has not delivered the required return by the filing date for the return. (2) The officer may make a determination, to the best of the officer's information and belief, of the amount of capital gains tax which should have been assessed in the required return as the amount notionally chargeable. (3) Notice of any determination under this section must be served on the person in respect of whom it is made and must state the date on which it is issued. (4) Until such time (if any) as it is superseded by an advance self-assessment on the basis of information contained in an NRCGT return, a determination under this section is to have effect as if it were an advance self-assessment contained in an NRCGT return made by the person in respect of the disposal concerned. (5) Where— (a) proceedings have been commenced for the recovery of an amount payable by virtue of a determination under this section, and (b) before those proceedings are concluded, the determination is superseded by an advance self-assessment made by the person in respect of the disposal, those proceedings may be continued as if they were proceedings for the recovery of so much of the amount payable by virtue of the advance self-assessment as is due and payable and has not been paid. (6) No determination under this section, and no advance self-assessment superseding such a determination may be made— (a) after the end of the period of 3 years beginning with 31 January of the year following the tax year to which the determination relates, or (b) in the case of such an advance self-assessment, after the end of the period of 12 months beginning with the date of the determination. (7) In this section— - “advance self-assessment” is to be interpreted in accordance with section 12ZE(1); - “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1); - “filing date”, in relation to an NRCGT return, is to be interpreted in accordance with section 12ZB(8). (8) For the meaning in this section of “non-resident CGT disposal” see section 14B of the 1992 Act.

46

In section 29 (assessment where loss of tax discovered), in subsection (7)(a), omit the “and” following sub-paragraph (i), and after that sub-paragraph insert—

(ia) a reference to any NRCGT return made and delivered by the taxpayer which contains an advance self-assessment relating to the relevant year of assessment or either of the two immediately preceding chargeable periods; and

.

47

After section 29 insert—

(29A) (1) Subsection (2) applies if HMRC discover, as regards a non-resident CGT disposal made by a person (“P”) (or two or more such disposals in a case falling within section 12ZC) and a tax year (“the relevant tax year”) that— (a) an amount that ought to have been assessed as the amount notionally chargeable in an advance self-assessment under section 12ZE(1) has not been so assessed by the filing date, or (b) an assessment of the amount notionally chargeable for the purposes of section 12ZF(1) contained in an NRCGT return made and delivered by P has become insufficient. (2) HMRC may determine that the amount or further amount which in its opinion ought to be assessed under section 12ZE to remedy the failure mentioned in subsection (1)(a) or the insufficiency mentioned in subsection (1)(b) is to be treated for the purposes of this Act as if it were so assessed in— (a) an NRCGT return made by P in respect of the disposal, or (b) (if P has made and delivered an NRCGT return in respect of the disposal) that return. But see subsections (3) to (5). (3) Where P has made and delivered in respect of the disposal an NRCGT return containing an advance self-assessment, HMRC may not make a determination under subsection (2) in respect of the disposal unless one of the two conditions mentioned below is met. (4) The first condition is that the situation mentioned in subsection (1) was brought about carelessly or deliberately by P or a person acting on P's behalf. (5) The second condition is that at the time when an officer of Revenue and Customs— (a) ceased to be entitled to give notice of the officer's intention to enquire into the NRCGT return, or (b) informed P of the completion of the officer's enquiries into the return, the officer could not reasonably have been expected, on the basis of the information made available to the officer before that time, to be aware of the situation mentioned in subsection (1). (6) For the purposes of subsection (5), information is made available to an officer of Revenue and Customs if— (a) it is contained in an NRCGT return made and delivered by P which relates to the relevant tax year or either or the two immediately preceding tax years, (b) it is contained in any return under section 8 or 8A made and delivered by P in respect of either of the two tax years immediately preceding the relevant tax year, (c) it is contained in any claim made by P which relates to P's capital gains tax position with respect to the relevant tax year or either of the two immediately preceding tax years, (d) it is contained in any accounts, statements or documents accompanying a return falling within paragraph (a) or (b) or a claim falling within paragraph (c), (e) it is contained in any documents, accounts or particulars which, for the purposes of any enquiries by an officer of Revenue and Customs into a return falling within paragraph (a) or (b) or a claim falling within paragraph (c) are produced or provided by P to the officer, or (f) it is information the existence of which, and the relevance of which as regards the situation mentioned in subsection (1)— (i) could be reasonably expected to be inferred by an officer of Revenue and Customs from information falling within paragraphs (a) to (e), or (ii) are notified in writing by the taxpayer to an officer of Revenue and Customs. (7) In subsection (6)— (a) any reference to a return made and delivered by P under section 8 in respect of a tax year includes, if P carries on a trade, profession or business in partnership, a reference to any partnership return with respect to the partnership for that tax year, and (b) any reference to P includes a person acting on P's behalf. (8) An objection to the making of a determination under subsection (2) on the ground that neither of the two conditions mentioned above is fulfilled may not be made otherwise than on an appeal against the assessment. (9) In this section— - “advance self-assessment” has the meaning given by section 12ZE(1); - “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1); - “filing date”, in relation to an NRCGT return, has the meaning given by section 12ZB(8). (10) For the meaning in this section of “non-resident CGT disposal” see section 14B of the 1992 Act.

48

In section 34 (ordinary time limit of 4 years), after subsection (1) insert—

(1A) In subsection (1) the reference to an assessment to capital gains tax includes a determination under section 29A (non-resident CGT disposals: determination of amount which should have been assessed).

49

In section 42 (procedure for making claims), in subsection (11), after “8A,” insert “ 12ZB ”.

50

In section 59A (payments on account of income tax), omit subsection (7).

51

After section 59A insert—

(59AA) (1) Subsections (2) and (3) apply where a person (“P”) is required to make, in relation to a tax year, an NRCGT return in respect of one or more non-resident CGT disposals containing an advance self-assessment and the amount in subsection (6)(a) is greater than the amount in subsection (6)(b). (2) With effect from the filing date for the return, the balancing amount is (or, where applicable, becomes) the amount payable by P on account of P's liability to capital gains tax for the tax year. (3) Where P is the relevant members of an NRCGT group, P is responsible for discharging the obligation of the taxable person to pay any balancing amounts and such amounts are payable on account of the taxable person's liability to capital gains tax for the tax year. (4) Subsection (5) applies where a person (“P”) is required to make, in relation to a tax year, an NRCGT return containing an advance self-assessment and the amount in subsection (6)(a) is less than the amount in subsection (6)(b). (5) The balancing amount is repayable to P on the filing date for the return. (6) The amounts referred to in subsections (1) and (4) are— (a) the amount notionally chargeable contained in the self-assessment, and (b) the total of any amounts previously paid under this section on account of P's liability to capital gains tax for the tax year. (7) In subsections (2) and (5) “the balancing amount” means the difference between those amounts. (8) Where, in the case of a repayment, the NRCGT return is enquired into by an officer of Revenue and Customs— (a) nothing in subsection (5) requires the repayment to be made before the day on which, by virtue of section 28A(1), the enquiry is completed, but (b) the officer may at any time before that day make the repayment, on a provisional basis, to such extent as the officer thinks fit. (9) Subsection (10) applies to— (a) any amount payable on account of capital gains tax as a result of the amendment or correction under section 12ZK, 12ZL or 28A of an advance self-assessment, and (b) any amount paid on account of capital gains tax which is repayable as a result of such an amendment or correction. (10) The amount is payable or (as the case may be) repayable on or before the day specified by the relevant provision of Schedule 3ZA. (11) Subsection (12) applies where a determination under section 28G (determination of amount notionally chargeable where no NRCGT return delivered) which has effect as a person's advance self-assessment is superseded by an advance self-assessment in an NRCGT return made and delivered by the person under section 12ZB. (12) Any amount which is payable on account of capital gains tax, and any amount paid on account of capital gains tax which is repayable, by virtue of the supersession is to be payable or (as the case may be) repayable on or before the filing date for the return. (13) In this section— - “advance self-assessment” has the meaning given by section 12ZE(1); - “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1); - “filing date”, in relation to an NRCGT return, has the meaning given by section 12ZB(8); - the “taxable person”, in relation to a non-resident CGT disposal, means the person who would be chargeable to capital gains tax in respect of any chargeable NRCGT gain accruing on the disposal (were such a gain to accrue). (14) For the meaning in this section of “non-resident CGT disposal” see section 14B of the 1992 Act. (15) For the meaning in this section of “NRCGT group” see section 288(1) of the 1992 Act. (59AB) The provisions of the Taxes Acts as to the recovery of tax shall apply to an amount falling to be paid on account of tax in the same manner as they apply to an amount of tax.

52

• (1) Section 59B (payment of income tax and capital gains tax) is amended as follows.

• (2) In subsection (1)(b), after “59A” insert “ or 59AA ”.

• (3) After subsection (2) insert—

(2A) The reference in subsection (1)(b) to payments on account under section 59AA does not include any amounts already repaid under section 59AA(5).

53

In section 107A (relevant trustees), in subsection (2)(b), after “59A” insert “ , 59AA ”.

54

In section 118 (interpretation), in subsection (1), at the appropriate place insert—

“NRCGT return” has the meaning given by section 12ZB;

.

55

• (1) Schedule 3ZA (date by which payment to be made after amendment or correction of self-assessment) is amended as follows.

• (2) In paragraph 1—

• (a) in sub-paragraph (1), at the end insert “ or an advance self-assessment (see section 12ZE(1)) ”;

• (b) in sub-paragraph (2), after “section” insert “ 59AA(2) or ”.

• (3) In paragraph 2—

• (a) in sub-paragraph (1), at the end insert “ or an amendment of an advance self-assessment under section 12ZK (amendment of NRCGT return by taxpayer) ”;

• (b) in sub-paragraph (3), after “9B(3)” insert “ or 12ZN(3) ” and after “self-assessment” insert “ or advance self-assessment ”.

• (4) In paragraph 3(1), after “9ZB” insert “ or 12ZL ” and after “trustee return” insert “ or NRCGT return ”.

• (5) In paragraph 5(1)—

• (a) after “amount of tax” insert “ or an amount on account of capital gains tax ”;

• (b) after “self-assessment” insert “ or advance self-assessment ”;

• (c) omit “personal or trustee”.

56

• (1) In FA 2007, Schedule 24 (penalties for errors) is amended as follows.

• (2) In paragraph 1, in the table in sub-paragraph (4), after the entry relating to accounts in connection with a partnership return insert—

Capital gains tax	Return under section 12ZB of TMA 1970 (NRCGT return).

• (3) After paragraph 21B insert—

(21C) In paragraphs 1(2) and 5 references to “tax” are to be interpreted as if amounts payable under section 59AA(2) of TMA 1970 (non-resident CGT disposals: payments on account of capital gains tax) were tax.

57

In Schedule 36 to FA 2008 (information and inspection powers), after paragraph 21 insert—

(21ZA) (1) Where a person has delivered an NRCGT return with respect to a non-resident CGT disposal, a taxpayer notice may not be given for the purpose of checking the person's capital gains tax position as regards the matters dealt with in that return. (2) Sub-paragraph (1) does not apply where, or to the extent that, any of conditions A to C is met. (3) Condition A is that notice of enquiry has been given in respect of— (a) the return, or (b) a claim (or an amendment of a claim) made by the person in relation to the chargeable period, and the enquiry has not been completed. (4) In sub-paragraph (3) “notice of enquiry” means a notice under section 12ZM of TMA 1970. (5) Condition B is that an officer of Revenue and Customs has reason to suspect that— (a) an amount that ought to have been assessed under section 12ZE of TMA 1970 as payable on account of the person's liability to capital gains tax for the tax year to which the return relates has not been so assessed by the filing date for the return, or (b) an assessment under section 12ZE of TMA 1970 of the amount payable on account of P's liability to capital gains tax for the tax year to which the return relates has become insufficient. (6) Condition C is that the notice is given for the purpose of obtaining any information or document that is also required for the purpose of checking that person's position as regards a tax other than capital gains tax. (7) In this paragraph— - “NRCGT return” has the meaning given by section 12ZB of TMA 1970; - “non-resident CGT disposal” has the meaning given by section 14B of TCGA 1992.

58

In CTA 2009, in section 2 (charge to corporation tax), in subsection (2A), for the words from “under” to the end substitute

under— (a) section 2B of TCGA 1992 (companies etc chargeable to capital gains tax on ATED-related gains on relevant high value disposals), or (b) section 14D or 188D of that Act (persons chargeable to capital gains tax on NRCGT gains on non-resident CGT disposals).

59

• (1) In Schedule 55 to FA 2009 (penalty for failure to make returns etc), in the Table in paragraph 1, after item 2 insert—

2A	Capital gains tax	NRCGT return under section 12ZB of TMA 1970

.

• (2) That Schedule, as amended by sub-paragraph (1), is taken to have come into force for the purposes of NRCGT returns on the date on which this Act is passed.

PART 3 — Commencement

60

The amendments made by this Schedule have effect in relation to disposals made on or after 6 April 2015.

SCHEDULE 8

Introduction

1

The Taxation of Chargeable Gains Act 1992 is amended as follows.

“Relevant high value disposal”

2

• (1) Section 2C (“relevant high value disposal”) is amended as follows.

• (2) In subsection (6), in the definition of “the relevant ownership period” for “6 April 2013” substitute “ 6 April in the relevant year ”.

• (3) In that subsection, after that definition insert—

• “the relevant year” means—
• in Case 1 in paragraph 2 of Schedule 4ZZA, 2013;
• in Case 2 in that paragraph, 2015;
• in Case 3 in that paragraph, 2016;

.

• (4) In subsection (7)(b), for “1 April 2013” substitute “ 1 April in the relevant year ”.

Threshold amount for the tax year 2015-16

3

• (1) Section 2D (CGT on ATED-related gains: the threshold amount) is amended as follows.

• (2) In subsection (2) for “£2 million” substitute “ £1 million ”.

• (3) In subsection (3) for “£2 million” substitute “ £1 million ”.

• (4) In subsection (5) for “ “£2 million”” substitute “ “£1 million” ”.

• (5) The amendments made by this paragraph have effect in relation to disposals occurring in the tax year 2015-16.

Threshold amount from 6 April 2016

4

• (1) Section 2D (CGT on ATED-related gains: the threshold amount) is amended as follows.

• (2) In subsection (2) for “£1 million” substitute “ £500,000 ”.

• (3) In subsection (3) for “£1 million” substitute “ £500,000 ”.

• (4) In subsection (5) for “ “£1 million”” substitute “ “£500,000” ”.

• (5) The amendments made by this paragraph have effect in relation to disposals occurring on or after 6 April 2016.

Restriction of losses

5

In section 2E (restriction of losses), in subsection (3)—

• (a) after “5 April 2013” insert “ etc ”, and

• (b) for “post-April 2013” substitute “ post-commencement ”.

Calculation of gains and losses

6

Schedule 4ZZA (relevant high value disposals: gains and losses) is amended as follows.

7

For the italic heading before paragraph 2 substitute “ Assets held on 5 April 2013, 5 April 2015 or 5 April 2016: no paragraph 5 election ”.

8

For paragraph 2 substitute—

(2) (1) In Cases 1 to 3 below— (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. (2) Case 1 is that— (a) the interest disposed of was held by P on 5 April 2013, and (b) neither Case 2 nor Case 3 applies. (3) Case 2 is that— (a) the interest disposed of was held by P on 5 April 2015, (b) Case 3 does not apply, and (c) no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2015 during which P held the interest disposed of. (4) Case 3 is that— (a) the interest disposed of was held by P on 5 April 2016, and (b) no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2016 during which P held the interest disposed of. (5) For the purposes of this paragraph— (a) “relevant single-dwelling interest” means the single-dwelling interest by reference to which Condition B in section 2C is met in relation to the relevant high value disposal, or, if Condition B is met by reference to more than one such interest, each of them; (b) a relevant single dwelling interest is “subject to ATED” on a day if P— (i) was within the charge to annual tax on enveloped dwellings with respect to that interest on that day, or (ii) would have been within that charge but for the day being “relievable” by virtue of any of the provisions mentioned in section 132 of the Finance Act 2013 (ATED: effect of reliefs). (6) In paragraphs 3 and 4, “the relevant year” means— (a) in relation to Case 1, 2013; (b) in relation to Case 2, 2015; (c) in relation to Case 3, 2016.

9

• (1) Paragraph 3 is amended as follows.

• (2) In sub-paragraph (1) for “post-April 2013” substitute “ post-commencement ”.

• (3) In sub-paragraph (2)—

• (a) for “post-April 2013” substitute “ post-commencement ”, and

• (b) for “5 April 2013” substitute “ 5 April in the relevant year ”.

• (4) In sub-paragraph (5), for “6 April 2013” substitute “ 6 April in the relevant year ”.

10

• (1) Paragraph 4 is amended as follows.

• (2) In sub-paragraph (1)—

• (a) for “pre-April 2013” substitute “ pre-commencement ”, and

• (b) for “post-April 2013”, in both places, substitute “ post-commencement ”.

• (3) In sub-paragraph (2)—

• (a) for “pre-April 2013” substitute “ pre-commencement ”, and

• (b) for “5 April 2013” substitute “ 5 April in the relevant year ”.

• (4) In sub-paragraph (4) for “post-April 2013” substitute “ post-commencement ”.

• (5) In sub-paragraph (5) for “pre-April 2013” substitute “ pre-commencement ”.

11

• (1) Paragraph 5 is amended as follows.

• (2) In sub-paragraph (1) for “5 April 2013” substitute “ 5 April in the relevant year ”.

• (3) In sub-paragraph (3) for “6 April 2013” substitute “ 6 April in the relevant year ”.

• (4) For sub-paragraph (6) substitute—

(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); - “relevant year” has the meaning given by paragraph 2.

12

In the italic heading before paragraph 6, for “assets acquired after 5 April 2013” substitute “ or none of Cases 1 to 3 apply ”.

13

In paragraph 6, for sub-paragraph (1)(b) substitute—

(b) none of Cases 1, 2 and 3 in paragraph 2 applies to the disposal.

SCHEDULE 9

1

TCGA 1992 is amended in accordance with this Schedule.

2

In section 222 (relief on disposal of private residence)—

• (a) after subsection (6) insert—

(6A) Where an individual has determined, by giving notice under subsection (5)(a), that a residence is the individual's main residence, that determination does not cease to be effective at any time by reason only of the fact that, at that time, another of the individual's residences is treated by section 222B(1) as not being occupied as a residence (or, having been so treated, is no longer so treated).

;

• (b) in subsection (7), for “223” substitute “ 222A ”.

3

After section 222 insert—

(222A) (1) This section applies where— (a) an individual (“P”) makes a disposal of, or of an interest in— (i) a dwelling-house, or part of a dwelling-house, which was at any time in P's period of ownership occupied by P as a residence, or (ii) land (as mentioned in section 222(1)(b)) which P had for P's own occupation and enjoyment with that residence as its garden or grounds, and (b) the disposal is a non-resident CGT disposal (see section 14B). In the remainder of this section the residence concerned is referred to as “the dwelling-house”. (2) So far as it is necessary for the purposes of section 222, P may determine, by a notice under this section, which of 2 or more residences (of which one is the dwelling-house) was P's main residence for any period within P's period of ownership of the dwelling-house. (3) A notice under this section may vary, as respects any period within P's period of ownership of the dwelling-house, a notice previously given under section 222(5)(a). See also subsections (4) and (7). (4) A notice under this section may not vary a notice previously given under section 222(5)(a) as respects any period for which the previous notice had the effect of determining whether or not a disposed of residence was P's main residence. (5) In subsection (4) “disposed of residence” means one of P's residences which was disposed of (in whole or in part) before the date of the disposal mentioned in subsection (1)(a). (6) A notice under this section— (a) must be given in the NRCGT return in respect of the disposal mentioned in subsection (1)(a), and (b) may not subsequently be varied, whether by a notice under this section or section 222(5)(a). (7) Where a notice under this section affects both P and an individual (“X”) who was, in the period to which the notice relates (“the relevant period”), P's spouse or civil partner living with P— (a) in a case where each of P and X is required to make an NRCGT return in respect of the disposal of an interest in the dwelling-house, notice given by P under this section is effective as respects any part of the relevant period when P and X were living together as spouses or civil partners only if notice to the same effect is also given under this section by X in respect of that period; (b) in any other case, notice given by P under this section is effective as respects any part of the relevant period when P and X were living together as spouses or civil partners only if it is accompanied by written notification from X agreeing to the terms of the notice in respect of that period. (8) Nothing in subsection (2) affects the application of section 222(5) in relation to P. (222B) (1) For the purposes of sections 222 to 226 the dwelling-house or part of a dwelling-house mentioned in section 222(1) is treated as not being occupied as a residence by the individual so mentioned (“P”) at any time in P's period of ownership which falls within— (a) a non-qualifying tax year, or (b) a non-qualifying partial tax year. In the remainder of this section the dwelling-house or part of a dwelling-house is referred to as “the dwelling-house”. (2) Except where the disposal mentioned in section 222(1) is a non-resident CGT disposal, subsection (1) does not have effect in respect of any tax year or partial tax year before the tax year 2015-16. (3) A tax year the whole of which falls within P's period of ownership is “a non-qualifying tax year” in relation to the dwelling-house if— (a) neither P nor P's spouse or civil partner was resident for that tax year in the territory in which the dwelling-house is situated, and (b) the day count test was not met by P with respect to the dwelling-house for that tax year (see section 222C). (4) A partial tax year is “a non-qualifying partial tax year” in relation to the dwelling-house if— (a) neither P nor P's spouse or civil partner was resident for the tax year in question in the territory in which the dwelling-house is situated, and (b) the day count test was not met by P with respect to the dwelling-house for that partial tax year. (5) Where part only of a tax year falls within P's period of ownership, that part is a “partial tax year” for the purposes of this section. (6) For the purposes of this section an individual is resident in a territory outside the United Kingdom (“the overseas territory”) for a tax year (“year X”) in relation to which condition A or B is met. (7) Condition A is that the individual is, in respect of a period or periods making up more than half of year X, liable to tax in the overseas territory under the law of that territory by reason of the individual's domicile or residence. (8) Condition B is that the individual would be resident in the overseas territory for year X in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013, if in Parts 1 and 2 of that Schedule— (a) any reference to the United Kingdom (however expressed) were read as a reference to the overseas territory, (b) “overseas” meant anywhere outside that territory, and (c) in paragraph 26 (meaning of “work”), sub-paragraphs (2) to (4), (6) and (7) were disregarded. (9) In applying the statutory residence test in accordance with subsection (8), any determination of whether— (a) the individual was resident in the overseas territory for a tax year preceding year X, or (b) another individual is resident in the overseas territory for year X, is to be made in accordance with the statutory residence test, as modified by subsection (8). (10) Section 11(1)(a) (visiting forces etc) is to be disregarded in determining for the purposes of this section whether or not an individual is resident in the United Kingdom. (11) Subsection (1) is subject to— (a) section 222(8) (job-related accommodation), and (b) section 223(3) (absence reliefs). (222C) (1) This section explains how P meets the day count test (see section 222B) with respect to the dwelling-house or part of a dwelling-house mentioned in section 222(1) for a full or partial tax year. In the remainder of this section the dwelling-house or part of a dwelling-house is referred to as “the dwelling-house”. (2) P meets that test for a tax year with respect to the dwelling-house if, during that year, P spends at least 90 days in one or more qualifying houses. (3) P meets that test for a partial tax year with respect to the dwelling-house if, during that partial tax year, P spends at least the relevant number of days in one or more qualifying houses. (4) To find the relevant number of days for the purposes of subsection (3), multiply 90 days by the relevant fraction and round up the result to the nearest whole number of days if necessary. (5) The relevant fraction is— $$X Y$where—“X” is the number of days in the partial tax year;“Y” is the number of days in the tax year.$ (6) For the purposes of subsections (2) and (3) the days need not be consecutive, and days spent in different qualifying houses may be aggregated. (7) A day spent by P's spouse or civil partner in a dwelling-house or part of a dwelling-house which is a qualifying house in relation to P counts as a day spent by P in the qualifying house (but no day is to be counted twice as a result of this subsection). (8) For the purposes of this section, a day counts as a day spent by an individual in a qualifying house if— (a) the individual is present at the house at the end of the day, or (b) the individual— (i) is present in the house for some period during the day, and (ii) the next day, has stayed overnight in the house. (9) For the purposes of this section— (a) the dwelling-house is a qualifying house in relation to P, and (b) any other dwelling-house or part of a dwelling-house which is situated in the same territory as the dwelling-house is a qualifying house in relation to P at any particular time if at that time any of the following has an interest in it— (i) P, (ii) an individual who is P's spouse or civil partner at that time, and (iii) an individual who is P's spouse or civil partner at the time of disposal of the dwelling-house. (10) In this section “partial tax year” has the meaning given by section 222B(5).

4

• (1) Section 223 (amount of relief) is amended as follows.

• (2) In subsection (3)—

• (a) after “the purposes of” insert “ sections 222(5) and 222A and ”;

• (b) for “was the individual's only or main residence” substitute “ were occupied by the individual as a residence ”.

• (3) For subsection (7) substitute—

(7) In this section “period of ownership”— (a) does not include any period before 31 March 1982, and (b) where the whole or part of the gain to which section 222 applies is an NRCGT gain chargeable to capital gains tax by virtue of section 14D, does not include any period before 6 April 2015 (but see subsection (7A)). (7A) Paragraph (b) of the definition of “period of ownership” does not apply in a case where paragraph 9 of Schedule 4ZZB applies by virtue of sub-paragraph (1)(b) of that paragraph (the individual has made an election for the retrospective basis of computation to apply). (7B) In this section “period of absence” means a period during which the dwelling-house or the part of the dwelling-house was not occupied by the individual as a residence.

5

After section 223 insert—

(223A) (1) This section applies where— (a) the individual mentioned in section 223(1) (“P”) acquired the asset to which the gain mentioned in section 222(1) is attributable before 6 April 2015, and (b) P's period of ownership for the purposes of section 223 begins on that date because of section 223(7)(b). (2) Times before 6 April 2015 are to be ignored in determining whether or not condition A in section 223 is met in relation to a period of absence, unless P elects that this subsection is not to apply in relation to the period. (3) An election under subsection (2)— (a) must specify which day before 6 April 2015 P relies on in relation to the period of absence for the purpose of meeting condition A in section 223, and (b) must be made in the NRCGT return in respect of the disposal. (4) Where P has made an election under subsection (2), section 223 applies as if relevant prior periods of absence counted against the maximum periods (and maximum aggregate periods) specified in subsection (3)(a), (c) and (d) of that section. (5) In relation to a maximum period (or maximum aggregate period) specified in paragraph (a), (c) or (d) of section 223(3), “relevant prior period of absence” means a period of absence which would have counted against that maximum period (or maximum aggregate period) if the bridge period were included in the period of ownership. (6) In subsection (5) “the bridge period” means the period beginning with the day specified in the election and ending with 5 April 2015. (7) In this section “period of absence” has the same meaning as in section 223.

6

• (1) Section 225 (private residence occupied under terms of settlement) is amended as follows.

• (2) The existing text becomes subsection (1).

• (3) In that subsection—

• (a) in the words before paragraph (a), after “person” insert “ (“B”) ”;

• (b) in paragraph (a), for “the occupation of the dwelling-house or part of the dwelling-house, and” substitute “ the matters dealt with in subsection (2), ”;

• (c) in paragraph (b), for “the person entitled to occupy the dwelling-house or part of the dwelling-house;” substitute “ B, and ”;

• (d) after paragraph (b) insert—

(c) the notice which may be given by the trustees under section 222A is effective only if it is accompanied by written notification from B agreeing to the terms of the notice;

.

• (4) After that subsection insert—

(2) In sections 222 to 224, as applied by subsection (1), references to the individual, in relation to— (a) the occupation of the dwelling-house or part of the dwelling-house, (b) residence in a territory, or (c) meeting the day count test, are to be taken as references to B.

7

• (1) Section 225A (private residence held by personal representatives) is amended as follows.

• (2) In subsection (5)—

• (a) in paragraph (a), for the words from “the occupation” to the end substitute “ the matters dealt with in paragraph (aa), ”;

• (b) after paragraph (a) insert—

(aa) in relation to the occupation of the dwelling-house or part of the dwelling-house, residence in a territory, or meeting the day count test, references to the individual are to be taken as references to a qualifying individual,

;

• (c) after paragraph (b) insert

and (c) the notice which may be given by the personal representatives under section 222A is effective only if it is accompanied by written notification from the individual or individuals entitled to occupy the dwelling-house or part of the dwelling-house agreeing to the terms of the notice.

• (3) After subsection (6) insert—

(7) In subsection (5)(aa) “a qualifying individual” means an individual— (a) who has a relevant entitlement, and (b) by virtue of whom the first condition is met.

8

In section 225B (disposals in connection with divorce etc), in subsection (4), after “222(5)” insert “ or 222A ”.

9

In section 225E (disposals by disabled persons or persons in care homes etc), in subsection (6)(b), after “subsection (5) of that section” insert “ or under section 222A ”.

10

The amendments made by this Schedule have effect in relation to disposals made on or after 6 April 2015.

SCHEDULE 10

1

CAA 2001 is amended as follows.

Transfer and long funding leaseback: restrictions on lessee’s allowances

2

• (1) Section 70DA is amended as follows.

• (2) After subsection (5) insert—

(5A) D is nil if— (a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and (b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.

• (3) After subsection (8) insert—

(9) Linked person”, in relation to plant or machinery, means a person— (a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and (b) who was connected with S at any time between— (i) the time when the person became owner of the plant or machinery, and (ii) the time of the transfer referred to in subsection (1)(a). (10) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature— (a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or (b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.

• (4) The amendments made by this paragraph have effect in relation to cases where the lease referred to in section 70DA(1)(b) of CAA 2001 is entered into on or after 26 February 2015.

Restriction on qualifying expenditure on sale, hire purchase (etc) and assignment

3

• (1) Section 218 is amended as follows.

• (2) In subsection (1), for “(2) and” substitute “ (2), (2A) and ”.

• (3) After subsection (2) insert—

(2A) D is nil if— (a) S is not required to bring a disposal value into account under this Part because of the relevant transaction, and (b) at any time before that transaction S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.

• (4) In subsection (3), for the words from the beginning to “transaction,” substitute “ Otherwise, ”.

• (5) After that subsection insert—

(3A) Linked person”, in relation to plant or machinery, means a person— (a) who owned the plant or machinery at any time before the relevant transaction, and (b) who was connected with S at any time between— (i) the time when the person became owner of the plant or machinery, and (ii) the time of the relevant transaction. (3B) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature— (a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or (b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.

• (6) The amendments made by this paragraph have effect in relation to expenditure of B's that is incurred on or after 26 February 2015.

Transfer followed by hire-purchase etc: restrictions on hirer’s allowances

4

• (1) Section 229A is amended as follows.

• (2) After subsection (5) insert—

(5A) D is nil if— (a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and (b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.

• (3) After subsection (9) insert—

(10) Linked person”, in relation to plant or machinery, means a person— (a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and (b) who was connected with S at any time between— (i) the time when the person became owner of the plant or machinery, and (ii) the time of the transfer referred to in subsection (1)(a). (11) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature— (a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or (b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.

• (4) The amendments made by this paragraph have effect in relation to cases where the contract referred to in section 229A(1)(c) of CAA 2001 is entered into on or after 26 February 2015.

Restriction on qualifying expenditure on sale, hire purchase (etc) and assignment: VAT

5

• (1) Section 242 is amended as follows.

• (2) After subsection (4) insert—

(4A) D is nil if— (a) S is not required to bring a disposal value into account under this Part because of the relevant transaction, and (b) at any time before that transaction S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.

• (3) In subsection (5), for the words from the beginning to “transaction,” substitute “ Otherwise, ”.

• (4) In subsection (6)—

• (a) omit paragraph (a), and

• (b) in paragraph (b), for “the smallest amount under subsection (5)” substitute “ subsection (5) applies and the smallest amount under that subsection ”.

• (5) After that subsection insert—

(7) Linked person”, in relation to plant or machinery, means a person— (a) who owned the plant or machinery at any time before the relevant transaction, and (b) who was connected with S at any time between— (i) the time when the person became owner of the plant or machinery, and (ii) the time of the relevant transaction. (8) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature— (a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or (b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.

• (6) The amendments made by this paragraph have effect in relation to expenditure of B's that is incurred on or after 26 February 2015.

SCHEDULE 11

Amendments of Chapter 5 of Part 8 of CTA 2010

1

Chapter 5 of Part 8 of CTA 2010 (ring fence expenditure supplement) is amended as follows.

2

In section 307 (overview of Chapter), in subsection (5) for “6” substitute “ 10 ”.

3

In section 309 (accounting periods), in subsection (4), for the words from “Chapter” to the end substitute

Chapter— (a) in relation to straddling periods (see sections 311, 324 and 327(4) to (7)), and (b) in relation to accounting periods which begin before, but end on or after, 5 December 2013 (see sections 311(1C), 318A and 328A).

4

• (1) Section 311 (limit on number of accounting periods for which supplement may be claimed) is amended as follows.

• (2) In subsection (1) for “6” substitute “ 10 ”.

• (3) After subsection (1) insert—

(1A) In this Chapter— - “the initial 6 periods” means the first 6 accounting periods (in chronological order) for which the company claims supplement under this Chapter; - “the additional 4 periods” means the 4 accounting periods after the initial 6 periods for which the company claims supplement under this Chapter. (1B) None of the additional 4 periods may be accounting periods beginning before 5 December 2013. (1C) But, where— (a) a company has an accounting period which begins before 5 December 2013 and ends on or after that date, and (b) that accounting period falls after the initial 6 accounting periods, so much of that accounting period as falls before 5 December 2013 and so much of it as falls on or after that date are treated as separate accounting periods for the purposes of this Chapter.

• (4) In the heading of the section after “Limit on number” insert “ etc ”.

5

In section 316 (the mixed pool of qualifying pre-commencement expenditure and supplement previously allowed), after subsection (5) insert—

(6) This section is subject to section 318A (adjustment of pool to remove pre-2013 expenditure after the initial 6 periods).

6

In section 317 (reduction in respect of disposal receipts under CAA 2001), at the end insert—

(4) This section is subject to section 318A(5) (exclusion of deductible amounts in respect of pre-2013 expenditure when determining pre-commencement supplement for additional 4 periods).

7

After section 318 insert—

(318A) (1) This section applies for the purposes of determining the amount of any pre-commencement supplement on any claim made by a company for supplement under this Chapter in respect of an accounting period which is one of the additional 4 periods. (2) The pool which (under section 316) the company is to be taken to have had, at all times in the pre-commencement periods of the company, is to be taken to have been reduced at the time specified in subsection (4). (3) The amount of the reduction is the sum of— (a) the relevant amount (if any) which the company carries forward under Schedule 19B to ICTA, (b) the total amount of qualifying pre-commencement expenditure allocated to the pool for pre-commencement periods beginning before 5 December 2013, and (c) the total amount of the company's pre-commencement supplement allocated to the pool for pre-commencement periods beginning before that date. (4) The time is— (a) immediately after the last of the initial 6 periods, or (b) if later, 5 December 2013. (5) Subsection (3) of section 317 (reduction in respect of disposal receipts under CAA 2001) has effect as if the reference in paragraph (a) of that subsection to “all such events” did not include events occurring in relation to an asset representing expenditure incurred before 5 December 2013. (6) Where a company has a pre-commencement period (“the straddling 2013 period”) which begins before 5 December 2013 and ends on or after that date, for the purposes of making a reduction under this section— (a) so much of the straddling 2013 period as falls before 5 December 2013 (“the pre-2013 period”), and (b) so much of that period as falls on or after that date (“the post-2013 period”), are to be treated as separate pre-commencement periods. (7) Accordingly, any amount of qualifying pre-commencement expenditure, and any amount of the company's pre-commencement supplement, allocated to the pool for the straddling 2013 period is to be— (a) apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each, and (b) treated as allocated to the pool in question for the period in question (rather than the straddling 2013 period). (8) If the basis of the apportionment in subsection (7) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election.

8

• (1) Section 326 (the ring fence pool) is amended as follows.

• (2) In subsection (3), for “the following provisions of this Chapter” substitute “ sections 327 and 328 ”.

• (3) In subsection (4), after “made”, in the first place, insert “ under section 327 or 328 ”.

• (4) After subsection (5) insert—

(6) This section is subject to section 328A (adjustment of pool to remove pre-2013 losses after the initial 6 periods).

9

In section 327 (reductions in respect of utilised ring fence losses), after subsection (3) insert—

(3A) Subsection (3) is subject to section 328A(11).

10

After section 328 insert—

(328A) (1) This section applies for the purposes of determining the amount of any post-commencement supplement on any claim in respect of any of the additional 4 periods. (2) The ring fence pool is to be taken to have been reduced at the time specified in subsection (6). (3) The amount of the reduction is the amount of the total pre-2013 pool reduced (but not below nil) by the amount of the total pre-2013 reduction. (4) “The amount of the total pre-2013 pool” means the sum of— (a) the carried forward qualifying Schedule 19B amount (within the meaning of section 326(5)) which is in the pool at the time specified in subsection (6) (if any), (b) the total amount of the company's ring fence losses added to the pool in post-commencement periods beginning before 5 December 2013, (c) if the commencement period begins on or after 5 December 2013, so much of any ring fence loss added to the pool in that period as does not exceed the sum of— (i) any pre-commencement expenditure added to the pool in a pre-commencement period ending before 5 December 2013, and (ii) any pre-commencement supplement allowed in respect of such a pre-commencement period, and (d) the total amount of the company's post-commencement supplement added to the pool in post-commencement periods beginning before that date. (5) “The amount of the total pre-2013 reduction” means the total amount of the reductions in the ring fence pool falling to be made under section 327 or 328 in post-commencement periods beginning before the time specified in subsection (6). (6) The time is— (a) immediately after the last of the 6 initial periods, or (b) if later, 5 December 2013. (7) The amount (if any) in the non-qualifying pool under section 325(3) is reduced to nil (and so ceases to exist under section 325(4)). (8) Section 318A(6) (“the straddling 2013 period”) applies for the purposes of making a reduction under this section as it applies for the purposes of making a reduction under section 318A. (9) Accordingly— (a) any ring fence loss of the company added to the pool in the straddling 2013 period is to be apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each and treated as allocated to the pool for the period in question; (b) any amount of the company's post-commencement supplement allocated to the pool for the straddling period is to be apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each and treated as allocated to the pool for the period in question; (c) the total amount of reductions in the ring fence pool falling to be made in the straddling period is apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each and treated as a reduction falling to be made in the period in question. (10) If the basis of the apportionment in subsection (9)(a), (b) or (c) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election. (11) Once a reduction in the pool has been made under this section— (a) nothing in section 327 applies to require a reduction in the pool in respect of the use under section 45 of a loss if and to the extent that the loss is represented by the reduction made under this section, and (b) if and to the extent that losses are represented by the reduction they are to be used under section 45 to reduce any profits of a post-commencement period before ring fence losses of the company the use of which would trigger a reduction of the ring fence pool under section 327.

Abolition of extended ring fence expenditure supplement for onshore activities

11

In section 270 of CTA 2010 (overview of Part 8) omit subsection (5A).

12

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

• (2) The following definitions are inserted at the appropriate places—

the initial 6 periods (in Chapter 5 of Part 8)	section 311(1A)

;

the additional 4 periods (in Chapter 5 of Part 8)	section 311(1A)

.

• (3) The following definitions are omitted—

the commencement period (in Chapter 5A of Part 8)	section 329D(1)

;

offshore oil-related activities (in Chapter 5A of Part 8)	section 329C(3)

;

onshore oil-related activities (in Chapter 5A of Part 8)	section 329C(2)

;

onshore ring fence loss (in Chapter 5A of Part 8)	section 329P

;

the onshore ring fence pool (in Chapter 5A of Part 8)	section 329Q

;

the period of the loss (in Chapter 5A of Part 8)	section 329P

;

post-commencement additional supplement (in Chapter 5A of Part 8)	section 329N(1)

;

the post-commencement additional supplement provisions (in Chapter 5A of Part 8)	section 329N(4)

;

post-commencement period (in Chapter 5A of Part 8)	section 329D(1)

;

pre-commencement additional supplement (in Chapter 5A of Part 8)	section 329I(1)

;

pre-commencement period (in Chapter 5A of Part 8)	section 329D(1)

;

qualifying company (in Chapter 5A of Part 8)	section 329B

;

qualifying pre-commencement onshore expenditure (in Chapter 5A of Part 8)	section 329G

;

the relevant percentage (in Chapter 5A of Part 8)	section 329E

;

straddling period (in Chapter 5A of Part 8)	section 329D(3)

;

unrelieved group ring fence profits (in Chapter 5A of Part 8)	section 329H

.

13

• (1) In Part 8 of CTA 2010, Chapter 5A (extended ring fence expenditure supplement for onshore activities) is repealed.

• (2) Accordingly, section 69 of and Schedule 14 to FA 2014 are also repealed.

Commencement

14

The amendments made by this Schedule have effect in relation to accounting periods ending on or after 5 December 2013.

SCHEDULE 12

PART 1 — Amendments of Part 8 of CTA 2010

1

Part 8 of CTA 2010 (oil activities) is amended in accordance with paragraphs 2 and 3.

Investment allowance

2

After Chapter 6 insert—