Finance Act 2015

SCHEDULE C1 (1) This Part of this Schedule sets out the rules for determining, for the purposes of sections 14F and 14G, whether or not a company is a closely-held company. (2) (1) “Closely-held company” means a company in relation to which condition A or B is met. (2) Condition A is that the company is under the control of 5 or fewer participators. (3) Condition B is that 5 or fewer participators together possess or are entitled to acquire— (a) such rights as would, in the event of the winding up of the company (“the relevant company”) on the basis set out in paragraph 3, entitle them to receive the greater part of the assets of the relevant company which would then be available for distribution among the participators, or (b) such rights as would, in that event, so entitle them if there were disregarded any rights which any of them or any other person has as a loan creditor (in relation to the relevant company or any other company). (3) (1) This paragraph applies for the purposes of paragraph 2(3). (2) In the notional winding up of the relevant company, the part of the assets available for distribution among the participators which any person is entitled to receive is the aggregate of— (a) any part of those assets which the person would be entitled to receive in the event of the winding up of the relevant company, and (b) any part of those assets which the person would be entitled to receive if— (i) any other company which is a participator in the relevant company and is entitled to receive any assets in the notional winding up were also wound up on the basis set out in this paragraph, and (ii) the part of the assets of the relevant company to which the other company is entitled were distributed among the participators in the other company in proportion to their respective entitlement to the assets of the other company available for distribution among the participators. (3) In the application of sub-paragraph (2)— (a) to the notional winding up of the other company mentioned in paragraph (b) of that sub-paragraph, and (b) to any further notional winding up required by that paragraph (or by any further application of that paragraph), references to “the relevant company” are to be read as references to the company concerned. (4) (1) This paragraph applies for the purpose of determining whether, under sub-paragraph (3) of paragraph 2, 5 or fewer participators together possess or are entitled to acquire rights such as are mentioned in paragraph (a) or (b) of that sub-paragraph. (2) A person is to be treated as a participator in the relevant company if the person is a participator in any other company which would be entitled to receive assets in the notional winding up of the relevant company on the basis set out in paragraph 3. (3) No account is to be taken of a participator which is a company unless the company possesses or is entitled to acquire the rights in a fiduciary or representative capacity. (4) But sub-paragraph (3) does not apply for the purposes of paragraph 3. (5) (1) A company is not to be treated as a closely-held company if condition A or B is met. (2) Condition A is that the company cannot be treated as a closely-held company except by taking, as one of the 5 or fewer participators requisite for its being so treated, a person which is a diversely-held company. (3) Condition B is that the company— (a) would not be a closely-held company were it not for paragraph (a) of paragraph 2(3) or paragraph (d) of paragraph 7(2), and (b) would not be a closely-held company if the references in paragraphs 2(3)(a) and 7(2)(d) to participators did not include loan creditors which are diversely-held companies or qualifying institutional investors. (4) In this paragraph “qualifying institutional investor” means any of the following persons— (a) a scheme (as defined in section 14F(7)) which is a widely-marketed scheme; (b) the trustee or manager of a qualifying pension scheme; (c) a company carrying on life assurance business (as defined in section 56 of the Finance Act 2012); (d) a person who cannot be liable for corporation tax or income tax (as relevant) on the ground of sovereign immunity. (5) In sub-paragraph (4)(b) “qualifying pension scheme” means a pension scheme (as defined in section 150(1) of the Finance Act 2004) other than— (a) an investment-regulated pension scheme within the meaning of Part 1 of Schedule 29A to that Act, or (b) a pension scheme that would be an investment-regulated pension scheme if it were a registered pension scheme. (6) The Treasury may by regulations amend sub-paragraphs (4) and (5). (7) Regulations under sub-paragraph (6) may make incidental, consequential, supplementary or transitional provision or savings. (6) (1) Sub-paragraph (2) applies where a participator in a company is a qualifying institutional investor. (2) For the purpose of determining whether or not the company is a closely-held company, any share or interest which the qualifying institutional investor has as a participator in the company (in any of the ways set out in section 454(2) of CTA 2010 or otherwise) is treated as a share or interest held by more than 5 participators. (3) Sub-paragraph (4) applies where a participator in a company is a general partner of a limited partnership which is a collective investment scheme (as defined in section 235 of the Financial Services and Markets Act 2000). (4) For the purpose of determining whether or not the company is a closely-held company, any share or interest which the general partner has as a participator in the company (in any of the ways set out in section 454(2) of CTA 2010 or otherwise) is treated as a share or interest held by more than 5 participators. (5) Sub-paragraph (4) does not apply to— (a) any rights which would, in the event of the winding up of the company (“the relevant company”) on the basis set out in paragraph 3, or in any other circumstances, entitle the general partner (or a participator in the general partner) to receive assets of the company which would then be available for distribution among the participators, or (b) any rights which would, in that event, so entitle the general partner (or a participator in the general partner) if there were disregarded any rights which a person has as a loan creditor (in relation to the relevant company or another company). (6) In this paragraph “limited partnership” means— (a) a limited partnership registered under the Limited Partnerships Act 1907, or (b) a firm or entity of a similar character formed under the law of a territory outside the United Kingdom. (7) In this paragraph, “general partner”, in relation to a limited partnership, means a partner other than a limited partner. (8) In this paragraph, “limited partner” means a person carrying on business as a partner in a limited partnership who— (a) is not entitled to take part in the management of that business, and (b) is entitled to have any liabilities of that business (or those beyond a certain limit) for debts or obligations incurred for the purposes of that business met or reimbursed by some other person. (9) In this paragraph “qualifying institutional investor” has the same meaning as in paragraph 5. (7) (1) For the purposes of this Schedule, a person (“P”) is treated as having control of a company (“C”) if P— (a) exercises, (b) is able to exercise, or (c) is entitled to acquire, direct or indirect control over C's affairs. (2) In particular, P is treated as having control of C if P possesses or is entitled to acquire— (a) the greater part of the share capital or issued share capital of C, (b) the greater part of the voting power in C, (c) so much of the issued share capital of C as would, on the assumption that the whole of the income of C were distributed among the participators, entitle P to receive the greater part of the amount so distributed, or (d) such rights as would entitle P, in the event of the winding up of C or in any other circumstances, to receive the greater part of the assets of C which would then be available for distribution among the participators. (3) Any rights that P or any other person has as a loan creditor are to be disregarded for the purposes of the assumption in sub-paragraph (2)(c). (4) If two or more persons together satisfy any of the conditions in sub-paragraphs (1) and (2), they are treated as having control of C. (8) (1) This paragraph applies for the purposes of paragraph 7. (2) If a person— (a) possesses any rights or powers on behalf of another person (“A”), or (b) may be required to exercise any rights or powers on A's direction or on A's behalf, those rights or powers are to be attributed to A. (3) There are also to be attributed to P all the rights and powers of any associate of P (including rights and powers exercisable jointly by any two or more associates of P). (4) In this paragraph “associate”, in relation to P, means— (a) any relative of P, (b) the trustees of any settlement in relation to which P is a settlor, and (c) the trustees of any settlement in relation to which any relative of P (living or dead) is or was a settlor. (5) In this paragraph “relative” means— (a) a spouse or civil partner, (b) a parent or remoter forebear, (c) a child or remoter issue, or (d) a brother or sister. (9) In this Part of this Schedule— - “diversely-held company” means a company which is not a closely-held company; - “loan creditor” has the meaning given by section 453 of CTA 2010; - “open-ended investment company” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 236 of that Act); - “participator”, in relation to a company, has the meaning given by section 454 of CTA 2010. (10) (1) This Part of this Schedule sets out the rules for determining, for the purposes of this Schedule and section 14F, whether or not a scheme is a widely-marketed scheme at any time. (2) In this Part of this Schedule “scheme” has the same meaning as in section 14F. (11) (1) A scheme is a widely-marketed scheme at any time when the scheme meets conditions A to C. (2) Condition A is that the scheme produces documents, available to investors and to Her Majesty's Revenue and Customs, which contain— (a) a statement specifying the intended categories of investor, (b) an undertaking that units in the scheme will be widely available, and (c) an undertaking that units in the scheme will be marketed and made available in accordance with the requirements of sub-paragraph (5)(a). (3) Condition B is that— (a) the specification of the intended categories of investor does not have a limiting or deterrent effect, and (b) any other terms or conditions governing participation in the scheme do not have a limiting or deterrent effect. (4) In sub-paragraph (3) “limiting or deterrent effect” means an effect which— (a) limits investors to a limited number of specific persons or specific groups of connected persons, or (b) deters a reasonable investor falling within one of (what are specified as) the intended categories of investor from investing in the scheme. (5) Condition C is that— (a) units in the scheme are marketed and made available— (i) sufficiently widely to reach the intended categories of investors, and (ii) in a manner appropriate to attract those categories of investors, and (b) a person who falls within one of the intended categories of investors can, upon request to the manager of the scheme, obtain information about the scheme and acquire units in it. (6) A scheme is not regarded as failing to meet condition C at any time by reason of the scheme's having, at that time, no capacity to receive additional investments, unless— (a) the capacity of the scheme to receive investments in it is fixed by the scheme documents (or otherwise), and (b) a pre-determined number of specific persons or specific groups of connected persons make investments in the scheme which collectively exhaust all, or substantially all, of that capacity. (12) In this Part of this Schedule— - “open-ended investment company” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 236 of that Act); - “units” means the rights or interests (however described) of the participants in a unit trust scheme or open-ended investment company.

38

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

• (2) In paragraph 1 the existing text becomes sub-paragraph (1).

• (3) After that sub-paragraph insert—

(2) See also Part 4 of Schedule 4ZZB, which— (a) makes provision about non-resident CGT disposals which are, or involve, relevant high value disposals, and (b) includes provision about the computation of gains or losses on such disposals which are neither NRCGT gains or losses (as defined in section 57B and Schedule 4ZZB) nor ATED-related.

• (4) In paragraph 2(1), after paragraph (b) insert—

See also the special rule in paragraph 6 (which takes precedence over paragraphs 3 and 4 where it applies).

• (5) In paragraph 5, after sub-paragraph (3) insert—

(3A) An election made in relation to an asset under paragraph 2(1)(b) of Schedule 4ZZB (disposals by non-residents etc of UK residential property interests: gains and losses) also has effect as an election made under this paragraph in relation to the asset.

• (6) After paragraph 6 insert—

(6A) (1) This paragraph applies where conditions A and B are met. (2) Condition A is that the relevant high value disposal is— (a) a non-resident CGT disposal (see section 14B), or (b) one of two or more disposals which are (by virtue of section 2C and this Schedule) treated as comprised in a non-resident CGT disposal. (3) Condition B is that— (a) the interest disposed of by the relevant high value disposal was held by P on 5 April 2015, (b) neither Case 2 nor Case 3 in paragraph 2 applies, and (c) no election under paragraph 5 of this Schedule (or paragraph 2(1)(b) of Schedule 4ZZB) is or has been made in relation to the chargeable interest which (or a part of which) is the subject of the relevant high value disposal. (4) The ATED-related gain or loss accruing on the relevant high value disposal is computed as follows. - Step 1 Determine the amount of the post-April 2015 ATED-related gain or loss. - Step 2 Determine the amount of the pre-April 2015 ATED-related gain or loss. - Step 3 Add— 1. the amount of any gain or loss determined under Step 1, and 2. the amount of any gain or loss determined under Step 2, (5) The post-April 2015 ATED-related gain or loss is equal to the amount that would be given by paragraph 3(1) as the amount of the ATED-related gain or loss if the relevant year for the purposes of that paragraph were 2015. (6) The “pre-April 2015 ATED-related gain or loss” means the relevant fraction of the notional pre-April 2015 gain or loss. (7) “The relevant fraction” is— $$CD TD$where—“CD” is the number of days in the relevant ownership period which are ATED chargeable days;“TD” is the total number of days in the relevant ownership period.$ (8) If the interest disposed of was not held by P on 5 April 2013, the “notional pre-April 2015 gain or loss” is the gain or loss which would have accrued on 5 April 2015 had the interest been disposed of on that date for a consideration equal to its market value on that date. (9) If the interest disposed of was held by P on 5 April 2013, the “notional pre-April 2015 gain or loss” is the gain or loss which would have accrued on 5 April 2015 if P had— (a) acquired the interest on 5 April 2013 for a consideration equal to its market value on that date, and (b) disposed of it on 5 April 2015 for a consideration equal to its market value on that date. (10) Paragraph 3(3) applies for the purposes of sub-paragraphs (8) and (9) as for the purposes of paragraph 3(2). (11) In sub-paragraph (7) “relevant ownership period” means the period— (a) beginning with the day on which P acquired the chargeable interest or, if later, 6 April 2013, and (b) ending with 5 April 2015. (12) For how to compute the amount of the gain or loss on the relevant high value disposal that is neither ATED-related nor an NRCGT gain or loss (as defined in section 57B and Schedule 4ZZB) see paragraphs 16 to 19 of Schedule 4ZZB.

• (7) After paragraph 7 insert—

(8) (1) Sub-paragraph (2) applies where it is necessary, in computing in accordance with paragraph 3(2) the notional post-commencement gain or loss accruing to a person on a relevant high value disposal, to determine whether or not the interest which is the subject of the disposal is a wasting asset. (2) The assumption in paragraph 3(2) that the interest was acquired on a particular 5 April is to be ignored in determining that question. (3) Sub-paragraph (4) applies where it is necessary, in computing in accordance with paragraph 6A(9) the notional pre-April 2015 gain or loss accruing to a person on a disposal, to determine whether or not the interest which is the subject of the disposal is a wasting asset. (4) The assumption in paragraph 6A(9) that the interest was acquired on 5 April 2013 is to be ignored in determining that question. (5) In this paragraph references to a “wasting asset” are to a wasting asset as defined for the purposes of Chapter 2 of Part 2 of this Act. (9) (1) Sub-paragraph (2) applies where it is to be assumed for the purpose of computing— (a) the notional post-commencement gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 3(2), or (b) the notional pre-April 2015 gain or loss accruing to a person on a disposal in accordance with paragraph 6A(9), that an asset was acquired by a person on 5 April 2013 for a consideration equal to its market value on that date. (2) For the purposes of that computation, sections 41 (restriction of losses by reference to capital allowances etc) and 47 (wasting assets qualifying for capital allowances) are to apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by the person in acquiring or providing the asset as if that allowance were made in respect of the expenditure treated as incurred by the person on 5 April 2013 as mentioned in sub-paragraph (1).

39

After Schedule 4ZZA insert—

SCHEDULE 4ZZB (1) (1) This Schedule applies for the purpose of determining, in relation to a non-resident CGT disposal made by a person (“P”)— (a) whether an NRCGT gain or loss accrues to P on the disposal, and the amount of any such gain or loss, and (b) whether a gain or loss other than an NRCGT gain or loss accrues to P on the disposal, and the amount of any such gain or loss; (and see also sub-paragraph (2)(c)). (2) In this Schedule— (a) Part 2 is about elections to vary the method of computation of gains and losses; (b) Part 3 contains the main rules for computing the gains and losses; (c) Part 4 contains separate rules for computing, in a case where the non-resident CGT disposal is, or involves, a relevant high value disposal (as defined in section 2C)— (i) the amount of any NRCGT gains or losses accruing on the disposal, and (ii) the amount of any gains or losses accruing on the disposal that are neither ATED-related nor NRCGT gains or losses; (d) Part 5 contains special rules about non-resident CGT disposals made by companies; (e) Part 6 (miscellaneous provisions) contains special rules relating to wasting assets and capital allowances; (f) Part 7 contains definitions for the purposes of this Schedule. (3) See section 14B for the meaning of “non-resident CGT disposal”. (2) (1) A person (“P”) making a non-resident CGT disposal of (or of a part of) an interest in UK land which P held on 5 April 2015 may— (a) make an election for straight-line time apportionment in relation to the interest in UK land; (b) make an election for the retrospective basis of computation to apply in relation to that interest, (but may not do both). (2) P may not make an election under sub-paragraph (1)(a) if the disposal is one to which Part 4 of this Schedule applies (cases involving relevant high value disposals). (3) For the effect of making an election under sub-paragraph (1)(a), see paragraph 8. (4) For the effect of making (or not making) an election under sub-paragraph (1)(b), see paragraphs 5(1)(b), 9(1)(b), 13(1)(b), 14(1)(a) and 15(1)(c) (and paragraph 6A(3)(c) of Schedule 4ZZA). (5) An election made under paragraph 5 of Schedule 4ZZA (including any such election made before the coming into force of this paragraph) has effect as if it were also an election under sub-paragraph (1)(b). (3) (1) An election under paragraph 2(1) is irrevocable (and where an election has been made under paragraph 2(1) or paragraph 5 of Schedule 4ZZA in relation to an asset, no election may subsequently be made under either of those provisions in relation to the asset). (2) An election under paragraph 2(1) may (regardless of section 42(2) of the Management Act) be made by being included in— (a) a tax return under the Management Act for the tax year in which the first non-resident CGT disposal by P of the interest in UK land (or any part of it) is made, or (b) the NRCGT return relating to the disposal, (but not by any other method). (3) References in sub-paragraph (2) to an election being included in a return include an election being included by virtue of an amendment of the return. (4) 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 under paragraph 2(1). (4) (1) This Part of this Schedule applies where a person (“P”) makes a non-resident CGT disposal of (or of a part of) an interest in UK land. (2) But this Part of this Schedule does not apply if the disposal is— (a) a relevant high value disposal, or (b) a disposal in which a relevant high value disposal is comprised (see paragraph 12(3)). (3) In this Part of this Schedule “the disposed of interest” means— (a) the interest in UK land, or (b) if the disposal is of part of that interest, the part disposed of. (5) (1) Paragraphs 6 to 8 apply where— (a) the disposed of interest was held by P on 5 April 2015, and (b) P has not made an election under paragraph 2(1)(b) in relation to the interest in UK land. (2) In paragraphs 6 and 7— (a) “notional post-April 2015 gain or loss” means the gain or loss which would have accrued on the disposal had P acquired the disposed of interest on 5 April 2015 for a consideration equal to its market value on that date; (b) “notional pre-April 2015 gain or loss” means the gain or loss which would have accrued on 5 April 2015 had the disposed of interest been disposed of for a consideration equal to its market value on that date; but see also paragraph 8(1). (3) For the purpose of determining the amount of the hypothetical gain or loss mentioned in sub-paragraph (2)(a), no account is taken of section 57B or this Schedule (apart from paragraph 23). (6) But see also sub-paragraph (3). (1) The NRCGT gain or loss accruing on the disposal is equal to the relevant fraction of the notional post-April 2015 gain or loss (as the case may be). (2) “The relevant fraction” is— $$RD TD$where—“RD” is the number of days in the post-commencement ownership period on which the subject matter of the disposed of interest consists wholly or partly of a dwelling;“TD” is the total number of days in the post-commencement ownership period.$ (3) If there has been mixed use of the subject matter of the disposed of interest on one or more days in the post-commencement ownership period, the NRCGT gain or loss accruing on the disposal is the fraction of the amount that would (apart from this sub-paragraph) be given by sub-paragraphs (1) and (2) that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings. (4) For the purposes of this paragraph there is “mixed use” of land on any day on which the land consists partly, but not exclusively, of one or more dwellings. (5) “Post-commencement ownership period” means the period beginning with 6 April 2015 and ending with the day before the day on which the disposal occurs. (7) The gain or loss accruing on the disposal which is not an NRCGT gain or (as the case may be) loss is computed as follows. - Step 1 Determine the amount of the notional pre-April 2015 gain or loss. - Step 2 In a case where there is a notional post-April 2015 gain, determine the amount of that gain remaining after the deduction of the NRCGT gain determined under paragraph 6. - Step 3 In a case where there is a notional post-April 2015 loss, determine the amount of that loss remaining after the deduction of the NRCGT loss determined under paragraph 6. - Step 4 Add— 1. the amount of any gain or loss determined under Step 1, and 2. the amount of any gain determined under Step 2 or (as the case may be) any loss determined under Step 3, (8) (1) Where the non-resident CGT disposal is of (or of a part of) an interest in UK land in respect of which P makes, or has made, an election for straight-line time apportionment under paragraph 2(1)(a)— (a) paragraphs (a) and (b) of paragraph 5(2) do not apply in relation to the disposal, and (b) for the purposes of paragraphs 6 and 7, the “notional pre-April 2015 gain or loss” and the “notional post-April 2015 gain or loss” are to be determined in accordance with the following steps. - Step 1 Determine the amount of the gain or loss which accrues to P on the disposal. For the purpose of determining that amount, no account is taken of section 57B or this Schedule (apart from paragraph 23). - Step 2 An amount equal to the post-commencement fraction of that gain or loss is the notional post-April 2015 gain or (as the case may be) loss. - Step 3 An amount equal to the pre-commencement fraction of that gain or loss is the notional pre-April 2015 gain or (as the case may be) loss. (2) The “post-commencement fraction” is— $$PCD TD$where—“PCD” is the number of days in the post-commencement ownership period;“TD” is the total number of days in the ownership period.$ (3) The “pre-commencement fraction” is— $$TD − PCD TD$where “PCD” and “TD” have the same meanings as in sub-paragraph (2).$ (4) In this paragraph— - “ownership period” means the period beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982 and ending with the day before the day on which the disposal occurs; - “post-commencement ownership period” has the meaning given by paragraph 6(5). (9) (1) This paragraph applies if— (a) the disposed of interest was not held by P throughout the period beginning with 5 April 2015 and ending with the disposal, or (b) the non-resident CGT disposal is of (or of part of) an interest in UK land in respect of which P makes, or has made, an election under paragraph 2(1)(b). (2) The NRCGT gain or loss accruing on the disposal is computed as follows. - Step 1 Determine the amount of the gain or loss which accrues to P. For the purpose of determining the amount of that gain or loss, no account is taken of section 57B or this Schedule (apart from paragraph 23). - Step 2 The NRCGT gain or (as the case may be) loss accruing on the disposal is an amount equal to the relevant fraction of that gain or loss (but see Step 3). - Step 3 If there has been mixed use of the subject matter of the disposed of interest on one or more days in the relevant ownership period, the NRCGT gain or loss accruing on the disposal is equal to the appropriate fraction of the amount given by Step 2. (3) For the purposes of this paragraph there is “mixed use” of land on any day on which the land consists partly, but not exclusively, of one or more dwellings. (4) In Step 3 “the appropriate fraction” means the fraction that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings. (5) The gain or loss accruing on the disposal which is not an NRCGT gain or (as the case may be) loss is to be computed as follows. - Step 1 In a case where there is a gain under Step 1 of sub-paragraph (2), determine the amount of that gain remaining after the deduction of the NRCGT gain determined under that sub-paragraph. That remaining gain is the gain accruing on the disposal which is not an NRCGT gain. - Step 2 In a case where there is a loss under Step 1 of sub-paragraph (2), determine the amount of that loss remaining after deduction of the NRCGT loss determined under that sub-paragraph. That remaining loss is the loss accruing on the disposal which is not an NRCGT loss. (6) For the purposes of sub-paragraph (2), “the relevant fraction” is— $$RD TD$where—“RD” is the number of days in the relevant ownership period on which the subject matter of the disposed of interest consists wholly or partly of a dwelling;“TD” is the total number of days in the relevant ownership period.$ (7) “The relevant ownership period” means the period— (a) beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982, and (b) ending with the day before the day on which the disposal mentioned in paragraph 4(1) occurs. (10) (1) Sub-paragraph (2) applies where the non-resident CGT disposal referred to in paragraph 4(1) is a disposal of a UK residential property interest only because of the second condition in paragraph 1 of Schedule B1 (interest subsisting under a contract for the acquisition of land that consists of, or includes, a building that is to be constructed for use as a dwelling etc). (2) The land that is the subject of the contract concerned is treated for the purposes of this Part of this Schedule as consisting of (or, as the case requires, including) a dwelling throughout P's period of ownership of the disposed of interest. (11) (1) This Part is about non-resident CGT disposals which are, or involve, relevant high value disposals (see section 2B, which charges capital gains tax on ATED-related gains on relevant high value disposals). (2) Paragraphs 12 to 15 contain provision about how any NRCGT gains and losses on such a disposal are computed, including provision— (a) for the NRCGT gains or losses to be computed for each relevant high value disposal comprised in the non-resident CGT disposal (paragraphs 13 to 15), and (b) for the results to be added (where necessary) to find the NRCGT gain or loss on the non-resident CGT disposal (see paragraph 12). (3) For provision about how to compute any ATED-related gains or losses accruing on the relevant high value disposals, see Schedule 4ZZA. (4) Paragraphs 16 to 19 contain provisions for computing any gains or losses accruing on the disposals mentioned in sub-paragraph (1) which are neither ATED-related nor NRCGT gains or losses, including provision— (a) for such balancing gains or losses to be computed for each relevant high value disposal comprised in the non-resident CGT disposal, and (b) for the results to be added together (where necessary) to find the balancing gain or loss on the non-resident CGT disposal (see paragraph 16). (5) Paragraph 20 is about cases where a disposal which is not a relevant high value disposal is also comprised in the non-resident CGT disposal. (12) (1) This Part of this Schedule applies where— (a) a person (other than an excluded person) (“P”) makes a non-resident CGT disposal of (or of part of) an interest in UK land, and (b) that disposal (“the disposal of land”) is a relevant high value disposal or a relevant high value disposal is comprised in it. In this sub-paragraph “excluded person” has the meaning given by section 2B(2). (2) The NRCGT gain or loss accruing on the disposal of land is computed as follows. - Step 1 Determine in accordance with paragraphs 13 to 15 the amount of the NRCGT gain or loss accruing on each relevant high value disposal. - Step 2 Add together the amounts of any gains or losses determined under Step 1 (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the NRCGT gain on the disposal of land. If the result is a negative amount, that amount (expressed as a positive number) is the NRCGT loss on the disposal of land. See paragraphs 16 to 19 for how to compute the gain or loss on the disposal of land which is neither ATED-related nor an NRCGT gain or loss. (3) For the purposes of this Schedule, a relevant high value disposal is “comprised in” a non-resident CGT disposal if— (a) the non-resident CGT disposal is treated for the purposes of section 2C and Schedule 4ZZA as two or more disposals, and (b) the relevant high value disposal is one of those. (4) In this Part of this Schedule— (a) “the asset”, in relation to a relevant high value disposal, means the chargeable interest which (or a part of which) is the subject of that disposal, and (b) “the disposed of interest”, in relation to a relevant high value disposal, means the asset or, if only part of the asset is the subject of the relevant high value disposal, that part of the asset. (5) For the purposes of this Part of this Schedule a day is a “section 14D chargeable day” in relation to a relevant high value disposal if— (a) it is a day on which the subject matter of the disposed of interest consists wholly or partly of a dwelling, but (b) it is not an ATED chargeable day (as defined in paragraph 3 of Schedule 4ZZA). (13) (1) This paragraph applies where— (a) the disposed of interest was held by P on 5 April 2015, (b) P has not made an election under paragraph 2(1)(b) (or paragraph 5 of Schedule 4ZZA) in respect of the asset, and (c) paragraph 15 does not apply. (2) The NRCGT gain or loss accruing on the relevant high value disposal is equal to the special fraction of the notional post-April 2015 gain or loss (as the case may be) on that disposal. (3) “Notional post-April 2015 gain or loss” means the gain or loss which would have accrued on the relevant high value disposal had P acquired the disposed of interest on 5 April 2015 for a consideration equal to the market value of that interest on that date. (4) “The special fraction” is— $$SD TD$where—“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the post-commencement ownership period;“TD” is the total number of days in the post-commencement ownership period.$ (5) “The post-commencement ownership period” means the period beginning with 6 April 2015 and ending with the day before the day on which the relevant high value disposal occurs. (14) (1) This paragraph applies where— (a) P makes, or has made, an election under paragraph 2(1)(b) (or paragraph 5 of Schedule 4ZZA) in respect of the asset, or (b) the disposed of interest was not held by P throughout the period beginning with 5 April 2015 and ending with the disposal. (2) But this paragraph does not apply if paragraph 15 applies. (3) The NRCGT gain or loss accruing on the relevant high value disposal is computed as follows. - Step 1 Determine the amount of the gain or loss which accrues to P. (For the purpose of determining the amount of that gain or loss, no account need be taken of section 57B or this Schedule (apart from paragraph 23).) - Step 2 The NRCGT gain or loss accruing on the relevant high value disposal is equal to the special fraction of that gain or loss. (4) For this purpose “the special fraction” is— $$SD TD$where—“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the relevant ownership period;“TD” is the total number of days in the relevant ownership period.$ (5) “Relevant ownership period” means the period— (a) beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982, and (b) ending with the day before the day on which the relevant high value disposal occurs. (15) (1) This paragraph applies where— (a) the disposed of interest was held by P on 5 April 2016, (b) the relevant high value disposal falls within Case 3 for the purposes of Schedule 4ZZA (see paragraph 2(4) of that Schedule), and (c) no election is or has been made (or treated as made) by P under paragraph 2(1)(b) in respect of the asset. (2) The NRCGT gain or loss accruing on the relevant high value disposal is computed as follows. - Step 1 Determine the amount equal to the special fraction of the notional post-April 2016 gain or loss (as the case may be). - Step 2 Determine the amount equal to the special fraction of the notional pre-April 2016 gain or loss (as the case may be). - Step 3 Add— 1. the amount of any gain or loss determined under Step 1, and 2. the amount of any gain or loss determined under Step 2, (3) “The special fraction” is— $$SD TD$where—“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the relevant ownership period;“TD” is the total number of days in the relevant ownership period.$ (4) The “relevant ownership period” is— (a) for the purpose of computing under Step 1 of sub-paragraph (2) the special fraction of the notional post-April 2016 gain or loss, the period beginning with 6 April 2016 and ending with the day before the day on which the relevant high value disposal occurs; (b) for the purpose of computing under Step 2 of sub-paragraph (2) the special fraction of the notional pre-April 2016 gain or loss, the period beginning with the day on which P acquired the disposed of interest or, if later, 6 April 2015 and ending with 5 April 2016. (5) “Notional post-April 2016 gain or loss” means the gain or loss which would have accrued on the relevant high value disposal had P acquired the disposed of interest on 5 April 2016 for a consideration equal to its market value on that date. (6) If the disposed of interest was not held by P on 5 April 2015, “notional pre-April 2016 gain or loss” means the gain or loss which would have accrued on 5 April 2016 had the disposed of interest been disposed of for a consideration equal to the market value of the interest on that date. (7) If the disposed of interest was held by P on 5 April 2015, “notional pre-April 2016 gain or loss” means the gain or loss which would have accrued to P on the disposal mentioned in paragraph (b), had P— (a) acquired the disposed of interest on 5 April 2015 for a consideration equal to the market value of that interest on that date, and (b) disposed of that interest on 5 April 2016 for a consideration equal to the market value of that interest on that date. (16) (1) The gain or loss on the disposal of land (see paragraph 12(1)(b)) which is neither ATED-related nor an NRCGT gain or loss (“the balancing gain or loss”) is computed as follows. - Step 1 Determine in accordance with paragraphs 17 to 19 the amount of the gain or loss accruing on each relevant high value disposal which is neither ATED-related nor an NRCGT gain or loss. This is the “balancing” gain or loss for each such disposal. - Step 2 Add together the amounts of any balancing gains or losses determined under Step 1 (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the balancing gain on the disposal of land. If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the disposal of land. (2) In relation to a relevant high value disposal, “balancing day” means a day which is neither— (a) a section 14D chargeable day (see paragraph 12(5)), nor (b) an ATED chargeable day. (3) In relation to a relevant high value disposal, “non-ATED chargeable day” means a day which is not an ATED chargeable day. (4) The references in sub-paragraphs (2) and (3) to an “ATED chargeable day” are to be interpreted in accordance with paragraph 3(6) of Schedule 4ZZA. (17) (1) This paragraph applies in relation to a relevant high value disposal to which paragraph 13 applies. (2) If paragraph 6A of Schedule 4ZZA does not apply, the amount of the balancing gain or loss on the relevant high value disposal is found by adding— (a) the amount of the balancing gain or loss belonging to the notional post-April 2015 gain or loss, and (b) the amount of the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal. (3) If paragraph 6A of Schedule 4ZZA applies, the amount of the balancing gain or loss on the relevant high value disposal is found by adding— (a) the amount of the balancing gain or loss belonging to the notional post-April 2015 gain or loss, (b) the amount of the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, and (c) if P held the disposed of interest on 5 April 2013, the amount of the notional pre-April 2013 gain or loss, (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal. (4) The balancing gain or loss belonging to the notional post-April 2015 gain or loss is equal to the balancing fraction of the notional post-April 2015 gain or loss. (5) The balancing gain or loss belonging to the notional pre-April 2015 gain or loss is equal to the non-ATED related fraction of the notional pre-April 2015 gain or loss. (6) “The balancing fraction” is— $$BD TD$where—“BD” is the number of balancing days (see paragraph 16(2)) in the appropriate ownership period;“TD” is the total number of days in the appropriate ownership period.$ (7) “The non-ATED related fraction” is— $$NAD TD$where—“NAD” is the number of non-ATED chargeable days (see paragraph 16(3)) in the appropriate ownership period;“TD” is the total number of days in the appropriate ownership period.$ (8) “Appropriate ownership period” means— (a) for the purpose of computing the balancing gain or loss belonging to the notional post-April 2015 gain or loss, the post-commencement ownership period defined in paragraph 13(5); (b) for the purpose of computing the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, the relevant ownership period defined in paragraph 6A(11) of Schedule 4ZZA. (9) In this paragraph— (a) “notional post-April 2015 gain or loss” has the same meaning as in paragraph 13; (b) “notional pre-April 2015 gain or loss” has the same meaning as in paragraph 6A of Schedule 4ZZA; (c) “notional pre-April 2013 gain or loss” means the gain or loss which would have accrued on 5 April 2013 had the disposed of interest been disposed of for a consideration equal to the market value of that interest at that date. (18) (1) In the case of a relevant high value disposal to which paragraph 14 applies, the amount of the balancing gain or loss is determined as follows. (2) Determine the number of balancing days (see paragraph 16(2)) in the relevant ownership period. (3) The balancing gain or loss on the disposal is equal to the balancing fraction of the amount of the gain or (as the case may be) loss determined under Step 1 of paragraph 14(3). (4) “The balancing fraction” is— $$BD TD$where—“BD” is the number of balancing days in the relevant ownership period;“TD” is the total number of days in the relevant ownership period.$ (5) In this paragraph “relevant ownership period” has the same meaning as in paragraph 14. (19) (1) The amount of the balancing gain or loss on a relevant high value disposal to which paragraph 15 applies is found by adding— (a) the amount of the balancing gain or loss belonging to the notional post-April 2016 gain or loss, (b) the amount of the balancing gain or loss belonging to the notional pre-April 2016 gain or loss, and (c) if P held the disposed of interest on 5 April 2015, the amount of the notional pre-April 2015 gain or loss, (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal. (2) The balancing gain or loss belonging to the notional post-April 2016 gain or loss is equal to the balancing fraction of the notional post-April 2016 gain or loss. (3) The balancing gain or loss belonging to the notional pre-April 2016 gain or loss is equal to the balancing fraction of the notional pre-April 2016 gain or loss. (4) “The balancing fraction” is— $$BD TD$where—“BD” is the number of balancing days (see paragraph 16(2)) in the appropriate ownership period;“TD” is the total number of days in the appropriate ownership period.$ (5) The appropriate ownership period is— (a) for the purpose of computing the balancing gain or loss belonging to the notional post-April 2016 gain or loss, the relevant ownership period mentioned in paragraph 15(4)(a); (b) for the purpose of computing the balancing gain or loss belonging to the notional pre-April 2016 gain or loss, the relevant ownership period mentioned in paragraph 15(4)(b). (6) In this paragraph— (a) “notional post-April 2016 gain or loss” and “notional pre-April 2016 gain or loss” mean the same as in paragraph 15; (b) “notional pre-April 2015 gain or loss” means the gain or loss which would have accrued on 5 April 2015 if the disposed of interest had been disposed of for a consideration equal to the market value of that interest on that date. (20) (1) This paragraph applies where the disposals comprised in the disposal of land (see paragraph 12(3)) include a disposal (the “non-ATED related disposal”) which is not a relevant high value disposal. (2) This Part of this Schedule (apart from this paragraph) applies in relation to the non-ATED related disposal as if it were a relevant high value disposal. (3) Sub-paragraph (4) applies if there has, at any time in the relevant ownership period, been mixed use of the subject matter of the disposed of interest. (4) The amount of any NRCGT gain or loss on the non-ATED related disposal computed under this Part of this Schedule is taken to be the appropriate fraction of the amount that it would otherwise be. (5) In sub-paragraph (4) “the appropriate fraction” means the fraction that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings. (6) In this paragraph “the relevant ownership period” means, as applicable— (a) the post-commencement ownership period, as defined in paragraph 13(5), (b) the relevant ownership period, as defined in paragraph 14(5), or (c) the relevant ownership period as defined in paragraph 15(4). (21) (1) Sub-paragraph (2) applies where the non-resident CGT disposal made by P as mentioned in paragraph 12(1) is a disposal of a UK residential property interest only because of the second condition in paragraph 1 of Schedule B1 (interest subsisting under a contract for the acquisition of land that consists of, or includes, a building that is to be constructed for use as a dwelling etc). (2) The land that is the subject of the contract concerned is treated for the purposes of this Part of this Schedule as consisting of (or, as the case requires, including) a dwelling throughout P's period of ownership of the interest in UK land. (22) This Part of this Schedule applies where the person making the non-resident CGT disposal is a company. (23) The following amounts are computed as if the computation were for corporation tax purposes— (a) the notional post-April 2015 gain or loss for the purposes of paragraphs 6 and 7; (b) the notional pre-April 2015 gain or loss for the purposes of paragraphs 6 and 7; (c) the gain or loss determined under Step 1 of paragraph 9(2); (d) the notional post-April 2015 gain or loss for the purposes of paragraph 13; (e) the gain or loss determined under Step 1 of paragraph 14(3); (f) the notional post-April 2016 gain or loss for the purposes of paragraph 15; (g) the notional pre-April 2016 gain or loss for the purposes of paragraph 15; (h) the notional post-April 2015 gain or loss, the notional pre-April 2015 gain or loss and the notional pre-April 2013 gain or loss for the purposes of paragraph 17; (i) the notional post-April 2016 gain or loss, the notional pre-April 2016 gain or loss and the notional pre-April 2015 gain or loss for the purposes of paragraph 19. (24) (1) Sub-paragraph (2) applies where it is necessary, for the purposes of a relevant computation, to determine whether or not the asset which is the subject of the disposal in question is a wasting asset (as defined for the purposes of Chapter 2 of Part 2). (2) The assumption (which operates for the purposes of that computation) that the asset was acquired on 5 April 2015 or, as the case may be, 5 April 2016 is to be ignored in determining that question. (3) In sub-paragraph (1) “relevant computation” means a computation of— (a) the notional post-April 2015 gain or loss accruing to a person on a non-resident CGT disposal in accordance with paragraph 5(2)(a), (b) the notional post-April 2015 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 13(3), (c) the notional post-April 2016 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 15(5), or (d) the notional pre-April 2016 gain or loss accruing to a person on a disposal in accordance with paragraph 15(7). (25) (1) Sub-paragraph (2) applies where it is to be assumed for the purpose of computing— (a) the notional post-April 2015 gain or loss accruing to a person on a non-resident CGT disposal in accordance with paragraph 5(2)(a), (b) the notional post-April 2015 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 13(3), (c) the notional post-April 2016 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 15(5), or (d) the notional pre-April 2016 gain or loss accruing to a person on a disposal in accordance with paragraph 15(7), that an asset was acquired by a person on 5 April 2015 or (as the case may be) 5 April 2016 (“the deemed acquisition date”) for a consideration equal to its market value on that date. (2) For the purposes of that computation, sections 41 (restriction of losses by reference to capital allowances and renewals allowances) and 47 (wasting assets qualifying for capital allowances) are to apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by the person in acquiring or providing the asset as if that allowance were made in respect of the expenditure treated as incurred by the person on the deemed acquisition date as mentioned in sub-paragraph (1). (26) In this Schedule— - “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); - “dwelling” has the meaning given by paragraph 4 of Schedule B1; - “subject matter”, in relation to an interest in UK land (or a chargeable interest) means the land to which the interest relates.

40

In Schedule 4C (transfers of value: attribution of gains etc), in paragraph 4, after sub-paragraph (2) insert—

(3) Where any of the disposals which the trustees are treated as having made as mentioned in sub-paragraph (2) is a non-resident CGT disposal— (a) any chargeable gain or allowable loss accruing on that disposal, other than an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D, is to be treated for the purposes of sub-paragraph (2) as if it were a chargeable gain or (as the case requires) allowable loss falling to be taken into account in calculating the chargeable amount, and (b) that disposal is otherwise to be disregarded for the purpose of calculating the chargeable amount.

PART 2 — Other amendments

41

TMA 1970 is amended in accordance with paragraphs 42 to 55.

42

After section 7 insert—

(7A) (1) This section applies where— (a) a person (“P”) is the taxable person in relation to an NRCGT return relating to a tax year (“year X”) which is made and delivered to an officer of Revenue and Customs before the end of the notification period and contains an advance self-assessment, (b) the return is in respect of a non-resident CGT disposal on which an NRCGT gain accrues, and (c) P would (apart from this section) be required to give a notice under section 7 with respect to year X. (2) For the purpose of determining whether or not P is required to give such a notice (and only for that purpose), P is regarded as not being chargeable to capital gains tax in respect of the NRCGT gain mentioned in subsection (1)(b). (3) The reference in subsection (1) to the tax year to which an NRCGT return “relates” is to be interpreted in accordance with section 12ZB(7). (4) In this section— - “advance self-assessment” has the meaning given by section 12ZE(1); - “the notification period” has the meaning given by section 7(1C); - 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). (5) See— - section 14B of the 1992 Act for the meaning of “non-resident CGT disposal”; - section 57B of, and Schedule 4ZZB to, the 1992 Act for the meaning of “NRCGT gain”.

43

Before section 12AA (and the italic heading before it) insert—