Legalize / United Kingdom / Public General Act

Finance Act 2016

Type Public General Act

Publication 2016-09-15

Last updated 2025-04-24

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Basic provisions

Apprenticeship levy

98

(1) A tax called apprenticeship levy is to be charged in accordance with this Part.

(2) The Commissioners are responsible for the collection and management of apprenticeship levy.

Charge to apprenticeship levy

99

(1) Apprenticeship levy is charged if—

(a) a person has a pay bill for a tax year, and

(b) the relevant percentage of that pay bill exceeds the amount of the person's levy allowance (if any) for that tax year.

(2) The amount charged for the tax year is equal to—

$$N − A$where—N is the relevant percentage of the pay bill for the tax year, andA is the amount of the levy allowance (if any) to which the person is entitled for the tax year.$

(3) The person mentioned in subsection (1) is liable to pay the amount charged.

(4) Except so far as section 103 provides otherwise, a person who has a pay bill for a tax year is entitled to a levy allowance for the tax year.

(5) The amount of the levy allowance is £15,000 (except where section 101 or 102 provides otherwise).

(6) For the purposes of this section the “relevant percentage” is 0.5%.

A person’s pay bill for a tax year

100

(1) A person has a pay bill for a tax year if, in the tax year—

(a) the person is the secondary contributor in relation to payments of earnings to, or for the benefit of, one or more employed earners, and

(b) in consequence, the person incurs liabilities to pay secondary Class 1 contributions.

(2) The amount of the person's pay bill for the tax year is equal to the total amount of the earnings in respect of which the liabilities mentioned in subsection (1)(b) are incurred.

(3) For the purposes of this section a person is treated as incurring, in respect of any earnings, any liabilities which the person would incur but for the condition in section 6(1)(b) of the Contributions and Benefits Act.

(4) The Treasury may by regulations provide for persons specified in certificates in force under section 120(4) of the Social Security Contributions and Benefits Act 1992 (employment at sea: continental shelf operations) to be treated for the purposes of this section as the secondary contributor in relation to payments of earnings to which the certificate relates and as liable to pay secondary Class 1 contributions to which the certificate relates.

(5) For the purposes of this section—

(a) references to “payments of earnings” are to be interpreted as they would be interpreted for the purposes of determining liability to pay secondary Class 1 contributions under the Contributions and Benefits Act;

(b) the amount of any earnings is to be calculated in the same manner and on the same basis as for the purpose of calculating the liabilities mentioned in subsection (1)(b).

(6) In this section references to liability to pay secondary Class 1 contributions are to liability to pay secondary Class 1 contributions under Part 1 of the Contributions and Benefits Act (including a case where the amount of a liability to pay a secondary Class 1 contribution is £0).

Connected companies and charities

Connected companies

101

(1) Two or more companies which are not charities form a “company unit” for a tax year (and are the “members” of that unit) if—

(a) they are connected with one another at the beginning of the tax year, and

(b) each of them is entitled to a levy allowance for the tax year.

(2) The members of a company unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (4)).

But see subsections (6) and (11).

(3) A member's levy allowance for a tax year may be zero (but not a negative amount).

(4) The total amount of the levy allowances to which the members of a company unit are entitled for a tax year must equal £15,000.

(5) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (4)).

(6) If subsection (8) applies—

(a) HMRC must determine in accordance with subsection (7) what amount of levy allowance each of the relevant members (see subsection (8)(a)) of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.

(7) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (8)(a)) by—

$$15,000 T$where T is the total of the amounts of levy allowance set out in the relevant returns.$

The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (4) is complied with).

(8) This subsection applies if—

(a) HMRC is aware—

(i) that two or more members of a company unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (9), and

(ii) that those returns, together, imply that the total mentioned in subsection (4) is greater than £15,000,

(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (6), and

(9) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.

(10) If any member of the company unit mentioned in subsection (8)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.

(11) If subsection (13) applies—

(a) HMRC must determine in accordance with subsection (12) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.

(12) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—

$$15,000 N$where N is the number of the members of the company unit for the tax year.$

Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (4) is complied with.

(13) This subsection applies if—

(a) the total amount paid by the members of a company unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,

(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (4) is to be used by the members of the unit for the tax year,

(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (11), and

(d) the remedial action specified in the notice has not been taken within the period specified in the notice.

(14) Subsection (4) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (13)(a).

(15) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a company unit may alter a determination made under subsection (2) (despite subsection (5)).

(16) In this section “apprenticeship levy return” means a return under regulations under section 105(4).

(17) Part 1 of Schedule 1 to the National Insurance Contributions Act 2014 (rules for determining whether companies are “connected” with one another) applies for the purposes of subsection (1) as it applies for the purposes of section 3(1) of that Act.

(18) In this Part “company” has the meaning given by section 1121(1) of CTA 2010 and includes a limited liability partnership.

(19) See section 102 for the meaning of “charity”.

Connected charities

102

(1) Two or more charities form a “charities unit” for a tax year (and are the “members” of that unit) if—

(a) they are connected with one another at the beginning of the tax year, and

(b) each of them is entitled to a levy allowance for the tax year.

(2) The members of a charities unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (4)).

But see subsections (6) and (11).

(3) A member's levy allowance for a tax year may be zero (but not a negative amount).

(4) The total amount of the levy allowances to which the members of a charities unit are entitled for a tax year must equal £15,000.

(5) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (4)).

(6) If subsection (8) applies—

(a) HMRC must determine in accordance with subsection (7) what amount of levy allowance each of the relevant members (see subsection (8)(a)) of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.

(7) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (8)(a)) by—

$$15,000 T$where T is the total of the amounts of levy allowance set out in the relevant returns.$

(8) This subsection applies if—

(a) HMRC is aware—

(i) that two or more members of a charities unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (9), and

(ii) that those returns, together, imply that the total mentioned in subsection (4) is greater than £15,000,

(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (6), and

(9) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.

(10) If any member of the charities unit mentioned in subsection (8)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.

(11) If subsection (13) applies—

(a) HMRC must determine in accordance with subsection (12) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.

(12) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—

$$15,000 N$where N is the number of the members of the charities unit for the tax year.$

Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (4) is complied with.

(13) This subsection applies if—

(a) the total amount paid by the members of a charities unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,

(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (4) is to be used by the members of the unit for the tax year,

(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (11), and

(d) the remedial action specified in the notice has not been taken within the period specified in the notice.

(14) Subsection (4) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (13)(a).

(15) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a charities unit may alter a determination made under subsection (2) (despite subsection (5)).

(16) In this section “apprenticeship levy return” means a return under regulations under section 105(4).

(17) In this Part “charity” means—

(a) a charity within the meaning of Part 1 of Schedule 6 to FA 2010;

(b) the Trustees of the National Heritage Memorial Fund;

(d) a registered club within the meaning of Chapter 9 of Part 13 of CTA 2010 (community amateur sports clubs).

(18) Subsection (17) is subject to section 118(5).

(19) See sections 118 and 119 for provision about the meaning of “connected” in subsection (1).

Anti-avoidance

103

(1) For the purposes of this section “avoidance arrangements” are arrangements the main purpose, or one of the main purposes, of which is to secure that a person—

(a) benefits, or further benefits, from an entitlement to a levy allowance for a tax year, or

(b) otherwise obtains an advantage in relation to apprenticeship levy.

(2) Subsection (3) applies where, in consequence of avoidance arrangements within subsection (1)(a) or (b), a person incurs a liability to pay secondary Class 1 contributions in a particular tax year (as opposed to another tax year).

(3) If the person would (apart from this subsection) obtain an advantage in relation to apprenticeship levy as a result of incurring the liability at the time mentioned in subsection (2), section 100 has effect as if the liability had been incurred when it would have been incurred but for the avoidance arrangements.

(4) Subsection (6) applies where (apart from this section) a person (“P”)—

(a) would be in a position to use or make greater use of a levy allowance for a tax year, in consequence of avoidance arrangements within subsection (1)(a), or

(b) would otherwise obtain an advantage in relation to apprenticeship levy in consequence of avoidance arrangements within subsection (1)(a).

(5) But subsection (6) only applies so far as the advantage in relation to apprenticeship levy cannot be counteracted under subsection (3).

(6) P is not entitled to a levy allowance for the tax year.

(7) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

(8) In this section a reference to “an advantage in relation to apprenticeship levy” includes a reference to—

(a) repayment or increased repayment of apprenticeship levy,

(b) avoidance or reduction of a charge, or an assessment, to the levy,

(d) deferral of a payment of, or advancement of a repayment of, the levy, and

(e) avoidance of an obligation to account for the levy.

(9) Sections 101 and 102 are to be ignored for the purpose of determining under subsection (4) what the position would be apart from this section.

(10) In subsection (2) the reference to “a particular tax year” is to be read as including a reference to the period of 12 months beginning with 6 April 2016.

Application of other regimes to apprenticeship levy

104

(1) In section 318(1) of FA 2004 (disclosure of tax avoidance schemes: interpretation), in the definition of “tax”, after paragraph (d) insert—

(da) apprenticeship levy,

(2) In section 206(3) of FA 2013 (taxes to which the general anti-abuse rule applies), after paragraph (da) insert—

(db) apprenticeship levy,

(3) Part 4 of FA 2014 (follower notices and accelerated payments) is amended in accordance with subsections (4) and (5).

(4) In section 200 (meaning of “relevant tax”), after paragraph (c) insert—

(ca) apprenticeship levy,

(5) In section 203 (meaning of “tax appeal”), after paragraph (e) insert—

(ea) an appeal under section 114 of FA 2016 (apprenticeship levy: appeal against an assessment),

(6) Part 5 of FA 2014 (promoters of tax avoidance schemes) is amended in accordance with subsections (7) and (8).

(7) In section 253(6) (duty to notify the Commissioners: meaning of “tax return”), after paragraph (d) insert—

(da) a return under regulations made under section 105 of FA 2016 (apprenticeship levy);

(8) In section 283(1) (interpretation), in the definition of “tax”, after paragraph (d) insert—

(da) apprenticeship levy,

Payment, collection and recovery

Assessment, payment etc

105

(1) The Commissioners may by regulations make provision about the assessment, payment, collection and recovery of apprenticeship levy.

(2) Regulations under subsection (1) may include—

(a) provision which applies, with or without modifications, provisions of PAYE regulations;

(b) provision for combining any arrangements under the regulations with arrangements under PAYE regulations.

(3) Regulations under subsection (1) may—

(a) require payments to be made on account of apprenticeship levy;

(b) determine periods (“tax periods”) by reference to which payments are to be made;

(d) require the amounts payable by reference to tax periods to be calculated (and levy allowance to be taken into account) in the manner and on the basis determined by or under the regulations;

(e) make provision for dealing with cases where such calculations lead to overpayment of levy (by repayment or otherwise);

(f) make other provision about the recovery of overpayments of levy.

(4) Regulations under subsection (1) may make provision requiring persons to make returns, including provision about—

(a) the periods by reference to which returns are to be made,

(b) the information to be included in returns,

(d) the form of, and method of making, returns.

(5) Regulations under subsection (1) may—

(a) authorise HMRC to assess to the best of their judgement amounts payable by a person in respect of apprenticeship levy;

(b) make provision about the treatment of amounts so assessed, including provision for treating such amounts as apprenticeship levy payable by the person;

(6) Regulations under subsection (1) may make, in relation to amounts of apprenticeship levy which have been repaid to a person and ought not to have been repaid, any provision which may be made in relation to apprenticeship levy payable by a person.

(7) Where—

(a) a repayment of apprenticeship levy has been increased in accordance with section 102 of FA 2009 (repayment interest), and

(b) the whole or part of the repayment has been paid to any person but ought not to have been paid to the person,

any amount by which the repayment paid to the person ought not to have been increased is to be treated for the purposes of regulations made by virtue of subsection (6) as if it were an amount of apprenticeship levy repaid to the person which ought not to have been repaid.

(8) Regulations under subsection (1) may make provision for enabling the repayment or remission of interest under section 101 of FA 2009.

(9) The provision that may be made under subsection (1) includes—

(a) provision for the making of decisions (other than relevant assessments) by HMRC as to any matter required to be decided for the purposes of the regulations and for appeals against such decisions;

(b) provision for appeals with respect to matters arising under the regulations which would otherwise not be the subject of an appeal;

(10) In subsection (9) “relevant assessment” means an assessment of amounts payable by a person in respect of apprenticeship levy.

(11) Regulations under subsection (1) must not affect any right of appeal to the tribunal which a person would have apart from the regulations.

(12) In this section (except where the context requires otherwise) references to payments are to payments of, or on account of, apprenticeship levy.

Recovery from third parties

106

(1) Regulations under section 105(1) may make corresponding provision for the recovery of amounts in respect of apprenticeship levy from persons other than the person liable to pay the amounts by virtue of section 99(3).

(2) In subsection (1) “corresponding provision” means provision which corresponds to provision made by regulations under the Contributions and Benefits Act for secondary Class 1 contributions in respect of any earnings to be recovered from a person other than the secondary contributor.

Real time information

107

(1) Regulations under section 105(1) may make provision—

(a) for authorising or requiring relevant service providers to supply to HMRC information about payments of apprenticeship levy with respect to which their service is provided, or any information the Commissioners may request about features of the service provided or to be provided with respect to particular payments of apprenticeship levy;

(b) for requiring clients to provide relevant service providers with information about payments of apprenticeship levy;

(c) for prohibiting or restricting the disclosure, otherwise than to HMRC, of information by a person to whom it was supplied pursuant to a requirement imposed under paragraph (b);

(d) for conferring power on the Commissioners to specify by directions circumstances in which provision made by virtue of paragraph (a) or (b) is not to apply in relation to a payment;

(e) for requiring relevant service providers to take steps for facilitating the meeting by clients of obligations imposed under paragraph (b);

(f) for requiring compliance with any directions the Commissioners may give—

(i) specifying, or further specifying, steps for the purposes of paragraph (e), or

(ii) specifying information that a person making payments of apprenticeship levy must provide about the method by which the payments are made.

(2) Directions made under the regulations may make different provision for different cases or different classes of case.

(3) In this section—

“client”, in relation to a relevant service provider, means a person to whom that relevant service provider provides or is to provide a service with respect to a payment of apprenticeship levy;

“payment of apprenticeship levy” includes a payment on account of apprenticeship levy;

“relevant service provider” means a person who provides or is to provide with respect to payments of apprenticeship levy a service that is specified, or of a description specified, by the regulations.

Time limits for assessment

108

(1) The general rule is that no assessment under regulations under section 105 may be made more than 4 years after the end of the tax year to which it relates.

(2) An assessment on a person in a case of loss of apprenticeship levy brought about carelessly by the person may be made at any time not more than 6 years after the end of the tax year to which it relates.

(3) An assessment on a person in a case falling within subsection (4) may be made at any time not more than 20 years after the end of the tax year to which it relates.

(4) A case falls within this subsection if it involves a loss of apprenticeship levy—

(a) brought about deliberately by the person,

(b) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of FA 2004 (obligation of parties to tax avoidance schemes to provide information to HMRC), or

(c) attributable to arrangements which were expected to give rise to a tax advantage in respect of which the person was under an obligation to notify the Commissioners under section 253 of FA 2014 (duty to notify Commissioners of promoter reference number) but failed to do so.

(5) An assessment made by virtue of section 105(6) (amounts of levy repaid which ought not to have been repaid etc) is not out of time as a result of subsection (1) if it is made before the end of the tax year following that in which the amount assessed was repaid or paid (as the case may be).

(6) Subsections (2), (3) and (5) do not limit one another's application.

(7) An objection to the making of an assessment on the ground that the time limit for making it has expired may only be made on an appeal against the assessment.

(8) In subsections (2) and (4) references to a loss brought about by a person include a loss brought about by another person acting on behalf of that person.

No deduction in respect of levy to be made from earnings

109

(1) A person (“P”) must not—

(a) make from any payment of earnings any deduction in respect of apprenticeship levy for which P (or any other person) is liable,

(b) otherwise recover the cost, or any part of the cost, of P's (or any other person's) liability to apprenticeship levy from any person who is or has been a relevant earner, or

(2) In this section “relevant earner” means an earner in respect of whom P is or has been liable to pay any secondary Class 1 contributions under Part 1 of the Contributions and Benefits Act.

Collectors and court proceedings

110

(1) The following provisions of Part 6 of TMA 1970 apply in relation to apprenticeship levy as they apply in relation to income tax—

(a) section 60 (issue of demand notes and receipts);

(b) section 61 (distraint by collectors: Northern Ireland);

(2) See also Chapter 5 of Part 7 of FA 2008 (which makes general provision about payment and enforcement).

Information and penalties

Records

111

(1) The Commissioners may by regulations require persons—

(a) to keep for purposes connected with apprenticeship levy records of specified matters, and

(b) to preserve the records for a specified period.

(2) A duty under regulations under this section to preserve records may be discharged—

(a) by preserving them in any form and by any means, or

(b) by preserving the information contained in them in any form and by any means, subject to any conditions or exceptions specified in writing by the Commissioners.

(3) In this section “specified” means specified or described in the regulations.

Information and inspection powers

112

In Schedule 36 to FA 2008 (information and inspection powers), in paragraph 63(1), after paragraph (ca) insert—

(cb) apprenticeship levy,

Penalties

113

(1) Schedule 24 to FA 2007 (penalties for errors) is amended in accordance with subsections (2) to (4).

(2) In the Table in paragraph 1, after the entry relating to accounts in connection with a partnership return insert—

Apprenticeship levy	Return under regulations under section 105 of FA 2016.

(3) In paragraph 13—

(a) in sub-paragraph (1ZA), after “CIS returns,” insert “ or for two or more penalties relating to apprenticeship levy returns, ”;

(b) in sub-paragraph (1ZD), after the entry relating to “a CIS return” insert—

“an apprenticeship levy return” means a return under regulations under section 105 of FA 2016;

(4) In paragraph 21C, after “capital gains tax)” insert “ and amounts payable on account of apprenticeship levy ”.

(5) Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended in accordance with subsections (6) to (8).

(6) In the Table in paragraph 1, after item 4 insert—

4A	Apprenticeship levy	Return under regulations under section 105 of FA 2016

(7) In paragraph 6B, after “item 4” insert “ or 4A ”.

(8) In the italic heading before paragraph 6B, at the end insert “ and apprenticeship levy ”.

(9) Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended in accordance with subsections (10) to (15).

(10) In the Table in paragraph 1, after item 4 insert—

4A	Apprenticeship levy	Amount payable under regulations under section 105 of FA 2016	The date determined by or under regulations under section 105 of FA 2016

(11) In paragraph 3(1)—

(a) in paragraph (b) after “within” insert “ item 4A or ”;

(b) after paragraph (c) insert—

(ca) an amount in respect of apprenticeship levy falling within item 4A which is payable by virtue of regulations under section 106 of FA 2016 (recovery from third parties).

(12) In paragraph 5(1), for “or 4” substitute “ , 4 or 4A ”.

(13) In paragraph 5(2), for “or (c)” substitute “ , (c) or (ca). ”

(14) In paragraph 6(2), after paragraph (b) insert—

(ba) a payment under regulations under section 105 of FA 2016 of an amount in respect of apprenticeship levy payable in relation to the tax year;

(15) In the italic heading before paragraph 5, at the end insert “ etc. ”.

(16) The amendments made by subsections (1) to (4) of this section come into force in accordance with provision made by the Treasury by regulations.

(17) In subsections (2) and (4) of section 106 of FA 2009 (penalties for failure to make returns: commencement etc) references to Schedule 55 to that Act have effect as references to that Schedule as amended by subsections (5) to (8) of this section.

(18) Schedule 56 to FA 2009, as amended by this section, is taken to come into force for the purposes of apprenticeship levy on the date on which this Act is passed.

Appeals

114

(1) An appeal may be brought against an assessment of apprenticeship levy or other amounts under regulations under section 105.

(2) Notice of appeal must be given—

(a) in writing,

(b) within the period of 30 days beginning with the date on which notice of the assessment was given,

(3) Part 5 of TMA 1970 (appeals and other proceedings) applies in relation to an appeal under this section as it applies in relation to an appeal against an assessment to income tax.

General

Tax agents: dishonest conduct

115

In Schedule 38 to FA 2012 (tax agents: dishonest conduct), in paragraph 37(1), after paragraph (l) insert—

(la) apprenticeship levy,

Provisional collection of apprenticeship levy

116

In section 1 of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions), in subsection (1), after “diverted profits tax,” insert “ the apprenticeship levy, ”.

Crown application

117

This Part binds the Crown.

Charities which are “connected” with one another

118

(1) Two charities are connected with one another for the purposes of section 102(1) if—

(a) they are connected with one another in accordance with section 993 of ITA 2007 (meaning of “connected persons”), and

(b) their purposes and activities are the same or substantially similar.

(2) In the application of section 993 of ITA 2007 for the purposes of subsection (1)(a)—

(a) a charity which is a trust is to be treated as if it were a company (and accordingly a person), including in this subsection;

(b) a charity which is a trust has “control” of another person if the trustees (in their capacity as trustees of the charity) have, or any of them has, control of the person;

(i) the person is a trustee of the charity and some or all of the powers of the trustees of the charity could be exercised by the person acting alone or by the person acting together with any other persons who are trustees of the charity and who are connected with the person,

(ii) the person, alone or together with other persons, has power to appoint or remove a trustee of the charity, or

(iii) the person, alone or together with other persons, has any power of approval or direction in relation to the carrying out by the trustees of any of their functions.

(3) For the purposes of section 102(1) a charity which is a trust is also connected with another charity which is a trust if at least half of the trustees of one of the charities are—

(a) trustees of the other charity,

(b) persons who are connected with persons who are trustees of the other charity, or

and the charities' purposes and activities are the same or substantially similar.

(4) In determining if a person is connected with another person for the purposes of subsection (2)(c)(i) or (3)(b), apply section 993 of ITA 2007 with the omission of subsection (3) of that section (and without the modifications in subsection (2) above).

(5) If a charity (“A”) controls a company (“B”) which, apart from this subsection, would not be a charity—

(a) B is to be treated as if it were a charity for the purposes of this Part, and

(b) A and B are connected with one another for the purposes of section 102(1).

(6) In subsection (5) “control” has the same meaning as in Part 10 of CTA 2010 (see sections 450 and 451 of that Act) (and a limited liability partnership is to be treated as a company for the purposes of that Part as applied by this subsection).

(7) For this purpose, where under section 450 of that Act “C” is a limited liability partnership, subsection (3) of that section has effect as if before (a) there were inserted—

(za) rights to a share of more than half the assets, or of more than half the income, of C,

Connection between charities: further provision

119

(1) This section applies if—

(a) a charity (“A”) is connected with another charity (“B”) for the purposes of section 102(1), and

(b) B is connected with another charity (“C”) for the purposes of section 102(1).

(2) A and C are also connected with one another for the purposes of section 102(1) (if that would not otherwise be the case).

(3) In subsection (1)—

(a) in paragraph (a) the reference to a charity being connected with another charity for the purposes of section 102(1) is to that charity being so connected by virtue of section 118 or this section, and

(b) in paragraph (b) the reference to a charity being connected with another charity for the purposes of section 102(1) is to that charity being so connected by virtue of section 118.

General interpretation

120

(1) In this Part (except where the contrary is indicated, expressly or by implication), expressions which are also used in Part 1 of the Contributions and Benefits Act have the same meaning as in that Part.

(2) In this Part—

“charity” has the meaning given by section 102(17) and (18);

“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

“company” has the meaning given by section 101(18);

“the Contributions and Benefits Act” means the Social Security Contributions and Benefits Act 1992 or (as the case requires) the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

“HMRC” means Her Majesty's Revenue and Customs;

“tax year” means the 12 months beginning with 6 April in 2017 or any subsequent year;

“tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

Regulations

121

(1) Regulations under this Part—

(a) may make different provision for different purposes;

(b) may include incidental, consequential, supplementary or transitional provision.

(2) Regulations under this Part are to be made by statutory instrument.

(3) A statutory instrument containing regulations under this Part is subject to annulment in pursuance of a resolution of the House of Commons.

(4) Subsection (3) does not apply to a statutory instrument containing only regulations under section 113(16).

PART 7 — VAT

VAT: power to provide for persons to be eligible for refunds

122

In Part 2 of VATA 1994 (reliefs, exemptions and repayments), after section 33D insert—

(33E) (1) This section applies where— (a) VAT is chargeable on— (i) the supply of goods or services to a specified person, (ii) the acquisition of any goods from another member State by a specified person, or (iii) the importation of any goods from a place outside the member States by a specified person, and (b) the supply, acquisition or importation is not for the purpose of— (i) any business carried on by the person, or (ii) a supply by the person which, by virtue of section 41A, is treated as a supply in the course or furtherance of a business. (2) If and to the extent that the Treasury so direct, the Commissioners shall, on a claim made by the specified person at such time and in such form and manner as the Commissioners may determine, refund to the person the amount of the VAT so chargeable. This is subject to subsection (3) below. (3) A specified person may not make a claim under subsection (2) above unless it has been agreed with the Treasury that, in the circumstances specified in the agreement, the amount of the person's funding is to be reduced by all or part of the amount of the VAT so chargeable. (4) A claim under subsection (2) above in respect of a supply, acquisition or importation must be made on or before the relevant day. (5) The “relevant day” is— (a) in the case of a person who is registered, the last day on which the person may make a return under this Act for the prescribed accounting period containing the last day of the financial year in which the supply is made or the acquisition or importation takes place; (b) in the case of a person who is not registered, the last day of the period of 3 months beginning immediately after the end of the financial year in which the supply is made or the acquisition or importation takes place. (6) Subsection (7) applies where goods or services supplied to, or acquired or imported by, a specified person otherwise than for the purpose of— (a) any business carried on by the person, or (b) a supply falling within subsection (1)(b)(ii) above, cannot be conveniently distinguished from goods or services supplied to, or acquired or imported by, the person for such a purpose. (7) The amount to be refunded under this section is such amount as remains after deducting from the whole of the VAT chargeable on any supply to, or acquisition or importation by, the specified person such proportion of that VAT as appears to the Commissioners to be attributable to the carrying on of the business or (as the case may be) the making of the supply. (8) In this section, “specified person” means a person specified in an order made by the Treasury. (9) An order under subsection (8) may make transitional provision or savings. (10) References in this section to VAT do not include any VAT which, by virtue of an order under section 25(7), is excluded from credit under section 25.

VAT: representatives and security

123

(1) Section 48 of VATA 1994 (VAT representatives) is amended in accordance with subsections (2) to (11).

(2) In the heading, at the end insert “ and security ”.

(3) In subsection (1)—

(a) for “Where” substitute “ Subsection (1ZA) applies where ”,

(b) in paragraph (c) after “residence” insert “ or permanent address ”, and

(4) After subsection (1) insert—

(1ZA) The Commissioners may direct the person to secure that there is a UK-established person who is— (a) appointed to act on the person's behalf in relation to VAT, and (b) registered against the name of the person in accordance with any regulations under subsection (4).

(5) In subsection (1B) for paragraphs (a) and (b) substitute—

(a) section 87 of the Finance Act 2011 (mutual assistance for recovery of taxes etc) and Schedule 25 to that Act; (b) section 173 of the Finance Act 2006 (international tax enforcement arrangements);

(6) In subsection (2)—

(a) in paragraph (a), for the words from “required” to “VAT” substitute “ given a direction under subsection (1ZA) ”,

(b) in paragraph (b) for “that subsection” substitute “ subsection (1) ”, and

(7) In subsection (2A) for “(1)” substitute “ (1ZA) ”.

(8) In subsection (4)—

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

(b) after paragraph (b) insert—

(c) give the Commissioners power to refuse to register a person as a VAT representative, or to cancel a person's registration as a VAT representative, in such circumstances as may be specified in the regulations.

(9) In subsection (7) for the words from the beginning to the first “him” substitute “ The Commissioners may require a person in relation to whom the conditions specified in paragraphs (a), (b) and (c) of subsection (1) are satisfied ”.

(10) After subsection (7A) insert—

(7B) A direction under subsection (1ZA)— (a) may specify a time by which it (or any part of it) must be complied with; (b) may be varied; (c) continues to have effect (subject to any variation) until it is withdrawn or the conditions specified in subsection (1) are no longer satisfied. (7C) A requirement under subsection (7)— (a) may specify a time by which it (or any part of it) must be complied with; (b) may be varied; (c) continues to have effect (subject to any variation) until it is withdrawn.

(11) After subsection (8) insert—

(8A) For the purposes of subsections (1ZA) and (2)— (a) a person is UK-established if the person is established, or has a fixed establishment, in the United Kingdom, and (b) an individual is also UK-established if the person's usual place of residence or permanent address is in the United Kingdom.

(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VAT: joint and several liability of operators of online marketplaces

124

(1) VATA 1994 is amended in accordance with subsections (2) to (4).

(2) After section 77A insert—

(77B) (1) This section applies where a person (“P”) who is not UK-established— (a) makes taxable supplies of goods through an online marketplace, and (b) fails to comply with any requirement imposed on P by or under this Act (whether or not it relates to those supplies). (2) The Commissioners may give the person who is the operator of the online marketplace (“the operator”) a notice— (a) stating that, unless the operator secures the result mentioned in subsection (3), subsection (5) will apply, and (b) explaining the effect of subsection (5). (3) The result referred to in subsection (2)(a) is that P does not offer goods for sale through the online marketplace at any time between— (a) the end of such period as may be specified in the notice, and (b) the notice ceasing to have effect. (4) If the operator does not secure the result mentioned in subsection (3), subsection (5) applies. (5) The operator is jointly and severally liable to the Commissioners for the amount of VAT payable by P in respect of all taxable supplies of goods made by P through the online marketplace in the period for which the notice has effect. (6) A notice under subsection (2) (“the liability notice”) has effect for the period beginning with the day after the day on which it is given, and ending— (a) with the day specified in a notice given by the Commissioners under subsection (7), or (b) in accordance with subsection (8). (7) The Commissioners may at any time give the operator a notice stating that the period for which the liability notice has effect ends with the day specified in the notice. (8) If the person to whom the liability notice is given ceases to be the operator of the online marketplace, the liability notice ceases to have effect at the end of— (a) the day on which the person ceases to be the operator, or (b) (if later) the day on which the person notifies the Commissioners that the person is no longer the operator. (9) In this section— - “online marketplace” means a website, or any other means by which information is made available over the internet, through which persons other than the operator are able to offer goods for sale (whether or not the operator also does so); - “operator”, in relation to an online marketplace, means the person who controls access to, and the contents of, the online marketplace. (10) For the purposes of this section a person is “UK-established” if the person is established in the United Kingdom within the meaning of Article 10 of Implementing Regulation (EU) No 282/2011. (11) The Treasury may by regulations provide that supplies made or goods offered for sale in circumstances specified in the regulations are, or are not, to be treated for the purposes of this section as having been made or offered through an online marketplace. (12) The Treasury may by regulations amend this section so as to alter the meaning of— - “online marketplace”, - “operator”, and - “UK-established”. (77C) (1) The Commissioners may assess the amount of VAT due from the operator of an online marketplace by virtue of section 77B to the best of their judgment and notify it to the operator. (2) Subject to subsections (3) to (6), an assessment may be made for such period or periods as the Commissioners consider appropriate. (3) An assessment for any month may not be made after the end of— (a) 2 years after the end of that month, or (b) (if later) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of an assessment for that month, comes to their knowledge. (4) Subsection (5) applies if, after the Commissioners have made an assessment for a period, evidence of facts sufficient in the opinion of the Commissioners to justify the making of a further assessment for that period comes to their knowledge. (5) The Commissioners may, no later than one year after that evidence comes to their knowledge, make a further assessment for that period (subject to subsection (6)). (6) An assessment or further assessment for a month may not be made more than 4 years after the end of the month. (7) An amount which has been assessed and notified to a person under this section is deemed to be an amount of VAT due from the person and may be recovered accordingly (unless, or except to the extent that, the assessment is subsequently withdrawn or reduced). (8) Subsection (7) is subject to the provisions of this Act as to appeals. (9) Expressions used in this section and in section 77B have the same meaning in this section as in section 77B. (77D) (1) If an amount assessed under section 77C is not paid before the end of the period of 30 days beginning with the day on which notice of the assessment is given, the amount assessed carries interest from the day on which the notice of assessment is given until payment. (2) Interest under this section is payable at the rate applicable under section 197 of the Finance Act 1996. (3) Where the operator of an online marketplace is liable for interest under this section the Commissioners may assess the amount due and notify it to the operator. (4) A notice of assessment under this section must specify a date (not later than the date of the notice) to which the interest is calculated. (5) A further assessment or assessments may be made under this section in respect of any interest accrued after that date. (6) An amount of interest assessed and notified to the operator of an online marketplace under this section is recoverable as if it were VAT due from the operator (unless, or except to the extent that, the assessment is withdrawn or reduced). (7) Interest under this section is to be paid without any deduction of income tax. (8) Expressions used in this section and in section 77B have the same meaning in this section as in section 77B.

(3) In section 83(1) (appeals) after paragraph (ra) insert—

(rb) an assessment under section 77C or the amount of such an assessment;

(4) In section 84 (further provision relating to appeals)—

(a) in subsection (3) after “(ra)” insert “ , (rb) ”, and

(b) in subsection (5) after “83(1)(p)” insert “ or (rb) ”.

VAT: Isle of Man charities

125

In Schedule 6 to FA 2010 (charities etc), in paragraph 2(2) (jurisdiction condition: meaning of “a relevant UK court”), after paragraph (c) (and on a new line) insert “ (and, for enactments relating to value added tax, includes the High Court of the Isle of Man). ”

VAT: women’s sanitary products

126

(1) VATA 1994 is amended as follows.

(2) In Schedule 7A (reduced rate)—

(a) in Part 1 (index), omit the entry relating to women's sanitary products;

(b) in Part 2 (the Groups), omit Group 4 (women's sanitary products).

(3) In Schedule 8 (zero-rating), in Part 1 (index), at the end insert—

Women's sanitary products	Group 19

(4) In Schedule 8, in Part 2 (the Groups), after Group 18 insert—

(1) The supply of women's sanitary products. NOTES (1) In this Group “women's sanitary products” means women's sanitary products of any of the following descriptions— (a) subject to Note (2), products that are designed, and marketed, as being solely for use for absorbing, or otherwise collecting, lochia or menstrual flow; (b) panty liners, other than panty liners that are designed as being primarily for use as incontinence products; (c) sanitary belts. (2) Note (1)(a) does not include protective briefs or any other form of clothing.

(5) The amendments made by this section have effect in relation to supplies made, and acquisitions and importations taking place, on or after such day as the Treasury may by regulations made by statutory instrument appoint.

(6) The date appointed under subsection (5) must not be after the later of—

(a) 1 April 2017, and

(b) the earliest date that may be appointed consistently with the United Kingdom's EU obligations.

PART 8 — SDLT and ATED

Stamp duty land tax

SDLT: calculating tax on non-residential and mixed transactions

127

(1) Section 55 of FA 2003 (general rules on calculating the amount of stamp duty land tax chargeable) is amended in accordance with subsections (2) to (7).

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

(3) In subsection (1B)—

(a) omit the words from “the relevant land” to “and”,

(b) in Step 1—

(i) for “Table A” substitute “ the appropriate table ”,

(ii) for “that Table” substitute “ the appropriate table ”,

(iii) at the end insert—

“The “appropriate table” is— (a) Table A, if the relevant land consists entirely of residential property, and (b) Table B, if the relevant land consists of or includes land that is not residential property.

, and

Relevant consideration	Percentage
So much as does not exceed £150,000	0%
So much as exceeds £150,000 but does not exceed £250,000	2%
The remainder (if any)	5%

(4) In subsection (1C)—

(a) omit the words from “the relevant land” to “and” (in the first place it occurs),

(b) in Step 1—

(i) for “Table A” substitute “ the appropriate table ”,

(ii) for “that Table” substitute “ the appropriate table ”,

(iii) at the end insert—

“The “appropriate table” is— (a) Table A, if the relevant land consists entirely of residential property, and (b) Table B, if the relevant land consists of or includes land that is not residential property.

(5) Omit subsection (2).

(6) In subsection (3)—

(a) in the words before paragraph (a), for “subsections (1B) and (2)” substitute “ subsection (1B) ”, and

(b) in paragraph (b) omit “, subject as follows”.

(7) In subsection (4)—

(a) in the words before paragraph (a), for the words from “subsections (1C)” to “linked transactions” substitute “ subsection (1C) ”, and

(b) in paragraph (a) for “those” substitute “ the linked ”.

(8) Schedule 5 to FA 2003 (rules on calculating the amount of stamp duty land tax chargeable in respect of transactions for which the consideration consists of or includes rent) is amended in accordance with subsections (9) to (11).

(9) In paragraph 2(3) (calculation of tax chargeable in respect of rent) in Table B (bands and percentages for non-residential or mixed property) for the final entry substitute—

Over £150,000 but not over £5 million	1%
Over £5 million	2%

(10) In paragraph 9 (tax chargeable in respect of consideration other than rent: general), in sub-paragraph (1), omit “(but see paragraph 9A)”.

(11) Omit paragraph 9A (calculation of tax chargeable in respect of consideration other than rent: 0% band) and the cross-heading preceding it.

(12) The amendments made by this section have effect in relation to any land transaction of which the effective date is, or is after, 17 March 2016.

(13) But those amendments do not have effect in relation to a transaction if the purchaser so elects and either—

(a) the transaction is effected in pursuance of a contract entered into and substantially performed before 17 March 2016, or

(b) the transaction is effected in pursuance of a contract entered into before that date and is not excluded by subsection (15).

(14) An election under subsection (13)—

(a) must be included in the land transaction return made in respect of the transaction or in an amendment of that return, and

(b) must comply with any requirements specified by the Commissioners for Her Majesty's Revenue and Customs as to its form or the manner of its inclusion.

(15) A transaction effected in pursuance of a contract entered into before 17 March 2016 is excluded by this subsection if—

(a) there is any variation of the contract, or assignment of rights under the contract, on or after 17 March 2016,

(b) the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or

(c) on or after that date there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.

(16) In this section—

“land transaction return”, in relation to a transaction, means the return under section 76 of FA 2003 in respect of that transaction;

“purchaser” has the same meaning as in Part 4 of that Act (see section 43(4) of that Act);

“substantially performed”, in relation to a contract, has the same meaning as in that Part (see section 44(5) of that Act).

SDLT: higher rates for additional dwellings etc

128

(1) FA 2003 is amended in accordance with subsections (2) to (4).

(2) In section 55 (amount of tax chargeable: general) after subsection (4) insert—

(4A) Schedule 4ZA (higher rates for additional dwellings and dwellings purchased by companies) modifies this section as it applies for the purpose of determining the amount of tax chargeable in respect of certain transactions involving major interests in dwellings.

(3) After Schedule 4 insert—

SCHEDULE 4ZA (1) (1) In its application for the purpose of determining the amount of tax chargeable in respect of a chargeable transaction which is a higher rates transaction, section 55 (amount of tax chargeable: general) has effect with the modification in sub-paragraph (2). (2) In subsection (1B) of section 55, for Table A substitute—

Relevant consideration	Percentage
So much as does not exceed £125,000	3%
So much as exceeds £125,000 but does not exceed £250,000	5%
So much as exceeds £250,000 but does not exceed £925,000	8%
So much as exceeds £925,000 but does not exceed £1,500,000	13%
The remainder (if any)	15%

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