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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

(30A) (1) In paragraph 5 of Schedule 34 (non-compliance with Part 7 of FA 2004), in sub-paragraph (4)— (a) paragraph (a) includes a reference to a decision having been made for corresponding NICs purposes that P is to be deemed not to have failed to comply with the provision concerned as P had a reasonable excuse for not doing the thing required to be done, and (b) the reference in paragraph (c) to a determination is to be read accordingly. (2) In this paragraph “corresponding NICs purposes” means the purposes of any provision of regulations under section 132A of SSAA 1992. (30B) (1) Schedule 34A (promoters of tax avoidance schemes: defeated arrangements) has effect with the following modifications. (2) References to an assessment (or an assessment to tax) include a NICs decision relating to a person's liability for relevant contributions. (3) References to adjustments include a payment in respect of a liability to pay relevant contributions (and the definition of “adjustments” in paragraph 24 accordingly has effect as if such payments were included in it). (4) In paragraph 9(3) the reference to an enquiry into a return includes a relevant contributions dispute (as defined in paragraph 6 of this Schedule). (5) In paragraph 28(3)— (a) paragraph (a) includes a reference to a decision having been made for corresponding NICs purposes that the person is to be deemed not to have failed to comply with the provision concerned as the person had a reasonable excuse for not doing the thing required to be done, and (b) the reference in paragraph (c) to a determination is to be read accordingly. “Corresponding NICs purposes” means the purposes of any provision of regulations under section 132A of SSAA 1992.

(19) In paragraph 31 (interpretation)—

(a) before paragraph (a) insert—

(za) NICs decision” means a decision under section 8 of SSC(TF)A 1999 or Article 7 of the Social Security Contributions (Transfer of Functions, etc) (Northern Ireland) Order 1999 (SI 1999/671);

(b) in paragraph (b), for “are to sections of” substitute “ or Schedules are to sections of, or Schedules to ”.

(20) For the purposes of sections 237A and 241A of FA 2014, a defeat (by virtue of any of Conditions A to F in Schedule 34A to that Act) of arrangements is treated as not having occurred if—

(a) there has been a final judicial ruling on or before the day on which this Act is passed as a result of which the counteraction referred to in paragraph 11(d), 12(1)(b), 13(1)(d), 14(1)(d) or 15(1)(d) (as the case may be) is final for the purposes of Schedule 34A of that Act, or

(b) (in the case of a defeat by virtue of Condition F in Schedule 34A) the judicial ruling mentioned in paragraph 16(1)(d) of that Schedule becomes final on or before the day on which this Act is passed.

(21) Subsection (20) does not apply in relation to a person (who is carrying on a business as a promoter) if at any time after 17 July 2014 that person or an associated person takes action as a result of which the person taking the action—

(a) becomes a promoter in relation to the arrangements, or arrangements related to those arrangements, or

(b) would have become a promoter in relation to arrangements mentioned in paragraph (a) had the person not already been a promoter in relation to those arrangements.

(22) For the purposes of sections 237A and 241A of FA 2014, a defeat of arrangements is treated as not having occurred if it would (ignoring this sub-paragraph) have occurred—

(a) on or before the first anniversary of the day on which this Act is passed, and

(b) by virtue of any of Conditions A to E in Schedule 34A to FA 2014, but otherwise than as a result of a final judicial ruling.

(23) For the purposes of subsection (21) a person (“Q”) is an “associated person” in relation to another person (“P”) at any time when any of the following conditions is met—

(a) P is a relevant body which is controlled by Q;

(b) Q is a relevant body, P is not an individual and Q is controlled by P;

(24) In subsection (23) “relevant body” and “control” are to be interpreted in accordance with paragraph 19 of Schedule 34A to FA 2014.

(25) In subsections (20) to (22) expressions used in Part 5 of FA 2014 (as amended by this section) have the same meaning as in that Part.

Large businesses: tax strategies and sanctions for persistently unco-operative behaviour

161

(1) Schedule 19 contains provisions relating to—

(a) the publication of tax strategies by bodies which are or are part of a large business,

(b) the imposition of sanctions for such bodies where there has been persistent unco-operative behaviour.

(2) That Schedule, so far as relating to the publication of a tax strategy for a financial year of a relevant body or other entity, has effect only where the financial year begins on or after the day on which this Act is passed.

(3) An officer of HMRC may not give a warning notice under Part 3 of that Schedule to a relevant body or other entity before the beginning of its first financial year beginning on or after the day on which this Act is passed.

(4) In this section and Schedule 19 “HMRC” means Her Majesty's Revenue and Customs.

Offshore activities

Penalties for enablers of offshore tax evasion or non-compliance

162

(1) Schedule 20 makes provision for penalties for persons who enable offshore tax evasion or non-compliance by other persons.

(2) Subsection (1) and that Schedule come into force on such day as the Treasury may appoint by regulations made by statutory instrument.

(3) Regulations under this section may—

(a) commence a provision generally or only for specified purposes,

(b) appoint different days for different purposes, and

(c) make supplemental, incidental and transitional provision in connection with the coming into force of any provision of the Schedule.

Penalties in connection with offshore matters and offshore transfers

163

(1) Schedule 21 contains provisions amending—

(a) Schedule 24 to FA 2007 (penalties for errors in tax returns etc),

(b) Schedule 41 to FA 2008 (penalties for failure to notify etc), and

(2) That Schedule comes into force on such day as the Treasury may by regulations made by statutory instrument appoint.

(3) Regulations under this section may—

(a) commence a provision generally or only for specified purposes,

(b) appoint different days for different provisions or for different purposes, and

Offshore tax errors etc: publishing details of deliberate tax defaulters

164

(1) Section 94 of FA 2009 (publishing details of deliberate tax defaulters) is amended as follows.

(2) After subsection (4), insert—

(4A) Subsection (4B) applies where a person who is a body corporate or a partnership has incurred— (a) a penalty under paragraph 1 of Schedule 24 to FA 2007 in respect of a deliberate inaccuracy which involves an offshore matter or an offshore transfer (within the meaning of paragraph 4A of that Schedule), or (b) a penalty under paragraph 1 of Schedule 41 to FA 2008 in respect of a deliberate failure which involves an offshore matter or an offshore transfer (within the meaning of paragraph 6A of that Schedule). (4B) The Commissioners may publish the information mentioned in subsection (4) in respect of any individual who— (a) controls the body corporate or the partnership (within the meaning of section 1124 of CTA 2010), and (b) has obtained a tax advantage as a result of the inaccuracy or failure. (4C) Subsection (4D) applies where one or more trustees of a settlement have incurred— (a) a penalty under paragraph 1 of Schedule 24 to FA 2007 in respect of a deliberate inaccuracy which involves an offshore matter or an offshore transfer (within the meaning of paragraph 4A of that Schedule), or (b) a penalty under paragraph 1 of Schedule 41 to FA 2008 in respect of a deliberate failure which involves an offshore matter or an offshore transfer (within the meaning of paragraph 6A of that Schedule). (4D) The Commissioners may publish the information mentioned in subsection (4) in respect of any trustee who is an individual and who has obtained a tax advantage as a result of the inaccuracy or failure.

(3) In subsection (6), after “information” insert “ about a person under subsection (1), ”.

(4) After subsection (6), insert—

(6A) Before publishing any information about an individual under subsection (4B) or (4D), the Commissioners— (a) must inform the individual that they are considering doing so, and (b) afford the individual reasonable opportunity to make representations about whether it should be published.

(5) In subsection (10)—

(a) omit the word “or” at the end of paragraph (a), and after that paragraph insert—

(aa) paragraph 10A of that Schedule to the full extent permitted following an unprompted disclosure,

;

(b) after paragraph (b) insert

, or (c) paragraph 13A of that Schedule to the full extent permitted following an unprompted disclosure.

(6) For subsection (16) substitute—

(16) In this section— - “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs; - “tax advantage” has the meaning given by section 208 of FA 2013.

(7) The amendments made by this section come into force on such day as the Treasury may by regulations made by statutory instrument appoint.

Asset-based penalties for offshore inaccuracies and failures

165

(1) Schedule 22 contains provision imposing asset-based penalties on certain taxpayers who have been charged a penalty for deliberate offshore inaccuracies and failures.

(2) That Schedule comes into force on such day as the Treasury may by regulations made by statutory instrument appoint.

(3) Regulations under subsection (2) may—

(a) commence a provision generally or only for specified purposes,

(b) appoint different days for different provisions or for different purposes, and

Offences relating to offshore income, assets and activities

166

(1) After section 106A of TMA 1970 insert—

(106B) (1) A person who is required by section 7 to give notice of being chargeable to income tax or capital gains tax (or both) for a year of assessment and who has not given that notice by the end of the notification period commits an offence if— (a) the tax in question is chargeable (wholly or in part) on or by reference to offshore income, assets or activities, and (b) the total amount of income tax and capital gains tax that is chargeable for the year of assessment on or by reference to offshore income, assets or activities exceeds the threshold amount. (2) It is a defence for a person accused of an offence under this section to prove that the person had a reasonable excuse for failing to give the notice required by section 7. (3) In this section “the notification period” has the same meaning as in section 7 (see subsection (1C) of that section). (106C) (1) A person who is required by a notice under section 8 to make and deliver a return for a year of assessment commits an offence if— (a) the return is not delivered by the end of the withdrawal period, (b) an accurate return would have disclosed liability to income tax or capital gains tax (or both) that is chargeable for the year of assessment on or by reference to offshore income, assets or activities, and (c) the total amount of income tax and capital gains tax that is chargeable for the year of assessment on or by reference to offshore income, assets or activities exceeds the threshold amount. (2) It is a defence for a person accused of an offence under this section to prove that the person had a reasonable excuse for failing to deliver the return. (3) In this section “the withdrawal period” has the same meaning as in section 8B (see subsection (6) of that section). (106D) (1) A person who is required by a notice under section 8 to make and deliver a return for a year of assessment commits an offence if, at the end of the amendment period— (a) the return contains an inaccuracy the correction of which would result in an increase in the amount of income tax or capital gains tax (or both) that is chargeable for the year of assessment on or by reference to offshore income, assets or activities, and (b) the amount of that increase exceeds the threshold amount. (2) It is a defence for a person accused of an offence under this section to prove that the person took reasonable care to ensure that the return was accurate. (3) In this section “the amendment period” means the period for amending the return under section 9ZA. (106E) (1) A person is not guilty of an offence under section 106B, 106C or 106D if the capacity in which the person is required to give the notice or make and deliver the return is— (a) as a relevant trustee of a settlement, or (b) as the executor or administrator of a deceased person. (2) The Treasury may by regulations provide that a person is not guilty of an offence under section 106B, 106C or 106D if— (a) conditions specified in the regulations are met, or (b) circumstances so specified exist. (3) The conditions may (in particular) include conditions in relation to the income, assets or activities on or by reference to which the tax in question is chargeable. (106F) (1) Where a period of time is extended under subsection (2) of section 118 by HMRC, the tribunal or an officer (but not where a period is otherwise extended under that subsection), any reference in section 106B, 106C or 106D to the end of the period is to be read as a reference to the end of the period as so extended. (2) The Treasury may by regulations specify the amount (which must not be less than £25,000) that is to be the threshold amount for the purposes of sections 106B to 106D. (3) The Treasury may by regulations make provision as to the calculation for the purposes of sections 106B to 106D of— (a) the amount of tax that is chargeable on or by reference to offshore income, assets or activities, and (b) the increase in the amount of tax that is so chargeable as a result of correcting an inaccuracy. (4) In sections 106B to 106D and this section “offshore income, assets or activities” means— (a) income arising from a source in a territory outside the United Kingdom, (b) assets situated or held in a territory outside the United Kingdom, or (c) activities carried on wholly or mainly in a territory outside the United Kingdom. (5) In subsection (4), “assets” has the meaning given in section 21(1) of the 1992 Act, but also includes sterling. (106G) (1) A person guilty of an offence under section 106B, 106C or 106D is liable on summary conviction— (a) in England and Wales, to a fine or to imprisonment for a term not exceeding 51 weeks or to both, and (b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale or to imprisonment for a term not exceeding 6 months or to both. (2) In relation to an offence committed before the coming into force of section 281(5) of the Criminal Justice Act 2003, the reference in subsection (1)(a) to 51 weeks is to be read as a reference to 6 months. (106H) (1) This section makes provision about regulations under sections 106E and 106F. (2) If the regulations contain a reference to a document or any provision of a document and it appears to the Treasury that it is necessary or expedient for the reference to be construed as a reference to that document or that provision as amended from time to time, the regulations may make express provision to that effect. (3) The regulations— (a) may make different provision for different cases, and (b) may include incidental, supplemental, consequential and transitional provision and savings. (4) The regulations are to be made by statutory instrument. (5) An instrument containing the regulations is subject to annulment in pursuance of a resolution of the House of Commons.

(2) The amendment made by this section comes into force on such day as the Treasury may by regulations made by statutory instrument appoint.

(3) The regulations—

(a) may appoint different days for different purposes, and

(b) may include incidental, supplemental, consequential and transitional provision and savings.

(4) The amendment made by this section does not have effect in relation to—

(a) a failure to give a notice required by section 7 of TMA 1970,

(b) a failure to make and deliver a return required by section 8 of TMA 1970, or

if the notice or return relates to a tax year before that in which the amendment comes into force.

PART 11 — Administration, enforcement and supplementary powers

Assessment and returns

Simple assessments

167

(1) Schedule 23 contains provisions about simple assessments by HMRC.

(2) Paragraphs 1 to 8 of that Schedule have effect in relation to the 2016-17 tax year and subsequent years.

(3) Paragraph 9 of that Schedule comes into force on such day as the Treasury may appoint by regulations made by statutory instrument.

(4) Regulations under subsection (3) may—

(a) commence paragraph 9 generally or only for specified purposes, and

(b) appoint different days for different purposes.

Time limit for self assessment tax returns

168

(1) TMA 1970 is amended as follows.

(2) In section 34 (ordinary time limit of 4 years for assessments), after subsection (2) insert—

(3) In this section “assessment” does not include a self-assessment.

(3) After that section insert—

(34A) (1) Subject to subsections (2) and (3), a self assessment contained in a return under section 8 or 8A may be made and delivered at any time not more than 4 years after the end of the year of assessment to which it relates. (2) Nothing in subsection (1) prevents— (a) a person who has received a notice under section 8 or 8A within that period of 4 years from delivering a return including a self-assessment within the period of 3 months beginning with the date of the notice, (b) a person in respect of whom a determination under section 28C has been made from making a self-assessment in accordance with that section within the period allowed by subsection (5)(a) or (b) of that section. (3) Subsection (1) has effect subject to the following provisions of this Act and to any other provisions of the Taxes Acts allowing a longer period in any particular class of case. (4) This section has effect in relation to self-assessments for a year of assessment earlier than 2012-13 as if— (a) in subsection (1) for the words from “not more” to the end there were substituted “ on or before 5 April 2017 ”, and (b) in subsection (2)(a) for the words “within that period of 4 years” there were substituted “ on or before 5 April 2017. ”

HMRC power to withdraw notice to file a tax return

169

(1) Section 8B of TMA 1970 (withdrawal of notice under section 8 or 8A) is amended as follows.

(2) In subsection (2) for the words from “the person” to the end substitute “ HMRC may withdraw the notice (whether at the request of the person or otherwise) ”.

(3) In subsection (3) for “no request may be made” substitute “ the notice may not be withdrawn ”.

(4) In subsection (4) omit “, on receiving a request,”.

(5) In subsection (6)(b) for “agree with the person” substitute “ determine ”.

(6) In paragraph 17A of Schedule 55 to the Finance Act 2009 (penalty for failure to make returns etc), in sub-paragraph (1)(b) for the words from the beginning to “withdraw” substitute “ HMRC decide to give P a notice under section 8B withdrawing ”.

(7) The amendments made by this section have effect in relation to any notice under section 8 or 8A of TMA 1970 given in relation to the 2014-15 tax year or any subsequent year (and it is immaterial whether the notice was given before or after the passing of this Act).

Judgment debts

Rate of interest applicable to judgment debts etc: Scotland

170

(1) This section applies if—

(a) a sum is payable to or by the Commissioners under a decree or extract issued in any court proceedings relating to a taxation matter (a “tax-related judgment debt”), and

(b) interest in relation to the tax-related judgment debt is included in or payable under the decree or extract.

(2) In a case where the rate of interest in relation to the tax-related judgment debt is stated in the decree or extract, the rate stated in relation to that debt may not exceed (and may not be capable of exceeding)—

(a) in the case of a sum payable to the Commissioners, the late payment interest rate, and

(b) in the case of a sum payable by the Commissioners, the special repayment rate.

(3) In a case where the rate of interest in relation to the tax-related judgment debt is not stated in the decree or extract but provided for by an enactment or rule of court (whenever passed or made), that enactment or rule is to have effect in relation to the debt as if for the rate for which it provides there were substituted—

(a) in the case of a sum payable to the Commissioners, the late payment interest rate, and

(b) in the case of a sum payable by the Commissioners, the special repayment rate.

(4) This section has effect in relation to interest for periods beginning on or after the day on which this Act is passed, regardless of—

(a) the date of the decree or extract in question, and

(b) whether interest begins to run on or after the day on which this Act is passed, or began to run before that date.

(5) In this section—

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

“enactment” includes an Act of the Scottish Parliament or an instrument made under such an Act;

“late payment interest rate” means the rate provided for in regulations made by the Treasury under section 103(1) of FA 2009;

“special repayment rate” has the same meaning as in section 52 of F(No.2)A 2015 (and subsections (7) to (10) of that section apply for the purposes of this section as they apply for the purposes of that section);

“taxation matter” means anything the collection and management of which is the responsibility of the Commissioners (or was the responsibility of the Commissioners of Inland Revenue or Commissioners of Customs and Excise);

“working day” means any day other than a non-business day as defined in section 92 of the Bills of Exchange Act 1882.

(6) This section extends to Scotland only.

Rate of interest applicable to judgment debts etc: Northern Ireland

171

(1) This section applies if a sum payable to or by the Commissioners under a judgment or order given or made in any court proceedings relating to a taxation matter (a “tax-related judgment debt”) carries interest.

(2) In a case where the rate of interest is specified in the judgment (in the case of the High Court) or directed by the judge (in the case of a county court), the rate specified or directed in relation to that debt may not exceed (and may not be capable of exceeding)—

(a) in the case of a sum payable to the Commissioners, the late payment interest rate, and

(b) in the case of a sum payable by the Commissioners, the special repayment rate.

(3) In a case where the rate of interest in relation to the tax-related judgment debt is not specified in the judgment or directed by the judge but provided for by an enactment or rule of court (whenever passed or made), that enactment or rule is to have effect in relation to the debt as if for the rate for which it provides there were substituted—

(a) in the case of a sum payable to the Commissioners, the late payment interest rate, and

(b) in the case of a sum payable by the Commissioners, the special repayment rate.

(4) This section has effect in relation to interest for periods beginning on or after the day on which this Act is passed, regardless of—

(a) the date of the judgment or order in question, and

(b) whether interest begins to run on or after the day on which this Act is passed, or began to run before that date.

(5) In this section—

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

“enactment” includes Northern Ireland legislation or an instrument made under such legislation;

“late payment interest rate” means the rate provided for in regulations made by the Treasury under section 103(1) of FA 2009;

“special repayment rate” has the same meaning as in section 52 of F(No.2) A 2015 (and subsections (7) to (10) of that section apply for the purposes of this section as they apply for the purposes of that section);

“taxation matter” means anything the collection and management of which is the responsibility of the Commissioners (or was the responsibility of the Commissioners of Inland Revenue or Commissioners of Customs and Excise);

“working day” means any day other than a non-business day as defined in section 92 of the Bills of Exchange Act 1882.

(6) This section extends to Northern Ireland only.

Rate of interest applicable to judgment debts etc: England and Wales

172

(1) In section 52 of F(No. 2)A 2015 (rates of interest applicable to judgment debts etc in taxation matters: England and Wales), in subsection (15), in the definition of “taxation matter” omit “, other than national insurance contributions,”.

(2) This section has effect in relation to interest for periods beginning on or after the day on which this Act is passed, regardless of—

(a) the date of the judgment or order in question, and

(b) whether interest begins to run on or after the day on which this Act is passed, or began to run before that date.

(3) This section extends to England and Wales only.

Enforcement powers

Gift aid: power to impose penalties on charities and intermediaries

173

(1) At the end of section 428 of ITA 2007 insert—

(5) The regulations may also make provision— (a) for the imposition of a penalty of a specified amount (which must not exceed £3000) for a failure to comply with a specified requirement imposed by the regulations, (b) for the assessment and recovery of the penalty (which may include provision about the reduction of the penalty in specified circumstances), and (c) conferring a right of appeal against a decision that a penalty is payable.

(2) The amendment made by this section comes into force on such day as the Treasury may by regulations made by statutory instrument appoint.

Proceedings under customs and excise Acts: prosecuting authority

174

(1) Part 11 of CEMA 1979 (arrest of persons, forfeiture and legal proceedings) is amended as set out in subsections (2) and (3).

(2) In section 146A(7) (definition of prosecuting authority)—

(a) in the opening words, for “prosecution” substitute “ prosecuting ”;

(b) in paragraph (b), omit “the Commissioners or”;

(3) In section 150(1) (joint and several liability), for the words from “the Director” to “Ireland)” substitute “ prosecuting authority (within the meaning of section 146A) ”.

(4) In consequence of subsection (3), in Schedule 4 to the Commissioners for Revenue and Customs Act 2005, omit paragraph 25.

(5) The amendments made by this section apply in relation to proceedings commenced on or after the day on which this Act is passed.

Detention and seizure under CEMA 1979: notice requirements etc

175

(1) CEMA 1979 is amended as follows.

(2) Schedule 2A (detention of things as liable to forfeiture) is amended as set out in subsections (3) and (4).

(3) In paragraph 3(2) (exceptions to requirement of notice of detention)—

(a) omit the “or” at the end of paragraph (b), and after that paragraph insert—

(ba) a person who has (or appears to have) possession or control of the thing being detained,

;

(b) in paragraph (c), after “on” insert “ or from ”;

, or (d) in the case of any thing detained on or from a vehicle, the driver of the vehicle.

(4) In paragraph 4(2) (unauthorised removal or disposal of things detained: definition of “responsible person”), for paragraphs (a) and (b) substitute—

(a) the person whose offence or suspected offence occasioned the detention, (b) the owner or any of the owners of the thing detained or any servant or agent of such an owner, (c) a person who has (or appears to have) possession or control of the thing being detained, (d) in the case of any thing detained on a ship or aircraft, the master or commander, (e) in the case of any thing detained on a vehicle, the driver of the vehicle, or (f) a person whom the person who detains the thing reasonably believes to be a person within any of paragraphs (a) to (e).

(5) In Schedule 3 (seizure and forfeiture), in paragraph 1(2) (exceptions to requirement of notice of seizure)—

(a) after paragraph (b) insert—

(ba) a person who has (or appears to have) possession or control of the thing being seized; or

;

(b) in paragraph (c), for “in” substitute “ on or from ”;

; or (d) in the case of any thing seized on or from a vehicle, the driver of the vehicle.

(6) The amendments made by this section have effect in relation to things detained or seized on or after the day on which this Act is passed.

Data-gathering powers: providers of payment or intermediary services

176

(1) In Part 2 of Schedule 23 to FA 2011 (data-gathering powers: relevant data-holders), after paragraph 13A insert—

(13B) (1) A person who provides electronic stored-value payment services is a relevant data-holder. (2) In this paragraph “electronic stored-value payment services” means services by means of which monetary value is stored electronically for the purpose of payments being made in respect of transactions to which the provider of those services is not a party. (13C) (1) A person who— (a) provides services to enable or facilitate transactions between suppliers and their customers or clients (other than services provided solely to enable payments to be made), and (b) receives information about such transactions in the course of doing so, is a relevant data-holder. (2) In this paragraph “suppliers” means persons supplying goods or services in the course of business. (3) For the purposes of this paragraph, information about transactions includes information that is capable of indicating the likely quantity or value of transactions.

(2) This section applies in relation to relevant data with a bearing on any period (whether before, on or after the day on which this Act is passed).

Data-gathering powers: daily penalties for extended default

177

(1) Part 4 of Schedule 23 to FA 2011 (data-gathering powers: penalties) is amended as follows.

(2) In paragraph 38 (increased daily default penalty)—

(a) in sub-paragraphs (1)(c) and (2), for “imposed” substitute “ assessable ”;

(b) for sub-paragraphs (3) and (4) substitute—

(3) If the tribunal decides that an increased daily penalty should be assessable— (a) the tribunal must determine the day from which the increased daily penalty is to apply and the maximum amount of that penalty (“the new maximum amount”); (b) from that day, paragraph 31 has effect in the data-holder's case as if “the new maximum amount” were substituted for “£60”. (4) The new maximum amount may not be more than £1,000.

;

(3) In paragraph 39—

(a) in sub-paragraph (1), for “a data-holder becomes liable to a penalty” substitute “ the tribunal makes a determination ”;

(b) in sub-paragraph (2), for “the day from which the increased penalty is to apply” substitute “ new maximum amount and the day from which it applies ”;

(4) In paragraph 40 (enforcement of penalties), in sub-paragraph (2)(a) omit “or 39”.

(5) At the end of paragraph 36 (right to appeal against penalty), the existing text of which becomes sub-paragraph (1), insert—

(2) But sub-paragraph (1)(b) does not give a right of appeal against the amount of an increased daily penalty payable by virtue of paragraph 38.

Payment

Extension of provisions about set-off to Scotland

178

(1) Sections 130 and 131 of FA 2008 (which deal with the availability of set-off in England and Wales and Northern Ireland) extend also to Scotland.

(2) Accordingly, those sections are amended as follows.

(3) In section 130—

(a) omit subsection (10), and

(b) in the heading omit “: England and Wales and Northern Ireland”.

(4) In section 131—

(a) in subsection (5), in paragraph (a), after “winding up order” insert “ or award of sequestration ”,

(b) in that subsection, omit the “or” at the end of paragraph (d) and after paragraph (e) insert

, or (f) that person's estate becomes vested in any other person as that person's trustee under a trust deed (within the meaning of the Bankruptcy (Scotland) Act 1985).

, and

Raw tobacco

Raw tobacco approval scheme

179

(1) After section 8J of TPDA 1979 insert—

(8K) (1) The following definitions apply for the purposes of sections 8L to 8U. (2) “Raw tobacco” means the leaves or any other part of a plant of the genus Nicotiana but does not include— (a) any part of a living plant, or (b) a tobacco product. (3) “Controlled activity” means any activity involving raw tobacco. (8L) (1) A person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under this section. (2) The Commissioners may approve a person to carry on a controlled activity only if satisfied that— (a) the person is a fit and proper person to carry on the activity, and (b) the activity will not be carried on for the purpose of, or with a view to, the fraudulent evasion of the duty of excise charged on tobacco products under section 2(1). (3) An approval may— (a) specify the period of approval, and (b) be subject to conditions or restrictions. (4) The Commissioners may at any time for reasonable cause revoke or vary the terms of an approval. (8M) The Commissioners may, by or under regulations, make provision— (a) regulating the approval of persons under section 8L, (b) about the form, manner and content of an application for approval, (c) specifying conditions or restrictions to which an approval is subject, (d) regulating the variation or revocation of an approval, or of any condition or restriction to which an approval is subject, and (e) about the surrender or transfer of an approval. (8N) (1) The Commissioners may by regulations provide that section 8L(1) does not apply in relation to a person (an “exempt person”) who— (a) carries on any controlled activity, or a controlled activity of a specified description, and (b) meets the conditions (if any) specified by or under the regulations. (2) The regulations may require an exempt person to comply with specified requirements or restrictions relating to the carrying on of a controlled activity. (3) The regulations may, in particular— (a) specify the maximum quantity of raw tobacco that may be involved in a controlled activity carried on by an exempt person; (b) require an exempt person to keep records relating to the activity. (8O) (1) A person who contravenes section 8L(1) is liable to a penalty of an amount equal to the amount of duty that would be charged on the relevant quantity of smoking tobacco. (2) A person who contravenes a requirement or restriction imposed by regulations under section 8N is liable to a penalty of— (a) £250, or (b) if less, an amount equal to the amount of duty that would be charged on the relevant quantity of smoking tobacco. (3) The relevant quantity of smoking tobacco is equal to the quantity by weight of the raw tobacco in respect of which the controlled activity contravening section 8L(1) or (as the case may be) regulations under section 8N has been carried on. (4) In this section a reference to “smoking tobacco” is a reference to tobacco products within section 1(1)(d) (“other smoking tobacco”). (8P) (1) If the Commissioners think it right because of special circumstances, they may reduce a penalty under section 8O. (2) In subsection (1) “special circumstances” does not include ability to pay. (3) In subsection (1) the reference to reducing a penalty includes a reference to— (a) staying a penalty, and (b) agreeing a compromise in relation to proceedings for a penalty. (8Q) (1) Where a person becomes liable for a penalty under section 8O— (a) the Commissioners may assess the penalty, and (b) if they do so, they must notify the person liable. (2) A notice under subsection (1)(b) must state the contravention in respect of which the penalty is assessed. (3) A penalty payable under section 8O must be paid before the end of the period of 30 days beginning with the day on which the notification of the penalty is issued. (4) An assessment is to be treated as an amount of duty due from the person liable for the penalty and may be recovered accordingly. (5) An assessment may not be made later than one year after evidence of facts sufficient in the opinion of the Commissioners to indicate the contravention comes to their knowledge. (6) Two or more contraventions may be treated by the Commissioners as a single contravention for the purposes of assessing a penalty payable under section 8O. (8R) (1) A person is not liable to a penalty under section 8O in respect of a contravention if— (a) the contravention is not deliberate, and (b) the person satisfies the Commissioners that there is a reasonable excuse for the contravention. (2) For the purposes of subsection (1)(b)— (a) where the person relies on another person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the contravention; (b) where the person had a reasonable excuse for the relevant act or failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the contravention is remedied without unreasonable delay after the excuse has ceased. (8S) A person is not liable to a penalty under section 8O in respect of a contravention in respect of which the person has been convicted of an offence. (8T) Where a person carries on a controlled activity in relation to raw tobacco in contravention of section 8L(1) or a requirement or restriction imposed by regulations under section 8N, the raw tobacco is liable to forfeiture. (8U) The Commissioners may by regulations provide that specified provisions of the Customs and Excise Management Act 1979 apply (with or without modification)— (a) in relation to persons who carry on controlled activities as they apply in relation to revenue traders whose trade or business relates to tobacco products, and (b) in relation to raw tobacco as they apply in relation to tobacco products.

(2) In section 9 of TPDA 1979 (regulations)—

(a) in subsection (1), after “statutory instrument and” insert “ , subject to subsection (1A), ”, and

(b) after subsection (1) insert—

(1A) A statutory instrument containing regulations under section 8M, 8N or 8U is subject to annulment in pursuance of a resolution of the House of Commons.

(3) In section 13A(2) of FA 1994 (customs and excise reviews and appeals: “relevant decisions”), after paragraph (g) insert—

(gb) any decision by HMRC that a person is liable to a penalty, or as to the amount of the person's liability, under section 8O of the Tobacco Products Duty Act 1979;

(4) In Schedule 5 to FA 1994 (decisions subject to review and appeal) after paragraph 5 insert—

(5A) Any decision— (a) to refuse an approval under section 8L of the Tobacco Products Duty Act 1979 (raw tobacco: approval to carry on a controlled activity); (b) to impose a condition or restriction on, or to revoke or vary the terms of, an approval under that section.

(5) The amendments made by this section come into force on such day as the Commissioners for Her Majesty's Revenue and Customs may by regulations made by statutory instrument appoint.

(6) Regulations under subsection (5) may appoint different days for different purposes.

State aids granted through provision of tax advantages

Powers to obtain information about certain tax advantages

180

(1) The powers conferred by this section are only exercisable for the purpose of complying (or enabling another person to comply) with relevant EU obligations.

(2) The Commissioners may determine that claims made for a tax advantage of a description listed in Part 1 of Schedule 24 must include (or be accompanied by) such information, presented in such form, as the determination may specify.

(3) For the purposes of subsection (2) “information” includes—

(a) information about the claimant (or the claimant's activities),

(b) information about the subject-matter of the claim, and

(4) A determination under subsection (2)—

(a) may make different provision for different descriptions of tax advantages or for different cases or circumstances, and

(b) may be revoked or amended by another determination.

(5) Subsection (6) applies where it appears to the Commissioners that a tax advantage of a description listed in Part 2 of Schedule 24—

(a) has been given, or

(b) may be given in the future.

(6) The Commissioners may give the relevant person a notice requiring the person—

(a) to supply the Commissioners with the information specified in the request, and

(b) if the notice so provides, to present it in the form specified in the request.

(7) The relevant person must comply with those requirements within the period specified in the notice.

(8) In subsections (6) and (7) “the relevant person”, in relation to a tax advantage of any description, means the person mentioned in the third column of the entry for that tax advantage in Part 2 of Schedule 24.

(9) For the purposes of subsection (6) “information” includes—

(a) information about—

(i) the person to whom the request is given (or their activities),

(ii) any other person who is the beneficiary of the tax advantage,

(b) information about the tax advantage (including the circumstances in which it was obtained), and

(c) any other information which relates to the grant of state aid through the provision of the tax advantage in question.

(10) A determination under subsection (2) may not apply to claims made before 1 July 2016.

(11) A notice under subsection (6) may relate to any information required by the Commissioners for the purpose mentioned in subsection (1) (including information which relates to matters arising before this Act is passed).

Power to publish state aid information

181

(1) The Commissioners may publish any state aid information for the purpose of securing compliance with any relevant EU obligation which requires the publication of that information.

(2) That power includes power to disclose state aid information to another person for the purpose of securing its publication.

(3) In this section “state aid information” means information which relates to the grant of state aid through the provision of a tax advantage and includes (but is not limited to) any information mentioned in section 180(3) or (9).

(4) This section applies to any state aid information (including information which relates to a tax advantage given before the passing of this Act).

Information powers: supplementary

182

(1) In sections 180 and 181—

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

“relevant EU obligations” means—obligations under the General Block Exemption Regulation that relate to the grant of state aid through the provision of a tax advantage, orany corresponding post-withdrawal obligations that apply to the grant of a notified state aid through the provision of a tax advantage.

(2) The “General Block Exemption Regulation” is Commission Regulation (EU) No 651/2014 declaring certain categories of aid to be compatible with the internal market in application of Articles 107 and 108 of the Treaty establishing the European Union (which relate to state aids granted by Member States) as it has effect by virtue of the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement.

“Post-withdrawal obligations” means obligations that arise or continue by virtue of the EU withdrawal agreement (including the Protocol on Ireland/Northern Ireland).

(3) The Treasury may by regulations made by statutory instrument amend Part 1 or Part 2 of Schedule 24 by adding, omitting or varying an entry for any description of tax advantage.

(4) Regulations under subsection (3) may include incidental or supplemental provision.

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

(6) The powers under sections 180 and 181 are in addition to any other powers of the Commissioners to acquire, disclose or publish information.

Qualifying transformer vehicles

183

(1) In this section “qualifying transformer vehicle” means a transformer vehicle which meets conditions which are specified in regulations made by the Treasury.

(2) The Treasury may by regulations make provision about the treatment for the purposes of any enactment relating to taxation of—

(a) qualifying transformer vehicles;

(b) investors in qualifying transformer vehicles;

(3) Regulations under subsection (2) may, in particular, disapply, apply (with or without modification) or modify the application of any enactment.

(4) Without limiting the generality of subsection (2), regulations under that subsection may in particular include—

(a) provision for profits or other amounts to be calculated with any adjustments, or on any basis, set out in the regulations;

(b) provision conferring, altering or removing an exemption or relief;

(c) provision about the treatment of arrangements the purpose, or one of the main purposes, of which is to secure a tax advantage;

(d) provision about collection and enforcement (including the withholding of tax);

(e) in relation to qualifying transformer vehicles, requirements with regard to the provision of information to investors;

(f) in relation to qualifying transformer vehicles or investors in qualifying transformer vehicles, requirements with regard to—

(i) the provision of information to Her Majesty's Revenue and Customs,

(ii) the preparation of accounts,

(iii) the keeping of records, or

(iv) other administrative matters.

(5) Regulations under this section—

(a) may provide for Her Majesty's Revenue and Customs to exercise a discretion in dealing with any matter;

(b) may make provision by reference to rules, guidance or other documents issued by any person (as they have effect from time to time).

(6) Regulations under this section may—

(a) make different provision for different cases or different purposes (including different provision in relation to different descriptions of qualifying transformer vehicle or, as the case may be, transformer vehicle);

(b) contain incidental, supplementary, consequential and transitional provision and savings.

(7) Regulations under this section are to be made by statutory instrument.

(8) A statutory instrument containing regulations under subsection (1) is subject to annulment in pursuance of a resolution of the House of Commons.

(9) But the first set of regulations under subsection (1) may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.

(10) A statutory instrument containing regulations under subsection (2) may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.

(11) In this section—

“enactment” includes subordinate legislation (as defined in section 21 of the Interpretation Act 1978);

“investors” in relation to a qualifying transformer vehicle means holders of investments issued by the qualifying transformer vehicle; and for this purpose “investment” includes any asset, right or interest;

“tax advantage” has the meaning given by section 1139 of CTA 2010;

“transformer vehicle” has the same meaning as in section 284A of the Financial Services and Markets Act 2000.

PART 12 — Office of Tax Simplification

Office of Tax Simplification

184

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

Functions of the OTS: general

185

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

Functions of the OTS: reviews and reports

186

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

Annual report

187

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

Review of the OTS

188

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

Commencement

189

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

PART 13 — Final

Interpretation

190

In this Act—

“ALDA 1979” means the Alcoholic Liquor Duties Act 1979;

“CAA 2001” means the Capital Allowances Act 2001;

“CEMA 1979” means the Customs and Excise Management Act 1979;

“CTA 2009” means the Corporation Tax Act 2009;

“CTA 2010” means the Corporation Tax Act 2010;

“FA”, followed by a year, means the Finance Act of that year;

“F(No.2)A, followed by a year means the Finance (No.2) Act of that year;

“F(No.3)A, followed by a year, means the Finance (No.3) Act of that year;

“HODA 1979” means the Hydrocarbon Oil Duties Act 1979;

“ICTA” means the Income and Corporation Taxes Act 1988;

“IHTA 1984” means the Inheritance Tax Act 1984;

“ITA 2007” means the Income Tax Act 2007;

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;

“OTA 1975” means the Oil Taxation Act 1975;

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992;

“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010;

“TMA 1970” means the Taxes Management Act 1970;

“TPDA 1979” means the Tobacco Products Duty Act 1979;

“VATA 1994” means the Value Added Tax Act 1994;

“VERA 1994” means the Vehicle Excise and Registration Act 1994.

Short title

191

This Act may be cited as the Finance Act 2016.

SCHEDULE 1

Main repeals

1

(1) In ITTOIA 2005 omit sections 397 to 398, 400, 414 and 421 (distributions: tax credits, and tax treated as paid).

(2) In CTA 2010 omit section 1109 (tax credits for certain distributions).

Further amendments in ITTOIA 2005

2

ITTOIA 2005 is further amended as follows.

3

In the heading of Chapter 3 of Part 4, for “credits etc” substitute “ treated as paid ”.

4

In section 382(2) (other contents of Chapter 3 of Part 4)—

(a) omit “tax credits,”, and

(b) for “397” substitute “ 399 ”.

5

Omit section 384(3) (which refers to section 398).

6

Omit section 393(5) (determining entitlement to tax credit).

7

In section 394 (which deems a distribution to be made)—

(a) omit subsection (5) (determining entitlement to tax credit), and

(b) in subsection (6), for “But for” substitute “ For ”.

8

In section 395(3) (interpretation of section 395(2)) omit the words from “after” to the end.

9

For section 396A(2)(b) (alternative receipt treated as qualifying distribution for the purposes of sections 397 and 399 and for the purposes of section 1100 of CTA 2010) substitute—

(b) for the purposes of sections 1100 to 1103 of CTA 2010 (statements and returns of details of distributions) it is treated as a distribution that— (i) is so made, and (ii) is one to which section 1100 of CTA 2010 applies.

10

In the italic heading before section 397, omit “Tax credits and”.

11

(1) Section 399 (qualifying distribution received by person not entitled to tax credits) is amended as follows.

(2) For subsection (1) substitute—

(1) This section applies if— (a) a person's income for a tax year includes a distribution of a company, and (b) the person is non-UK resident.

(3) In subsection (2) omit “(but see subsection (7))”.

(4) Omit subsections (3) to (5) (amount of dividend received by non-UK resident to be treated as its grossed-up amount).

(5) Omit subsection (5A) (amounts treated as qualifying distributions for purposes of the section).

(6) Omit subsection (7) (which provides for subsection (2) to be subject to repealed provisions).

(7) For the heading substitute “ Tax treated as paid on distributions received by non-UK resident persons ”.

12

(1) Section 401 (relief: qualifying distribution after linked non-qualifying distribution) is amended as follows.

(2) For subsections (1) to (6) substitute—

(1) Where a person is liable to income tax on a CD distribution, the person's liability to income tax on a subsequent non-CD distribution is reduced in accordance with this section if the non-CD distribution consists of a repayment of— (a) the share capital, or (b) the principal of the security, which constituted the CD distribution. (1A) The reduction is— (a) the amount of income tax to which the person is liable on the CD distribution, or (b) if lower, the amount of income tax to which the person is liable on the non-CD distribution. (1B) For the purposes of calculating the amounts mentioned in subsection (1A)(a) and (b) assume— (a) that the CD distribution is the lowest part of the person's dividend income in the tax year (“year 1”) in which it is made, (b) that the non-CD distribution, if it is made in year 1, is the part of the person's dividend income in year 1 that is next lowest after the CD distribution, and (c) that the non-CD distribution, if it is made after year 1, is the lowest part of the person's dividend income in the tax year in which it is made.

(3) In subsection (7) (interpretation), for “ “security”” substitute

— “CD distribution” means a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) of CTA 2010 (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company), “non-CD distribution” means a distribution which is not a CD distribution, and “security”

(4) In the heading, for “qualifying distribution after linked non-qualifying distribution” substitute “ distribution repaying shares or security issued in earlier distribution ”.

13

Omit section 401A (recovery of overpaid tax credit etc).

14

In section 401B (power to obtain information for the purposes of section 397), for “section 397”, in each place it occurs, substitute “ this Chapter ”.

15

Omit sections 406(4A) and 407(4A) (determining entitlement to tax credit).

16

In section 408(2A) (interpretation of section 408(2)) omit the words from “after” to the end.

17

In section 411(2) (stock dividends: amount on which tax charged) omit “, grossed up by reference to the dividend ordinary rate for the tax year”.

18

In section 416 (released debts: amount on which tax charged)—

(a) in subsection (1) (tax charged on gross amount) omit “gross”, and

(b) omit subsection (2) (meaning of “gross amount”).

19

In section 418(3) (release of loan: tax only on grossed-up amount of excess where part previously charged) omit “, grossed up by reference to the dividend ordinary rate”.

20

In section 651 (meaning of “UK estate” and “foreign estate”)—

(a) in subsection (4), for “680(3) or (4) (sums” substitute “ 664(2)(c) or (d) or 680(4) (sums not liable to tax and sums ”, and

(b) in subsection (5), for “680(3) or (4)” substitute “ 664(2)(c) or (d) or 680(4) ”.

21

In section 657 (tax charged on estate income from foreign estates), for “680(3) or (4)”, in both places, substitute “ 680(4) ”.

22

In section 663 (applicable rate for purposes of grossing-up under sections 656 and 657), after subsection (4) insert—

(5) The aggregate income of the estate, so far as it consists of income within section 664(2)(c) or (d), is treated for the purposes of this section as bearing income tax at 0%.

23

In section 670 (applicable rate for purposes of Step 2 in section 665(1)), after subsection (4) insert—

(4A) The aggregate income of the estate, so far as it consists of income within section 664(2)(c) or (d), is treated for the purposes of this section as bearing income tax at 0%.

24

In section 680 (income of an estate that is treated as bearing income tax)—

(a) in subsection (2) omit “(3) or”, and

(b) omit subsection (3) (sums treated as bearing tax at the dividend ordinary rate).

25

In section 680A (estate income treated as dividend income), in each of subsections (1)(a) and (4)(a), after “at the dividend ordinary rate” insert “ or as bearing tax at 0% because of section 663(5) ”.

26

In section 854(6) (carrying on by partner of notional business: meaning of “untaxed income”)—

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

(b) after paragraph (c) insert—

(d) income chargeable under Chapter 5 of Part 4 (stock dividends from UK resident companies), or (e) income chargeable under Chapter 6 of Part 4 (release of loan to participator in closed company).

27

Omit section 858(3) (partnerships with foreign element: entitlement to tax credit).

Further amendments in CTA 2010

28

CTA 2010 is further amended as follows.

29

(1) Section 279F (ring fence profits: related 51% group company) is amended as follows.

(2) In subsection (7)(c) (conditions to be met by a company's dividend income in order for company to be a passive company), in sub-paragraph (ii) (dividends must be franked investment income) for “franked investment income” substitute “ exempt ABGH distributions ”.

(3) After subsection (9) insert—

(10) In subsection (7)(c) “exempt ABGH distribution” means a distribution which— (a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and (b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

30

(1) Section 279G (ring fence profits: meaning of “augmented profits”) is amended as follows.

(2) In subsection (1)(b) (franked investment income is part of augmented profits unless excluded)—

(a) for “franked investment income” substitute “ exempt ABGH distributions ”, and

(b) for “is” substitute “ are ”.

(3) In subsection (3) (exclusion of franked investment income received from certain subsidiaries etc), for “franked investment income” substitute “ exempt ABGH distribution ”.

(4) After subsection (4) insert—

(5) In this section “exempt ABGH distribution” means a distribution which— (a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and (b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

31

For section 463(7) (loan to trustees of settlement which has ended: amount on which debtor taxed when all or part of loan released or written off) substitute—

(7) The amount which Y is treated as receiving is equal to the amount released or written off.

32

(1) Section 549 (distributions: supplementary) is amended as follows.

(2) Omit subsection (2) (which excludes entitlement to tax credits).

(3) In subsection (2A) (which disapplies sections 409 to 414 of ITTOIA 2005), for “414” substitute “ 413A ”.

33

(1) Section 751 (interpretation of Part 15 (transactions in securities)) is amended as follows.

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

(3) In that subsection, in the definition of “dividends”, omit “qualifying”.

(4) After that subsection insert—

(2) In the definition of “dividends” given by subsection (1), “other distributions” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).

34

Omit section 814D(8) (which excludes entitlement to tax credits).

35

Omit section 997(5) (which introduces sections 1109 to 1111).

36

In sections 1026(1)(b) and 1027(2)(b) (cases where amount paid up in respect of bonus shares does not fall to be treated as a qualifying distribution) omit “qualifying”.

37

(1) Section 1070 (distributions by company carrying on mutual business) is amended as follows.

(2) In subsection (2) (provisions about distributions apply to company's distributions only where made out of taxed profits or franked investment income), for paragraph (b) (franked investment income) substitute—

(b) income of the company consisting of exempt ABGH distributions.

(3) After subsection (5) insert—

(5A) In subsection (2) “exempt ABGH distribution” means a distribution which— (a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and (b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

38

(1) Section 1071 (company not carrying on business) is amended as follows.

(2) In subsection (5) (provisions about distributions apply to company's distributions only where made out of taxed profits or franked investment income), for paragraph (b) (franked investment income) substitute—

(b) income of the company consisting of exempt ABGH distributions.

(3) After subsection (5) insert—

(5A) In subsection (5) “exempt ABGH distribution” means a distribution which— (a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and (b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

39

(1) Section 1100 (qualifying distribution: right to request a statement) is amended as follows.

(2) In subsection (1) (requests for statement)—

(a) for “qualifying distribution” substitute “ distribution to which this section applies ”, and

(b) omit paragraph (b) (amount of any tax credit), and the “and” preceding it.

(3) After subsection (4) insert—

(4A) This section applies to any distribution other than one which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).

(4) Omit subsections (2) and (5) (interpretation of subsection (1)(b)).

(5) In subsection (7) (section to be read with section 396A(2) of ITTOIA 2005)—

(a) for “needs” substitute “ , and sections 1101 to 1103, need ”, and

(b) for “as “qualifying distributions” for the purposes of this section” substitute “ as distributions to which this section applies ”.

(6) In the heading, for “Qualifying” substitute “ Certain ”.

40

(1) Section 1101 (non-qualifying distributions etc: returns and information) is amended as follows.

(2) In subsection (1) (duty to make return), for “which is not a qualifying distribution” substitute “ to which section 1100 does not apply ”.

(3) In subsection (4) (duty to make return where not clear whether distribution is non-qualifying), for “which is not a qualifying distribution” substitute “ to which section 1100 does not apply ”.

(4) In the heading, and in the heading of section 1102, for “Non-qualifying” substitute “ Other ”.

41

In section 1103 (regulations about information about non-qualifying distributions)—

(a) in subsection (2) (purpose for which sections 1101 and 1102 may be rewritten), for “which are not qualifying distributions” substitute “ to which section 1100 does not apply ”,

(b) in subsection (4) (special arrangements about matters specified in subsection (5)), for “matters” substitute “ matter ”, and

(i) for “Those matters are” substitute “ That matter is ”, and

(ii) omit paragraph (b) (tax credits), and the “and” preceding it.

42

(1) Section 1106 (interpretation of sections 1104 and 1105) is amended as follows.

(2) In subsection (4) (meaning of “tax certificate”)—

(a) after paragraph (a) insert “ and ”, and

(b) omit paragraph (c) (tax credits), and the “and” preceding it.

(3) Omit subsections (5) and (6) (interpretation of subsection (4)(c)).

43

Omit sections 1110 and 1111 (recovery of overpaid tax credits etc).

44

(1) Section 1115 (meaning of “new consideration” in Part 23) is amended as follows.

(2) In subsections (5)(a) and (6)(b) for “qualifying” substitute “ non-CD ”.

(3) After subsection (6) insert—

(7) In this section “non-CD distribution” means any distribution other than one which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).

45

In section 1119 (definitions for the purposes of the Corporation Tax Acts) omit the entries for “franked investment income”, “qualifying distribution” and “tax credit”.

46

Omit section 1126 (meaning of “franked investment income”).

47

Omit section 1136 (meaning of “qualifying distribution”).

48

Omit section 1139(4) (“relief” includes tax credit).

49

In Schedule 2 (transitionals and savings etc) omit paragraph 106(1) (operation of sections 1026 and 1027 in relation to share capital issued before 7 April 1973).

50

In Schedule 4 (index of defined expressions) omit the entries for “franked investment income”, “qualifying distribution” and “tax credit”.

Other amendments

51

(1) TMA 1970 is amended as follows.

(2) In section 8(1AA)(b) (payable income tax is chargeable amount less tax deducted at source and tax credits) omit the words after “source”.

(3) In section 8A(1AA)(b) (payable income tax is chargeable amount less tax deducted at source and tax credits) omit the words after “source”.

(4) In section 9(1) (self-assessment)—

(a) in paragraph (b) (payable income tax is assessed amount less tax deducted at source and tax credits) omit the words after “source”, and

(b) in the words after paragraph (b) omit “, 400(2), 414(1), 421(1)”.

(5) In section 12AA(1A)(b) (partner's payable income tax is chargeable amount less tax deducted at source and tax credits) omit the words after “source”.

(6) In section 12AB (partnership statement in partnership return)—

(a) in subsection (1)(a)—

(i) after sub-paragraph (ia) insert “ and ”, and

(ii) omit sub-paragraph (iii) (tax credits), and the “and” preceding it,

(b) in subsection (1)(b) for “, tax or credit” substitute “ or tax ”, and

(7) In section 12B(4A)(a)(i) (statements themselves must be preserved if of amount of qualifying distribution and tax credit), after “amount” insert “ of distribution, formerly amount ”.

(8) In section 59A(8)(b) (amounts included in annual total of deductions at source) omit “or are tax credits to which section 397(1) or 397A(1) of ITTOIA 2005 applies,”.

(9) In section 59B (payment of income tax and capital gains tax)—

(a) in subsection (1) omit “, 400(2), 414(1), 421(1)”, and

(b) in subsection (2)(b) omit “or is a tax credit to which section 397(1) or 397A(1) of ITTOIA 2005 applies,”.

(10) Omit section 87A(5) (interest on assessments under section 1110 of CTA 2010 on overpaid tax credits etc).

(11) In section 98 (special returns), in the first column of the table omit the entry for section 1109 of CTA 2010.

52

(1) ICTA is amended as follows.

(2) Omit section 231B (arrangements to pass on value of tax credit).

(3) Omit section 824(2) (repayment supplements: tax credits).

(4) In section 824(4A) omit paragraph (b) (repayment supplements: tax credit treated as income tax deducted at source), and the “and” preceding it.

(5) In section 825(1) (repayment supplements: companies) omit paragraph (c) (tax credits comprised in franked investment income), and the “or” preceding it.

(6) In section 826 (interest on tax overpaid by companies)—

(a) in subsection (1) omit paragraph (c) (tax credits), including the “or” at the end, and

(b) in subsection (3)—

(i) omit “or a payment of the whole or part of a tax credit falling within subsection (1)(c) above”, and

(ii) omit “or, as the case may be, the franked investment income referred to in subsection (1)(c) above”.

53

In FA 1988, in Schedule 13 omit paragraph 7(c) (post-consolidation amendment of section 824(2) of ICTA).

54

In FA 1989—

(a) omit section 115 (double taxation: tax credits), and

(b) in section 179(1)(b)(i) (amendments of provisions of TMA 1970 including section 87A(1) and (5)) omit “and (5)”.

55

In FA 1993 omit section 171(2B) (which excludes entitlement to tax credits).

56

In FA 1994 omit section 219(4B) (which excludes entitlement to tax credits).

57

(1) F(No.2)A 1997 is amended as follows.

(2) Omit section 22(1) (which inserted section 171(2B) of FA 1993).

(3) Omit section 28 (which inserted section 231B of ICTA).

(4) Omit section 30(9) and (10) (effect of double taxation arrangements in relation to tax credits).

(5) In Schedule 6 (repeal of provisions relating to foreign income dividends), in paragraph 23 (transitional provision for certain foreign income dividends paid before 6 April 1999 but received on or after that date) omit—

(a) “qualifying”, and

(b) “nine tenths of”.

58

(1) FA 1998 is amended as follows.

(2) Omit section 76(3) (regulations about tax credits where non-UK residents have invested in individual savings accounts).

(3) In Schedule 18 (company tax returns etc)—

(a) omit paragraph 9(3) (certain claims by companies for payment of tax credits),

(b) in paragraphs 22(3)(a)(i) and 23(3)(a)(i) (which relate to a statement as to amount of qualifying distribution and tax credit), after “amount” insert “ of distribution, but formerly amount ”, and

59

In the Commonwealth Development Corporation Act 1999, in Schedule 3 omit paragraph 6(2)(b) (provisions about tax credits do not apply in relation to distributions by the Corporation).

60

In the Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629)—

(a) omit article 82(a), and

(b) in article 87(a) omit “and (4B)”.

61

(1) ITEPA 2003 is amended as follows.

(2) Omit sections 58(6) and 61H(6) (tax credits to be reduced in line with reductions in distributions).

(3) In Part 2 of Schedule 1 (index of defined expressions) omit the entry for “tax credit”.

62

In ITTOIA 2005, in Schedule 1 (minor and consequential amendments) omit paragraphs 116, 331(2), 359, 360, 361(a), 363, 364, 376, 377(3), 464(3), 496, 503 and 510(2).

63

(1) ITA 2007 is amended as follows.

(2) In section 26(1)(b) (list of provisions giving tax reductions), in the entry for section 401 of ITTOIA 2005, for “qualifying distribution after linked non-qualifying distribution” substitute “ distribution repaying shares or security issued in earlier distribution ”.

(3) In section 31 (calculation of total income)—

(a) omit subsection (3) (dividend etc treated as increased by amount of tax credit), and

(b) in subsection (4), for “Subsections (2) and (3) apply” substitute “ Subsection (2) applies ”.

(4) In section 425(5) (deductions in calculating total amount of income tax for gift aid purposes)—

(a) in paragraph (a)—

(i) in sub-paragraph (i) omit “or 400(2)”, and

(ii) omit sub-paragraphs (ii) and (iii),

(b) after paragraph (a) insert “ and ”,

(d) omit paragraph (c), and the “and” before it.

(5) In section 482 (types of amount charged at special rates for trustees), in the entry for Type 1 amounts, omit “qualifying”.

(6) In section 487(6) (non-UK resident trustees: disregarded income which is not included in untaxed income)—

(a) after paragraph (a) insert “ or ”, and

(b) omit paragraph (c) (income in respect of which there is a tax credit), and the “or” preceding it.

(7) In section 498 (discretionary payments by trustees: types of tax to be included in trustees' tax pool)—

(a) in subsection (1)—

(i) in Type 1 (tax at special rates for trustees on income not attracting tax credits), omit “2, 3 or”,

(ii) omit Types 2 and 3 (tax at dividend trust rate on income attracting dividend tax credits), and

(iii) in Type 4 (tax charged at basic rate as a result of section 491), omit “at the basic rate”, and

(b) omit subsection (2) (interpretation of Types 2 and 3).

(8) In section 502(3) (non-UK resident beneficiaries: disregarded income which is not included in untaxed income)—

(a) after paragraph (a) insert “ or ”, and

(b) omit paragraph (c) (income in respect of which there is a tax credit), and the “or” preceding it.

(9) In section 614ZD (treatment of recipient of manufactured payment)—

(a) in subsection (3), for “to (6)” substitute “ and (5) ”, and

(b) omit subsection (6) (which excludes entitlement to tax credits).

(10) In section 687 (transactions in securities: meaning of “income tax advantage”)—

(a) omit “qualifying” in each place, and

(b) in subsection (4), after “In this section” insert

— (a) distribution” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) of CTA 2010 (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company), and (b)

(11) In section 713 (interpretation of Chapter 1 (transactions in securities))—

(a) the existing text becomes subsection (1),

(b) in that subsection, in the definition of “dividends”, omit “qualifying”, and

(2) In the definition of “dividends” given by subsection (1), “other distributions” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).

(12) In section 745(1) (transfer of assets abroad: same rate of tax not to be charged twice)—

(a) after “at the basic rate,” insert “ or ”, and

(b) omit “or the dividend ordinary rate”.

(13) In section 809S(4) (meaning of “income tax advantage”) omit the words after paragraph (d).

(14) In section 811(4) (limit on liability to income tax of non-UK residents)—

(a) after paragraph (a) insert “ and ”, and

(b) omit paragraph (c) (tax credits), and the “and” preceding it.

(15) In section 815(3) (limit on liability to income tax of non-UK resident companies)—

(a) after paragraph (a) insert “ and ”, and

(b) omit paragraph (c) (tax credits), and the “and” preceding it.

(16) In section 989 (definitions for the purposes of the Income Tax Acts) omit the entries for “qualifying distribution” and “tax credit”.

(17) In section 1026 (“non-qualifying income” includes income on which tax treated as paid)—

(a) in paragraph (a) (deemed payment under sections 399 and 400 of ITTOIA 2005)—

(i) omit “or 400(2)”, and

(ii) for “from UK resident companies on which there is no tax credit” substitute “ to non-UK resident persons ”, and

(b) omit paragraphs (b) and (c) (deemed payment under sections 414 and 421 of ITTOIA 2005).

(18) In Schedule 1 (minor and consequential amendments) omit paragraphs 26, 245(2)(a) and (3), 446(27), 515(3), 516, 517(2), 520 and 522.

(19) In Schedule 4 (index of defined expressions) omit the entries for “qualifying distribution” and “tax credit”.

64

In FA 2008, in Schedule 12 (amendments relating to tax credits) omit paragraphs 3, 5, 6, 8 to 16, 19, 20, 24(b) and 31.

65

(1) CTA 2009 is amended as follows.

(2) In section 1222 (company with investment business: amount deductible for management expenses to be reduced by income from sources not charged to tax)—

(a) in subsection (1) (UK resident company), for paragraph (c) (franked investment income does not reduce deductibles) substitute—

(c) the income does not consist of exempt ABGH distributions.

(b) in subsection (2) (non-UK resident company), for paragraph (d) (franked investment income does not reduce deductibles) substitute—

(d) the income does not consist of exempt ABGH distributions.

, and

(4) In this section “exempt ABGH distribution” means a distribution which— (a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1) of CTA 2010, and (b) is exempt for the purposes of Part 9A (company distributions).

(3) Omit section 1266(3) (partnerships with foreign element: entitlement to tax credit).

(4) In Schedule 4 (index of defined expressions) omit the entry for “qualifying distribution”.

66

(1) FA 2009 is amended as follows.

(2) In Schedule 19 (amendments relating to tax credits) omit paragraphs 2(2) and (3), 3, 5, 6(2)(a), (3) and (4), 7, 9, 10(a), 11, 12 and 13(c).

(3) In paragraph 14 of Schedule 19 (amendments made by the Schedule have effect in relation to distributions etc arising or paid on or after 22 April 2009), after sub-paragraph (2) insert—

(3) Section 873(4) of ITTOIA 2005 (inserted by paragraph 8), so far as relating to any order or regulations made after the passing of FA 2016 under any provision of ITTOIA 2005 other than section 397BA of that Act, has effect as if sub-paragraph (1) did not apply in relation to it.

(4) In Schedule 53 (late payment interest) omit—

(a) paragraph 6 (late payment interest start date in relation to assessments of overpaid tax credits etc under section 1110 of CTA 2010), and

(b) the italic heading preceding it.

(5) In paragraph 9B of Schedule 54 (repayment interest start date: companies: income tax and certain tax credits)—

(a) in sub-paragraph (1) omit paragraph (b) (tax credit comprised in franked investment income), and the “and” preceding it, and

(b) in sub-paragraph (2)—

(i) omit “or payment”, and

(ii) omit “or the franked investment income mentioned in sub-paragraph (1)(b)”.

(6) In paragraph 14 of Schedule 54 (interpretation) omit paragraph (b) (tax deducted at source treated as including tax credits), and the “and” preceding it.

67

In Schedule 1 to CTA 2010 (minor and consequential amendments) omit paragraphs 19, 153, 156(3), 282, 303(2), 456, 562(7), 704(27) and 722.

68

(1) TIOPA 2010 is amended as follows.

(2) In section 6(2) (effect of double taxation arrangements)—

(a) after paragraph (e) insert “ or ”, and

(b) omit paragraph (g) (tax credits), and the “or” preceding it.

(3) In section 187A (excess interest treated as a qualifying distribution), in subsection (2), and the heading, omit “qualifying”.

(4) Omit section 234(2) (“relief” includes tax credit).

(5) In Schedule 8 (minor and consequential amendments) omit paragraphs 38, 51, 52, 66 and 67.

69

In FA 2011—

(a) in Part 6 of Schedule 23 (consequential provisions) omit paragraph 64(3), and

(b) in Schedule 26 omit paragraph 1(2)(a)(i) (which amended section 231B of ICTA), including the “and” at the end.

70

In FA 2012, in section 169(2) (payments by certain friendly societies treated as qualifying distributions) omit “qualifying”.

71

In FA 2013—

(a) in paragraph 6(2) of Schedule 19 (which amends section 549 of CTA 2010), for “subsections (2) and” substitute “ subsection ”, and

(b) in Part 3 of Schedule 29 (manufactured dividends: consequential etc amendments) omit paragraphs 13, 14(a) and 44(3).

72

In FA 2015, in section 19—

(a) in subsection (1), for “credits etc” substitute “ treated as paid ”, and

(b) omit subsections (5) and (6) (which insert sections 397(5A) and 399(5A) of ITTOIA 2005).

Commencement

73

(1) Subject to the following sub-paragraphs of this paragraph, the amendments made by this Schedule have effect in relation to dividends paid or arising (or treated as paid), and other distributions made (or treated as made), in the tax year 2016-17 or at any later time.

(2) The following have effect for the tax year 2016-17 and subsequent tax years—

(a) the amendments in sections 8 to 9, 12AA and 59B of TMA 1970,

(b) the amendments in section 854(6) of ITTOIA 2005,

(c) the amendments in section 425 except the amendment in section 425(5)(b), and the amendments in sections 498, 745 and 1026, of ITA 2007,

(d) the repeals of paragraphs 359, 360, 361(a), 363 and 377(3) of Schedule 1 to ITTOIA 2005,

(e) the repeals of paragraphs 8 to 11 and 14 of Schedule 12 to FA 2008, and

(f) the repeals of the following provisions of Schedule 19 to FA 2009—

(i) paragraph 9(a) and (b),

(ii) paragraph 9(c) so far as relating to section 12AA of TMA 1970, and

(iii) paragraph 9(d) so far as relating to section 59B of TMA 1970.

(3) The amendment in paragraph 23 of Schedule 6 to F(No.2)A 1997 has effect in relation to foreign income dividends received on or after 6 April 2016.

(4) The amendments in sections 393 and 406 of ITTOIA 2005, and the repeal of paragraph 19 of Schedule 12 to FA 2008, have effect in relation to cash dividends paid over in the tax year 2016-17 or at any later time.

(5) The amendment in section 396A of ITTOIA 2005 has effect in relation to things received on or after 6 April 2016 (even if the choice to receive them was made before that date).

(6) The amendments in section 401 of ITTOIA 2005 have effect where the subsequent distribution is made in the tax year 2016-17 or at any later time, even if the prior distribution is made before 6 April 2016.

(7) The amendments in sections 411 and 414 of ITTOIA 2005, and the repeal of paragraph 520 of Schedule 1 to ITA 2007, have effect in relation to stock dividend income treated as arising in the tax year 2016-17 or at any later time.

(8) The amendments in sections 651 to 680A of ITTOIA 2005 (but not the repeal of section 680(3)(a) of that Act) and the amendment in section 425(5)(b) of ITA 2007—

(a) so far as they relate to income within section 664(2)(c) of ITTOIA 2005 (stock dividends), have effect in relation to stock dividend income treated as arising in the tax year 2016-17 or at any later time, and

(b) so far as they relate to income within section 664(2)(d) of ITTOIA 2005 (release of loans), have effect in relation to amounts released or written off in the tax year 2016-17 or at any later time.

(9) The amendments in Chapter 6 of Part 4 of ITTOIA 2005 and in section 463 of CTA 2010, and the repeal of paragraph 522 of Schedule 1 to ITA 2007, have effect in relation to amounts released or written off in the tax year 2016-17 or at any later time.

(10) The amendments in section 614ZD of ITA 2007 have effect in relation to manufactured payments made on or after 6 April 2016.

(11) The amendments in section 687 of ITA 2007 have effect where the relevant consideration is received in the tax year 2016-17 or at any later time.

(12) The amendments in section 1222 of CTA 2009 have effect in relation to income arising in the tax year 2016-17 or at any later time.

(13) The amendment in section 1026(1) of CTA 2010 has effect where the bonus share capital is issued on or after 6 April 2016.

(14) Sub-paragraph (1) does not apply in relation to—

(a) the amendments in section 401B of ITTOIA 2005;

(b) the amendment in paragraph 14 of Schedule 19 to FA 2009.

SCHEDULE 2

Income tax: sporting testimonial payments treated as earnings

1

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