# Finance Act 2013

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U.K.

# Finance Act 2013

# 2013 CHAPTER 29

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue,                        and to make further provision in connection with finance.                     

[17th July 2013]

Most Gracious Sovereign

WE,  Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising                           the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely                           and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore                           most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with                           the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the                           authority of the same, as follows:—                        

## **PART 1**U.K.Income Tax, Corporation Tax and Capital Gains Tax

### CHAPTER 1U.K.Charges, rates etc

#### Income taxU.K.

##### 1Charge for 2013-14U.K.

##### 2Personal allowance for 2013-14 for those born after 5 April 1948U.K.

##### 3Basic rate limit for 2013-14U.K.

#### Corporation taxU.K.

##### 4Charge and main rate for financial year 2014U.K.

##### 5Small profits rate and fractions for financial year 2013U.K.

##### 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### Capital allowancesU.K.

##### 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### CHAPTER 2U.K.Income tax: general

#### Exemptions and reliefsU.K.

##### 8London Anniversary GamesU.K.

(1)An accredited competitor who performs an Anniversary Games activity is not liable to income tax in respect of any income arising                        from the activity if the non-residence condition is met.                  

(2)The following are Anniversary Games activities—                  

(a)competing at the Anniversary Games, and                  

(b)any activity that is performed during the games period the main purpose of which is to support or promote the Anniversary                        Games.                  

(3)The non-residence condition is that—                  

(a)the accredited competitor is non-UK resident for the tax year 2013-14, or                  

(b)the accredited competitor is UK resident for the tax year 2013-14 but the year is a split year as respects the competitor and the activity is performed in                        the overseas part of the year.                  

(4)Section 966 of ITA 2007 (deduction of sums representing income tax) does not apply to any payment or transfer which gives                        rise to income benefiting from the exemption under subsection (1).                  

(5)In this section—                  
          -  “accredited competitor” means a person to whom an accreditation card in the athletes' category has been issued by the company named UK Athletics                           Limited which was incorporated on 16 December 1998;                         
          -  “the Anniversary Games” means the British Athletics London Anniversary Games held at the Olympic Stadium in London in July 2013;                         
          -  “the games period” means the period—                          (a)
beginning with 21 July 2013, and
(b)
ending with 29 July 2013;
 
          -  “income” means employment income or profits of a trade, profession or vocation (including profits treated as arising as a result                           of section 13 of ITTOIA 2005).                         

(6)This section is treated as having come into force on 6 April 2013.                  

##### 9Glasgow Commonwealth GamesU.K.

(1)An accredited competitor who performs a Commonwealth Games activity is not liable to income tax in respect of any income arising                        from the activity if the non-residence condition is met.                  

(2)The following are Commonwealth Games activities—                  

(a)competing at the Glasgow Commonwealth Games, and                  

(b)any activity that is performed during the games period the main purpose of which is to support or promote the Glasgow Commonwealth                        Games or any future Commonwealth Games.                  

(3)The non-residence condition is that—                  

(a)the accredited competitor is non-UK resident for the tax year in which the Commonwealth Games activity is performed, or                  

(b)the accredited competitor is UK resident for the tax year in which the activity is performed but the year is a split year                        as respects the competitor and the activity is performed in the overseas part of the year.                  

(4)Section 966 of ITA 2007 (deduction of sums representing income tax) does not apply to any payment or transfer which gives                        rise to income benefiting from the exemption under subsection (1).                  

(5)In this section—                  
          -  “accredited competitor” means a person to whom a Glasgow 2014 accreditation card in the athletes' category has been issued by the company named                           Glasgow 2014 Limited which was incorporated on 11 June 2007;                         
          -  “the games period” means the period—                          (a)
beginning with 4 March 2014, and
(b)
ending with 3 September 2014;
 
          -  “the Glasgow Commonwealth Games” means the Commonwealth Games held in Scotland in 2014;                         
          -  “income” means employment income or profits of a trade, profession or vocation (including profits treated as arising as a result                           of section 13 of ITTOIA 2005).                         

##### 10Expenses of elected representativesU.K.

(1)After section 293A of ITEPA 2003 insert—                  

###### “293BUK travel expenses of other elected representatives

(1)No liability to income tax arises in respect of a payment to which this section applies if it is expressed to be made in respect                           of relevant UK travel expenses.                  

(2)This section applies to payments—                  

(a)made to members of the Scottish Parliament under section 81(2) of the Scotland Act 1998,                  

(b)made to members of the National Assembly for Wales under section 20(2) of the Government of Wales Act 2006 or to a member                           of the Welsh Assembly Government under section 53(2) of that Act, or                  

(c)made to members of the Northern Ireland Assembly under section 47(2) of the Northern Ireland Act 1998.                  

(3)In this section “relevant UK travel expenses” means expenses necessarily incurred on journeys of the following kinds within the United Kingdom—                  

(a)journeys within subsection (4) made by the member that are necessary for the performance of his or her duties as a member;                  

(b)if the member shares caring responsibilities with a spouse or partner, journeys made by the spouse or partner between the                           constituency or region and the member's parliamentary home.                  

(4)The journeys referred to in subsection (3)(a) are those—                  

(a)between the constituency or region and the Parliament or Assembly to which the member belongs,                  

(b)between the constituency or region and the member's parliamentary home, or                  

(c)within the constituency or region, but not excluded by subsection (5).                  

(5)A journey is excluded if—                  

(a)in the case of a member who has only one local office, it is between the member's local home and that office, and                  

(b)in any other case, it is between the member's local home and the principal local office.                  

(6)In this section—                  
          -  “constituency or region”, in relation to a member, means the constituency or region which the member represents and the area within 20 miles of the                              boundary of that constituency or region;                         
          -  “local office”, in relation to a member, means an office which is situated in the constituency or region and occupied by the member for                              the purposes of performing duties as a member;                         
          -  “the member's local home” means a residence of the member situated in the constituency or region;                         
          -  “the member's parliamentary home” means the member's only or main residence in the area comprising—                          (a)
the main site of the Parliament or Assembly to which the member belongs, and                                 
(b)
the area within 20 miles of that site;                                 
 
          -  “principal local office”, in relation to a member, means the local office most frequently occupied by the member for the purposes of performing duties                              as a member.                         

(7)A person has “caring responsibilities” if the person—                  

(a)has parental responsibility for a dependent child aged under 17 or for a child aged 17 or 18 who is in full-time education,                           or                  

(b)is the primary carer for a family member in receipt of—                  

(i)attendance allowance,                  

(ii)disability living allowance at the middle or highest rate for personal care,                  

(iii)the daily living component of personal independence payment, or                  

(iv)constant attendance allowance at or above the maximum rate with an industrial injuries disablement benefit, or the basic (full                           day) rate with a war disablement pension.                  

(8)The Treasury may by order amend the definition of “caring responsibilities” in subsection (7).”                  

(2)The amendment made by this section has effect in relation to payments made on or after 6 April 2013.                  

##### 11Exemption from income tax of contributions to pension schemesU.K.

(1)In Chapter 9 of Part 4 of ITEPA 2003 (exemptions from income tax for pension provision), in section 308 (exemption of contributions                        to registered pension scheme), at the end insert “ in respect of the employee ”.                  

(2)The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.                  

##### 12Childcare exemptions: meaning of disabled childU.K.

(1)In section 318B of ITEPA 2003 (childcare: meaning of “disabled” etc), in subsection (3)(a), after “allowance” insert “ or personal independence payment ”.                  

(2)The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.                  

##### 13Income tax exemption for universal creditU.K.

(1)In section 677(1) of ITEPA 2003 (UK social security benefits wholly exempt from tax), in Part 1 of Table B (benefits payable                        under primary legislation), insert at the appropriate place—                  

(2)The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.                  

##### 14Tax advantaged employee share schemesU.K.

Schedule 2 amends the SIP code, the SAYE code, the CSOP code and the EMI code.

##### 15Abolition of tax relief for patent royaltiesU.K.

(1)Chapter 4 of Part 8 of ITA 2007 (reliefs: annual payments and patent royalties) is amended in accordance with subsections                        (2) and (3).                  

(2)In section 448 (relief for individuals), in subsection (1)(b) omit “or 903(5)” and “and patent royalties”.                  

(3)In section 449 (relief for other persons), in subsection (1)(b) omit “or 903(6)” and “and patent royalties”.                  

(4)Accordingly, that Act is amended as follows—                  

(a)in section 2 (overview of Act), in subsection (8)(c) omit “and patent royalties”,                  

(b)in section 24 (reliefs deductible at Step 2), in subsection (1)(b) omit “and patent royalties”, and                  

(c)in the heading for Chapter 4 of Part 8 of that Act omit “AND PATENT ROYALTIES”.                  

(5)The amendments made by this section have effect in relation to payments made on or after 5 December 2012.                  

##### 16Limit on income tax reliefsU.K.

Schedule 3 contains provision limiting the deductions which may be made at Step 2 of the calculation in section 23 of ITA                     2007 (calculation of income tax liability).                  

#### Trade profitsU.K.

##### 17Cash basis for small businessesU.K.

Schedule 4 contains provision enabling the profits of a trade, profession or vocation to be calculated on the cash basis.

##### 18Deductions allowable at a fixed rateU.K.

Schedule 5 contains provision enabling persons carrying on a trade, profession or vocation to claim deductions for certain                     expenses at a fixed rate.                  

#### Other provisionsU.K.

##### 19Employment income: duties performed in the UK and overseasU.K.

##### 20Remittance basis: exempt propertyU.K.

##### 21Payments on accountU.K.

##### 22Arrangements made by intermediariesU.K.

##### 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 24Gains from contracts for life insurance etcU.K.

##### 25Qualifying insurance policiesU.K.

##### 26Transfer of assets abroadU.K.

##### 27Payments of interestU.K.

##### 28Disguised interestU.K.

### CHAPTER 3U.K.Corporation tax: general

#### Losses, other reliefs and deductionsU.K.

##### 29Restriction on surrender of losses: controlled foreign company casesU.K.

##### 30Loss relief surrenderable by non-UK resident established in EEA stateU.K.

##### 31Arrangements for transfers of companiesU.K.

##### 32Change in company ownership: company reconstructionsU.K.

##### 33Change in company ownership: shell companiesU.K.

##### 34Transfer of deductionsU.K.

##### 35R&D expenditure creditsU.K.

##### 36Relief for television production and video games developmentU.K.

#### Exemption from chargeU.K.

##### 37Health service bodies: exemptionU.K.

##### 38Chief constables etc (England and Wales): exemptionU.K.

#### Other provisionsU.K.

##### 39Real estate investment trusts: UK REITs which invest in other UK REITsU.K.

##### 40Corporation tax relief for employee share acquisitions etcU.K.

##### 41Derivative contracts: property total return swaps etcU.K.

##### 42Corporation tax: tax mismatch schemesU.K.

##### 43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 45Condition for company to be an “investment trust”U.K.

##### 46Community amateur sports clubsU.K.

### CHAPTER 4U.K.Pensions

#### 47Lifetime allowance charge: power to amend the transitional provision in Part 2 of Schedule 18 to FA 2011 etcU.K.

(1)Part 2 of Schedule 18 to FA 2011 (lifetime allowance charge: commencement and transitional provision relating to changes made                        for the tax year 2012-13 and onwards) is amended as follows.                  

(2)In paragraph 14—                  

(a)omit sub-paragraphs (2) and (15) to (17) (which confer power on the HMRC Commissioners to make provision specifying how notices under paragraph 14 are to be given),                  

(b)in sub-paragraph (7) omit “the annual rate of” where it first appears, and                  

(c)in sub-paragraph (11) after “(5)(a)” insert “ and (c)(i) ”.                  

(3)After paragraph 14 insert—                  

##### 

“15(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 14.                  

(2)Regulations under this paragraph may (for example) add to the cases in which paragraph 14 is to apply or is to cease to apply.                  

(3)Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made;                           but—                  

(a)the time must be no earlier than 6 April 2012, and                  

(b)the provision must not increase any person's liability to tax.                  

(4)In relation to regulations under this paragraph made during 2013, sub-paragraph (3) has effect with the omission of paragraph                           (b) so long as the time in question is no earlier than 6 April 2013.                  

##### 

16(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision specifying how any notice required                           to be given to an officer of Revenue and Customs under paragraph 14 is to be given.                  

(2)In sub-paragraph (1) the reference to paragraph 14 is to that paragraph as amended from time to time by regulations under                           paragraph 15.                  

##### 

17(1)Regulations under paragraph 15 or 16 may include supplementary or incidental provision.                  

(2)The powers to make regulations under paragraphs 15 and 16 are exercisable by statutory instrument.                  

(3)A statutory instrument containing regulations under paragraph 15 or 16 is subject to annulment in pursuance of a resolution                           of the House of Commons.”                  

(4)The amendments made by subsection (2)(b) and (c) are treated as having come into force on 6 April 2012.                  

(5)The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 (S.I. 2011/1752) are to continue to have effect and, so far as they were made under paragraph 14(2) and (15) of Schedule 18 to                        FA 2011, are to be treated as if they were made under paragraphs 16 and 17(1) of that Schedule (as inserted by subsection                        (3) above).                  

#### 48Lifetime allowance charge: new standard lifetime allowance for the tax year 2014-15 and subsequent tax yearsU.K.

(1)Section 218 of FA 2004 (standard lifetime allowance etc) is amended as follows.                  

(2)For subsection (2) substitute—                  

“(2)The standard lifetime allowance for the tax year 2014-15 and, subject to subsection (3), subsequent tax years is £1,250,000.”                  

(3)In subsection (3) for “the tax year 2012-13” substitute “ the tax year 2014-15 ”.                  

(4)The amendments made by subsections (2) and (3) have effect for the tax year 2014-15 and subsequent tax years.                  

(5)Schedule 22 contains transitional provision etc.                  

#### 49Annual allowance: new annual allowance for the tax year 2014-15 and subsequent tax yearsU.K.

(1)Section 228 of FA 2004 (annual allowance) is amended as follows.                  

(2)For subsection (1) substitute—                  

“(1)The annual allowance for the tax year 2014-15 and, subject to subsection (2), each subsequent tax year is £40,000.”                  

(3)In subsection (2) for “2011-12” substitute “ 2014-15 ”.                  

(4)The amendments made by this section have effect for the tax year 2014-15 and subsequent tax years.                  

#### 50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 52Abolition of contracting out of state second pension: consequential amendments etcU.K.

(1)FA 2004 is amended as follows.                  

(2)In section 188 (relief for contributions), in subsection (3) (contributions excluded from relief), omit paragraph (c) and                        the word “and” immediately preceding that paragraph.                  

(3)In that section, omit subsection (6) (which treats certain amounts recovered by individual's employer as contributions paid                        by individual).                  

(4)Omit section 190(5) (certain reliefs not to count towards annual limit for relief).                  

(5)Omit section 196(5) (references to contributions to include references to minimum payments when determining relief for employers).                  

(6)Omit section 202 (minimum contributions under pensions legislation).                  

(7)Omit section 233(2) (references to contributions not to include references to minimum payments when determining pension input                        amount).                  

(8)In paragraph 5 of Schedule 29 (short service refund lump sum), after sub-paragraph (2) insert—                  

“(2A)In sub-paragraph (2) the reference to the member's contributions includes—                  

(a)any amount paid under section 7 of the Social Security Act 1986 (incentive payments to schemes becoming contracted-out between                           1986 and 1993),                  

(b)any amount paid by the Commissioners for Her Majesty's Revenue and Customs under section 42A(3) of the Pension Schemes Act                           1993 or section 38A(3) of the Pension Schemes (Northern Ireland) Act 1993 (rebates), and                  

(c)any amount recovered by the member's employer under regulations falling within sub-paragraph (2B) in respect of minimum payments                           made to the scheme in relation to any period before 6 April 2012.                  

(2B)Those regulations are regulations which were made under—                  

(a)section 8(3) of the Pension Schemes Act 1993 (recovery of minimum payments), or                  

(b)section 4(3) of the Pension Schemes (Northern Ireland) Act 1993 (corresponding provision for Northern Ireland).”                  

(9)Omit paragraph 14(2) of Schedule 36 (which excludes minimum payments from being relevant contributions for the purposes of                        enhanced protection from lifetime allowance charge).                  

(10)Subsections (1), (3) to (5) and (7) to (9) come into force on 6 April 2013.                  

(11)Subsection (2) comes into force on 6 April 2015.                  

(12)Subsection (6) comes into force on 6 April 2016, except that the repeal of section 202(5) of FA 2004 comes into force on such                        day as the Treasury may appoint by order made by statutory instrument.                  

#### 53Overseas pension schemes: generalU.K.

(1)In section 150(8) of FA 2004 (meaning of “recognised overseas pension scheme”), for the words from “which” to the end substitute                        “ which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners                           for Her Majesty's Revenue and Customs. ”                  

(2)Section 169 of that Act (pension schemes: recognised transfers) is amended as follows.                  

(3)In subsection (2)(c), for “any prescribed information requirements imposed on the scheme manager” substitute “ any requirements imposed under subsection (4) ”.                  

(4)For subsection (4) substitute—                  

“(4)Regulations may require the scheme manager of a QROPS or former QROPS to—                  

(a)give the Commissioners information of a prescribed description,                  

(b)give the Commissioners such evidence as they may require of a prescribed matter, and                  

(c)give a prescribed authority, in prescribed circumstances, information of a prescribed description.                  

(4A)Regulations under subsection (4) may make provision as to—                  

(a)the way and form in which information or evidence is to be given, and                  

(b)the times or intervals at which information or evidence is to be given.                  

(4B)The regulations may apply any provision of Part 7 of Schedule 36 to FA 2008 (penalties), with or without modifications, in                           relation to requirements imposed under the regulations on a former QROPS.”                  

(5)In subsection (5)—                  

(a)for “the Inland Revenue has” substitute “ the Commissioners have ”,                  

(b)for paragraph (a) (but not the “and” at the end of it) substitute—                  

“(a)any of the following conditions is met in relation to the scheme—                  

(i)there has been a failure to comply with a relevant requirement and the failure is significant,                  

(ii)any information given pursuant to a relevant requirement is incorrect in a material respect,                  

(iii)any declaration given pursuant to a relevant requirement is false in a material respect,                  

(iv)there is no scheme manager,”, and                  

(c)in paragraph (b), for “the failure” substitute “ that condition being met ”.                  

(6)For subsection (6) substitute—                  

“(6)A failure to comply with a requirement is significant if—                  

(a)it is a failure to give information or evidence that is (or may be) of significance, or                  

(b)there are reasonable grounds for believing that the failure prejudices (or might prejudice) the assessment or collection of                           tax by the Commissioners.”                  

(7)After subsection (7) insert—                  

“(8)In subsections (4) to (6) and this subsection—                  
          -  “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;                         
          -  “prescribed” means prescribed by regulations;                         
          -  “QROPS” means a qualifying recognised overseas pension scheme, and “former QROPS” means a scheme that has at any time been a QROPS;                         
          -  “regulations” means regulations made by the Commissioners;                         
          -  “relevant requirement” means—                          (a)
a requirement imposed by regulations under subsection (4), or                                 
(b)
a requirement imposed by virtue of Part 1 of Schedule 36 to FA 2008 (powers to obtain information and documents).”                                 
 

(8)In section 280(1) of that Act (abbreviations), insert at the appropriate place—                  

““FA 2008” means the Finance Act 2008,”.                  

#### 54Overseas pension schemes: information and inspection powersU.K.

(1)Part 6 of Schedule 36 to FA 2008 (information and inspection powers: special cases) is amended as follows.                  

(2)In paragraph 34B (registered pension schemes etc)—                  

(a)in sub-paragraph (2), omit the “or” at the end of paragraph (b) and, at the end of paragraph (c) insert—                  

“(d)a QROPS or former QROPS, or                  

(e)an annuity purchased with sums or assets held for the purposes of a QROPS or former QROPS.”;                  

(b)after sub-paragraph (4) insert—                  

“(4A)In relation to a notice to which this paragraph applies that refers only to information or documents relating to a matter                           within sub-paragraph (2)(d) or (e), paragraph 20 (old documents) has effect as if the reference to 6 years were to 10 years.”;                  

(c)after sub-paragraph (7) insert—                  

“(7A)Where the notice relates to a matter within sub-paragraph (2)(d) or (e), the officer of Revenue and Customs who gives the                           notice must give a copy of the notice to the scheme manager in relation to the pension scheme.”;                  

(d)in sub-paragraph (8), for “and (7)” substitute “ to (7A) ”.                  

(3)In paragraph 34C (registered pension schemes etc: interpretation), insert at the appropriate places—                  

““QROPS” and “former QROPS” have the meanings given by section 169(8) of FA 2004;”;                  

““ “scheme manager”, in relation to a pension scheme, has the meaning given by section 169(3) of FA 2004.”                  

(4)In paragraphs 34B and 34C of Schedule 36 to FA 2008, references to a former QROPS include a scheme that ceased to be a QROPS                        before this Act was passed.                  

### CHAPTER 5U.K.Other provisions

#### Employee shareholder sharesU.K.

##### 55Employee shareholder sharesU.K.

#### Seed enterprise investment schemeU.K.

##### 56SEIS: income tax reliefU.K.

##### 57SEIS: re-investment reliefU.K.

#### DisincorporationU.K.

##### 58Disincorporation reliefU.K.

##### 59Qualifying business transferU.K.

##### 60Making a claimU.K.

##### 61Effect of disincorporation reliefU.K.

#### Capital gainsU.K.

##### 62Attribution of gains to members of non-resident companiesU.K.

##### 63Heritage maintenance settlementsU.K.

##### 64EMI options and entrepreneurs' relief etcU.K.

##### 65Charge on certain high value disposals by companies etcU.K.

##### 66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### Capital allowancesU.K.

##### 67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 69Gas refuelling stations: extension of time limit for capital allowanceU.K.

##### 70First-year allowance to be available for ships and railway assetsU.K.

##### 71Restrictions on buying capital allowancesU.K.

##### 72Hire cars for disabled personsU.K.

##### 73Contribution allowances: plant and machineryU.K.

#### MiscellaneousU.K.

##### 74Community investment tax reliefU.K.

##### 75Lease premium reliefU.K.

##### 76Manufactured payments: stock lending arrangementsU.K.

##### 77Manufactured payments: generalU.K.

##### 78Relationship between rules prohibiting and allowing deductionsU.K.

##### 79Close companiesU.K.

## **PART 2**U.K.Oil

### Decommissioning relief agreementsU.K.

#### 80Decommissioning relief agreementsU.K.

(1)There are to be paid out of money provided by Parliament any sums which a Minister of the Crown is liable to pay under a decommissioning                        relief agreement.                  

(2)A “decommissioning relief agreement” is an agreement which—                  

(a)is made between a Minister of the Crown and a qualifying company, and                  

(b)provides that, in such circumstances as are specified in the agreement, if the amount of tax relief in respect of any decommissioning                        expenditure incurred by that or another qualifying company is less than an amount determined in accordance with the agreement                        (“the reference amount”), the difference is payable to the company that incurred the expenditure.                  

(3)“Qualifying company” means—                  

(a)any company that has at any time carried on a ring fence trade,                  

(b)any company that is associated with a company carrying on a ring fence trade,                  

(c)any company that has at any time been associated with a company that was carrying on a ring fence trade at that time, and                  

(d)in the case of decommissioning expenditure incurred in connection with any plant or machinery, or any land, situated in the                        UK sector of a cross-boundary field, any company that is a party to a joint operating agreement or unitisation agreement in                        relation to that field.                  

(4)For the purposes of subsection (2)(b) the amount of tax relief in respect of any decommissioning expenditure is to be determined                        in accordance with the agreement; and in making such a determination tax relief in respect of expenditure incurred by the                        qualifying company that is not decommissioning expenditure may, in such circumstances as are specified in the agreement, be                        treated as if it were tax relief in respect of decommissioning expenditure.                  

(5)A payment made to a company under a decommissioning relief agreement is not to be regarded as income or a gain of the company                        for any purpose of the Tax Acts.                  

(6)Section 18(1) of CRCA 2005 (restriction on disclosure by Revenue and Customs officials) does not prevent—                  

(a)disclosure to a Minister of the Crown for the purpose of enabling the Minister of the Crown to determine the extent of any                        liability under a decommissioning relief agreement, or                  

(b)disclosure to a company that has rights under a decommissioning relief agreement for the purpose of enabling the company to                        determine the reference amount.                  

(7)In this section—                  
          -  “company” has the meaning given by section 1121 of CTA 2010,                         
          -  “cross-boundary field” has the meaning given by section 10(9) of the Petroleum Act 1998,                         
          -  “decommissioning expenditure” has the meaning given by section 81,                         
          -  “Minister of the Crown” includes the Treasury,                         
          -  “ring fence trade” has the same meaning as in Part 8 of CTA 2010 (see section 277 of that Act),                         
          -  “the UK sector of a cross-boundary field” means that part of a cross-boundary field lying within the UK marine area (as defined by section 42 of the Marine and Coastal                           Access Act 2009), and                         
          -  “unitisation agreement” has the meaning given by paragraph 1(2) of Schedule 17 to FA 1980.                         

(8)Subsections (8) to (9) of section 30 of the Petroleum Act 1998 (which specifies when one body corporate is associated with                        another) apply for the purposes of this section as they apply for the purposes of that section.                  

#### 81Meaning of “decommissioning expenditure”U.K.

(1)In section 80 “decommissioning expenditure” means expenditure incurred in connection with—                  

(a)demolishing any plant or machinery,                  

(b)preserving any plant or machinery pending its reuse or demolition,                  

(c)preparing any plant or machinery for reuse,                  

(d)arranging for the reuse of any plant or machinery, or                  

(e)the restoration of any land.                  

(2)It is immaterial for the purposes of subsection (1)(b) whether the plant or machinery is reused, is demolished or is partly                        reused and partly demolished.                  

(3)It is immaterial for the purposes of subsection (1)(c) and (d) whether the plant or machinery is in fact reused.                  

(4)In subsection (1)(e) “restoration” includes landscaping.                  

(5)The Treasury may by order amend this section.                  

(6)An order under subsection (5) may include transitional provision and savings.                  

(7)The power to make an order under subsection (5) is exercisable by statutory instrument.                  

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

#### 82Annual reportU.K.

(1)For each financial year the Treasury must prepare a report containing the information in subsection (2).                  

(2)The information is—                  

(a)the number of decommissioning relief agreements entered into in that year,                  

(b)the total number of decommissioning relief agreements in force at the end of that year,                  

(c)the number of payments made under any decommissioning relief agreements during that year, and the amount of each payment,                  

(d)the total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and                        the total amount of those payments, and                  

(e)an estimate of the maximum amount liable to be paid under any decommissioning relief agreements.                  

(3)The report for a financial year must be laid before the House of Commons as soon as is reasonably practicable after the end                        of that year.                  

(4)In this section “decommissioning relief agreement” has the same meaning as in section 80.                  

(5)This section has effect in relation to financial years ending on or after 31 March 2014.                  

#### 83Effect of claim on PRTU.K.

(1)This section applies where a sum is payable to a company (“the claimant”) under a decommissioning relief agreement.                  

(2)Subsection (3) applies where the reference amount is calculated by reference to what the claimant's assessable profit in any                        chargeable period would be if any expenditure incurred by it were used to reduce its profit in a particular way (rather than                        in any way that it has in fact been used).                  

(3)For the purposes of petroleum revenue tax—                  

(a)the expenditure is treated as having been used to reduce the claimant's profit in that way (rather than in any way that it                        has in fact been used), and                  

(b)the claimant is treated as if it had received the tax relief it would receive if its profit were reduced in that way (so no                        repayment of tax is to be made by virtue of this subsection).                  

(4)Subsection (5) applies where the reference amount is calculated by reference to what any other company's assessable profit                        in any chargeable period would be if any expenditure incurred by the claimant—                  

(a)had been incurred by the other company, and                  

(b)were used to reduce the other company's profit in a particular way.                  

(5)For the purposes of petroleum revenue tax—                  

(a)the expenditure is treated as incurred by the other company (and not the claimant),                  

(b)the expenditure is treated as having been used by the other company to reduce its profit in that way, and                  

(c)the other company is treated as if it had received the tax relief it would receive if its profit were reduced in that way                        (so no repayment of tax is to be made by virtue of this subsection).                  

(6)In this section—                  
          -  “assessable profit” and “chargeable period” have the same meaning as in Part 1 of OTA 1975,                         
          -  “company” has the meaning given by section 1121 of CTA 2010,                         
          -  “decommissioning relief agreement” has the same meaning as in section 80, and                         
          -  “the reference amount” means the reference amount (within the meaning of that section) that relates to the sum mentioned in subsection (1).                         

#### 84Terminal losses accruing by virtue of another's defaultU.K.

(1)This section applies where—                  

(a)a company defaults on a liability under—                  

(i)a relevant agreement, or                  

(ii)an abandonment programme,                  

to make a payment towards decommissioning expenditure in respect of an oil field,

(b)in consequence of the default, another company (“the other company”) that has rights under a decommissioning relief agreement at the time of the default incurs decommissioning expenditure                        in respect of that oil field, and                  

(c)but for paragraph 15 of Schedule 17 to FA 1980 (terminal losses), a sum (or a sum of a greater amount) would be payable to                        the other company under the decommissioning relief agreement.                  

(2)Paragraph 15 of Schedule 17 to FA 1980 does not apply in relation to any allowable loss accruing to the other company from                        that oil field.                  

(3)Any allowable unrelievable field loss (within the meaning of section 6 of OTA 1975) that—                  

(a)consists of the unrelieved portion of an allowable loss within subsection (2), and                  

(b)would (in the absence of this subsection) arise as a result of subsection (2),                  

is not to be regarded as arising.

(4)Nothing in this section affects the operation of section 83(3) or (5).                  

(5)In this section—                  
          -  “abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised),                         
          -  “company” has the meaning given by section 1121 of CTA 2010,                         
          -  “decommissioning expenditure” has the same meaning as in section 80,                         
          -  “decommissioning relief agreement” has the same meaning as in that section,                         
          -  “oil field” has the same meaning as in OTA 1975,                         
          -  “relevant agreement” has the meaning given by section 104(5)(a) of FA 1991, and                         
          -  “unrelieved portion”, in relation to an allowable loss, is to be read in accordance with section 6 of OTA 1975.                         

#### 85Claims under agreement not to affect oil allowanceU.K.

(1)This section applies where—                  

(a)a company defaults on a liability under—                  

(i)a relevant agreement, or                  

(ii)an abandonment programme,                  

to make a payment towards decommissioning expenditure in respect of an oil field,

(b)in consequence of the default, another company that has rights under a decommissioning relief agreement at the time of the                        default incurs decommissioning expenditure in respect of that oil field, and                  

(c)by virtue of section 83, any expenditure incurred by that company (whether or not that decommissioning expenditure) is treated                        as having been used by that company or any other company (“the affected company”) to reduce its assessable profit in a chargeable                        period in a particular way.                  

(2)If, in the absence of section 83, the assessable profit accruing to the affected company from an oil field in that chargeable                        period would be reduced under section 8(1) of OTA 1975, the amount of the oil allowance for the oil field utilised by the                        affected company in that chargeable period for the purposes of section 8 of that Act is to be determined as if section 83                        did not apply.                  

(3)In this section—                  
          -  “abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised),                         
          -  “company” has the meaning given by section 1121 of CTA 2010,                         
          -  “decommissioning expenditure” has the same meaning as in section 80,                         
          -  “decommissioning relief agreement” has the same meaning as in that section,                         
          -  “oil field” has the same meaning as in OTA 1975, and                         
          -  “relevant agreement” has the meaning given by section 104(5)(a) of FA 1991.                         

### Decommissioning security settlementsU.K.

#### 86Removal of IHT charges in respect of decommissioning security settlementsU.K.

(1)In Chapter 3 of Part 3 of IHTA 1984 (settled property: settlements without interests in possession etc), section 58 (relevant property) is amended as follows.                  

(2)In subsection (1), omit the “and” at the end of paragraph (ea) and before paragraph (f) insert—                  

“(eb)property comprised in a decommissioning security settlement; and”.                  

(3)At the end insert—                  

“(6)For the purposes of subsection (1)(eb) above a settlement is a “decommissioning security settlement” if the sole or main purpose                           of the settlement is to provide security for the performance of obligations under an abandonment programme.                  

(7)In subsection (6)—                  
          -  “abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised);                         
          -  “security” has the same meaning as in section 38A of that Act.”                         

(4)This section is treated as having come into force on 20 March 1993.                  

(5)For the purposes of section 58 of IHTA 1984—                  

(a)any reference in that section to Part 4 of the Petroleum Act 1998 has effect, in relation to any period before the coming                        into force of that Part, as a reference to Part 1 of the Petroleum Act 1987, and                  

(b)section 38A of the Petroleum Act 1998 is to be treated as having come into force at the same time as this section.                  

(6)There is to be no charge to tax under section 65 of IHTA 1984 if the only reason for such a charge would be that property                        ceases to be relevant property by virtue of the coming into force of this section.                  

#### 87Loan relationships arising from decommissioning security settlementsU.K.

(1)In Part 8 of CTA 2010 (oil activities), after section 287 insert—                  

##### “287ARestriction where debits or credits relate to decommissioning security settlement

(1)No debits or credits are to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect                           of a company's loan relationship so far as the loan relationship is in respect of property comprised in a decommissioning                           security settlement.                  

(2)For the purposes of this section a settlement is a “decommissioning security settlement” if the sole or main purpose of the                           settlement is to provide security for the performance of obligations under an abandonment programme.                  

(3)In subsection (2)—                  
          -  “abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised),                              and                         
          -  “security” has the same meaning as in section 38A of that Act.”                         

(2)In section 464 of CTA 2009 (priority of Part 5 for corporation tax purposes), in subsection (3)(e), for “and 287” substitute                        “ to 287A ”.                  

(3)The amendments made by this section have effect in relation to accounting periods beginning on or after the day on which this                        Act is passed.                  

### Decommissioning expenditure etcU.K.

#### 88Decommissioning expenditure taken into account for PRT purposesU.K.

(1)Section 330B of CTA 2010 (decommissioning expenditure taken into account for PRT purposes) is amended as follows.                  

(2)In subsection (1), omit the “and” at the end of paragraph (a) and after paragraph (b) insert “, and                   

(c)an amount equal to the appropriate fraction of the used-up amount of that expenditure is added under section 330A(2) in calculating                           the participator's adjusted ring fence profits for an accounting period.”                  

(3)For subsection (2) substitute—                  

“(2)In calculating for the purposes of section 330(1) the amount of the participator's adjusted ring fence profits for the accounting                           period, there is to be deducted the amount given by—                  

where—                     

RP is the relevant percentage of the decommissioning expenditure,                        

AF is the appropriate fraction, and                        

D is the PRT difference.”                        

(4)In subsection (3)—                  

(a)before the definition of “the appropriate fraction” insert—                  

““the relevant percentage of the decommissioning expenditure” is the percentage of that expenditure that is the used-up amount                        referred to in subsection (1)(c),”;                  

(b)in the definition of “the appropriate fraction”, omit “relevant”;                  

(c)in the definition of “the PRT difference”, for “subsection (1)” substitute “ subsection (1)(a) ”.                  

(5)In subsection (4), for “subsection (1)” substitute “ subsection (1)(a) ”.                  

(6)In subsection (7)—                  

(a)omit the definition of “the relevant accounting period”, and                  

(b)at the end insert—                  

““the used-up amount”, in relation to any expenditure, has the same meaning as in section 330A (see subsection (3) of that section).”                  

(7)The amendments made by this section have effect in relation to expenditure incurred in connection with decommissioning carried                        out on or after the day on which this Act is passed.                  

#### 89Miscellaneous amendments relating to decommissioningU.K.

(1)Part 1 of Schedule 31 contains provision about expenditure on and under abandonment guarantees and abandonment expenditure.                  

(2)Part 2 of Schedule 31 contains provision about calculating the profits of a ring fence trade carried on by a person who incurs                        expenditure on meeting another person's decommissioning liabilities.                  

### Capital allowancesU.K.

#### 90Expenditure on decommissioning onshore installationsU.K.

(1)Section 163 of CAA 2001 (meaning of “general decommissioning expenditure”) is amended as follows.                  

(2)In subsection (1)—                  

(a)the words after “if” become paragraph (a) of that subsection,                  

(b)in that paragraph, for “subsections (3) to (4)” substitute “ subsections (3), (3A) and (4) ”, and                  

(c)at the end of that paragraph insert “, or                   

(b)the conditions in subsections (3B) and (4) are met.”                  

(3)After subsection (3A) insert—                  

“(3B)The expenditure must have been incurred on decommissioning plant or machinery—                  

(a)which has been brought into use wholly or partly for the purposes of a ring fence trade, and                  

(b)which—                  

(i)is, or forms part of, a relevant onshore installation, or                  

(ii)when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation.                  

(3C)In subsection (3B) “relevant onshore installation” means any building or structure which—                  

(a)falls within any of sub-paragraphs (ii) to (iv) of section 3(4)(c) of OTA 1975,                  

(b)is not an offshore installation, and                  

(c)is or has been used for purposes connected with the winning of oil from an oil field any part of which lies within—                  

(i)the boundaries of the territorial sea of the United Kingdom, or                  

(ii)an area designated under section 1(7) of the Continental Shelf Act 1964.”                  

(4)In subsection (5)(a), for “ “oil field” has” substitute “ “oil” and “oil field” have”.                  

(5)The amendments made by this section have effect in relation to expenditure incurred on decommissioning carried out on or after                        the day on which this Act is passed.                  

#### 91Expenditure on decommissioning certain redundant plant or machineryU.K.

(1)In section 164 of CAA 2001 (general decommissioning expenditure incurred before cessation of ring fence trade), after subsection                        (1B) insert—                  

“(1C)If the plant or machinery concerned is incidentally-acquired redundant plant or machinery (see subsection (1D)), it is to                           be regarded for the purposes of this section as having been brought into use for the purposes of the ring fence trade.                  

(1D)Plant or machinery is “incidentally-acquired redundant plant or machinery” if—                  

(a)it has not been brought into use for the purposes of the ring fence trade,                  

(b)it forms part of a relevant installation (see subsection (1E)) which has been brought into use for the purposes of the ring                           fence trade,                  

(c)at the time R acquired an interest in the relevant installation, the plant or machinery was not being used for any purposes,                           and                  

(d)the acquisition of the interest in the plant or machinery was merely incidental to the acquisition of the interest in the                           relevant installation.                  

(1E)For the purposes of subsection (1D)—                  
          -  “relevant installation” means—                          (a)
an offshore installation,                                 
(b)
a submarine pipeline, or                                 
(c)
a relevant onshore installation;                                 
 
          -  “offshore installation” and “submarine pipeline” have the same meaning as in Part 4 of the Petroleum Act 1998;                         
          -  “relevant onshore installation” has the meaning given by section 163(3C).”                         

(2)The amendment made by this section has effect in relation to expenditure incurred on decommissioning carried out on or after                        the day on which this Act is passed.                  

#### 92Expenditure on site restorationU.K.

(1)Part 5 of CAA 2001 (mineral extraction allowances) is amended as follows.                  

(2)In section 395 (qualifying expenditure), in subsection (1)(d), omit “post-trading”.                  

(3)In section 403 (qualifying expenditure on acquiring a mineral asset), after subsection (2) insert—                  

“(2A)For the purposes of this section the reference to expenditure on acquiring a mineral asset does not include expenditure incurred                           on the restoration of a relevant site (within the meaning of section 416 or 416ZA).”                  

(4)In section 416 (expenditure on restoration within 3 years of ceasing to trade)—                  

(a)in subsections (1)(a) and (6)(a), before “mineral extraction trade” insert “ relevant ”;                  

(b)in subsection (5), at the end insert—                  

“But it does not include decommissioning any plant or machinery (within the meaning of section 163).”;                  

(c)after subsection (7) insert—                  

“(7A)Relevant mineral extraction trade” means a mineral extraction trade that is not a ring fence trade within the meaning of Part                           8 of CTA 2010 (see section 277 of that Act).”;                  

(d)the heading of section 416 becomes “ **Non-ring fence trades: expenditure on restoration within 3 years of ceasing to trade** ”.                  

(5)In Chapter 5, after section 416 insert—                  

##### “416ZARing fence trades: expenditure on site restoration

(1)If—                  

(a)a person who is carrying on, or has ceased to carry on, a ring fence trade incurs expenditure on the restoration of a relevant                           site,                  

(b)that part of the restoration work to which the expenditure relates has been carried out, and                  

(c)the expenditure has not been deducted in calculating for tax purposes the profits of any trade carried on by the person,                  

the net cost of the restoration is qualifying expenditure for the relevant period in which that part of the work to which                        the expenditure relates was carried out.                  

(2)“Relevant period” means—                  

(a)in the case of restoration work carried out while the person is carrying on the trade, a chargeable period, and                  

(b)in the case of restoration work carried out after the person has ceased to carry on the trade, a notional accounting period.                  

For the meaning of “notional accounting period”, see section 416ZB.                  

(3)The qualifying expenditure for a notional accounting period is treated as incurred on the last day of trading.                  

(4)If the amount of expenditure incurred on any part of the restoration work carried out in a relevant period is disproportionate                           to that part of the restoration work, only so much of the net cost of the restoration as is proportionate to that part of                           the restoration work (the “allowable expenditure for the period”) is to be treated as qualifying expenditure for that period.                  

(5)But subsection (4) does not prevent that part of the expenditure that is not allowable expenditure for the period from being                           treated as qualifying expenditure for a subsequent relevant period.                  

(6)If any expenditure incurred by a person is qualifying expenditure under this section—                  

(a)the whole of the expenditure on the restoration (not just the net cost) is not deductible in calculating the person's income                           for any tax purposes, and                  

(b)none of the amounts subtracted to produce the net cost is to be treated as the person's income for any tax purposes.                  

(7)“Restoration” includes—                  

(a)landscaping,                  

(b)in relation to land in the United Kingdom, the carrying out of any works required as a condition of granting planning permission                           for development relating to the winning of oil from an oil field,                  

(c)in relation to land in the UK marine area, the carrying out of any works required in order to comply with—                  

(i)an approved abandonment programme,                  

(ii)a condition to which the approval of an abandonment programme is subject, or                  

(iii)a requirement imposed by the Secretary of State, or an agreement made with the Secretary of State, in relation to a relevant                           site, and                  

(d)in relation to land in a foreign sector of the continental shelf, the carrying out of any works required in order to comply                           with anything corresponding to a matter within paragraph (c)(i), (ii) or (iii) under the law of a territory outside the United                           Kingdom.                  

But it does not include decommissioning any plant or machinery (within the meaning of section 163).                  

(8)A “relevant site” means—                  

(a)the site of a source to the working of which the ring fence trade relates (or related), or                  

(b)land used in connection with working such a source.                  

(9)“The net cost of the restoration” means the expenditure incurred on the restoration less any amounts that—                  

(a)are received, or are to be received, by the person, and                  

(b)are attributable to the restoration of the relevant site.                  

(10)All such adjustments are to be made, by way of discharge or repayment of tax or otherwise, as are necessary to give effect                           to this section.                  

(11)In this section—                  
          -  “abandonment programme”, “approval” and “approved” (in relation to an abandonment programme) have the same meaning as in Part                              4 of the Petroleum Act 1998,                         
          -  “foreign sector of the continental shelf” means an area within which rights are exercisable with respect to the sea bed and subsoil and their natural resources by                              a territory outside the United Kingdom,                         
          -  “oil” and “oil field” have the same meaning as in Part 1 of OTA 1975,                         
          -  “ring fence trade” has the same meaning as in Part 8 of CTA 2010 (see section 277 of that Act), and                         
          -  “UK marine area” has the meaning given by section 42 of the Marine and Coastal Access Act 2009.                         

##### 416ZB“Notional accounting period”

(1)For the purposes of section 416ZA “notional accounting period”, in relation to a person (“the former trader”) who has ceased to carry on a ring fence trade, means each of the following                           periods—                  

(a)the period that—                  

(i)begins with the day following the last day on which the former trader carried on the ring fence trade, and                  

(ii)ends with the day on which the first termination event subsequently occurs, and                  

(b)each period that—                  

(i)begins with the day following the last day of a period determined under paragraph (a) or this paragraph, and                  

(ii)ends with the day on which the first termination event subsequently occurs.                  

(2)But there are to be no notional accounting periods after the end of the post-cessation period (see subsection (4)).                  

(3)“Termination event”, in relation to a notional accounting period, means each of the following—                  

(a)the end of the period of 12 months beginning with the first day of the notional accounting period,                  

(b)the occurrence of an accounting date of the former trader or, if there is a period for which the former trader does not make                           up accounts, the end of that period (but see subsections (6) and (7)), and                  

(c)the end of the post-cessation period.                  

(4)“The post-cessation period” means the period that—                  

(a)begins with the day following the last day on which the former trader carried on the ring fence trade, and                  

(b)ends with the day on which the appropriate authority is satisfied that the restoration of the relevant site has been completed.                  

(5)In subsection (4) “the appropriate authority” means—                  

(a)in the case of restoration falling within section 416ZA(7)(c), the Secretary of State, and                  

(b)in any other case, such person or body as the Commissioners for Her Majesty's Revenue and Customs may specify.                  

(6)If the former trader—                  

(a)carries on more than one trade,                  

(b)makes up accounts of any of them to different dates, and                  

(c)does not make up general accounts for the whole of the former trader's activities,                  

subsection (3)(b) applies with reference to the accounting date of such one of the trades as the former trader may determine.                  

(7)If the Commissioners for Her Majesty's Revenue and Customs are of the opinion, on reasonable grounds, that a date determined                           by the former trader for the purposes of subsection (6) is inappropriate, the Commissioners may by notice direct that the                           accounting date of such other of the trades referred to in that subsection as appears to the Commissioners to be appropriate                           is to be used instead.                  

(8)Expressions used in this section and in section 416ZA have the same meaning in this section as they do in that section.”                  

(6)In section 416B (first-year qualifying expenditure), in subsection (2), at the end insert “ (within the meaning of section 403) ”.                  

(7)Part 4 of CTA 2010 (loss relief) is amended as follows.                  

(8)In section 40 (ring fence trades: extension of periods for which relief may be given), in subsection (1)(b), for “403” substitute                        “ by virtue of section 416ZA ”.                  

(9)In section 43 (claim period in case of ring fence or mineral extraction trades), in subsection (1)(b)—                  

(a)after “416” insert “ or 416ZA ”, and                  

(b)for the words from “restoration” to “trade” substitute “ site restoration ”.                  

(10)The amendments made by this section have effect in relation to expenditure incurred on restoration carried out on or after                        the day on which this Act is passed.                  

#### 93Restrictions on allowances for certain oil-related expenditureU.K.

Schedule 32 contains provision in connection with restrictions on allowances for certain oil-related expenditure.

## **PART 3**U.K.Annual tax on enveloped dwellings

### The charge to taxU.K.

#### 94. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 95Entitlement to interestsU.K.

#### 96Person liableU.K.

#### 97Liability of persons jointly entitledU.K.

#### 98Collective investment schemes: liability for and collection of taxU.K.

#### 99. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 100Interim reliefU.K.

#### 101. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 103Section 102: “substantial” acquisitions and disposalsU.K.

#### 104No double chargeU.K.

### Adjustment of amount chargedU.K.

#### 105“Adjusted chargeable amount”U.K.

#### 106Adjustment of amount chargeableU.K.

### Chargeable interests and “single-dwelling interest”U.K.

#### 107Chargeable interestsU.K.

#### 108Meaning of “single-dwelling interest”U.K.

#### 109Different interests held in the same dwellingU.K.

#### 110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 111Different interests held in the same dwelling: effect of reliefs etcU.K.

### Meaning of “dwelling”U.K.

#### 112Meaning of “dwelling”U.K.

#### 113Substantial performance of “off plan” purchaseU.K.

#### 114Power to modify meaning of “use as a dwelling”U.K.

#### 115Parts of a greater wholeU.K.

#### 116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 118Section 117: supplementaryU.K.

#### 119Terraces etcU.K.

### Acquisitions and disposalsU.K.

#### 120Acquisitions and disposals of chargeable interestsU.K.

#### 121Date of acquisition or disposalU.K.

#### 122Contract and conveyance: the purchaserU.K.

#### 123Contract and conveyance: the vendorU.K.

### New dwellings, conversions, demolition etcU.K.

#### 124New dwellingsU.K.

#### 125Dwellings produced from other dwellingsU.K.

#### 126Demolition of a dwellingU.K.

#### 127Demolition without replacementU.K.

#### 128Demolition and replacement: new dwellingsU.K.

#### 129Demolition and replacement: other casesU.K.

#### 130Conversion of dwelling for non-residential useU.K.

#### 131Damage to a dwellingU.K.

### ReliefsU.K.

#### 132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 133Property rental businessesU.K.

#### 134Rental property: preparation for sale, demolition etcU.K.

#### 135Non-qualifying occupation: look-forward and look-backU.K.

#### 136Meaning of “non-qualifying individual”U.K.

#### 137Dwellings opened to the publicU.K.

#### 138Property developersU.K.

#### 139Property developers: exchange of dwellingsU.K.

#### 140Property developers: supplementaryU.K.

#### 141Property tradersU.K.

#### 142Property traders: supplementaryU.K.

#### 143Financial institutions acquiring dwellings in the course of lendingU.K.

#### 144Section 143: supplementaryU.K.

#### 145. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 146. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 148FarmhousesU.K.

#### 149“Farm worker” and “former long-serving farm worker”U.K.

#### 150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### ExemptionsU.K.

#### 151Charitable companiesU.K.

#### 152Section 151: supplementaryU.K.

#### 153Public bodiesU.K.

#### 154Bodies established for national purposesU.K.

#### 155Dwelling conditionally exempt from inheritance taxU.K.

### Power to modify reliefsU.K.

#### 156Modification of reliefsU.K.

### Alternative property financeU.K.

#### 157. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### Administration and payment of taxU.K.

#### 158Responsibility for collection and managementU.K.

#### 159. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 160Return of adjusted chargeable amountU.K.

#### 161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 162Returns, enquiries, assessments and other administrative mattersU.K.

#### 163. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 164Information and enforcementU.K.

#### 165Collection and recovery of tax etcU.K.

### Application of provisionsU.K.

#### 166CompaniesU.K.

#### 167PartnershipsU.K.

### Supplementary provisionsU.K.

#### 168Miscellaneous amendments and transitory provisionU.K.

#### 169Orders and regulationsU.K.

### InterpretationU.K.

#### 170Meaning of “chargeable day” and “within the charge”U.K.

#### 171References to the state of affairs “on” a dayU.K.

#### 172. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 173Connected persons: cell companiesU.K.

#### 174. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

## **PART 4**U.K.Excise duties and other taxes

### Inheritance taxU.K.

#### 175Open- ended investment companies and authorised unit trustsU.K.

#### 176Treatment of liabilities for inheritance tax purposesU.K.

#### 177Election to be treated as domiciled in United KingdomU.K.

#### 178Transfer to spouse or civil partner not domiciled in United KingdomU.K.

### FuelU.K.

#### 179Fuel duties: rates of duty and rebates from 1 April 2013U.K.

### AlcoholU.K.

#### 180Rates of alcoholic liquor dutiesU.K.

### TobaccoU.K.

#### 181Rates of tobacco products dutyU.K.

#### 182Meaning of “tobacco products”U.K.

### GamblingU.K.

#### 183Rates of gaming dutyU.K.

#### 184Combined bingoU.K.

### Air passenger dutyU.K.

#### 185Air passenger duty: rates of duty from 1 April 2013U.K.

#### 186Air passenger duty: miscellaneous provisionU.K.

### Vehicle excise dutyU.K.

#### 187VED rates for light passenger vehicles, light goods vehicles, motorcycles etcU.K.

#### 188Not exhibiting licence: period of graceU.K.

#### 189Vehicles not kept or used on public roadU.K.

#### 190Vehicle licences for disabled peopleU.K.

### Value added taxU.K.

#### 191Repayments of value added tax to health service bodiesU.K.

#### 192Valuation of certain supplies of fuelU.K.

#### 193Reduced rate for energy-saving materialsU.K.

### Stamp duty land taxU.K.

#### 194Pre-completion transactions: existing casesU.K.

#### 195Pre-completion transactionsU.K.

#### 196Relief from higher rateU.K.

#### 197LeasesU.K.

### Landfill taxU.K.

#### 198Standard rate of landfill taxU.K.

### Climate change levyU.K.

#### 199Climate change levy: main ratesU.K.

#### 200Climate change levy: supplies subject to carbon price support rates etcU.K.

### Insurance premium taxU.K.

#### 201Contracts that are not taxableU.K.

### Bank levyU.K.

#### 202Bank levy: rates from 1 January 2013U.K.

#### 203. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 204No deductions for UK or foreign bank leviesU.K.

#### 205High quality liquid assetsU.K.

## **PART 5**U.K.General anti-abuse rule

### 206. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### 207. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### 208Meaning of “tax advantage”U.K.

### 209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### 210. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### 211. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### 212Relationship between the GAAR and priority rulesU.K.

### 213Consequential amendmentU.K.

### 214. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### 215Commencement and transitional provisionU.K.

## **PART 6**U.K.Other provisions

### TrustsU.K.

#### 216Trusts with vulnerable beneficiaryU.K.

### Unit trustsU.K.

#### 217Unauthorised unit trustsU.K.

### ResidenceU.K.

#### 218Statutory residence testU.K.

#### 219Ordinary residenceU.K.

### International mattersU.K.

#### 220Controlled foreign companies etcU.K.

#### 221Agreement between UK and SwitzerlandU.K.

#### 222. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### DisclosureU.K.

#### 223Disclosure of tax avoidance schemesU.K.

### PowersU.K.

#### 224Powers under Proceeds of Crime Act 2002U.K.

#### 225Definition of “goods” for certain customs purposesU.K.

#### 226Power to detain goodsU.K.

#### 227Penalty instead of forfeiture of larger shipsU.K.

#### 228Data-gathering from merchant acquirers etcU.K.

### PaymentU.K.

#### 229Corporation tax: deferral of payment of exit chargeU.K.

#### 230Penalties: late filing, late payment and errorsU.K.

#### 231Overpayment relief: generally prevailing practice exclusion and EU lawU.K.

#### 232Overpayment relief: time limit for claimsU.K.

### AdministrationU.K.

#### 233Self assessment: withdrawal of notice to file etcU.K.

### Interim remediesU.K.

#### 234Restrictions on interim payments in proceedings relating to taxation mattersU.K.

## **PART 7**U.K.Final provisions

### 235InterpretationU.K.

### 236Short titleU.K.

# SCHEDULES

 Section 7

## SCHEDULE 1U.K.Annual investment allowance: periods straddling 1 January 2013 or 1 January 2015

### Chargeable periods which straddle 1 January 2013U.K.

1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Straddling period beginning before the relevant dateU.K.

2(1)This paragraph applies where the first straddling period begins before the relevant date.U.K.

(2)So far as concerns expenditure incurred before the relevant date, the maximum allowance under section 51A of CAA 2001 for                        the first straddling period is what would have been the maximum allowance for that period if the amendment made by section                        7(1) had not been made.

(3)So far as concerns expenditure incurred on or after the relevant date but before 1 January 2013, the maximum allowance under                        section 51A of CAA 2001 for the first straddling period is—

(4)In sub-paragraph (3)—

(a)“A” means the amount that would have been the maximum allowance for the period beginning on the relevant date and ending at                        the end of the first straddling period if—

(i)that period had been a separate chargeable period, and

(ii)the amendment made by section 7(1) had not been made;

(b)“B” means the amount (if any) by which—

(i)the AIA expenditure incurred in the period mentioned in paragraph 1(2)(a) in respect of which a claim for an annual investment                        allowance is made, exceeds

(ii)the maximum allowance under section 51A of CAA 2001 for that period if it were treated as a separate chargeable period.

(5)So far as concerns expenditure incurred on or after 1 January 2013, the maximum allowance under section 51A of CAA 2001 for                        the first straddling period is the sum of each maximum allowance that would be found if the period mentioned in paragraph                        1(2)(b) and the period mentioned in paragraph 1(2)(c) were each treated as separate chargeable periods.

### First straddling period beginning on or after the relevant dateU.K.

3(1)This paragraph applies where no part of the first straddling period falls within paragraph 1(2)(a).U.K.

(2)So far as concerns expenditure incurred before 1 January 2013, the maximum allowance under section 51A of CAA 2001 for the                        first straddling period is to be calculated as if the amendment made by section 7(1) had not been made.

### Chargeable periods which straddle 1 January 2015U.K.

4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Operation of annual investment allowance where restrictions applyU.K.

5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

 Section 14

## SCHEDULE 2U.K.Tax advantaged employee share schemes

### **PART 1**U.K.Retirement of participants

#### IntroductionU.K.

1U.K.Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities) is amended as follows.

#### Share incentive plansU.K.

2U.K.In section 498 (no charge on shares ceasing to be subject to plan in certain circumstances) in subsection (2)(e) omit the                        words from “on” to “2)”.

3U.K.In Part 4 of Schedule 2 (types of shares that may be awarded) in paragraph 32 (provision for forfeiture) in sub-paragraph                        (2)(e) omit the words from “on” to “98)”.

4U.K.Part 11 of Schedule 2 (supplementary provisions) is amended as follows.

5U.K.Omit paragraph 98 (meaning of “specified retirement age”).

6U.K.In paragraph 100 (index of defined expressions) omit the entry for “the specified retirement age”.

#### SAYE option schemesU.K.

7U.K.Part 6 of Schedule 3 (requirements etc relating to share options) is amended as follows.

8U.K.In paragraph 27 (introduction) in sub-paragraph (1)—

(a)omit the entry for paragraph 31,

(b)after the entry for paragraph 32 insert “ and ”, and

(c)omit the entry for paragraph 33 and the “and” after it.

9U.K.In paragraph 30 (time for exercising options) in sub-paragraph (2)(a)—

(a)for “32 to” substitute “ 32, ”, and

(b)omit “reaching the specified age without retiring,”.

10U.K.Omit paragraph 31 (requirement to have a “specified age”).

11U.K.Omit paragraph 33 (exercise of options: reaching specified age without retiring).

12U.K.In paragraph 34 (exercise of options: scheme-related employment ends) in sub-paragraph (2)(b) omit the words from “on” to                        “employment”.

13U.K.In Part 9 of Schedule 3 (supplementary provisions) in paragraph 49 (index of defined expressions) omit the entry for “specified                        age”.

#### CSOP schemesU.K.

14U.K.In section 524 (no charge in respect of exercise of option) in subsection (2C) omit the definition of “retirement” and the                        “and” before it.

15U.K.In Part 8 of Schedule 4 (supplementary provisions) omit paragraph 35A (retirement age).

#### Transitional provisionU.K.

16U.K.The amendment made by paragraph 11 above has no effect in relation to options granted before the day on which this Act is                        passed; and the effect of the amendments made by paragraphs 8 to 10 and 13 above is limited accordingly.

17(1)A SIP, SAYE option scheme or CSOP scheme approved before the day on which this Act is passed has effect with any modifications                        needed to reflect the amendments made by this Part of this Schedule.U.K.

(2)In relation to any shares awarded under a SIP before that day which are subject to provision for forfeiture, that provision                        has effect with any modifications needed to reflect the amendment made by paragraph 3 above.

(3)Because of paragraphs 48 and 58 below, that amendment is not relevant to shares awarded under a SIP on or after that day.

### **PART 2**U.K.“Good leavers” (other than retirees)

#### IntroductionU.K.

18U.K.Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities) is amended as follows.

#### Share incentive plansU.K.

19U.K.In section 498 (no charge on shares ceasing to be subject to plan in certain circumstances) after subsection (2) insert—

“(3)A participant is not liable to income tax on shares (“the relevant shares”) in a company (“the relevant company”) being withdrawn from the plan if—                  

(a)the withdrawal of the relevant shares from the plan relates to—                  

(i)a transaction resulting from a compromise, arrangement or scheme falling within subsection (9),                  

(ii)an offer forming part of a general offer falling within subsection (10), or                  

(iii)the application of sections 979 to 982 or 983 to 985 of the Companies Act 2006 in the case of a takeover offer (as defined                           in section 974 of that Act) falling within subsection (13), and                  

(b)as a result of, as the case may be—                  

(i)the transaction,                  

(ii)the offer, or                  

(iii)the application of sections 979 to 982 or 983 to 985 of the Companies Act 2006,                  

the participant receives cash (and no other assets) in exchange for the relevant shares.                  

(4)For the purposes of subsection (3)(b) it does not matter if the participant receives other assets in exchange for shares other                           than the relevant shares.                  

(5)Subsection (3) does not apply to the relevant shares (or to a proportion of them) if in connection with, as the case may be—                  

(a)the compromise, arrangement or scheme,                  

(b)the general offer, or                  

(c)the takeover offer,                  

a course of action was open to the participant which, had it been followed, would have resulted in other assets being received                        in exchange for the relevant shares (or the proportion of them) instead of cash.                  

(6)Subsection (3) does not apply to the relevant shares (or to a proportion of them) if it is reasonable to suppose that the                           relevant shares (or the proportion of them) would not have been awarded to the participant—                  

(a)had, as the case may be—                  

(i)the compromise, arrangement or scheme,                  

(ii)the general offer, or                  

(iii)the takeover offer,                  

not been made, or                  

(b)had any arrangements for the making of—                  

(i)a compromise, arrangement or scheme which would fall within subsection (9),                  

(ii)a general offer which would fall within subsection (10), or                  

(iii)a takeover offer (as defined in section 974 of the Companies Act 2006) which would fall within subsection (13),                  

which were in place or under consideration at any time not been in place or under consideration.                  

(7)In subsection (6) the reference to shares being awarded to the participant is to be read, in the case of dividend shares,                           as a reference to the shares being acquired by the trustees on the participant's behalf.                  

(8)In subsection (6)(b) “arrangements” includes any plan, scheme, agreement or understanding, whether or not legally enforceable.                  

(9)A compromise, arrangement or scheme falls within this subsection if it is applicable to or affects—                  

(a)all the ordinary share capital of the relevant company or all the shares of the same class as the relevant shares, or                  

(b)all the shares, or all the shares of that same class, which are held by a class of shareholders identified otherwise than                           by reference to their employment or their participation in an approved SIP.                  

(10)A general offer falls within this subsection if—                  

(a)it is made to holders of shares of the same class as the relevant shares or to holders of shares in the relevant company,                           and                  

(b)it is made in the first instance on a condition such that if it is satisfied the person making the offer will have control                           of the relevant company.                  

(11)For the purposes of subsection (10) it does not matter if the general offer is made to different shareholders by different                           means.                  

(12)In subsection (10)(b) “control” has the meaning given by sections 450 and 451 of CTA 2010.                  

(13)A takeover offer falls within this subsection if—                  

(a)it relates to the relevant company, and                  

(b)where there is more than one class of share in the relevant company, the class or classes to which it relates is or include                           the class of the relevant shares.”                  

20(1)In Part 5 of Schedule 2 (free shares) in paragraph 37 (holding period: power of participant to direct trustees to accept general                        offers etc) after sub-paragraph (6) insert—U.K.

“(7)For the purposes of sub-paragraph (5) it does not matter if the general offer is made to different shareholders by different                           means.                  

(8)If in the case of a takeover offer (as defined in section 974 of the Companies Act 2006) there arises a right under section                           983 of that Act to require the offeror to acquire the participant's free shares, or such of them as are of a particular class,                           the participant may direct the trustees to exercise that right.”                  

(2)A SIP approved before the day on which this Act is passed has effect with any modifications needed to reflect the amendment                        made by this paragraph.

#### SAYE option schemesU.K.

21U.K.In section 519 (no charge in respect of exercise of option) after subsection (3) insert—

“(3A)In relation to any shares acquired by the exercise of the share option, no liability to income tax arises in respect of its                           exercise if—                  

(a)the individual exercises the option before the third anniversary of the date on which the option was granted at a time when                           the SAYE option scheme is approved,                  

(b)the option is exercised by virtue of a provision included in the scheme—                  

(i)under paragraph 37(1) of Schedule 3 where the relevant date is the relevant date for the purposes of paragraph 37(2) or (4),                           or                  

(ii)under paragraph 37(6) of Schedule 3,                  

(c)as a result of, as the case may be—                  

(i)the general offer,                  

(ii)the compromise or arrangement, or                  

(iii)the takeover offer,                  

the individual receives cash (and no other assets) in exchange for the shares,                  

(d)when the decision to grant the option was taken—                  

(i)the general offer,                  

(ii)the compromise or arrangement, or                  

(iii)the takeover offer,                  

as the case may be, had not been made,                  

(e)when that decision was taken, no arrangements were in place or under consideration for—                  

(i)the making of a general offer which would fall within subsection (3D),                  

(ii)the making of any compromise or arrangement which would fall within subsection (3H), or                  

(iii)the making of a takeover offer (as defined in section 974 of the Companies Act 2006) which would fall within subsection (3I),                  

(f)if the scheme includes a provision under paragraph 38 of Schedule 3 (“the paragraph 38 provision”), in connection with—                  

(i)the general offer,                  

(ii)the compromise or arrangement, or                  

(iii)the takeover offer,                  

as the case may be, no course of action was open to the individual which, had it been followed, would have resulted in the                        individual making an agreement under the paragraph 38 provision which would have prevented the individual from acquiring the                        shares by the exercise of the option, and                  

(g)the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements                           under which the option was granted or is exercised.                  

(3B)In subsection (3A)(c)(iii), (d)(iii) and (f)(iii) “the takeover offer” means the takeover offer (as defined in section 974 of the Companies Act 2006) giving rise to the application of sections                           979 to 982 or 983 to 985 of that Act.                  

(3C)In subsection (3A)(e) “arrangements” includes any plan, scheme, agreement or understanding, whether or not legally enforceable.                  

(3D)A general offer falls within this subsection if it is—                  

(a)a general offer to acquire the whole of the issued ordinary share capital of the relevant company which is made on a condition                           such that, if it is met, the person making the offer will have control of the relevant company, or                  

(b)a general offer to acquire all the shares in the relevant company which are of the same class as those acquired by the exercise                           of the option.                  

(3E)In subsection (3D)(a) the reference to the issued ordinary share capital of the relevant company does not include any capital                           already held by the person making the offer or a person connected with that person and in subsection (3D)(b) the reference                           to the shares in the relevant company does not include any shares already held by the person making the offer or a person                           connected with that person.                  

(3F)For the purposes of subsection (3D)(a) and (b) it does not matter if the general offer is made to different shareholders by                           different means.                  

(3G)For the purposes of subsection (3D)(a) a person is to be treated as obtaining control of a company if that person and others                           acting in concert together obtain control of it.                  

(3H)A compromise or arrangement falls within this subsection if it is applicable to or affects—                  

(a)all the ordinary share capital of the relevant company or all the shares of the same class as those acquired by the exercise                           of the option, or                  

(b)all the shares, or all the shares of that same class, which are held by a class of shareholders identified otherwise than                           by reference to their employment or directorships or their participation in an approved SAYE option scheme.                  

(3I)A takeover offer falls within this subsection if—                  

(a)it relates to the relevant company, and                  

(b)where there is more than one class of share in the relevant company, the class or classes to which it relates is or include                           the class of the shares acquired by the exercise of the option.                  

(3J)In subsections (3D), (3H) and (3I) “the relevant company” means the company whose shares are acquired by the exercise of the option.”                  

22U.K.Part 6 of Schedule 3 (requirements etc relating to share options) is amended as follows.

23(1)Paragraph 34 (exercise of options: scheme-related employment ends) is amended as follows.U.K.

(2)In sub-paragraph (2)—

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

(b)after paragraph (b) insert—

“(c)a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006, or                  

(d)if P holds office or is employed in a company which is an associated company (as defined in paragraph 35(4)) of the scheme                           organiser, that company ceasing to be an associated company of the scheme organiser by reason of a change of control (as determined                           in accordance with sections 450 and 451 of CTA 2010),”.                  

(3)In sub-paragraphs (4) and (5A)(b) for “or (b)” substitute “ to (d) ”.

(4)A SAYE option scheme approved before the day on which this Act is passed has effect with any modifications needed to reflect                        the amendments made by this paragraph.

24(1)Paragraph 37 (exercise of options: company events) is amended as follows.U.K.

(2)After sub-paragraph (3) insert—

“(3A)In sub-paragraph (3)(a) the reference to the issued ordinary share capital of the company does not include any capital already                           held by the person making the offer or a person connected with that person and in sub-paragraph (3)(b) the reference to the                           shares in the company does not include any shares already held by the person making the offer or a person connected with that                           person.                  

(3B)For the purposes of sub-paragraph (3)(a) and (b) it does not matter if the general offer is made to different shareholders                           by different means.”                  

(3)A SAYE option scheme approved before the day on which this Act is passed which contains provision under paragraph 37(1) of                        Schedule 3 to ITEPA 2003 by reference to paragraph 37(2) has effect with any modifications needed to reflect the amendment                        made by sub-paragraph (2).

(4)In sub-paragraph (4) for the words from “proposed” to the end substitute “applicable to or affecting— 

(a)all the ordinary share capital of the company or all the shares of the same class as the shares to which the option relates,                           or                  

(b)all the shares, or all the shares of that same class, which are held by a class of shareholders identified otherwise than                           by reference to their employment or directorships or their participation in an approved SAYE option scheme.”                  

(5)A SAYE option scheme approved before the day on which this Act is passed which contains provision under paragraph 37(1) of                        Schedule 3 to ITEPA 2003 by reference to paragraph 37(4) has effect with any modifications needed to reflect the amendment                        made by sub-paragraph (4).

(6)In sub-paragraph (6)—

(a)after “982” insert “ or 983 to 985 ”, and

(b)after “shareholder” insert “ etc ”.

(7)A SAYE option scheme approved before the day on which this Act is passed which contains provision under paragraph 37(6) of                        Schedule 3 to ITEPA 2003 has effect with any modifications needed to reflect the amendments made by sub-paragraph (6).

25(1)In Part 7 of Schedule 3 (exercise of share options) paragraph 38 (exchange of options on company reorganisation) is amended                        as follows.U.K.

(2)In sub-paragraph (2)(c)—

(a)after “982” insert “ or 983 to 985 ”, and

(b)after “shareholder” insert “ etc ”.

(3)After sub-paragraph (2) insert—

“(2A)In sub-paragraph (2)(a)(i) the reference to the issued ordinary share capital of the scheme company does not include any capital                           already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference                           to the shares in the scheme company does not include any shares already held by the person making the offer or a person connected                           with that person.                  

(2B)For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders                           by different means.”                  

(4)A SAYE option scheme approved before the day on which this Act is passed which contains provision under paragraph 38 of Schedule                        3 to ITEPA 2003 has effect with any modifications needed to reflect the amendments made by this paragraph.

#### CSOP schemesU.K.

26(1)Section 524 (no charge in respect of exercise of option) is amended as follows.U.K.

(2)In subsection (2B) for paragraph (a) substitute—

“(a)has ceased to be in qualifying employment because of—                  

(i)injury, disability, redundancy or retirement,                  

(ii)a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006, or                  

(iii)in the case of a group scheme where the qualifying employment is as a director or employee of a constituent company, that                           company ceasing to be controlled by the scheme organiser, and”.                  

(3)After subsection (2B) insert—

“(2BA)For the purposes of subsection (2B) an individual is in “qualifying employment” if the individual is a full-time director                           or qualifying employee (as defined in paragraph 8(2) of Schedule 4) of—                  

(a)the scheme organiser, or                  

(b)in the case of a group scheme, a constituent company.”                  

(4)In subsection (2C) for “(2B)” substitute “ (2B)(a)(i) ”.

(5)After subsection (2C) insert—

“(2D)Subsection (2B)(a)(iii) does not cover a case where the constituent company was controlled by the scheme organiser by virtue                           of paragraph 34 of Schedule 4 (jointly owned companies).                  

(2E)In relation to any shares acquired by the exercise of the share option, no liability to income tax arises in respect of its                           exercise if—                  

(a)the individual exercises the option before the third anniversary of the date on which the option was granted at a time when                           the CSOP scheme is approved,                  

(b)the option is exercised by virtue of a provision included in the scheme under paragraph 25A of Schedule 4,                  

(c)as a result of, as the case may be—                  

(i)the general offer,                  

(ii)the compromise or arrangement, or                  

(iii)the takeover offer,                  

the individual receives cash (and no other assets) in exchange for the shares,                  

(d)when the decision to grant the option was taken—                  

(i)the general offer,                  

(ii)the compromise or arrangement, or                  

(iii)the takeover offer,                  

as the case may be, had not been made,                  

(e)when that decision was taken, no arrangements were in place or under consideration for—                  

(i)the making of a general offer which would fall within subsection (2H),                  

(ii)the making of any compromise or arrangement which would fall within subsection (2L), or                  

(iii)the making of a takeover offer (as defined in section 974 of the Companies Act 2006) which would fall within subsection (2M),                  

(f)if the scheme includes a provision under paragraph 26 of Schedule 4 (“the paragraph 26 provision”), in connection with—                  

(i)the general offer,                  

(ii)the compromise or arrangement, or                  

(iii)the takeover offer,                  

as the case may be, no course of action was open to the individual which, had it been followed, would have resulted in the                        individual making an agreement under the paragraph 26 provision which would have prevented the individual from acquiring the                        shares by the exercise of the option, and                  

(g)the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements                           under which the option was granted or is exercised.                  

(2F)In subsection (2E)(c)(iii), (d)(iii) and (f)(iii) “the takeover offer” means the takeover offer (as defined in section 974 of the Companies Act 2006) giving rise to the application of sections                           979 to 982 or 983 to 985 of that Act.                  

(2G)In subsection (2E)(e) “arrangements” includes any plan, scheme, agreement or understanding, whether or not legally enforceable.                  

(2H)A general offer falls within this subsection if it is—                  

(a)a general offer to acquire the whole of the issued ordinary share capital of the relevant company which is made on a condition                           such that, if it is met, the person making the offer will have control of the relevant company, or                  

(b)a general offer to acquire all the shares in the relevant company which are of the same class as those acquired by the exercise                           of the option.                  

(2I)In subsection (2H)(a) the reference to the issued ordinary share capital of the relevant company does not include any capital                           already held by the person making the offer or a person connected with that person and in subsection (2H)(b) the reference                           to the shares in the relevant company does not include any shares already held by the person making the offer or a person                           connected with that person.                  

(2J)For the purposes of subsection (2H)(a) and (b) it does not matter if the general offer is made to different shareholders by                           different means.                  

(2K)For the purposes of subsection (2H)(a) a person is to be treated as obtaining control of a company if that person and others                           acting in concert together obtain control of it.                  

(2L)A compromise or arrangement falls within this subsection if it is applicable to or affects—                  

(a)all the ordinary share capital of the relevant company or all the shares of the same class as those acquired by the exercise                           of the option, or                  

(b)all the shares, or all the shares of that same class, which are held by a class of shareholders identified otherwise than                           by reference to their employment or directorships or their participation in an approved CSOP scheme.                  

(2M)A takeover offer falls within this subsection if—                  

(a)it relates to the relevant company, and                  

(b)where there is more than one class of share in the relevant company, the class or classes to which it relates is or include                           the class of the shares acquired by the exercise of the option.                  

(2N)In subsections (2H), (2L) and (2M) “the relevant company” means the company whose shares are acquired by the exercise of the option.”                  

27U.K.Part 5 of Schedule 4 (requirements etc relating to share options) is amended as follows.

28U.K.In paragraph 21 (introduction) in sub-paragraph (2)—

(a)after the entry for paragraph 24 omit “or”, and

(b)after the entry for paragraph 25 insert “, or 

paragraph 25A (exercise of options: company events)”.                  

29U.K.After paragraph 25 insert—

##### “Exercise of options: company eventsU.K.

25A(1)The scheme may provide that share options relating to shares in a company may be exercised within 6 months after the relevant                           date for the purposes of sub-paragraph (2) or (6).                  

(2)The relevant date for the purposes of this sub-paragraph is the date when—                  

(a)a person has obtained control of the company as a result of making an offer falling within sub-paragraph (3), and                  

(b)any condition subject to which the offer is made has been satisfied.                  

(3)An offer falls within this sub-paragraph if it is—                  

(a)a general offer to acquire the whole of the issued ordinary share capital of the company which is made on a condition such                           that, if it is met, the person making the offer will have control of the company, or                  

(b)a general offer to acquire all the shares in the company which are of the same class as the shares to which the option relates.                  

(4)In sub-paragraph (3)(a) the reference to the issued ordinary share capital of the company does not include any capital already                           held by the person making the offer or a person connected with that person and in sub-paragraph (3)(b) the reference to the                           shares in the company does not include any shares already held by the person making the offer or a person connected with that                           person.                  

(5)For the purposes of sub-paragraph (3)(a) and (b) it does not matter if the general offer is made to different shareholders                           by different means.                  

(6)The relevant date for the purposes of this sub-paragraph is the date when the court sanctions under section 899 of the Companies                           Act 2006 (court sanction for compromise or arrangement) a compromise or arrangement applicable to or affecting—                  

(a)all the ordinary share capital of the company or all the shares of the same class as the shares to which the option relates,                           or                  

(b)all the shares, or all the shares of that same class, which are held by a class of shareholders identified otherwise than                           by reference to their employment or directorships or their participation in an approved CSOP scheme.                  

(7)The scheme may provide that share options relating to shares in a company may be exercised at any time when any person is                           bound or entitled to acquire shares in the company under sections 979 to 982 or 983 to 985 of the Companies Act 2006 (takeover                           offers: right of offeror to buy out minority shareholder etc).                  

(8)For the purposes of this paragraph a person is to be treated as obtaining control of a company if that person and others acting                           in concert together obtain control of it.”                  

30(1)In Part 6 of Schedule 4 (exercise of share options) paragraph 26 (exchange of options on company reorganisation) is amended                        as follows.U.K.

(2)In sub-paragraph (2)(c)—

(a)after “982” insert “ or 983 to 985 ”, and

(b)after “shareholder” insert “ etc ”.

(3)After sub-paragraph (2) insert—

“(2A)In sub-paragraph (2)(a)(i) the reference to the issued ordinary share capital of the scheme company does not include any capital                           already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference                           to the shares in the scheme company does not include any shares already held by the person making the offer or a person connected                           with that person.                  

(2B)For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders                           by different means.”                  

(4)A CSOP scheme approved before the day on which this Act is passed which contains provision under paragraph 26 of Schedule                        4 to ITEPA 2003 has effect with any modifications needed to reflect the amendments made by this paragraph.

#### Enterprise management incentivesU.K.

31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### **PART 3**U.K.Material interest rules

#### IntroductionU.K.

32U.K.Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities) is amended as follows.

#### Share incentive plansU.K.

33U.K.Part 3 of Schedule 2 (eligibility of individuals) is amended as follows.

34U.K.In paragraph 13 (introduction)—

(a)after the entry for paragraph 18 insert “ and ”, and

(b)omit the entry for paragraph 19 and the “and” before it.

35U.K.In paragraph 14 (time of eligibility to participate) in sub-paragraph (7)—

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

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

36U.K.Omit paragraphs 19 to 24 (the “no material interest” requirement).

37U.K.In Part 11 of Schedule 2 (supplementary provisions) in paragraph 100 (index of defined expressions), in the entry for “close                        company”, omit “(and see paragraph 20(4))”.

38(1)The amendments made by paragraphs 33 to 37 above have effect for the purpose of determining whether an individual is eligible                        to participate in an award of shares on the day on which this Act is passed or any later day.U.K.

(2)A SIP approved before the day on which this Act is passed has effect accordingly with the omission of any provision falling                        within a provision of Schedule 2 to ITEPA 2003 omitted by those paragraphs.

#### SAYE option schemesU.K.

39U.K.Part 3 of Schedule 3 (eligibility of individuals) is amended as follows.

40U.K.In paragraph 9 (introduction) omit the entry for paragraph 11 and the “and” before it.

41U.K.Omit paragraphs 11 to 16 (the “no material interest” requirement).

42U.K.In Part 9 of Schedule 3 (supplementary provisions) in paragraph 49 (index of defined expressions), in the entry for “close                        company”, omit “(and see paragraph 11(4))”.

43(1)The amendments made by paragraphs 39 to 42 above have effect for the purpose of determining whether an individual is eligible                        to participate in a scheme on the day on which this Act is passed or any later day.U.K.

(2)A SAYE option scheme approved before the day on which this Act is passed has effect accordingly with the omission of any provision                        falling within a provision of Schedule 3 to ITEPA 2003 omitted by those paragraphs.

#### CSOP schemesU.K.

44(1)In Part 3 of Schedule 4 (eligibility of individuals) in paragraphs 10(2) and (3), 11(3) and (4) and 13(2) (which relate to                        the “no material interest” requirement) for “25%” substitute “ 30% ”.U.K.

(2)The amendments made by this paragraph have effect for the purpose of determining whether a person is eligible to participate                        in a scheme on the day on which this Act is passed or any later day (by altering what constitutes a material interest on that                        day and within the 12 months preceding that day).

(3)A CSOP scheme approved before the day on which this Act is passed has effect with any modifications needed to reflect the                        amendments made by this paragraph.

### **PART 4**U.K.Restricted shares

#### IntroductionU.K.

45U.K.Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities) is amended as follows.

#### Share incentive plansU.K.

46U.K.Part 4 of Schedule 2 (types of shares that may be awarded) is amended as follows.

47U.K.In paragraph 25 (introduction) in sub-paragraph (1)—

(a)after the entry for paragraph 28 insert “ and ”, and

(b)omit the entry for paragraph 30 and the “and” before it.

48U.K.Omit paragraphs 30 to 33 (only certain kinds of restrictions allowed).

49U.K.In Part 5 of Schedule 2 (free shares) in paragraph 35 (maximum annual award) omit sub-paragraphs (3) and (4).

50U.K.In Part 6 of Schedule 2 (partnership shares) in paragraph 43 (introduction) after sub-paragraph (2) insert—

“(2A)The plan must provide that partnership shares are not to be subject to any provision for forfeiture.”                  

51U.K.In Part 7 of Schedule 2 (matching shares) in paragraph 59 (general requirement for matching shares) omit sub-paragraph (2).

52U.K.In Part 9 of Schedule 2 (trustees) in paragraph 75 (duty to give notice of award of shares etc) in sub-paragraphs (2) and                        (3) after paragraph (a) insert—

“(aa)if the shares are subject to any restriction, giving details of the restriction,”.                  

53(1)In Part 10 of Schedule 2 (approval of plans) paragraph 84 (disqualifying events) is amended as follows.U.K.

(2)In sub-paragraph (3)—

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

(b)omit paragraph (c) and the “or” after it.

(3)In sub-paragraph (4)(b) for “provision for forfeiture” substitute “ restriction ”.

54U.K.Part 11 of Schedule 2 (supplementary provision) is amended as follows.

55U.K.In paragraph 92 (determination of market value) for sub-paragraph (2) substitute—

“(2)For the purposes of this Schedule the market value of shares subject to a restriction is to be determined as if they were                           not subject to the restriction.”                  

56U.K.In paragraph 99 (minor definitions) after sub-paragraph (3) insert—

“(4)For the purposes of the SIP code—                  

(a)shares are subject to a “restriction” if there is any contract, agreement, arrangement or condition which makes provision                           to which any of subsections (2) to (4) of section 423 (restricted securities) would apply if the references in those subsections                           to the employment-related securities were to the shares, and                  

(b)the “restriction” is that provision.”                  

57U.K.In paragraph 100 (index of defined expressions) at the appropriate place insert—

58(1)The amendments made by paragraphs 46 to 48 and 50 to 52 above have effect in relation to awards of shares made on or after                        the day on which this Act is passed.U.K.

(2)A SIP approved, or a trust instrument made, before that day has effect with any modifications needed to reflect the amendments                        made by paragraphs 46 to 57 above.

(3)In particular, in relation to awards of shares on or after that day, such a SIP has effect with the omission of any provision                        falling within a provision of Schedule 2 to ITEPA 2003 omitted by paragraph 48 above.

#### SAYE option schemesU.K.

59U.K.Part 4 of Schedule 3 (shares to which schemes can apply) is amended as follows.

60U.K.In paragraph 17 (introduction) in sub-paragraph (1)—

(a)after the entry for paragraph 20 insert “ and ”, and

(b)omit the entry for paragraph 21 and the “and” after it.

61U.K.Omit paragraph 21 (only certain kinds of restrictions allowed).

62U.K.In Part 6 of Schedule 3 (requirements etc relating to share options) in paragraph 28 (requirements as to price of acquisition                        of shares) after sub-paragraph (4) insert—

“(5)At the time a share option is granted—                  

(a)it must be stated whether or not the shares which may be acquired by the exercise of the option may be subject to any restriction,                           and                  

(b)if so, the details of the restriction must also be stated.                  

(6)For the purposes of this paragraph the market value of shares subject to a restriction is to be determined as if they were                           not subject to the restriction.”                  

63U.K.In Part 7 of Schedule 3 (exchange of share options) in paragraph 39 (requirements about share options granted in exchange)                        after sub-paragraph (6) insert—

“(7)For the purposes of this paragraph the market value of shares subject to a restriction is to be determined as if they were                           not subject to the restriction.”                  

64U.K.Part 9 of Schedule 3 (supplementary provisions) is amended as follows.

65U.K.In paragraph 48 (minor definitions) after sub-paragraph (2) insert—

“(3)For the purposes of the SAYE code—                  

(a)shares are subject to a “restriction” if there is any contract, agreement, arrangement or condition which makes provision                           to which any of subsections (2) to (4) of section 423 (restricted securities) would apply if the references in those subsections                           to the employment-related securities were to the shares, and                  

(b)the “restriction” is that provision.”                  

66U.K.In paragraph 49 (index of defined expressions) at the appropriate place insert—

67(1)The amendments made by paragraphs 59 to 62 above have effect in relation to options granted on or after the day on which this                        Act is passed.U.K.

(2)The amendment made by paragraph 63 above has effect for cases where the old options are granted on or after that day.

(3)A SAYE option scheme approved before that day has effect with any modifications needed to reflect the amendments made by paragraphs                        59 to 66 above.

(4)In particular, in relation to options granted on or after that day, such a SAYE option scheme has effect with the omission                        of any provision falling within a provision of Schedule 3 to ITEPA 2003 omitted by paragraph 61 above.

#### CSOP schemesU.K.

68U.K.In Part 2 of Schedule 4 (general requirements for approval) in paragraph 6 (limit on value of shares subject to options) after                        sub-paragraph (3) insert—

“(4)For the purposes of this paragraph the market value of shares subject to a restriction is to be determined as if they were                           not subject to the restriction.”                  

69U.K.Part 4 of Schedule 4 (shares to which schemes can apply) is amended as follows.

70U.K.In paragraph 15 (introduction)—

(a)after the entry for paragraph 18 insert “ and ”, and

(b)omit the entry relating to paragraph 19 and the “and” after it.

71U.K.Omit paragraph 19 (only certain kinds of restrictions allowed).

72U.K.In Part 5 of Schedule 4 (requirements etc relating to share options) in paragraph 22 after sub-paragraph (4) insert—

“(5)At the time a share option is granted—                  

(a)it must be stated whether or not the shares which may be acquired by the exercise of the option may be subject to any restriction,                           and                  

(b)if so, the details of the restriction must also be stated.                  

(6)For the purposes of this paragraph the market value of shares subject to a restriction is to be determined as if they were                           not subject to the restriction.”                  

73U.K.In Part 6 of Schedule 4 (exchange of share options) in paragraph 27 (requirements about share options granted in exchange)                        after sub-paragraph (6) insert—

“(7)For the purposes of this paragraph the market value of shares subject to a restriction is to be determined as if they were                           not subject to the restriction.”                  

74U.K.Part 8 of Schedule 4 (supplementary provisions) is amended as follows.

75U.K.In paragraph 36 (minor definitions) after sub-paragraph (2) insert—

“(3)For the purposes of the CSOP code—                  

(a)shares are subject to a “restriction” if there is any contract, agreement, arrangement or condition which makes provision                           to which any of subsections (2) to (4) of section 423 (restricted securities) would apply if the references in those subsections                           to the employment-related securities were to the shares, and                  

(b)the “restriction” is that provision.”                  

76U.K.In paragraph 37 (index of defined expressions) at the appropriate place insert—

77(1)The amendment made by paragraph 68 above has effect for the purpose of determining whether options may be granted to an individual                        on or after the day on which this Act is passed; but the amendment is to be ignored in determining the market value of any                        shares to which an option granted before that day relates.U.K.

(2)The amendments made by paragraphs 69 to 72 above have effect in relation to options granted on or after that day.

(3)The amendment made by paragraph 73 above has effect for cases where the old options are granted on or after that day.

(4)A CSOP scheme approved before that day has effect with any modifications needed to reflect the amendments made by paragraphs                        68 to 76 above.

(5)In particular, in relation to options granted on or after that day, such a CSOP scheme has effect with the omission of any                        provision falling within a provision of Schedule 4 to ITEPA 2003 omitted by paragraph 71 above.

### **PART 5**U.K.Share incentive plans: partnership shares

78U.K.Schedule 2 to ITEPA 2003 is amended as follows.

79(1)In Part 6 (partnership shares) paragraph 52 (application of money deducted in accumulation period) is amended as follows.U.K.

(2)After sub-paragraph (2) insert—

“(2A)The number of shares awarded to the employee must be determined in accordance with one of sub-paragraphs (3), (3A) and (3B)                           and the partnership share agreement must specify which one of those sub-paragraphs is to apply for the purposes of the agreement.”                  

(3)In sub-paragraph (3) for “The number of shares awarded to each” substitute “ If the agreement specifies that this sub-paragraph is to apply, the number of shares awarded to the ”.

(4)After sub-paragraph (3) insert—

“(3A)If the agreement specifies that this sub-paragraph is to apply, the number of shares awarded to the employee must be determined                           in accordance with the market value of the shares at the beginning of the accumulation period.                  

(3B)If the agreement specifies that this sub-paragraph is to apply, the number of shares awarded to the employee must be determined                           in accordance with the market value of the shares on the acquisition date.”                  

(5)In sub-paragraphs (4) and (5) for “and (3)” substitute “ to (3B) ”.

80U.K.In Part 9 (trustees) in paragraph 75 (duty to give notice of award of shares etc) in sub-paragraph (3) for paragraph (c) substitute—

“(c)stating the market value in accordance with which the number of shares awarded to the employee was determined.”                  

81(1)The amendments made by paragraphs 79 and 80 above have effect in relation to partnership share agreements made on or after                        the day on which this Act is passed.U.K.

(2)A trust instrument made before that day has effect with any modifications needed to reflect the amendment made by paragraph                        80 above.

### **PART 6**U.K.Share incentive plans: dividend shares

#### IntroductionU.K.

82U.K.Part 8 of Schedule 2 to ITEPA 2003 (cash dividends and dividend shares) is amended as follows.

#### Company's power to direct reinvestment of cash dividendsU.K.

83(1)Paragraph 62 (reinvestment of dividends) is amended as follows.U.K.

(2)In sub-paragraph (1) for the first “all” substitute “ some or all of the ”.

(3)After sub-paragraph (1) insert—

“(1A)The company's direction must set out—                  

(a)the amount of the cash dividends to be applied as mentioned in sub-paragraph (1), or                  

(b)how that amount is to be determined.”                  

(4)In sub-paragraph (4) after “may” insert “ modify or ”.

84U.K.In paragraph 68 (reinvestment: amounts to be carried forward) for sub-paragraph (1) substitute—

“(1)This paragraph applies where an amount is not reinvested because it is not sufficient to acquire a share.”                  

85U.K.In paragraph 69 (cash dividends with no requirement to reinvest) in sub-paragraph (2) for “which” substitute “ so far as they ”.

86(1)A SIP approved before the day on which this Act is passed which contains provision under paragraph 62(1) of Schedule 2 to                        ITEPA 2003 has effect with any modifications needed to reflect the amendments made by paragraphs 83 to 85 above.U.K.

(2)Sub-paragraph (3) applies to a direction requiring the reinvestment of cash dividends which is given before that day.

(3)For the purposes of paragraph 62(1A) of Schedule 2 to ITEPA 2003 the direction is to be treated as requiring the reinvestment                        of all the cash dividends, subject to any modification of the direction which is made on or after that day under paragraph                        62(4) of that Schedule.

#### Removal of limit on amount reinvestedU.K.

87U.K.In paragraph 63 (requirements to be met as regards cash dividends) in sub-paragraph (1) omit the entry for paragraph 64.

88U.K.Omit paragraph 64 (limit on amount reinvested).

89(1)The amendments made by paragraphs 87 and 88 above have effect in relation to the tax year 2013-14 and subsequent tax years.U.K.

(2)A SIP approved before 6 April 2013 has effect accordingly with the omission of any provision falling within a provision of                        Schedule 2 to ITEPA 2003 omitted by paragraph 88 above.

#### Amounts to be carried forwardU.K.

90(1)Paragraph 68 (reinvestment: amounts to be carried forward) is amended as follows.U.K.

(2)In sub-paragraph (4)—

(a)omit paragraph (a) and the “or” after it, and

(b)in paragraphs (b) and (c) omit “during that period”.

(3)Omit sub-paragraph (6).

(4)The amendments made by this paragraph have effect in relation to amounts held by trustees on or after 6 April 2013 (including                        amounts originally retained before that date in relation to which an event falling within paragraph 68(4)(a) to (c) of Schedule                        2 to ITEPA 2003 did not occur before that date).

(5)A SIP approved before 6 April 2013 has effect accordingly with the omission of any provision falling within a provision of                        Schedule 2 to ITEPA 2003 omitted by this paragraph.

### **PART 7**U.K.Share incentive plans: employee share ownership trusts

91U.K.Part 9 of Schedule 2 to ITEPA 2003 (trustees) is amended as follows.

92U.K.In paragraph 70 (introduction) in sub-paragraph (2)—

(a)after the entry for paragraph 77 insert “ and ”, and

(b)omit the entry for paragraph 78.

93(1)Omit paragraph 78 (acquisition of shares from employee share ownership trusts).U.K.

(2)A trust instrument made before the day on which this Act is passed has effect with the omission of any provision falling within                        a provision of Schedule 2 to ITEPA 2003 omitted by this paragraph.

### **PART 8**U.K.Enterprise management incentives: consequences of disqualifying events

94(1)In section 532 of ITEPA 2003 (modified tax consequences following disqualifying events) in subsection (1)(b) for “40” substitute                        “ 90 ”.U.K.

(2)The amendment made by this paragraph has effect in relation to disqualifying events occurring on or after the day on which                        this Act is passed.

 Section 16

## SCHEDULE 3U.K.Limit on income tax reliefs

### The limitU.K.

1U.K.In Chapter 3 of Part 2 of ITA 2007 (calculation of income tax liability) after section 24 insert—

#### “24ALimit on Step 2 deductions

### Consequential amendmentsU.K.

2(1)ITA 2007 is amended as follows.U.K.

(2)In section 23 (calculation of income tax liability) at step 2 for “section 25” substitute “ sections 24A and 25 ”.

(3)In the following provisions (which explain how certain reliefs work) for “section 25(4) and (5)” substitute “ sections 24A and 25(4) and (5) ”

(a)section 65(1),

(b)section 73,

(c)section 121(1),

(d)section 129(1), and

(e)section 133(1).

(4)In section 148 (share loss relief: disposal of shares forming part of mixed holding) in subsection (3)(b) before sub-paragraph                        (i) insert—

“(ai)shares to which SEIS relief is attributable (as determined in accordance with Part 5A),”.                  

### Commencement and transitional provisionU.K.

3U.K.The amendments made by paragraphs 1 and 2 above have effect for the tax year 2013-14 and subsequent tax years.

4(1)Sub-paragraph (2) applies to a claim which relates to the tax year 2013-14 or a subsequent tax year by virtue of paragraph                        2 of Schedule 1B to TMA 1970 where the earlier year is a tax year before the tax year 2013-14.U.K.

(2)The amount of the claim is to be determined as if the amendments made by paragraphs 1 and 2 above also have effect for tax                        years before the tax year 2013-14.

(3)For this purpose, section 24A(6) of ITA 2007 (as inserted by paragraph 1 above) is treated as having effect for tax years                        before the tax year 2013-14 as if—

(a)in paragraphs (a), (b), (f) and (g) the references to relief were limited to relief in respect of a loss made in the tax year                        2013-14 or a subsequent tax year, and

(b)all the other paragraphs were omitted.

5U.K.In section 24A(6)(d) of ITA 2007 (as inserted by paragraph 1 above) the reference to relief does not include relief in respect                        of a loss made in the tax year 2012-13.

 Section 17

## SCHEDULE 4U.K.Cash basis for small businesses

### **PART 1**U.K.Main provisions

#### IntroductoryU.K.

1U.K.Part 2 of ITTOIA 2005 (trading income) is amended as follows.

#### Eligibility to calculate profits on cash basisU.K.

2U.K.Chapter 3 (trade profits: basic rules) is amended as follows.

3U.K.In section 25(3) (exception to requirement to use generally accepted accounting practice), for “section 160 (barristers and                        advocates in early years of practice)” substitute “ section 25A (cash basis for small businesses) ”.

4U.K.After section 25 insert—

##### “25ACash basis for small businesses

5U.K.After Chapter 3 insert—

##### “CHAPTER 3AU.K.Trade profits: cash basis

###### EligibilityU.K.

###### 31AConditions to be met for profits to be calculated on cash basis

###### 31BRelevant maximum

###### 31CExcluded persons

###### Elections under section 25AU.K.

###### 31DEffect of election under section 25A

###### Calculation of profits on cash basisU.K.

###### 31ECalculation of profits on cash basis

###### Overview of rest of Part 2U.K.

###### 31FOverview of rest of Part 2 as it applies to cash basis

#### Rules restricting deductionsU.K.

6U.K.Chapter 4 (trade profits: rules restricting deductions) is amended as follows.

7U.K.After section 32 insert—

##### “Cash basis accountingU.K.

###### 32AApplication of Chapter to the cash basis

8U.K.After section 33 insert—

##### “33ACash basis: capital expenditure

9U.K.In section 38 (restriction of deductions in respect of employee benefit contributions), after subsection (2) insert—

“(2A)In calculating for income tax purposes the profits of a trade on the cash basis, this section has effect as if—                  

(a)in subsection (1), the words “or to be made” were omitted, and                  

(b)in subsection (2), the words “or within 9 months from the end of it” were omitted (in both places).”                  

10U.K.Before section 52 (and after the heading “*Interest payments*”) insert—

##### “51ACash basis: interest payments on loans

11(1)Section 55A (expenditure on integral features) is amended as follows.U.K.

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

(3)After that subsection insert—

“(2)But section 33A(3) of CAA 2001 does not apply in calculating the profits of a trade on the cash basis.”                  

#### Rules allowing deductionsU.K.

12U.K.Chapter 5 (trade profits: rules allowing deductions) is amended as follows.

13U.K.After section 56 insert—

##### “Cash basis accountingU.K.

###### 56AApplication of Chapter to the cash basis

14U.K.After section 57A insert—

##### “Cash basis: interest paymentsU.K.

###### 57BCash basis: interest payments on loans

15U.K.In section 58 (incidental costs of obtaining finance), in subsection (5), after “with” insert “— 

(a)section 57B(3) (which imposes a limit on the total amount that may be deducted by virtue of this section or section 57B),                           and                  

(b)”.

16U.K.In section 72 (payroll deduction schemes: contributions to agents' expenses), after subsection (2) insert—

“(2A)In calculating the profits of the employer's trade on the cash basis, subsection (2) has effect as if paragraph (b) were omitted.”                  

17U.K.In section 94A (costs of setting up SAYE option scheme or CSOP scheme), after subsection (4) insert—

“(5)But subsection (4) does not apply in calculating the profits of a trade on the cash basis.”                  

#### ReceiptsU.K.

18U.K.Chapter 6 (trade profits: receipts) is amended as follows.

19U.K.After section 95 insert—

##### “Cash basis accountingU.K.

###### 95AApplication of Chapter to the cash basis

20U.K.After section 96 insert—

##### “96ACash basis: capital receipts

21U.K.After section 97 insert—

##### “Cash basis: value of stock and work in progress on cessationU.K.

###### 97ACash basis: value of trading stock on cessation of trade

###### 97BCash basis: value of work in progress on cessation of profession or vocation

22(1)Section 105 (industrial development grants) is amended as follows.U.K.

(2)In subsection (2), at the end of paragraph (a) insert “ (but see subsection (2A)) ”.

(3)After that subsection insert—

“(2A)Subsection (2)(a) is to be disregarded in calculating the profits of a trade on the cash basis.”                  

#### Amounts not reflecting commercial transactionsU.K.

23U.K.After Chapter 6 insert—

##### “CHAPTER 6AU.K.Trade profits: amounts not reflecting commercial transactions

###### 106AProfessions and vocations

###### 106BApplication of Chapter

###### 106CAmounts not reflecting commercial transactions

###### 106DCapital receipts

###### 106EGifts to charities etc

#### Herd basis rulesU.K.

24U.K.In Chapter 8 (trade profits: herd basis rules), after section 111 insert—

##### “111AHerd basis rules not to apply where cash basis used

#### Sound recordingsU.K.

25U.K.In Chapter 9 (trade profits: sound recordings), after section 130 insert—

##### “130AChapter not to apply where cash basis used

#### Telecommunication rightsU.K.

26U.K.In Chapter 10 (trade profits: certain telecommunication rights), before section 145 insert—

##### “144AChapter not to apply where cash basis used

#### Long funding leasesU.K.

27U.K.In Chapter 10A (leases of plant or machinery: special rules for long funding leases), before section 148A (and the italic                        heading preceding it) insert—

##### “Application of ChapterU.K.

###### 148ZAChapter not to apply where cash basis used

#### Specific tradesU.K.

28U.K.In Chapter 11 (trade profits: other specific trades), before section 149 (and the italic heading preceding it) insert—

##### “Cash basis accountingU.K.

###### 148KApplication of Chapter to the cash basis

#### Changes in trading stockU.K.

29U.K.In Chapter 11A (trade profits: changes in trading stock), after section 172A insert—

##### “172AAChapter not to apply where cash basis used

#### Unremittable amountsU.K.

30U.K.In Chapter 13 (deductions from profits: unremittable amounts), after section 188 insert—

##### “188AChapter not to apply where cash basis used

#### Disposal and acquisition of know-howU.K.

31U.K.In Chapter 14 (disposal and acquisition of know-how), before section 192 insert—

##### “191AChapter not to apply where cash basis used

#### Averaging profits of farmers and creative artistsU.K.

32U.K.In Chapter 16 (averaging profits of farmers and creative artists), after section 221 insert—

##### “221AClaim not available where cash basis used

#### Compensation for compulsory slaughter of animalU.K.

33U.K.In Chapter 16ZA (compensation for compulsory slaughter of animal), after section 225ZA insert—

##### “225ZAAChapter not to apply where cash basis used

#### Oil activitiesU.K.

34U.K.In Chapter 16A (oil activities), before section 225A (and the italic heading preceding it) insert—

##### “Application of ChapterU.K.

###### 225ZHChapter not to apply where cash basis used

#### Adjustment incomeU.K.

35U.K.Chapter 17 (adjustment income) is amended as follows.

36U.K.After section 227 insert—

##### “227AApplication of Chapter where cash basis used

37U.K.After section 239 insert—

##### “Spreading of adjustment income on leaving cash basisU.K.

###### 239ASpreading on leaving cash basis

###### 239BElection to accelerate charge under section 239A

#### Adjustments for capital allowancesU.K.

38U.K.After Chapter 17 insert—

##### “CHAPTER 17AU.K.Cash basis: adjustments for capital allowances

###### IntroductionU.K.

###### 240AProfessions and vocations

###### Adjustments on entering cash basisU.K.

###### 240B“Entering the cash basis”

###### 240CUnrelieved qualifying expenditure

###### 240DAssets not fully paid for

###### Successions where predecessor and successor are connected personsU.K.

###### 240EEffect of election where predecessor and successor are connected persons

#### Post-cessation receiptsU.K.

39(1)Chapter 18 (post-cessation receipts) is amended as follows.U.K.

(2)In section 246 (basic meaning of “post-cessation receipt”), after subsection (2) insert—

“(2A)If, immediately before a person permanently ceases to carry on a trade, an election under section 25A (cash basis for small                           businesses) has effect in relation to the trade, a sum is to be treated as a post-cessation receipt only if it would have                           been brought into account in calculating the profits of the trade on the cash basis had it been received at that time.”                  

(3)In section 254 (allowable deductions), after subsection (2) insert—

“(2A)If, immediately before the person permanently ceases to carry on the trade, an election under section 25A (cash basis for                           small businesses) has effect in relation to the trade, assume for the purposes of subsection (2) that such an election has                           effect in relation to the trade.”                  

#### Rent-a-room reliefU.K.

40U.K.In Chapter 1 of Part 7 of ITTOIA 2005 (rent-a-room relief), in section 786 (meaning of “rent-a-room receipts”), after subsection                        (4) insert—

“(5)Subsections (6) and (7) apply if—                  

(a)the receipts would otherwise be brought into account in calculating the profits of a trade, and                  

(b)an election under section 25A (cash basis for small businesses) has effect in relation to the trade.                  

(6)Any amounts brought into account under section 96A (capital receipts) as a receipt in calculating the profits of the trade                           are to be treated as receipts within paragraph (a) of subsection (1) above.                  

(7)The reference in subsection (1)(b) to receipts that accrue to an individual during the income period for those receipts is                           to be read as a reference to receipts that are received by the individual during that period.”                  

#### Qualifying care reliefU.K.

41U.K.Chapter 2 of Part 7 of ITTOIA 2005 (qualifying care relief) is amended as follows.

42U.K.In section 805 (meaning of “qualifying care receipts”), after subsection (3) insert—

“(4)Subsections (5) and (6) apply if—                  

(a)the receipts would otherwise be brought into account in calculating the profits of a trade, and                  

(b)an election under section 25A (cash basis for small businesses) has effect in relation to the trade.                  

(5)Any amounts brought into account under section 96A (capital receipts) as a receipt in calculating the profits of the trade                           are to be treated as receipts within paragraph (a) of subsection (1) above.                  

(6)The reference in subsection (1)(b) to receipts that accrue to an individual during the income period for those receipts is                           to be read as a reference to receipts that are received by the individual during that period.”                  

43U.K.In section 820 (periods of account not ending on 5th April)—

(a)the existing provision becomes subsection (1), and

(b)after that subsection insert—

“(2)Where an election under section 25A (cash basis for small businesses) has effect in relation to the trade, any reference in                           this section or sections 821 to 823 to the period of account in which receipts accrue is to be read as a reference to the                           period of account in which receipts are received.”                  

### **PART 2**U.K.Consequential amendments

#### TMA 1970U.K.

44U.K.In section 42 of TMA 1970 (procedure for making claims etc), in subsection (7)(e), after “sections” insert “ 25A, ”.

#### TCGA 1992U.K.

45U.K.After section 47 of TCGA 1992 insert—

##### “Cash basis accountingU.K.

###### 47AExemption for disposals by persons using cash basis

###### 47BDisposals made by persons after leaving cash basis

#### CAA 2001U.K.

46U.K.In section 1 of CAA 2001 (capital allowances), after subsection (3) insert—

“(4)But a person is not entitled to any allowance or liable to any charge under this Act in calculating the profits of a trade,                           profession or vocation of the person in relation to which an election under section 25A of ITTOIA 2005 (cash basis for small                           businesses) has effect, other than an allowance in respect of expenditure incurred on the provision of a car (or a charge                           in connection with such an allowance).                  

(5)In subsection (4) “car” has the same meaning as in Part 2 (see section 268A).”                  

47U.K.In section 59 of CAA 2001 (unrelieved qualifying expenditure), after subsection (3) insert—

“(4)If a person carrying on a trade, profession or vocation enters the cash basis for a tax year, no amount may be carried forward                           as unrelieved qualifying expenditure from the chargeable period ending with the basis period for the previous tax year.                  

(5)But subsection (4) does not apply to unrelieved qualifying expenditure incurred on the provision of a car.                  

(6)Where a person has unrelieved qualifying expenditure to carry forward from a chargeable period that is not expenditure allocated                           to a single asset pool, the amount of unrelieved qualifying expenditure incurred on the provision of a car is to be determined                           on such basis as is just and reasonable in all the circumstances.                  

(7)Section 240B of ITTOIA 2005 (meaning of “entering the cash basis”) applies for the purposes of this section as it applies                           for the purposes of Chapter 17A of Part 2 of that Act.”                  

48U.K.In Chapter 5 of Part 2 of CAA 2001 (plant and machinery allowances and charges), after section 66 insert—

##### “Application of Chapter to person leaving cash basisU.K.

###### 66APersons leaving cash basis

#### ITTOIA 2005U.K.

49U.K.In section 31 of ITTOIA 2005 (relationship between rules prohibiting and allowing deductions), in subsection (2), omit the                        “or” at the end of paragraph (b) and after paragraph (c) insert “or 

(d)Chapter 17A,”.                  

50U.K.In section 56 of ITTOIA 2005 (rules allowing deductions: professions and vocations), after “marks)” insert “ and section 97A (cash basis: value of trading stock on cessation of trade) ”.

51U.K.Omit section 160 of ITTOIA 2005 (cash basis of calculation for barristers and advocates in early years of practice).

52(1)Chapter 17 of Part 2 of ITTOIA 2005 (adjustment income) is amended as follows.U.K.

(2)In section 229(2)(a), for “sections 237 to 239” substitute “ sections 237 to 239B ”.

(3)Omit sections 238 and 239 (spreading of adjustment income: barristers and advocates).

53U.K.In Part 2 of Schedule 4 to ITTOIA 2005 (index of defined expressions), at the appropriate place insert—

#### ITA 2007U.K.

54(1)In Part 4 of ITA 2007 (loss relief), Chapter 2 (trade losses) is amended as follows.U.K.

(2)In section 64 (deduction of losses from general income), in subsection (8), after paragraph (ba) insert—

“(bb)section 74E (restriction on the relief and early trade losses relief where cash basis applies),”.                  

(3)In section 72 (relief for individuals for losses in first 4 years of trade), in subsection (5), after paragraph (ba) insert—

“(bb)section 74E (restriction on the relief and trade loss relief where cash basis applies),”.                  

(4)After section 74D insert—

##### “Restriction on sideways relief and capital gains relief where cash basis appliesU.K.

###### 74ENo relief where cash basis used to calculate losses

55(1)Chapter 1 of Part 8 of ITA 2007 (relief for interest payments) is amended as follows.U.K.

(2)In section 383(5), after paragraph (a) insert—

“(aa)section 384B (restriction on relief where cash basis applies),”.                  

(3)After section 384A insert—

##### “384BRestriction on relief where cash basis applies

### **PART 3**U.K.Commencement and transitional provision

56U.K.Subject to paragraph 57, the amendments made by this Schedule have effect for the tax year 2013-14 and subsequent tax years.

57(1)In a case where—U.K.

(a)the profits of a barrister or advocate in independent practice for a period of account ending in the tax year 2012-13 have                        been calculated in accordance with section 160 of ITTOIA 2005 (barristers and advocates: alternative basis of calculation                        in early years of practice), and

(b)if that section had not been repealed by this Schedule, the profits of the barrister or advocate for any subsequent period                        of account could have been calculated in accordance with that section,

the profits of the barrister or advocate for that subsequent period of account may be calculated in accordance with that section.

(2)The repeal of sections 238 and 239 of ITTOIA 2005 (spreading of adjustment income: barristers and advocates) does not have                        effect in relation to any individual whose profits for a period of account ending in or before the tax year 2012-13 have been                        calculated in accordance with section 160 of ITTOIA 2005.

 Section 18

## SCHEDULE 5U.K.Deductions allowable at a fixed rate

1U.K.Part 2 of ITTOIA 2005 (trading income) is amended as follows.

2U.K.After Chapter 5 insert—

### “CHAPTER 5AU.K.Trade profits: deductions allowable at a fixed rate

#### IntroductionU.K.

##### 94BProfessions and vocations

##### 94CProvisions not applicable to certain firms

#### Expenditure on vehiclesU.K.

##### 94DExpenditure on vehicles

##### 94EExcluded vehicles

##### 94FThe appropriate mileage amount

##### 94GDefinitions of types of vehicle

#### Use of home for business purposesU.K.

##### 94HUse of home for business purposes

#### Premises used both as home and business premisesU.K.

##### 94IPremises used both as a home and as business premises

3U.K.In section 31 (relationship between rules prohibiting and allowing deductions), in subsection (2), after paragraph (a) insert—

“(aa)Chapter 5A,”.                  

4U.K.In Chapter 18 (post-cessation receipts), in section 254 (allowable deductions), after subsection (2A) (inserted by paragraph                        39 of Schedule 4) insert—

“(2B)If—                  

(a)the loss or expense is incurred, or the debit arises, in relation to a vehicle, and                  

(b)immediately before the person permanently ceases to carry on the trade, section 94D (deduction allowable at fixed rate for                           expenditure on vehicles) applies in relation to the vehicle,                  

assume for the purposes of subsection (2) that that section applies in relation to the vehicle.”                  

5(1)Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.U.K.

(2)In Chapter 3 (qualifying expenditure), after section 38 insert—

### “38ZAVehicles for which deductions allowed at fixed rate under Part 2 of ITTOIA 2005

(3)In Chapter 5 (allowances and charges), in section 59 (unrelieved qualifying expenditure), at the end insert—

“(8)Subsection (9) applies if—                  

(a)a person carrying on a trade, profession or vocation incurs expenditure in relation to a vehicle,                  

(b)at the end of the basis period for a tax year, the person has unrelieved qualifying expenditure incurred in relation to the                           vehicle to carry forward from the chargeable period ending with that basis period (“the relevant chargeable period”),                  

(c)in calculating the profits of a trade, profession or vocation of a person for the following tax year, a deduction is made                           under section 94D of ITTOIA 2005 in respect of expenditure incurred in relation to the vehicle, and                  

(d)the person does not enter the cash basis for that tax year.                  

(9)None of the unrelieved qualifying expenditure incurred in relation to the vehicle may be carried forward as unrelieved qualifying                           expenditure from the relevant chargeable period.                  

(10)Where a person has unrelieved qualifying expenditure to carry forward from a chargeable period that is not expenditure allocated                           to a single asset pool, the amount of the unrelieved qualifying expenditure incurred in relation to the vehicle is to be determined                           on such basis as is just and reasonable in all the circumstances.”                  

6U.K.The amendments made by this Schedule have effect for the tax year 2013-14 and subsequent tax years.

 Section 19

## SCHEDULE 6U.K.Employment income: duties performed in the UK and overseas

### **PART 1**U.K.Apportionment of earnings

1U.K.Part 2 of ITEPA 2003 (employment income: charge to tax) is amended as follows.

2U.K.In section 15 (earnings for year when employee UK resident), as amended by Schedule 45 to this Act, in subsection (5)—

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

(b)after paragraph (b) insert “, and 

(c)section 41ZA (which is about determining the extent to which general earnings are in respect of United Kingdom duties).”                  

3U.K.In Chapter 5 (taxable earnings: remittance basis rules and rules for non-UK resident employees), after section 41 insert—

#### “Apportionment of earningsU.K.

##### 41ZABasis of apportionment

### **PART 2**U.K.Remittance basis of taxation: special mixed fund rules

4U.K.Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

5U.K.In section 809Q (sections 809L and 809P: transfers from mixed funds), after subsection (1) insert—

“(1A)But this section must be read subject to section 809RA.”                  

6U.K.After section 809R insert—

#### “809RASpecial mixed fund rules for certain employment cases

#### 809RBQualifying accounts

#### 809RCBreaches of the deposit rule

#### 809RDEffect where 30-day deadline is met

### **PART 3**U.K.Commencement

7U.K.The amendments made by Part 1 of this Schedule have effect in relation to earnings for the tax year 2013-14 and subsequent                        tax years.

8U.K.The amendments made by Part 2 of this Schedule have effect in relation to transfers from a mixed fund that are made in the                        tax year 2013-14 or any subsequent tax year.

 Section 20

## SCHEDULE 7U.K.Remittance basis: exempt property

1U.K.Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

2U.K.In section 809X(3) (exempt property: public access rule), for “sections 809Z and 809Z1)” substitute “ section 809Z) ”.

3(1)Section 809Y (property that ceases to be exempt property treated as remitted) is amended as follows.U.K.

(2)In subsection (2), for “either” substitute “ any ”.

(3)After subsection (4) insert—

“(4A)Where exempt property has been lost, stolen or destroyed, the first and second cases do not apply in relation to the property                           during any period—                  

(a)beginning with the time at which it was lost, stolen or destroyed, and                  

(b)(if lost or stolen) ending with the time at which it is recovered.                  

(4B)The third case is where a compensation payment is released in respect of exempt property that has been lost, stolen or destroyed.”                  

(4)In subsection (6), after “exempt property” insert “ by virtue of the first or second case ”.

4U.K.After section 809YE insert—

### “809YFException to section 809Y: compensation taken offshore or invested

5(1)Section 809Z (public access rule: general) is amended as follows.U.K.

(2)In subsection (1), for “A to D” substitute “ B and C ”.

(3)Omit subsection (2).

(4)After subsection (8) insert—

“(8A)But if the property is lost or stolen—                  

(a)the relevant period ends with the time at which it is lost or stolen, and                  

(b)a new relevant period begins with its importation or the time at which it is recovered.”                  

(5)Omit subsection (10).

6U.K.Omit section 809Z1 (public access rule: relevant VAT relief).

7(1)Section 809Z4 (temporary importation rule) is amended as follows.U.K.

(2)In subsection (1), after “days” insert “ (subject to any increase under subsection (3B)) ”.

(3)In subsection (3)—

(a)before paragraph (a) insert—

“(za)the property meets the public access rule,”,                  

(b)after paragraph (b) insert—

“(ba)subsection (3A) applies to the property,”, and                  

(c)in paragraph (d) for “or 809YC(2)” substitute “ , 809YC(2) or 809YF(4) ”.

(4)After that subsection insert—

“(3A)This subsection applies to the property if—                  

(a)it is not available to be used or enjoyed in the United Kingdom by or for the benefit of a relevant person because it has                           been lost, stolen or destroyed,                  

(b)(if lost or stolen) it has not been recovered, and                  

(c)no compensation payment has been released in respect of it.                  

(3B)If—                  

(a)property that has been lost or stolen is recovered,                  

(b)the first day after the day on which it is recovered is a countable day, and                  

(c)excluding that countable day there have already been 231 or more countable days in relation to the property,                  

the number of countable days specified in subsection (1) is read as being increased by the number necessary for there to be                        45 countable days beginning with the countable day mentioned in paragraph (b).”                  

(5)Omit subsections (4) to (10).

8U.K.In section 809Z6 (exempt property: other interpretation), after subsection (4) insert—

“(5)References to property being lost, stolen or destroyed are to the property being lost, stolen or destroyed whilst in the United                           Kingdom.                  

(6)“Compensation payment”, in relation to property that has been lost, stolen or destroyed, means any payment of compensation (whether under an insurance                           policy or otherwise) in respect of the property.                  

(7)A compensation payment is “released” on the day on which it first becomes available for use in the United Kingdom by or for                           the benefit of any relevant person.                  

(8)Property that has been lost or stolen is “recovered” on the day on which it becomes available to be used or enjoyed in the                           United Kingdom by or for the benefit of a relevant person.”                  

9U.K.The amendments made by paragraphs 3, 4, 5(4), 7(2), (3)(b) and (c) and (4) and 8 have effect in relation to property that                        is lost, stolen or destroyed on or after 6 April 2013.

10U.K.The other amendments made by this Schedule have effect—

(a)in relation to property that is not in the United Kingdom on 6 April 2013, as from that date, and

(b)in relation to property that is in the United Kingdom on that date, as from the time when it ceases to be in the United Kingdom                        or is lost or stolen.

11U.K.In the case of property that falls within paragraph 10(b) by virtue of being lost or stolen, any period that is a period of                        importation in relation to the property for the purposes of section 809Z4 of ITA 2007 ends with the time at which it is lost                        or stolen.

 Section 24

## SCHEDULE 8U.K.Gains from contracts for life insurance etc

1U.K.Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc) is amended as follows.

2U.K.In section 476 (special rules: foreign policies) in subsection (2)—

(a)after the entry relating to section 474(3) to (5) insert “ and ”,

(b)omit the entry relating to section 528,

(c)omit the “and” after the entry relating to sections 531 to 534, and

(d)omit the entry relating to section 536(6).

3U.K.For section 528 substitute—

### “528Reduction in amount charged on basis of non-UK residence where individual liable for tax

### 528AReduction in amount charged on basis of non-UK residence of deceased person

4U.K.Omit section 529 (exceptions to section 528).

5(1)Section 536 (top slicing relieved liability: one chargeable event) is amended as follows.U.K.

(2)In subsection (6) for the words from “from” to the end substitute “ reduced under section 528 in the case of the individual. ”

(3)For subsection (7) substitute—

“(7)If in the case of the individual the gain is reduced under section 528, for steps 1 and 3 in subsection (1) N is reduced by                           the number of complete years consisting wholly of days falling within section 528(1)(b) (including days falling within section                           528(1)(b) by virtue of section 528(8)).”                  

6U.K.In section 552 of ICTA (information: duty of insurers) after subsection (13) insert—

“(14)For the purposes of this section no account is to be taken of the effect of sections 528 and 528A of ITTOIA 2005.”                  

7(1)The amendments made by this Schedule have effect in relation to—U.K.

(a)any policy of life insurance issued in respect of an insurance made on or after 6 April 2013, or

(b)any contract constituting a capital redemption policy made on or after that date.

(2)The amendment made by paragraph 3 above has effect in relation to any insurance or contract made before 6 April 2013 if on                        or after that date—

(a)the policy or contract is varied with the result that there is an increase in the benefits secured,

(b)there is or was an assignment (or assignation) of rights, or a share of the rights, conferred by the policy or contract (whether                        or not for money's worth) to the individual or deceased, or

(c)some or all of the rights conferred by the policy or contract become or became held as a security for a debt of the individual                        or deceased,

and the other amendments made by this Schedule have effect in relation to the insurance or contract accordingly.

(3)For the purposes of sub-paragraph (2)(a) an exercise of rights conferred by a policy or contract is to count as a variation                        of the policy or contract.

(4)In the case of a policy or contract treated under section 473A of ITTOIA 2005 as a single policy or contract, for the purposes                        of sub-paragraphs (1) and (2) the date on which the insurance or contract is made is the date on which, as the case may be—

(a)the first insurance is made in respect of which the connected policies are issued, or

(b)the first of the connected contracts is made.

 Section 25

## SCHEDULE 9U.K.Qualifying insurance policies

### **PART 1**U.K.Amendments of Schedule 15 to ICTA etc

1U.K.Schedule 15 to ICTA (qualifying insurance policies) is amended as follows.

2U.K.Before Part 1 insert—

#### **“PART A1**U.K.Premium limit for qualifying policies

##### Premium limit for qualifying policies to apply from 6 April 2013U.K.

A1(1)Sub-paragraph (2) applies if—                  

(a)an event falling within sub-paragraph (3) occurs,                  

(b)apart from sub-paragraph (2), the policy to which the event relates would be a qualifying policy after the event, and                  

(c)an individual who is a beneficiary under that policy is in breach of the premium limit for qualifying policies.                  

(2)That policy is not to be a qualifying policy after the event.                  

(3)The events falling within this sub-paragraph are—                  

(a)the issue of a policy in respect of an insurance made on or after 6 April 2013;                  

(b)the variation of a policy on or after 6 April 2013 where as a result of the variation—                  

(i)the period over which premiums are payable under the policy is or could be lengthened, or                  

(ii)the total amount of the premiums payable under the policy in any relevant period is or could be increased,                  

or both;                  

(c)the assignment on or after 6 April 2013 of any rights, or any share in any rights, under a policy where the assignment falls                           within paragraph B2(3)(c) to (g) or (5) below;                  

(d)a deceased beneficiary event on or after 6 April 2013;                  

(e)the conditions in paragraph 24(3) below being fulfilled for the first time in respect of a new non-resident policy where—                  

(i)the conditions are fulfilled for the first time on or after 6 April 2013, and                  

(ii)but for the conditions being fulfilled, the policy could not be a qualifying policy because of paragraph 24(2).                  

(4)An event does not fall within sub-paragraph (3) if—                  

(a)the policy to which the event relates is—                  

(i)a protected policy,                  

(ii)a restricted relief qualifying policy, or                  

(iii)a pure protection policy,                  

(b)the event is the issue of a policy which is a new policy in relation to an earlier policy where—                  

(i)the new policy is issued in substitution for the earlier policy (and not on its maturity), and                  

(ii)the life assured under the new policy is different to the life assured under the earlier policy but that is the only difference                           to what the position would have been had the earlier policy continued to run,                  

(c)paragraph 20ZA below applies to a policy and the event is the reinstatement or replacement of the policy as mentioned in paragraph                           20ZA(4),                  

(d)the event is the issue or variation of a policy in relation to which paragraph 29 of Schedule 39 to the Finance Act 2012 applies,                           or                  

(e)the event is an assignment falling within paragraph B2(3)(e) below where the assignment is a mortgage endowment assignment.                  

(5)In sub-paragraph (3)(b)(ii) “relevant period” means any period of 12 months beginning at or after the time of the variation.                  

(6)A variation is to be ignored for the purposes of sub-paragraph (3)(b) if its effect is nullified before the end of the period                           of 3 months after the day on which the variation occurs.                  

(7)Sub-paragraph (4)(a)(i) does not apply in the case of an event mentioned in sub-paragraph (3)(e).                  

(8)Sub-paragraph (4)(a)(ii) does not apply in the case of—                  

(a)an event mentioned in sub-paragraph (3)(c) or (d) occurring in relation to a restricted relief qualifying policy (“the assigned                           policy”),                  

(b)any subsequent event relating to the assigned policy, or                  

(c)any event relating to—                  

(i)a later policy which is a new policy in relation to the assigned policy, or                  

(ii)any policy which is a new policy in relation to the later policy,                  

and so on.                  

(9)In the case of an event mentioned in sub-paragraph (3)(b), sub-paragraph (4)(a)(iii) applies only if the policy is a pure                           protection policy both before and after the variation.                  

(10)This paragraph is to be applied after all other provisions of this Schedule relevant to the question of whether a policy is                           a qualifying policy after an event have been applied.                  

##### Restricted relief qualifying policiesU.K.

A2(1)Sub-paragraph (2) applies if—                  

(a)an event falling within sub-paragraph (3) occurs,                  

(b)the policy to which the event relates is a qualifying policy after the event, and                  

(c)an individual who is a beneficiary under that policy is in breach of the premium limit for qualifying policies.                  

(2)That policy is to be a restricted relief qualifying policy after the event.                  

(3)The events falling within this sub-paragraph are—                  

(a)a premium limit event in relation to a protected policy on or after 21 March 2012;                  

(b)the issue of a policy as mentioned in paragraph A4(2)(b) below if, assuming that the substitution of the protected policy                           were instead a variation of that policy, there would be a premium limit event in relation to that policy;                  

(c)the assignment on or after 6 April 2013 of any rights, or any share in any rights, under a protected policy where the assignment                           falls within paragraph B2(3)(c) to (g) or (5) below;                  

(d)a deceased beneficiary event on or after 6 April 2013 where the policy in question is a protected policy;                  

(e)the issue of a policy in respect of an insurance made on or after 21 March 2012 but before 6 April 2013 otherwise than as                           mentioned in paragraph A4(2)(b) below;                  

(f)the variation of a policy, other than a protected policy, on or after 21 March 2012 but before 6 April 2013 where as a result                           of the variation—                  

(i)the period over which premiums are payable under the policy is or could be lengthened, or                  

(ii)the total amount of the premiums payable under the policy in any relevant period is or could be increased,                  

or both;                  

(g)the conditions in either sub-paragraph (3) or sub-paragraph (4) of paragraph 24 below being fulfilled for the first time in                           respect of a new non-resident policy where—                  

(i)the conditions are fulfilled for the first time on or after 21 March 2012 but before 6 April 2013, and                  

(ii)but for the conditions being fulfilled, the policy could not be a qualifying policy because of sub-paragraph (2) of paragraph                           24.                  

(4)An event does not fall within sub-paragraph (3) if—                  

(a)the policy to which the event relates is a pure protection policy,                  

(b)the event is the issue of a policy which is a new policy in relation to an earlier policy where—                  

(i)the new policy is issued in substitution for the earlier policy (and not on its maturity), and                  

(ii)the life assured under the new policy is different to the life assured under the earlier policy but that is the only difference                           to what the position would have been had the earlier policy continued to run,                  

(c)paragraph 20ZA below applies to a policy and the event is the reinstatement or replacement of the policy as mentioned in paragraph                           20ZA(4),                  

(d)the event is the issue or variation of a policy in relation to which paragraph 29 of Schedule 39 to the Finance Act 2012 applies,                           or                  

(e)the event is an assignment falling within paragraph B2(3)(e) below where the assignment is a mortgage endowment assignment.                  

(5)In sub-paragraph (3)(f)(ii) “relevant period” means any period of 12 months beginning at or after the time of the variation.                  

(6)A premium limit event or a variation is to be ignored for the purposes of sub-paragraph (3)(a) or (f) if its effect is nullified                           before 6 July 2013.                  

(7)In the case of a premium limit event which occurs on or after 6 April 2013, in sub-paragraph (6) the reference to 6 July 2013                           is to be read as a reference to the end of the period of 3 months after the day on which the premium limit event occurs.                  

(8)In the case of an event mentioned in sub-paragraph (3)(a) or (f), sub-paragraph (4)(a) applies only if the policy is a pure                           protection policy both before and after the premium limit event or variation.                  

(9)A “premium limit event” occurs in relation to a protected policy if—                  

(a)the policy is varied or a relevant option is exercised so as to change the terms of the policy, and                  

(b)as a result of the variation or exercise of the relevant option—                  

(i)the period over which premiums are payable under the policy is or could be lengthened, or                  

(ii)the total amount of the premiums payable under the policy in any relevant period is or could be increased,                  

or both.                  

(10)A “premium limit event” also occurs in relation to a protected policy if on or after 6 April 2013—                  

(a)the policy is varied or a relevant option is exercised so as to change the terms of the policy, and                  

(b)as a result of the variation or exercise of the relevant option—                  

(i)the period over which premiums are payable under the policy is or could be shortened, or                  

(ii)the total amount of the premiums payable under the policy in any relevant period is or could be decreased,                  

or both.                  

(11)In sub-paragraphs (9)(b)(ii) and (10)(b)(ii) “relevant period” means any period of 12 months beginning at or after the time of the variation or exercise of the relevant option.                  

(12)The variation of, or exercise of a relevant option under, a protected policy is not a premium limit event in relation to the                           policy if—                  

(a)the policy secures a capital sum payable either—                  

(i)on survival for a specified term, or                  

(ii)on earlier death or on earlier death or disability,                  

(b)the policy is issued and maintained for the sole purpose of ensuring that the borrower under an interest-only mortgage will                           have sufficient funds to repay the principal lent under the mortgage, and                  

(c)the policy is varied, or the relevant option is exercised, for that sole purpose.                  

(13)In sub-paragraph (3)(g) references to paragraph 24 below are to that paragraph as it has effect before the appointed date                           for the purposes of section 55 of the Finance Act 1995.                  

(14)A qualifying policy which is a new policy in relation to an earlier policy is a restricted relief qualifying policy if the                           earlier policy is a restricted relief qualifying policy.                  

(15)A policy which is a restricted relief qualifying policy remains a restricted relief qualifying policy so long as it is a qualifying                           policy.                  

(16)Paragraph A1 above is to be ignored in determining for the purposes of sub-paragraph (14) or (15) if a policy is a qualifying                           policy. This is subject to paragraph A1(8).                  

(17)For further provision about restricted relief qualifying policies, see sections 463A to 463D of ITTOIA 2005.                  

##### The premium limit for qualifying policiesU.K.

A3(1)For the purposes of paragraphs A1(1)(c) and A2(1)(c) above an individual is in breach of the premium limit for qualifying                           policies if the total amount of the premiums payable under relevant policies in any relevant period—                  

(a)exceeds £3,600, or                  

(b)could exceed £3,600 as a result of—                  

(i)the exercise of any one or more relevant options conferred by one or more relevant policies, or                  

(ii)so far as not covered by sub-paragraph (i), the application of one or more terms of one or more relevant policies relating                           to increases in premiums.                  

(2)For the purposes of sub-paragraph (1)—                  

(a)so much of a premium payable under a relevant policy as is charged on the grounds that an exceptional risk of death or disability                           is involved is to be left out of account in determining the premiums payable under the policy,                  

(b)so much of the first premium payable under a relevant policy the liability for the payment of which—                  

(i)is discharged in accordance with paragraph 15(2) below, or                  

(ii)in the case of a policy in relation to which paragraph 3 below applies, is discharged under a provision of the policy falling                           within paragraph 3(4)(c),                  

is to be left out of account in determining the premiums payable under the policy (subject to sub-paragraph (3) below),                  

(c)in determining the premiums payable under a relevant policy any provision for the waiver of premiums by reason of a person's                           disability is to be ignored, and                  

(d)“relevant period” means any period of 12 months beginning at or after the time when the event falling within paragraph A1(3) or A2(3) above                           (“the relevant event”) occurs.                  

(3)The maximum amount that may be left out of account under sub-paragraph (2)(b) in the case of a relevant policy is—                  

where N is the number of complete years for which ran—                     

the other policy involved, or                              

if there is more than one other policy involved, the policy which ran for the most number of complete years.                              

(4)For the purposes of this paragraph the following are “relevant policies”—                  

(a)the policy to which the relevant event relates, and                  

(b)any other policy—                  

(i)which is a qualifying policy, and                  

(ii)under which the individual is a beneficiary.                  

(5)But neither a protected policy nor a pure protection policy is to be a relevant policy by virtue of sub-paragraph (4)(b).                  

(6)Sub-paragraph (7) applies if this paragraph is to be applied in the case of an individual in consequence of two or more events                           occurring at the same time (including where one or more of the events falls within paragraph A1(3) above and one or more of                           the events falls within paragraph A2(3) above).                  

(7)For the purpose of applying this paragraph in the case of the individual in consequence of any of the events, sub-paragraph                           (4)(a) has effect as if the reference to the policy to which the relevant event relates were a reference to all the policies                           to which the events, taken together, relate.                  

(8)But sub-paragraph (7) does not apply, and sub-paragraph (9) applies instead, if—                  

(a)all the policies in question are policies issued by the same issuer, and                  

(b)each of them has an unique identifier in a series of unique identifiers which the issuer gives to policies issued by it.                  

(9)For the purpose of applying this paragraph in the case of the individual in consequence of any of the events, an event relating                           to a policy (“policy A”) is treated as occurring before an event relating to another policy (“policy B”) if, in the issuer's                           series of unique identifiers, policy A's unique identifier comes before policy B's unique identifier.                  

##### Protected policiesU.K.

A4(1)This paragraph applies for the purposes of this Part of this Schedule.                  

(2)A policy is “protected” if—                  

(a)it is issued in respect of an insurance made before 21 March 2012, or                  

(b)it is issued in respect of an insurance made on or after 21 March 2012 where—                  

(i)it is a new policy in relation to an earlier policy,                  

(ii)it is issued in substitution for the earlier policy (and not on its maturity), and                  

(iii)the earlier policy is a protected policy (whether by virtue of paragraph (a) or this paragraph).                  

(3)A policy which is protected ceases to be protected if it becomes a restricted relief qualifying policy.                  

(4)A policy issued as mentioned in sub-paragraph (2)(b) is not protected if—                  

(a)its issue is an event falling within paragraph A2(3) above, and                  

(b)after that event it is a restricted relief qualifying policy.                  

##### How to determine if an individual is a beneficiary under a policyU.K.

A5(1)This paragraph applies for the purposes of this Part of this Schedule in determining if an individual is a beneficiary under                           a policy.                  

(2)An individual is a beneficiary under a policy if the individual beneficially owns—                  

(a)any rights under the policy, or                  

(b)any share in any rights under the policy.                  

(3)An individual is a beneficiary under a policy if—                  

(a)any rights under the policy are, or any share in any rights under the policy is, held on non-charitable trusts created by                           the individual, and                  

(b)those rights are, or that share is, not beneficially owned by any individual.                  

(4)The following provisions of ITTOIA 2005 apply for the purposes of sub-paragraph (3)(a)—                  

(a)section 465(6), and                  

(b)the definition of “non-charitable trust” in section 545(1).                  

(5)An individual is a beneficiary under a policy if—                  

(a)any rights under the policy are, or any share in any rights under the policy is, held as security for a debt of the individual,                           and                  

(b)those rights are, or that share is, not beneficially owned by any individual.                  

##### Further definitionsU.K.

A6(1)In this Part of this Schedule—                  

(a)“new policy” has the meaning given in paragraph 17 below,                  

(b)references to the variation of a policy are to a variation in relation to which paragraph 18 below applies,                  

(c)“pure protection policy” means a policy—                  

(i)which has no surrender value and is not capable of acquiring a surrender value, or                  

(ii)under which the benefits payable cannot exceed the amount of the premiums paid except on death or in respect of disability,                           and                  

(d)“relevant option”, in relation to a policy, means an option conferred by the policy on the person to whom it is issued to have another policy                           substituted for it or to have any of its terms changed.                  

(2)For the purposes of this Part of this Schedule a “deceased beneficiary event” occurs if, in connection with the death of an                           individual (“D”) who was a beneficiary under a policy, an individual (“B”) becomes a beneficiary under that policy by reference                           (wholly or partly) to any rights, or to any share in any rights, by reference to which D was a beneficiary (wholly or partly).                  

For this purpose, it does not matter if B is already a beneficiary under the policy.                  

(3)For the purposes of this Part of this Schedule an assignment is a “mortgage endowment assignment” if—                  

(a)the policy to which the assignment relates secures a capital sum payable either—                  

(i)on survival for a specified term, or                  

(ii)on earlier death or on earlier death or disability,                  

(b)the policy is issued and maintained for the sole purpose of ensuring that the borrower under an interest-only mortgage will                           have sufficient funds to repay the principal lent under the mortgage, and                  

(c)when the assignment occurs, it is intended that the policy will continue to be maintained for that sole purpose.”                  

3U.K.At the beginning of Part 1 (qualifying conditions) insert— “RULES FOR QUALIFYING POLICIES 

#### Rights to be beneficially owned by individuals onlyU.K.

B1(1)Sub-paragraph (2) applies in relation to a policy issued in respect of an insurance made on or after 6 April 2013.                  

(2)In order for the policy to be a qualifying policy, when it is issued all the rights under it must be beneficially owned by                           (and only by)—                  

(a)one individual, or                  

(b)two or more individuals taken together.                  

(This is the case notwithstanding any other provision of this Schedule.)                  

(3)Sub-paragraph (2) does not apply if the policy is protected.                  

(4)A policy is “protected” if it is a new policy (as defined in paragraph 17 below) in relation to—                  

(a)a policy issued in respect of an insurance made before 21 March 2012, or                  

(b)a policy which is protected (whether by virtue of paragraph (a) or this paragraph).                  

#### AssignmentsU.K.

B2(1)Sub-paragraph (2) applies if any rights under a qualifying policy are, or any share in any rights under a qualifying policy                           is, assigned on or after 6 April 2013.                  

(2)The policy is not to be a qualifying policy after the assignment (notwithstanding any other provision of this Schedule).                  

(3)Sub-paragraph (2) does not apply if—                  

(a)the assignment is from an individual by way of security for a debt of the individual,                  

(b)the assignment is to an individual on the discharge of a debt of the individual secured by the rights or share,                  

(c)the assignment is from an individual to the individual's spouse or civil partner,                  

(d)the assignment is to an individual in pursuance of an order made by a court,                  

(e)the assignment is to an individual in pursuance of a legally enforceable obligation relating to a divorce or the dissolution                           of a civil partnership,                  

(f)the assignment is from an individual and, as a result of the assignment, the rights assigned are, or the share assigned is,                           held on trusts created by the individual,                  

(g)the assignment is to an individual and, as a result of the assignment, the rights assigned are, or the share assigned is,                           no longer held on trusts, or                  

(h)the assignment—                  

(i)is to the personal representatives of a deceased individual, or                  

(ii)is to an individual where, as a result of the assignment, a deceased beneficiary event (see paragraph A6(2) above) occurs.                  

(4)Section 465(6) of ITTOIA 2005 applies for the purposes of sub-paragraph (3)(f).                  

(5)The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that sub-paragraph (2) does not apply if                           prescribed conditions are met in relation to the assignment.                  

“Prescribed” means prescribed by the regulations.                  

(6)Regulations under sub-paragraph (5) may—                  

(a)make different provision for different cases or circumstances, and                  

(b)contain incidental, supplementary, consequential, transitional, transitory or saving provision.                  

(7)See paragraphs A1 and A2 above which may apply in consequence of an assignment falling within sub-paragraph (3) or (5).                  

#### Required statementsU.K.

B3(1)Sub-paragraph (2) applies if any of the following events occurs—                  

(a)the issue of a policy in respect of an insurance made on or after 6 April 2013;                  

(b)the variation of a policy on or after 6 April 2013 where paragraph 18 below applies in relation to the variation and as a                           result of the variation—                  

(i)the period over which premiums are payable under the policy is or could be lengthened, or                  

(ii)the total amount of the premiums payable under the policy in any relevant period is or could be increased,                  

or both;                  

(c)a premium limit event in relation to a protected policy on or after 6 April 2013 (see paragraph A2(9) to (12) above);                  

(d)an event on or after 6 April 2013 which would be a premium limit event in relation to a protected policy but for paragraph                           A2(12) above;                  

(e)the assignment on or after 6 April 2013 of any rights, or any share in any rights, under a policy where the assignment falls                           within paragraph B2(3)(c) to (g) or (5) above;                  

(f)a deceased beneficiary event (see paragraph A6(2) above) on or after 6 April 2013;                  

(g)the conditions in paragraph 24(3) below being fulfilled for the first time in respect of a new non-resident policy where—                  

(i)the conditions are fulfilled for the first time on or after 6 April 2013, and                  

(ii)but for the conditions being fulfilled, the policy could not be a qualifying policy because of paragraph 24(2).                  

(2)Each individual who is a beneficiary under the policy must, before the end of the statement period, make to the issuer of                           the policy a statement dealing with the prescribed matters.                  

(3)If an individual does not comply with sub-paragraph (2) the policy is not to be a qualifying policy after the event (notwithstanding                           any other provision of this Schedule).                  

(4)In sub-paragraph (1)(b)(ii) “relevant period” means any period of 12 months beginning at or after the time of the variation.                  

(5)Sub-paragraph (2)—                  

(a)does not apply in the case of an event mentioned in sub-paragraph (1)(a), (e), (f) or (g) if the policy is a pure protection                           policy, and                  

(b)does not apply in the case of an event mentioned in sub-paragraph (1)(b), (c) or (d) if the policy is a pure protection policy                           both before and after the event.                  

“Pure protection policy” has the meaning given by paragraph A6(1)(c) above.                  

(6)Sub-paragraph (2) does not apply in the case of an event mentioned in sub-paragraph (1)(e) where the assignment falls within                           paragraph B2(3)(e) above and is a mortgage endowment assignment.                  

“Mortgage endowment assignment” is to be read in accordance with paragraph A6(3) above.                  

(7)The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that an individual is not required to comply                           with sub-paragraph (2) if prescribed conditions are met.                  

“Prescribed” means prescribed by the regulations.                  

(8)Accordingly, if by virtue of regulations under sub-paragraph (7) an individual is not required to comply with sub-paragraph                           (2), sub-paragraph (3) does not apply because that individual does not comply with sub-paragraph (2).                  

(9)In sub-paragraph (2)—                  

(a)the reference to an individual who is a beneficiary under the policy is to be read in accordance with paragraph A5 above,                  

(b)“the statement period” means—                  

(i)the period of 3 months after the day on which the event occurs, or                  

(ii)if the event occurs before the day on which the first regulations under paragraph (c) below come into force, the period of                           3 months after that day,                  

or such longer period as an officer of Revenue and Customs may allow, and                  

(c)“prescribed” means prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.                  

(10)An officer of Revenue and Customs may allow a longer period for the purposes of sub-paragraph (9)(b) only if—                  

(a)the individual in question has made a request in writing to an officer of Revenue and Customs for a longer period to be allowed,                           and                  

(b)such an officer is satisfied—                  

(i)that there is a reasonable excuse for the required statement not having been made within the period mentioned in sub-paragraph                           (9)(b)(i) or (ii), and                  

(ii)that the request under paragraph (a) was made without unreasonable delay after the reasonable excuse ceased.                  

(11)Sub-paragraph (12) applies in relation to a policy if the obligations under the policy of its issuer are at any time the obligations                           of another person (“the transferee”) to whom there has been a transfer of the whole or any part of a business previously carried on by the issuer.                  

(12)In relation to that time, in sub-paragraph (2) the reference to the issuer of the policy is to be read as a reference to the                           transferee.                  

(13)Regulations under sub-paragraph (7) or (9)(c) may—                  

(a)make different provision for different cases or circumstances, and                  

(b)contain incidental, supplementary, consequential, transitional, transitory or saving provision.”                  

4(1)Paragraph 17 (substitutions) is amended as follows.U.K.

(2)In sub-paragraph (2) before paragraph (a) insert—

“(za)the new policy cannot be a qualifying policy if the old policy was not a qualifying policy by virtue of—                  

(i)paragraph A1(2), B1(2), B2(2) or B3(3) above, or                  

(ii)sub-paragraph (i) above or this sub-paragraph;”.                  

(3)In sub-paragraph (2)(a) after the first “not” insert “ and paragraph (za) above does not apply ”.

(4)In sub-paragraph (4) for “(2)” substitute “ (2)(a) to (c) ”.

(5)After sub-paragraph (4) insert—

“(5)In determining under sub-paragraph (2)(a) to (c) above whether the new policy would apart from this paragraph be a qualifying                           policy, paragraph A1 above is not to be applied in relation to the issue of the new policy; but this does not stop that paragraph                           being applied in relation to the issue of the new policy after this paragraph has been applied.”                  

5U.K.In paragraph 25 (application of paragraph 17 in cases involving new non-resident policies) after sub-paragraph (2) insert—

“(2A)In determining for the purposes of sub-paragraph (2)(a) above whether a policy would, apart from paragraph 24, have been a                           qualifying policy, paragraphs A1 and B1 to B3 above are to be ignored.                  

(But this does not affect the application of any of those paragraphs in relation to the new policy.)”.                  

6(1)In section 55 of FA 1995 (qualifying life insurance policies: disapplication of paragraph 21 of Schedule 15 to ICTA from appointed                        date) in subsection (3) after “subject” insert “ to paragraphs A1(2), B2(2) and B3(3) of that Schedule and ”.U.K.

(2)The amendment made by this paragraph is treated as having come into force on the appointed date (see section 55(9) of FA 1995).

### **PART 2**U.K.Restricted relief qualifying policies

7U.K.Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc) is amended as follows.

8U.K.After section 463 insert—

#### “463ARestricted relief qualifying policies: disapplication of section 485 etc

#### 463BRestricted relief qualifying policies: allowable premiums

#### 463CRestricted relief qualifying policies: personal representatives and trustees with deceased settlors

#### 463DRestricted relief qualifying policies: assignments and events following assignments etc

#### 463ETransitional protection for policies issued in respect of insurances made on or after 21 March 2012 but before 6 April 2013

9U.K.In section 485 (disregard of certain events in relation to qualifying policies) after subsection (7) insert—

“(8)This section is subject to sections 463A and 463C.”                  

### **PART 3**U.K.Information powers

10U.K.After section 552ZA of ICTA insert—

#### “552ZBRegulations in relation to qualifying policies

11U.K.In section 552B of ICTA (duties of overseas insurers' tax representatives) in subsection (2)—

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

(b)after paragraph (c) insert “and 

(d)any duties imposed by regulations under section 552ZB,”.                  

12U.K.In section 98 of TMA 1970 (special returns etc), in the second column of the Table, after the entry for regulations under                        section 552ZA(6) of ICTA insert— “ regulations under section 552ZB; ”.

 Section 26

## SCHEDULE 10U.K.Transfer of assets abroad

### **PART 1**U.K.Introduction

1U.K.Chapter 2 of Part 13 of ITA 2007 (tax avoidance: transfer of assets abroad) is amended as follows.

### **PART 2**U.K.New exemption for genuine transactions etc

2(1)Section 718 (meaning of “person abroad” etc) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)In this Chapter “person abroad” means—                  

(a)a person who is resident outside the United Kingdom, or                  

(b)an individual who is domiciled outside the United Kingdom.”                  

(3)Omit subsection (2)(a).

3U.K.In section 720 (charge to tax on income treated as arising under section 721) in subsection (7)—

(a)for “742” substitute “ 742A ”, and

(b)after “transaction” insert “ , etc ”.

4U.K.In section 727 (charge to tax on income treated as arising under section 728) in subsection (5)—

(a)for “742” substitute “ 742A ”, and

(b)after “transaction” insert “ , etc ”.

5U.K.In section 731 (charge to tax on income treated as arising under section 732) in subsection (4)—

(a)for “742” substitute “ 742A ”, and

(b)after “transaction” insert “ , etc ”.

6(1)Section 736 (exemptions: introduction) is amended as follows.U.K.

(2)In subsection (1) for “742” substitute “ 742A ”.

(3)After subsection (2) insert—

“(2A)The exemption given by section 742A applies only in the case of a relevant transaction effected on or after 6 April 2012.”                  

7U.K.After section 742 insert—

#### “742APost-5 April 2012 transactions: exemption for genuine transactions

8U.K.In section 751 (the Tribunal's jurisdiction on appeals) after paragraph (d) insert—

“(da)section 742A (post-5 April 2012 transactions: exemption for genuine transactions),”.                  

9(1)The amendments made by paragraph 2 above have effect in relation to times on or after 6 April 2012.U.K.

(2)The amendments made by paragraphs 3 to 8 above have effect for the tax year 2012-13 and subsequent tax years.

### **PART 3**U.K.Amendments relating to the charges under sections 720 and 727

#### Main provisionU.K.

10(1)Section 721 (individuals with power to enjoy income as a result of a relevant transaction) is amended as follows.U.K.

(2)In subsection (3) after “the income” insert “ of the person abroad ”.

(3)Before subsection (4) insert—

“(3B)The amount of the income treated as arising under subsection (1) is equal to the amount of the income of the person abroad                           (subject to sections 724 and 725).                  

(3C)Subsection (1) does not apply if—                  

(a)the individual is liable for income tax charged on the income of the person abroad by virtue of a charge not contained in                           this Chapter, and                  

(b)all that income tax has been paid.”                  

(4)In subsection (4) after “the income” insert “ of the person abroad ”.

(5)Omit subsection (5)(a).

11(1)Section 724 (special rules where benefit provided out of income of person abroad) is amended as follows.U.K.

(2)In subsection (2) after “on” insert “ an amount equal to ”.

(3)In subsection (3)—

(a)for “on” substitute “ by reference to ”, and

(b)after “previous tax year” insert “ under this Chapter ”.

12(1)Section 725 (reduction in amount charged where controlled foreign company involved) is amended as follows.U.K.

(2)In subsection (1), as substituted by paragraph 22 of Schedule 20 to FA 2012, for paragraph (b) and the “ and ” before it substitute—

“(b)an amount of income is treated as arising to an individual under section 721 for a tax year, and                  

(c)the income mentioned in section 721(2) is or includes a sum forming part of the CFC's chargeable profits for that accounting                           period.”                  

(3)After subsection (2) insert—

“(2A)In a case in which section 724 applies, the reference to S in the formula in subsection (2) is to be read as a reference to                           X% of S.                  

(2B)“X%” is determined as follows—                  

where—                     

A is the amount on which the individual is liable as determined under section 724(2), and                        

I is the amount of the income mentioned in section 721(2).”                        

(4)In relation to cases in which the amendments made by paragraph 22 of Schedule 20 to FA 2012 are to be ignored in accordance                        with paragraph 50(9) of that Schedule, the amendment made by sub-paragraph (5) below has effect instead of the amendment made                        by sub-paragraph (2) above.

(5)In subsection (1) for paragraph (c) and the “and” before it substitute—

“(c)an amount of income is treated as arising to an individual under section 721 for a tax year, and                  

(d)the income mentioned in section 721(2) is or includes a sum forming part of the controlled foreign company's chargeable profits                           for that accounting period.”                  

13U.K.In section 726 (non-UK domiciled individuals to whom remittance basis applies) in subsection (2) for “the extent” substitute                        “ the corresponding extent ”.

14(1)Section 728 (individuals receiving capital sums as a result of a relevant transaction) is amended as follows.U.K.

(2)After subsection (1) insert—

“(1A)The amount of the income treated as arising under subsection (1) is equal to the amount of the income of the person abroad                           (subject to subsection (2)).”                  

(3)In subsection (2) for the words from “it applies” to the end substitute “if— 

(a)in subsection (1) of that section—                  

(i)the reference to section 721 were a reference to this section, and                  

(ii)the reference to section 721(2) were a reference to subsection (1)(a) of this section, and                  

(b)subsections (2A) and (2B) of that section were omitted.”                  

(4)After subsection (2) insert—

“(2A)Subsection (1) does not apply if—                  

(a)the individual is liable for income tax charged on the income of the person abroad by virtue of a charge not contained in                           this Chapter, and                  

(b)all that income tax has been paid.”                  

(5)Omit subsection (3)(a).

15U.K.In section 730 (non-UK domiciled individuals to whom remittance basis applies) in subsection (2) for “the extent” substitute                        “ the corresponding extent ”.

16(1)Section 743 (no duplication of charges) is amended as follows.U.K.

(2)After subsection (2) insert—

“(2A)Subsection (2B) applies if—                  

(a)in the case of an individual, an amount of income is taken into account in charging income tax under section 720 or 727, and                  

(b)the individual subsequently receives that income.                  

(2B)The income received is treated as not being the individual's income for income tax purposes.”                  

(3)In subsection (3) for “subsections (1) and (2)” substitute “ this section ”.

(4)Omit subsection (4).

17(1)Section 744 (meaning of taking income into account in charging income tax for section 743) is amended as follows.U.K.

(2)In subsection (1) for “743(1) and (2)” substitute “ 743 ”.

(3)In subsection (2)—

(a)in paragraph (a) omit “or value of the benefit”, and

(b)in paragraph (b) for “income charged” substitute “ the income mentioned in section 721(2) ”.

(4)In subsection (3) for “that income” substitute “ the income mentioned in section 728(1)(a) ”.

18(1)Section 745 (rates of tax applicable to income charged under sections 720 and 727 etc) is amended as follows.U.K.

(2)In subsection (1) for “so far as it” substitute “ if (and to the corresponding extent that) the income mentioned in section 721(2) or 728(1)(a) ”.

(3)For subsections (3) and (4) substitute—

“(3)Subsection (4) applies to income treated as arising to an individual under section 721 or 728 so far as subsection (1) does                           not apply to it.                  

(4)The charge to income tax under section 720 or 727 operates by treating the income as if it were income within section 19(2)                           (meaning of “dividend income”) if the income mentioned in section 721(2) or 728(1)(a) would be dividend income were it the                           income of the individual.”                  

19U.K.In section 746 (deductions and reliefs where individual charged under section 720 or 727) for subsection (2) substitute—

“(2)For the purpose of determining the deductions and reliefs allowed to the individual, the individual is to be treated as if                           the individual had actually received the amount by reference to which the income treated as arising to the individual under                           section 721 or 728 is determined.”                  

#### Commencement and transitional provisionU.K.

20(1)The amendments made by this Part of this Schedule have effect for the tax year 2013-14 and subsequent tax years.U.K.

(2)They have effect in relation to relevant transfers occurring before 6 April 2013 as well as relevant transfers occurring on                        or after that date.

21(1)Sections 721(3C) and 728(2A) of ITA 2007 (as inserted by paragraphs 10(3) and 14(4) above) have effect only if the income                        of the person abroad arises to that person on or after 6 April 2013.U.K.

(2)The amendments made by paragraphs 10(5) and 14(5) above have no effect in relation to income arising to a person abroad before                        6 April 2013.

 Section 27

## SCHEDULE 11U.K.Deduction of income tax at source etc

### Deduction from interest payable on compensationU.K.

1U.K.Chapter 3 of Part 15 of ITA 2007 (deduction from certain payments of yearly interest) is amended as follows.

2U.K.In section 874 (duty to deduct from certain payments of yearly interest), after subsection (5) insert—

“(5A)For the purposes of subsection (1) a payment of interest which is payable to an individual in respect of compensation is to                           be treated as a payment of yearly interest (irrespective of the period in respect of which the interest is paid).                  

(5B)But the Commissioners for Her Majesty's Revenue and Customs may make regulations which provide that subsection (5A) does not                           apply in the circumstances prescribed in the regulations.”                  

3U.K.In section 875 (interest paid by building societies), at the end insert “ unless it is treated as a payment of yearly interest by virtue of section 874(5A). ”

4U.K.In section 878 (interest paid by banks), after subsection (1) insert—

“(1A)But that duty does apply to such a payment if it is treated as a payment of yearly interest by virtue of section 874(5A).”                  

### Deduction from yearly interest: specialtiesU.K.

5U.K.In section 874 of ITA 2007 (duty to deduct from certain payments of yearly interest), after subsection (6) insert—

“(6A)In determining for the purposes of subsection (1) whether a payment of interest arises in the United Kingdom no account is                           to be taken of the location of any deed which records the obligation to pay the interest.”                  

### Payment of interest in kindU.K.

6U.K.After section 370 of ITTOIA 2005 insert—

#### “370AValuation of interest not paid in cash

7U.K.In section 380 of that Act (funding bonds), in subsection (3), at the end insert “ (but does not include any instrument providing for payment in the form of goods or services or a voucher) ”.

8U.K.In section 939 of ITA 2007 (duty to retain bonds where issue treated as payment of interest), in subsection (6), at the end                        insert “ (but does not include any instrument providing for payment in the form of goods or services or a voucher) ”.

9U.K.In section 975 of that Act (statements about deduction of income tax), in subsection (1)—

(a)after “if” insert “— 

(a)”, and

(b)at the end insert “, and 

(b)the person is not under a duty to provide a statement under section 975A”.                  

10U.K.After section 975 of that Act insert—

#### “975AStatements about certain payments of interest

11U.K.In section 413 of CTA 2009 (issue of funding bonds), in subsection (3), at the end insert “ (but does not include any instrument providing for payment in the form of goods or services or a voucher) ”.

### CommencementU.K.

12(1)The amendments made by paragraphs 1 to 4 have effect—U.K.

(a)in relation to any payment of interest by a building society which is made on or after 1 September 2013, and

(b)in relation to any other payment of interest which is made on or after 1 October 2013.

(2)The amendments made by paragraphs 5 to 11 have effect in relation to any payment of interest which is made on or after the                        day on which this Act is passed.

 Section 28

## SCHEDULE 12U.K.Disguised interest

### Key amendments to Part 4 of ITTOIA 2005U.K.

1U.K.Part 4 of ITTOIA 2005 (savings and investment income) is amended in accordance with paragraphs 2 and 3.

2U.K.In section 365(1) (overview of Part 4)—

(a)after paragraph (a) insert—

“(aa)Chapter 2A (disguised interest),”, and                  

(b)omit paragraph (k).

3U.K.After Chapter 2 insert—

#### “CHAPTER 2AU.K.Disguised interest

##### 381ACharge to tax on disguised interest

##### 381BIncome charged

##### 381CPerson liable

##### 381DAvoidance of double taxation

##### 381EException for returns from certain shares

### Consequential amendmentsU.K.

4U.K.The following amendments are in consequence of the amendments made by paragraphs 2(a) and 3.

### TCGA 1992U.K.

5U.K.TCGA 1992 is amended as follows.

6U.K.In section 37 (consideration chargeable to tax on income), after subsection (2) insert—

“(2A)Subsection (1) is not to be taken as excluding from the consideration so taken into account any money or money's worth which                           is, or is taken into account in computing, a return on which income tax is charged under Chapter 2A of Part 4 of ITTOIA 2005                           (disguised interest) (but see section 381D of that Act).”                  

7U.K.In section 39 (exclusion of expenditure by reference to tax on income), after subsection (3) insert—

“(3A)This section is not to be taken as excluding, from the sums allowable under section 38 as a deduction in the computation of                           the gain, expenditure allowable as a deduction in computing a return on which income tax is charged under Chapter 2A of Part                           4 of ITTOIA 2005 (disguised interest) (but see section 381D of that Act).”                  

8U.K.Omit sections 148A to 148C (provision dealing with the capital gains tax consequences of Chapter 12 of Part 4 of ITTOIA 2005).

9(1)Section 263A (agreements for sale and repurchase of securities) is amended as follows.U.K.

(2)Before subsection (1) insert—

“(A1)For the purposes of this section there is a repo in respect of securities if—                  

(a)a person (“the original owner”) has agreed to sell the securities to another person (“the interim holder”), and                  

(b)the original owner or a person connected with the original owner—                  

(i)is required to buy back the securities by the agreement or a related agreement,                  

(ii)is required to buy back the securities as a result of the exercise of an option acquired under the agreement or a related                           agreement, or                  

(iii)exercises an option to buy back the securities which was acquired under the agreement or a related agreement.”                  

(3)In subsection (1), for the words from “falling” to “repos)” substitute “ where under a repo in respect of securities the original owner has transferred the securities to the interim holder ”.

(4)Omit subsection (5).

10U.K.After section 263A insert—

#### “263AASection 263A: interpretation

11(1)Section 263F (power to modify repo provisions: non-standard repo cases) is amended as follows.U.K.

(2)In subsection (2), for the words from “cases” to the end substitute “ any case mentioned in section 263A(1). ”

(3)For subsection (9) substitute—

“(9)Post-agreement fluctuations” are fluctuations in the value of—                  

(a)securities transferred in pursuance of the original sale, or                  

(b)representative securities,                  

which occur in the period after the making of the agreement for the original sale.                  

(10)“Representative securities” are securities which, for the purposes of the repurchase, are to represent securities transferred                           in pursuance of the original sale.”                  

12U.K.In section 263G (power to modify repo provisions: redemption arrangements)—

(a)in subsection (2), for the words from “cases” to the end substitute “ any case mentioned in section 263A(1). ”, and

(b)omit subsection (4).

### ITTOIA 2005U.K.

13(1)ITTOIA 2005 is amended as follows.U.K.

(2)Omit Chapter 12 of Part 4 (disposals of futures and options involving guaranteed returns).

(3)In section 687(2) (application of charge to tax), at the end insert “ or to income falling within Chapter 2A of Part 4 ”.

(4)In Schedule 1 (consequential amendments), omit paragraph 435.

(5)In Schedule 2 (transitionals and savings), omit paragraph 95.

(6)In Schedule 4 (abbreviations and defined expressions), omit the entry for “future (in Chapter 12 of Part 4)”.

### FA 2007U.K.

14U.K.In Schedule 14 of FA 2007 (sale and repurchase of securities: minor and consequential amendments), omit paragraphs 22 and                        23.

### ITA 2007U.K.

15(1)ITA 2007 is amended as follows.U.K.

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

(a)section 596(5),

(b)sections 597 to 605,

(c)section 606(1) to (7) and (9) and (10), and

(d)sections 607 to 614.

(3)In Schedule 1 (minor and consequential amendments), omit paragraphs 310, 543 and 544.

(4)In Schedule 2 (transitionals and savings), omit paragraphs 112 to 124.

(5)In Schedule 4 (index of defined expressions)—

(a)omit the entries for—

“company UK REIT (in Chapter 4 of Part 11)”,                  

“distribution (in Chapter 4 of Part 11)”,                  

“gross amount (in Chapter 4 of Part 11)”,                  

“group (in Chapter 4 of Part 11)”,                  

“group UK REIT (in Chapter 4 of Part 11)”,                  

“Manufactured dividend (in Chapter 4 of Part 11)”,                  

“principal company (in Chapter 4 of Part 11)”,                  

“property rental business (in Chapter 4 of Part 11)”, and                  

““the repurchase price of the securities (in Chapter 4 of Part 11)”, and                  

(b)in the entry for “distribution (except in Chapter 4 of Part 11)”, omit “(except in Chapter 4 of Part 11)”.

### CTA 2010U.K.

16U.K.In Schedule 1 of CTA 2010 (minor and consequential amendments), omit paragraphs 540 to 543 and 544(a), (c) and (d).

### FA 2010U.K.

17U.K.In Schedule 6 of FA 2010 (charities etc), omit paragraph 21(4).

### Commencement and transitional provisionU.K.

18(1)Subject to sub-paragraph (2), the amendments made by this Schedule have effect for the tax year 2013-2014 and subsequent tax                        years.U.K.

(2)Chapter 2A of Part 4 of ITTOIA 2005 does not apply in relation to an arrangement that produces a return for a person, in relation                        to an amount, which is economically equivalent to interest if—

(a)the person became party to the arrangement before 6 April 2013, and

(b)none of the provisions repealed by paragraphs 13(2) and 15(2) applied in relation to the arrangement before that date.

 Section 33

## SCHEDULE 13U.K.Change in ownership of shell company: restriction of relief

### Amendments of Part 14 of CTA 2010U.K.

1(1)Part 14 of CTA 2010 (change in company ownership) is amended as follows.U.K.

(2)In section 672 (overview of Part)—

(a)after subsection (3) insert—

“(3A)Chapter 5A restricts relief for certain non-trading deficits and losses where there is a change of ownership of a shell company.”;                  

(b)in subsection (7), omit the “and” at the end of paragraph (b) and after that paragraph insert—

“(ba)shell company”, see section 705A, and”.                  

(3)After Chapter 5 insert—

#### “CHAPTER 5AU.K.Shell companies: restrictions on relief

##### IntroductionU.K.

###### 705AIntroduction to Chapter

###### 705BNotional split of accounting period in which change in ownership occurs

##### Restrictions on reliefU.K.

###### 705CRestriction on debits to be brought into account

###### 705DRestriction on carry forward of non-trading deficit from loan relationships

###### 705ERestriction on relief for non-trading loss on intangible fixed assets

##### Apportionment of amountsU.K.

###### 705FApportionment of amounts

###### 705GMeaning of certain expressions in section 705F

(4)In section 721 (when things other than share capital may be taken into account: Chapters 2 to 5)—

(a)in the heading, for “**5**” substitute “ **5A** ”;

(b)in subsection (1), for “5” substitute “ 5A ”;

(c)in subsection (4), for “or 5” substitute “ , 5 or 5A ”.

(5)In section 725 (provision applying for the purposes of Chapters 2 to 5)—

(a)in the heading, for “**5**” substitute “ **5A** ”;

(b)in subsection (1), for “5” substitute “ 5A ”.

(6)In section 730 (meaning of “relevant non-trading debit”)—

(a)in subsection (1), for “and 696” substitute “ , 696 and 705C ”;

(b)in subsections (3)(c), (4)(c) and (5)(b) for “or 696” substitute “ , 696 or 705C ”.

### Consequential amendmentsU.K.

2U.K.In Schedule 4 to that Act (index of defined expressions) insert at the appropriate places—

### CommencementU.K.

3U.K.The amendments made by this Schedule have effect in relation to changes in ownership that occur on or after 20 March 2013.

 Section 34

## SCHEDULE 14U.K.Transfer of deductions

### New Part 14A of CTA 2010U.K.

1U.K.After Part 14 of CTA 2010 insert—

#### **“PART 14A**U.K.Transfer of deductions

##### 730AOverview

##### 730BInterpretation of Part

##### 730CDisallowance of deductible amounts: relevant claims

##### 730DDisallowance of deductible amounts: profit transfers

### Consequential amendmentsU.K.

2(1)In section 1(4) of CTA 2010 (overview of Act), after paragraph (a) insert—U.K.

“(aa)transfer of deductions (see Part 14A),”.                  

(2)In section 432 of that Act (sale of lessors: restriction on relief for certain expenses), after subsection (1) insert—

“(1A)For the purposes of subsection (1), an expense is to be disregarded if, and to the extent that, section 730D(2) (disallowance                           of deductible amounts: profit transfers) applies to it.”                  

(3)In Schedule 4 to that Act (index of defined expressions), insert at the appropriate places—

### Commencement and transitional provisionU.K.

3(1)The amendments made by this Schedule have effect in relation to a qualifying change if the relevant day is on or after 20                        March 2013.U.K.

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

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

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

(3)If—

(a)the relevant day in relation to a qualifying change is before 26 June 2013, or

(b)paragraph (a) or (b) of sub-paragraph (2) was satisfied before that date,

those amendments have effect in relation to the qualifying change as if section 730C(9)(b) were omitted.

 Section 35

## SCHEDULE 15U.K.R&D expenditure credits

### **PART 1**U.K.Amendments of CTA 2009

1U.K.In Part 3 of CTA 2009 (trading income), after Chapter 6 insert—

#### “CHAPTER 6AU.K.Trade profits: R&D expenditure credits

##### Claims for creditsU.K.

###### 104AR&D expenditure credits

###### 104BRestriction on claiming relief under Part 13 and credit for same expenditure

##### SMEs: qualifying expenditure on sub-contracted R&DU.K.

###### 104CQualifying expenditure on sub-contracted R&D

###### 104DExpenditure on sub-contracted R&D undertaken in-house

###### 104EExpenditure on sub-contracted R&D not undertaken in-house

##### SMEs: subsidised qualifying expenditureU.K.

###### 104FSubsidised qualifying expenditure

###### 104GSubsidised qualifying expenditure on in-house direct R&D

###### 104HSubsidised qualifying expenditure on contracted out R&D

##### SMEs: capped R&D expenditureU.K.

###### 104ICapped R&D expenditure

##### Large companies: qualifying R&D expenditureU.K.

###### 104JQualifying expenditure on in-house direct R&D

###### 104KQualifying expenditure on contracted out R&D

###### 104LQualifying expenditure on contributions to independent R&D

##### Amount of creditU.K.

###### 104MAmount of R&D expenditure credit

##### Payment of creditU.K.

###### 104NPayment of R&D expenditure credit

###### 104OAmounts deducted by way of tax adjustment

###### 104PTotal expenditure on workers

###### 104QTotal amount of company's PAYE and NIC liabilities

###### 104RSurrender of credit to other group companies

###### 104SRestrictions on payment of R&D expenditure credit

###### 104T“Going concern”

##### Insurance companiesU.K.

###### 104UInsurance companies treated as large companies

###### 104VEntitlement to credit: I minus E basis

##### Group companiesU.K.

###### 104WR&D expenditure of group companies

##### Anti-avoidanceU.K.

###### 104XArtificially inflated claims for credit

##### InterpretationU.K.

###### 104YInterpretation

2(1)Part 13 of CTA 2009 (additional relief for expenditure on research and development) is amended as follows.U.K.

(2)After section 1040 (and before the cross-heading “*Interpretation*”) insert—

#### “1040AR&D expenditure credits

(3)In section 1138 (meaning of “subsidised expenditure”), in subsection (3), omit the “and” at the end of paragraph (a) and after                        paragraph (b) insert—

“(c)R&D expenditure credits under Chapter 6A of Part 3.”                  

3U.K.In Schedule 4 to CTA 2009 (index of defined expressions), at the appropriate place insert—

### **PART 2**U.K.Consequential amendments

#### FA 1998U.K.

4U.K.Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

5U.K.In paragraph 10(2) (other claims and elections to be included in return), after “first-year tax credits” insert “ , R&D expenditure credits ”.

6(1)Paragraph 52 (recovery of excessive repayments etc) is amended as follows.U.K.

(2)In sub-paragraph (2), after paragraph (b) insert—

“(bza)R&D expenditure credit under Chapter 6A of Part 3 of the Corporation Tax Act 2009,”.                  

(3)In sub-paragraph (5)—

(a)after paragraph (a) insert—

“(aa)an amount of R&D expenditure credit paid to a company for an accounting period,”;                  

(b)after “paragraph (a),” insert “ (aa), ”.

7(1)Part 9A (claims for R&D tax relief) is amended as follows.U.K.

(2)In paragraph 83A (introduction), for the words after “applies” substitute “to— 

(a)claims for R&D expenditure credits under Chapter 6A of Part 3 of the Corporation Tax Act 2009, and                  

(b)claims for R&D tax relief under Part 13 of that Act.”                  

(3)In paragraph 83C (content of claim), before “relief” insert “ credit or ”.

(4)Accordingly, the heading of the Part becomes “ CLAIMS FOR R&D EXPENDITURE CREDITS OR R&D TAX RELIEF ”.

#### FA 2007U.K.

8U.K.In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (definition of “corporation tax credit”), after sub-paragraph                        (i) insert—

“(ia)an R&D expenditure credit under Chapter 6A of Part 3 of CTA 2009,”.                  

#### CTA 2010U.K.

9U.K.Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is amended as follows.

10U.K.In section 357CG (adjustments in calculating profits of trade), in subsection (4), after “amounts to be deducted are” insert “— 

(a)the amount of any R&D expenditure credits (within the meaning of Chapter 6A of Part 3 of CTA 2009) brought into account in                           calculating the profits of the trade for the accounting period, and                  

(b)”.

11U.K.In section 357CK (deductions that are not routine deductions), in subsection (3)—

(a)in paragraph (a), the words from “for which” to the end become sub-paragraph (i);

(b)after that sub-paragraph insert “, or 

(ii)in respect of which the company is entitled to an R&D expenditure credit for the accounting period under Chapter 6A of Part                           3 of CTA 2009,”;                  

(c)at the beginning of paragraph (b) insert “ where the company obtains an additional deduction as mentioned in paragraph (a)(i), ”.

### **PART 3**U.K.Abolition of certain relief under Part 13 of CTA 2009

#### Amendments of Part 13 of CTA 2009U.K.

12U.K.Part 13 of CTA 2009 (additional relief for expenditure on research and development) is amended as follows.

13(1)Section 1039 (overview of Part) is amended as follows.U.K.

(2)In subsection (3)—

(a)for “Chapters 2 to 4” substitute “ Chapter 2 ”;

(b)omit paragraphs (b) and (c).

(3)Omit subsection (4).

(4)In subsection (5)—

(a)for “Chapters 2 to 5” substitute “ Chapter 2 ”;

(b)omit paragraphs (b) and (c).

14U.K.Omit Chapter 3 (relief for SMEs: R&D sub-contracted to SME).

15U.K.Omit Chapter 4 (relief for SMEs: subsidised and capped expenditure on R&D).

16U.K.Omit Chapter 5 (relief for large companies).

17(1)Section 1081 (insurance companies treated as large companies) is amended as follows.U.K.

(2)In subsection (2), for “Chapters 2 to 5” substitute “ Chapter 2 ”.

(3)Omit subsection (3).

18U.K.Omit section 1082 (R&D expenditure of group companies).

19U.K.Omit section 1083 (refunds of expenditure treated as income chargeable to tax).

20(1)Section 1084 (artificially inflated claims for relief or tax credit) is amended as follows.U.K.

(2)In subsection (2)(a), for “Chapters 2 to 5” substitute “ Chapter 2 ”.

(3)In subsection (3)(a) and (b), for “Chapters 2 to 5” substitute “ Chapter 2 ”.

21U.K.In section 1119 (meaning of “small or medium-sized enterprise”), in subsection (3), for “Chapters 2 to 5” substitute “ Chapter 2 ”.

22U.K.In section 1133 (meaning of “sub-contractor” etc), in subsection (3), omit “section 1072(1)(a),”.

#### Consequential amendmentsU.K.

23U.K.In Schedule 4 to CTA 2009 (index of defined expressions), omit the following entries— “ capped R&D expenditure (in Part 13) ”, “ qualifying Chapter 3 expenditure (in Part 13) ”, “ qualifying Chapter 4 expenditure (in Part 13) ”, and “ qualifying Chapter 5 expenditure (in Part 13) ”.

24(1)CTA 2010 is amended as follows.U.K.

(2)In section 312 (ring fence expenditure supplement: qualifying pre-commencement expenditure), omit subsections (8) and (9).

(3)In section 1173, in Part 1 of the table in subsection (2), omit the entry relating to section 1083(5) of CTA 2009.

(4)In Schedule 1, omit paragraph 671.

25U.K.In section 13 of F(No.3)A 2010, omit subsections (4) and (5).

26(1)FA 2012 is amended as follows.U.K.

(2)In section 78(3), omit the entry relating to section 1080(2) of CTA 2009.

(3)In Schedule 16, omit paragraph 190.

### **PART 4**U.K.Commencement and transitional provision

27U.K.The amendments made by Parts 1 and 2 of this Schedule have effect in relation to expenditure incurred on or after 1 April                        2013.

28U.K.Subject to paragraph 29, the amendments made by Part 3 of this Schedule have effect in relation to expenditure incurred on                        or after 1 April 2016.

29(1)If a company claims an R&D expenditure credit under section 104A of CTA 2009 for an accounting period beginning before 1 April                        2016, the amendments made by Part 3 of this Schedule are treated as having effect in relation to expenditure incurred by the                        company on or after the first day of that accounting period.U.K.

(2)But in a case where the accounting period includes 1 April 2013, those amendments are treated as having effect in relation                        to expenditure incurred by the company on or after that day.

 Section 36

## SCHEDULE 16U.K.Tax relief for television production

### **PART 1**U.K.Amendments of CTA 2009

1U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### **PART 2**U.K.Commencement

2(1)Any power conferred on the Secretary of State or the Treasury by virtue of this Schedule to make regulations or an order comes                        into force on the day on which this Act is passed.U.K.

(2)So far as not already brought into force by sub-paragraph (1), the amendments made by this Schedule come into force in accordance                        with provision contained in an order made by the Treasury.

(3)An order under sub-paragraph (2)—

(a)may make different provision for different purposes;

(b)may make such adaptations of Part 15A of CTA 2009 as appear to be necessary or expedient in consequence of other provisions                        of this Act not yet having come into force.

3(1)The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 April 2013.U.K.

(2)Sub-paragraph (3) applies where a company has an accounting period beginning before 1 April 2013 and ending on or after that                        date (“the straddling period”).

(3)For the purposes of Part 15A of CTA 2009—

(a)so much of the straddling period as falls before 1 April 2013, and so much of that period as falls on or after that date,                        are treated as separate accounting periods, and

(b)any amounts brought into account for the purposes of calculating for corporation tax purposes the profits of any trade of                        the company for the straddling period are apportioned to the two separate accounting periods on such basis as is just and                        reasonable.

 Section 36

## SCHEDULE 17U.K.Tax relief for video games development

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

 Section 36

## SCHEDULE 18U.K.Television and video games tax relief: consequential amendments

### ICTAU.K.

1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### FA 1998U.K.

2U.K.Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### CAA 2001U.K.

6U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### FA 2007U.K.

7U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### CTA 2009U.K.

8U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11U.K.Part 15 of CTA 2009 (film tax relief) is amended as follows.

12U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### FA 2009U.K.

16U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### CTA 2010U.K.

17U.K.Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is amended as follows.

18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

19U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Consequential renumberingU.K.

21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### CommencementU.K.

22(1)The amendments made by this Schedule come into force in accordance with provision contained in an order made by the Treasury.U.K.

(2)An order under sub-paragraph (1)—

(a)may make different provision for different purposes;

(b)may provide for any of those amendments to be treated as having come into force on a day earlier than the day on which the                        order is made or this Act is passed;

(c)may make such adaptations of provisions of this Schedule brought into force as appear to be necessary or expedient in consequence                        of other provisions of this Act not yet having come into force.

23(1)The amendments made by this Schedule have effect in relation to accounting periods beginning on or after the relevant day.U.K.

(2)“The relevant day” is—

(a)in the case of amendments relating to Part 15A of CTA 2009, 1 April 2013, and

(b)in the case of amendments relating to Part 15B of that Act, the day specified by order for the purposes of paragraph 3 of                        Schedule 17.

(3)For provision about the case where a company has an accounting period beginning before the relevant day and ending on or after                        that day, see paragraph 3(3) of Schedule 16 or (as the case may be) paragraph 3(4) of Schedule 17.

 Section 39

## SCHEDULE 19U.K.Real estate investment trusts: UK REITs which invest in other UK REITs

1U.K.Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.

2(1)Section 530 (condition as to distribution of profits) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)In the case of a group UK REIT, the condition in this section is met in relation to an accounting period if—                  

(a)so much of the group's UK profits arising in the period as are UK REIT investment profits (see section 549A), and                  

(b)at least 90% of the rest of the group's UK profits arising in the period,                  

are distributed by the principal company of the group on or before the filing date for the principal company's tax return                        for the period (see paragraph 14 of Schedule 18 to FA 1998).”                  

(3)For subsection (4) substitute—

“(4)In the case of a company UK REIT, the condition in this section is met in relation to an accounting period if—                  

(a)so much of the profits of the company's property rental business arising in the period as are UK REIT investment profits (see                           section 549A), and                  

(b)at least 90% of the rest of the profits of the company's property rental business arising in the period,                  

are distributed on or before the filing date for the company's tax return for the period (see paragraph 14 of Schedule 18                        to FA 1998).                  

(4A)For the purposes of subsection (4) profits of the company's property rental business are to be calculated in accordance with                           section 599.”                  

3(1)Section 530A (condition as to distribution of profits: increase in profits after delivery of tax return) is amended as follows.U.K.

(2)In subsection (2) for “530(1)(c)” substitute “ 530(1) ”.

(3)In subsection (6) for “530(4)(b)” substitute “ 530(4) ”.

(4)After subsection (9) insert—

“(10)This section cannot be relied upon to satisfy the requirement of section 530(1)(a) or (4)(a).”                  

4(1)Section 531 (conditions as to balance of business) is amended as follows.U.K.

(2)After subsection (4) insert—

“(4A)In the case of a group, for the purposes of subsections (1) and (2) a distribution falling within section 549A(6) or (8) received                           by a member of the group is to be treated as profits of a property rental business in accordance with section 549A(1) notwithstanding                           section 549A(5).                  

(4B)In the case of a company, for the purposes of subsections (1) and (3) a distribution falling within section 549A(6) or (8)                           received by the company is to be treated as profits of a property rental business in accordance with section 549A(1) notwithstanding                           section 549A(5).”                  

(3)In subsection (5)(b) after “cash” insert “ or relevant UK REIT shares ”.

(4)In subsection (6)(b) after “cash” insert “ and relevant UK REIT shares ”.

(5)After subsection (8) insert—

“(9)In this section “relevant UK REIT shares” means—                  

(a)in the case of a group UK REIT, shares held by a member of the group in the principal company of another group UK REIT or                           in a company UK REIT, and                  

(b)in the case of a company UK REIT, shares held by the company in the principal company of a group UK REIT or in another company                           UK REIT.”                  

5(1)Section 548 (distributions: liability to tax) is amended as follows.U.K.

(2)In subsection (5) after “2009)” insert “ so far as the distribution is a distribution of exempt profits ”.

(3)In subsection (6) after “2005)” insert “ so far as the distribution is a distribution of exempt profits ”.

(4)After subsection (8) insert—

“(9)This section does not apply in relation to a distribution falling within section 549A(6) or (8) so far as the distribution                           is a distribution of exempt profits.                  

(10)For the purposes of this Chapter a distribution is a “distribution of exempt profits” so far as the distribution falls within                           section 550(2)(a), (aa), (c) or (d).                  

(11)In applying section 550 for the purposes of subsection (10) in relation to a distribution made by the principal company of                           a post-cessation group or by a post-cessation company—                  

(a)subsection (1)(a) is to be read as referring to the principal company of the post-cessation group, or (as the case may be)                  

(b)subsection (1)(b) is to be read as referring to the post-cessation company.”                  

6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

7U.K.After section 549 insert—

### “549ADistributions from one UK REIT to another UK REIT

8U.K.In section 550 (attribution of distributions) in subsection (2)—

(a)for paragraph (a) substitute—

“(a)first, to distributions in satisfaction of the requirement of section 530(1)(a) or 530(4)(a) (as the case may be),                  

(aa)second, to distributions in satisfaction of the requirement of section 530(1)(b) or 530(4)(b) (as the case may be),”,                  

(b)in paragraph (b) for “second” substitute “ third ”,

(c)in paragraph (c) for “third” substitute “ fourth ”,

(d)in paragraph (d) for “fourth” substitute “ fifth ”, and

(e)in paragraph (e) for “fifth” substitute “ sixth ”.

9U.K.In section 588 (joint ventures: effect of notice under section 586) after subsection (6) insert—

“(7)Subsections (3) to (6) apply (in particular) for the purpose of interpreting section 549A(6)(a)(i) and (8)(a)(i).”                  

10U.K.In section 589 (joint ventures: effect of notice under section 587) after subsection (6) insert—

“(7)Subsections (3) to (6) apply (in particular) for the purpose of interpreting section 549A(6)(a)(i) and (8)(a)(i).”                  

11U.K.In section 605 (property rental business: exclusion of business producing listed income) after subsection (1) insert—

“(1A)But see section 549A which treats income falling within class 7 of the table as profits of property rental business.”                  

12U.K.In Chapter 18 of Part 15 of ITA 2007 (deduction of income tax at source) in sections 973 and 974 (which relate to distributions                        made by UK REITs) after subsection (6) insert—

“(7)In relation to references to profits of property rental business, see section 549A of CTA 2010.”                  

13(1)The amendments made by paragraph 4(3) to (5) above have effect for accounting periods beginning on or after the day on which                        this Act is passed.U.K.

(2)Subject to what follows, the amendments made by paragraphs 5 to 7 above have effect in relation to distributions received                        on or after the day on which this Act is passed.

(3)A distribution received by a member of a group UK REIT does not fall within section 549A(6) or (8) of CTA 2010 if it is received                        in an accounting period of the principal company of the group beginning before the day on which this Act is passed.

(4)A distribution received by a company UK REIT does not fall within section 549A(6) or (8) of CTA 2010 if it is received in                        an accounting period of the company beginning before the day on which this Act is passed.

 Section 42

## SCHEDULE 20U.K.Tax mismatch schemes

1U.K.CTA 2010 is amended in accordance with paragraphs 2 to 4.

2U.K.In section 1(4) (overview of Act), after paragraph (j) insert—

“(ja)tax mismatch schemes (see Part 21BA),”.                  

3U.K.After Part 21B insert—

### **“PART 21BA**U.K.Tax mismatch schemes

#### 938OLosses and profits from tax mismatch scheme to be disregarded

#### 938PMeaning of “tax mismatch scheme”

#### 938QMeaning of “scheme loss” and “scheme profit”

#### 938RMeaning of “relevant tax advantage” etc and “the scheme period”

#### 938SMeaning of references to economic profits and losses

#### 938TTax capacity assumption

#### 938UMeaning of “scheme”

#### 938VPriority

4U.K.In Schedule 4 (index of defined expressions), at the appropriate places insert—

5U.K.In section 231(8) of TIOPA 2010 (tax arbitrage: overview), for the words from “section” to the end substitute “ sections 938N and 938V of CTA 2010 (this Part treated as of no effect for the purposes of Parts 21B and 21BA of CTA 2010                           (group mismatch and tax mismatch schemes)). ”

6(1)The amendments made by this Schedule have effect in relation to schemes entered into at any time (including any time before                        the commencement date).U.K.

(2)But section 938O in Part 21BA of CTA 2010 (as inserted by paragraph 3 of this Schedule) does not apply to—

(a)scheme losses or profits that relate to a time before the commencement date, or

(b)scheme profits that relate to a time on or after that date but are made in relation to a scheme entered into before that date.

(3)In this paragraph “the commencement date” means 5 December 2012.

 Section 46

## SCHEDULE 21U.K.Community amateur sports clubs

### IntroductoryU.K.

1U.K.Chapter 9 of Part 13 of CTA 2010 (community amateur sports clubs) is amended as follows.

### Meaning of “open to the whole community”U.K.

2(1)Section 659 (meaning of “open to the whole community”) is amended as follows.U.K.

(2)In subsection (1), for paragraph (c) substitute—

“(c)the costs associated with membership of the club for any year do not represent a significant obstacle to membership of the                           club, use of its facilities or full participation in its activities (see subsection (2A)).”                  

(3)After subsection (2) insert—

“(2A)For the purposes of subsection (1)(c) the costs associated with membership of a club for any year represent a significant                           obstacle to membership of the club, use of its facilities or full participation in its activities if—                  

(a)those costs exceed the amount specified for the year for the purposes of this subsection in regulations made by the Treasury,                           and                  

(b)the club has not made such arrangements as are necessary to secure that those costs do not represent such an obstacle.                  

(2B)The Treasury may by regulations make provision supplementing subsection (2A), including—                  

(a)provision as to what constitutes full participation in a club's activities;                  

(b)provision as to costs that are, or are not, to be regarded as the costs associated with membership of a club;                  

(c)provision about calculating the amount of the costs associated with membership of a club for any year.                  

(2C)The provision that may be made by regulations under this section includes—                  

(a)different provision for different purposes, and                  

(b)provision having effect in relation to times before the regulations are made.                  

(2D)Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under                           this section if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of,                           the House of Commons.”                  

(4)For subsection (3) substitute—

“(3)A club is not prevented from being “open to the whole community” for the purposes of section 658 merely because it charges different fees for different descriptions of person.”                  

Commencement Information

I1Sch. 21 para. 2 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

### Meaning of “organised on an amateur basis”U.K.

3(1)Section 660 (meaning of “organised on an amateur basis”) is amended as follows.U.K.

(2)In subsection (1), omit the “and” after paragraph (b) and after that paragraph insert—

“(ba)it does not exceed the limit on paid players (see subsection (5A)), and”.                  

(3)In subsection (4)(g)—

(a)after “travel” insert “ or subsistence ”, and

(b)for “travelling to away matches” substitute “ in connection with away matches ”.

(4)After subsection (4) insert—

“(4A)In subsection (4)(g) “subsistence expenses” means expenses on food, drink and temporary living accommodation.”                  

(5)After subsection (5) insert—

“(5A)A club does not exceed the limit on paid players for the purposes of subsection (1) if—                  

(a)the number of persons paid to play for the club does not at any time exceed the specified maximum,                  

(b)the number of such persons in any year does not exceed the specified maximum for that year,                  

(c)the amount paid to any such person in any year in respect of activities undertaken for the club does not exceed the specified                           maximum for that year, and                  

(d)the total amount paid to such persons in any year in respect of activities undertaken for the club does not exceed the specified                           maximum for that year.                  

“Specified” means specified in regulations made by the Treasury.                  

(5B)The Treasury may by regulations make provision supplementing subsection (5A), including—                  

(a)provision as when a person is, or is not, to be regarded as a person paid to play for a club, and                  

(b)provision about calculating for the purposes of subsection (5A) the amount paid to such a person.”                  

(6)After subsection (7) insert—

“(8)The Treasury may by regulations make further provision as to when a club is “organised on an amateur basis” for the purposes of section 658.                  

(9)The provision that may be made by regulations under subsection (8) includes—                  

(a)provision as to the conditions which a club must meet in order to be “organised on an amateur basis” for the purposes of section 658;                  

(b)provision as to what are, or are not, to be regarded as “ordinary benefits of an amateur sports club” for the purposes of subsection (1);                  

(c)provision about persons who are, or are not, to be regarded as guests of a member of a club for the purposes of subsection                           (1).                  

(10)Regulations made under subsection (8) may amend this section or make other amendments to this Chapter.                  

(11)A statutory instrument that contains (whether alone or with other provisions) regulations under subsection (8) that amend                           this section or make other amendments to this Chapter may not be made unless a draft of the instrument has been laid before,                           and approved by a resolution of, the House of Commons.”                  

(7)After subsection (11) insert—

“(12)The provision that may be made by regulations under this section includes—                  

(a)different provision for different purposes, and                  

(b)provision having effect in relation to times before the regulations are made.                  

(13)Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under                           this section if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of,                           the House of Commons.”                  

Commencement Information

I2Sch. 21 para. 3 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

### Clubs consisting mainly of social membersU.K.

4U.K.In section 658 (meaning of “community amateur sports club”), in subsection (1A)(c), for “section 661” substitute “ sections 660A and 661 ”.

Commencement Information

I3Sch. 21 para. 4 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

5U.K.After section 660 insert—

#### “660AClubs consisting mainly of social members

(1)A club is not to be regarded as a club that has as its main purpose the provision of facilities for, and the promotion of                           participation in, one or more eligible sports if the percentage of its members who are social members exceeds the percentage                           specified for the purposes of this section in regulations made by the Treasury.                  

(2)A member is a “social member” for the purposes of this section if the member does not participate, or participates only occasionally, in the sporting                           activities of the club.                  

(3)The Treasury may by regulations make provision—                  

(a)as to activities that are, or are not, to be regarded as “sporting activities” of a club;                  

(b)as to the circumstances in which a member of a club is, or is not, to be regarded as participating in the sporting activities                           of the club;                  

(c)as to the circumstances in which a member of a club is, or is not, to be regarded as participating only occasionally in those                           activities.                  

(4)The provision that may be made by regulations under this section includes—                  

(a)different provision for different purposes, and                  

(b)provision having effect in relation to times before the regulations are made.                  

(5)Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under                           this section if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of,                           the House of Commons.”                  

Commencement Information

I4Sch. 21 para. 5 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

### ExemptionsU.K.

6U.K.In section 662 (exemption from corporation tax for UK trading income), after subsection (5) insert—

“(5A)The Treasury may by order amend the figure for the time being specified as the relevant threshold in subsection (5)(a).                  

(5B)A statutory instrument containing an order under subsection (5A) that amends that figure so as to substitute a lower figure                           may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.”                  

Commencement Information

I5Sch. 21 para. 6 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

7U.K.In section 663 (exemption from corporation tax for UK property income), after subsection (5) insert—

“(5A)The Treasury may by order amend the figure for the time being specified as the relevant threshold in subsection (5)(a).                  

(5B)A statutory instrument containing an order under subsection (5A) that amends that figure so as to substitute a lower figure                           may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.”                  

Commencement Information

I6Sch. 21 para. 7 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

### Power to specify income conditionU.K.

8(1)The Treasury may by regulations provide that a club is not entitled to be registered as a community amateur sports club under                        section 658 of CTA 2010 unless it meets one or more conditions relating to income received by the club.U.K.

(2)The provision that may be made by regulations under this paragraph includes, in particular—

(a)provision restricting the amount of income, or income of a specified description, that a community amateur sports club may                        receive for a period, and

(b)provision prohibiting such a club from receiving income of a specified description.

“Specified” means specified in the regulations.                  

(3)Regulations made under this paragraph may—

(a)amend Chapter 9 of Part 13 of CTA 2010,

(b)make different provision for different purposes, and

(c)contain provision having effect in relation to times before the regulations are made or this Act is passed.

(4)A statutory instrument that contains (whether alone or with other provisions) regulations under this paragraph may not be                        made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

Commencement Information

I7Sch. 21 para. 8 in force at 1.4.2010 for the purposes of the amendments made by that paragraph so far as not already in force by S.I. 2015/674, **art. 2**

### CommencementU.K.

9(1)Any power conferred on the Treasury under or by virtue of this Schedule to make regulations or an order comes into force on                        the day on which this Act is passed (and may be exercised to make provision having effect in relation to times before this                        Act is passed).U.K.

(2)So far as not already brought into force by virtue of sub-paragraph (1), the amendments made by this Schedule come into force                        in accordance with provision contained in an order made by the Treasury.

(3)An order made under sub-paragraph (2) may—

(a)provide for such amendments to be treated as having come into force on a date not earlier than 1 April 2010;

(b)make transitional provision or savings.

10(1)In a case where a club that was registered as a community amateur sports club before the day on which this Act is passed ceases                        to be entitled to be registered as such by virtue of this Schedule, an officer of Revenue and Customs may not cancel the club's                        registration with effect from a date earlier than that day.U.K.

(2)But sub-paragraph (1) does not prevent the cancellation of the club's registration if the officer is satisfied that—

(a)any information provided by a person (“P”) at the time of registration was inaccurate, and

(b)the inaccuracy was careless (within the meaning of paragraph 3 of Schedule 24 to FA 2007) or deliberate on P's part.

 Section 48

## SCHEDULE 22U.K.Transitional provision relating to reduction in standard lifetime allowance etc

### **PART 1**U.K.“Fixed protection 2014”

1(1)This paragraph applies on or after 6 April 2014 in the case of an individual—U.K.

(a)who, on that date, has one or more arrangements under—

(i)a registered pension scheme, or

(ii)a relieved non-UK pension scheme of which the individual is a relieved member,

(b)in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not make provision for a lifetime allowance                        enhancement factor,

(c)in relation to whom paragraph 12 of that Schedule (enhanced protection) does not apply on that date, and

(d)in whose case paragraph 14 of Schedule 18 to FA 2011 (transitional provision relating to new standard lifetime allowance for                        the tax year 2012-13) does not apply on that date,

if notice of intention to rely on it is given to an officer of Revenue and Customs.

(2)Part 4 of FA 2004 has effect in relation to the individual as if the standard lifetime allowance were the greater of the standard                        lifetime allowance and £1,500,000.

(3)But this paragraph ceases to apply if on or after 6 April 2014—

(a)there is benefit accrual in relation to the individual under an arrangement under a registered pension scheme,

(b)there is an impermissible transfer into any arrangement under a registered pension scheme relating to the individual,

(c)a transfer of sums or assets held for the purposes of, or representing accrued rights under, any such arrangement is made                        that is not a permitted transfer, or

(d)an arrangement relating to the individual is made under a registered pension scheme otherwise than in permitted circumstances.

(4)For the purposes of sub-paragraph (3)(a) there is benefit accrual in relation to the individual under an arrangement—

(a)in the case of a money purchase arrangement that is not a cash balance arrangement, if a relevant contribution is paid under                        the arrangement on or after 6 April 2014,

(b)in the case of a cash balance arrangement or a defined benefits arrangement, if there is an increase in the value of the individual's                        rights under the arrangement at any time on or after that date (but subject to sub-paragraph (11)), and

(c)in the case of a hybrid arrangement—

(i)where the benefits that may be provided to or in respect of the individual under the arrangement include money purchase benefits                        other than cash balance benefits, if a relevant contribution is paid under the arrangement on or after 6 April 2014, and

(ii)in any case, if there is an increase in the value of the individual's rights under the arrangement at any time on or after                        that date (but subject to sub-paragraph (11)).

(5)For the purposes of sub-paragraphs (4)(b) and (c)(ii) and (11) whether there is an increase in the value of the individual's                        rights under the arrangement (and its amount if there is) is to be determined—

(a)in the case of a cash balance arrangement (or a hybrid arrangement under which cash balance benefits may be provided to or                        in respect of the individual under the arrangement), by reference to whether there is an increase in the amount that would,                        on the valuation assumptions, be available for the provision of benefits to or in respect of the member (and, if there is,                        the amount of the increase), and

(b)in the case of a defined benefits arrangement (or a hybrid arrangement under which defined benefits may be provided to or                        in respect of the individual under the arrangement), by reference to whether there is an increase in the benefits amount.

(6)For the purposes of sub-paragraph (5)(b) “the benefits amount” is—

where—

LS is the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise                           than by commutation of pension);                        

P is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement;

RVF is the relevant valuation factor.

(7)Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies for the purposes of sub-paragraph (3)(b) but as                        if the references to a relevant existing arrangement were to the arrangement and the reference in sub-paragraph (2) to 5 April                        2006 were to 5 April 2014.

(8)Sub-paragraphs (7) to (8B) of paragraph 12 of Schedule 36 to FA 2004 (when there is a permitted transfer) apply for the purposes                        of sub-paragraph (3)(c); and where there is a permitted transfer—

(a)if it is a permitted transfer by virtue of sub-paragraph (8)(a) of paragraph 12, this paragraph applies in relation to the                        arrangement to which the transfer is made,

(b)if it is a permitted transfer by virtue of sub-paragraph (8)(b) of that paragraph, this paragraph applies in relation to the                        arrangement to which the transfer is made as if it were the same as that from which it is made, and

(c)if it is a permitted transfer by virtue of sub-paragraph (8)(c) of that paragraph, this paragraph applies in relation to the                        arrangement to which the transfer is made as if it were the same as that from which it is made and (if the employment is transferred)                        as if the employment with the transferee were the employment with the transferor.

(9)Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004 (“permitted circumstances”) apply for the purposes of                        sub-paragraph (3)(d).

(10)Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid under an arrangement) applies for the purposes                        of sub-paragraph (4)(a) and (c)(i).

(11)Increases in the value of the individual's rights under an arrangement are to be ignored for the purposes of sub-paragraph                        (4)(b) or (c)(ii) if in no tax year do they exceed the relevant percentage.

(12)The relevant percentage, in relation to a tax year, means—

(a)where the arrangement (or a predecessor arrangement) includes provision for the value of the rights of the individual to increase                        during the tax year at an annual rate specified in the rules of the pension scheme (or a predecessor registered pension scheme)                        on 11 December 2012—

(i)that percentage (or, where more than one arrangement includes such provision, the higher or highest of the percentages specified),                        plus

(ii)the relevant statutory increase percentage;

(b)otherwise—

(i)the percentage by which the consumer prices index for the month of September in the previous tax year is higher than it was                        for the September before that (or nil per cent if it is not higher), or

(ii)if higher, the relevant statutory increase percentage.

(13)In sub-paragraph (12)(a)—
          -  “predecessor arrangement”, in relation to an arrangement, means another arrangement (under the same or another registered pension scheme) from which                           some or all of the sums or assets held for the purposes of the arrangement directly or indirectly derive;                         
          -  “predecessor registered pension scheme”, in relation to a pension scheme, means another registered pension scheme from which some or all of the sums or assets held                           for the purposes of the arrangement under the pension scheme directly or indirectly derive.                         

(14)In sub-paragraph (12) “the relevant statutory increase percentage”, in relation to a tax year, means the percentage increase in the value of the individual's rights under the arrangement                        during the tax year so far as it is attributable solely to one or more of the following—

(a)an increase in accordance with section 15 of the Pension Schemes Act 1993 or section 11 of the Pension Schemes (Northern Ireland)                        Act 1993 (increase of guaranteed minimum where commencement of guaranteed minimum pension postponed);

(b)a revaluation in accordance with section 16 of the Pension Schemes Act 1993 or section 12 of the Pension Schemes (Northern                        Ireland) Act 1993 (early leavers: revaluation of earnings factors);

(c)a revaluation in accordance with Chapter 2 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland)                        Act 1993 (early leavers: revaluation of accrued benefits);

(d)a revaluation in accordance with Chapter 3 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland)                        Act 1993 (early leavers: protection of increases in guaranteed minimum pensions);

(e)the application of section 67 of the Equality Act 2010 (sex equality rule for occupational pension schemes).

(15)Sub-paragraph (16) applies in relation to a tax year if—

(a)the arrangement is a defined benefits arrangement which is under an annuity contract treated as a registered pension scheme                        under section 153(8) of FA 2004,

(b)the contract provides for the value of the rights of the individual to be increased during the tax year at an annual rate                        specified in the contract, and

(c)the contract limits the annual rate to the percentage increase in the retail prices index over a 12 month period specified                        in the contract.

(16)Sub-paragraph (12)(b)(i) applies as if it referred instead to the annual rate of the increase in the value of the rights during                        the tax year.

(17)For the purposes of sub-paragraph (15)(c) the 12 month period must end during the 12 month period preceding the month in which                        the increase in the value of the rights occurs.

(18)Subject to sub-paragraphs (19) to (21), sub-paragraph (3) applies in relation to an individual who is a relieved member of                        a relieved non-UK pension scheme as if the relieved non-UK pension scheme were a registered pension scheme; and the other                        sub-paragraphs of this paragraph apply accordingly.

(19)Sub-paragraphs (20) and (21) apply for the purposes of sub-paragraph (3)(a)(instead of sub-paragraph (4)) in determining if                        there is benefit accrual in relation to an individual under an arrangement under a relieved non-UK pension scheme of which                        the individual is a relieved member.

(20)There is benefit accrual in relation to the individual under the arrangement if there is a pension input amount under sections                        230 to 237 of FA 2004 (as applied by Schedule 34 to that Act) greater than nil in respect of the arrangement for a tax year;                        and, in such a case, the benefit accrual is treated as occurring at the end of the tax year.

(21)There is also benefit accrual in relation to the individual under the arrangement if—

(a)in a tax year there occurs a benefit crystallisation event in relation to the individual (whether in relation to the arrangement                        or to any other arrangement under any pension scheme or otherwise), and

(b)had the tax year ended immediately before the benefit crystallisation event, there would have been a pension input amount                        under sections 230 to 237 of FA 2004 greater than nil in respect of the arrangement for the tax year,

and, in such a case, the benefit accrual is treated as occurring immediately before the benefit crystallisation event.

(22)Expressions used in this paragraph and Part 4 of FA 2004 (pension schemes) have the same meaning in this paragraph as in that                        Part.

(23)In particular, references to a relieved non-UK pension scheme or a relieved member of such a scheme are to be read in accordance                        with paragraphs 13(3) and (4) and 18 of Schedule 34 to FA 2004 (application of lifetime allowance charge provisions to members                        of overseas pension schemes).

2(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 1.U.K.

(2)Regulations under this paragraph may (for example) add to the cases in which paragraph 1 is to apply or is to cease to apply.

(3)Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made;                        but—

(a)the time must be no earlier than 6 April 2014, and

(b)the provision must not increase any person's liability to tax.

3(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision specifying how any notice required                        to be given to an officer of Revenue and Customs under paragraph 1 is to be given.U.K.

(2)In sub-paragraph (1) the reference to paragraph 1 is to that paragraph as amended from time to time by regulations under paragraph                        2.

4(1)Regulations under paragraph 2 or 3 may include supplementary or incidental provision.U.K.

(2)The powers to make regulations under paragraphs 2 and 3 are exercisable by statutory instrument.

(3)A statutory instrument containing regulations under paragraph 2 or 3 is subject to annulment in pursuance of a resolution                        of the House of Commons.

### **PART 2**U.K.Other provision

5U.K.Part 4 of FA 2004 (pension schemes) is amended as follows.

6(1)Section 218 (standard lifetime allowance etc) is amended as follows.U.K.

(2)After subsection (5B) insert—

“(5BA)Where the operation of a lifetime allowance enhancement factor is provided for by any of sections 220, 222, 223 and 224 and                           the time mentioned in the definition of SLA in the section concerned fell within the period consisting of the tax year 2012-13                           and the tax year 2013-14, subsection (4) has effect as if the amount to be multiplied by LAEF were £1,500,000 if that is greater                           than SLA.                  

(5BB)Where more than one lifetime allowance enhancement factor operates, subsection (5BA) does not apply if subsection (5A) or                           (5B) applies.”                  

(3)After subsection (5C) insert—

“(5D)Where benefit crystallisation event 7 occurs on or after 6 April 2014 by reason of the payment of a relevant lump sum death                           benefit in respect of the death of the individual during the period consisting of the tax year 2012-13 and the tax year 2013-14,                           the standard lifetime allowance at the time of the benefit crystallisation event is £1,500,000.”                  

(4)The amendments made by this paragraph have effect for the tax year 2014-15 and subsequent tax years.

7(1)In section 219 (availability of individual's lifetime allowance) after subsection (5) insert—U.K.

“(5A)If paragraph 7 of Schedule 36 (primary protection) makes provision for a lifetime allowance enhancement factor in relation                           to the individual, subsection (5) has effect as if CSLA were £1,500,000 if that is greater than CSLA.”                  

(2)The amendment made by this paragraph has effect for cases in which the time of the current benefit crystallisation event falls                        on or after 6 April 2014.

8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

 Section 55

## SCHEDULE 23U.K.Employee shareholder shares

### **PART 1**U.K.Income tax treatment of employee shareholder shares

1U.K.ITEPA 2003 is amended in accordance with paragraphs 2 to 15.

2U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

15U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### **PART 2**U.K.Capital gains tax exemption for employee shareholder shares

17U.K.TCGA 1992 is amended as follows.

18U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

20U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### **PART 3**U.K.Corporation tax

21U.K.CTA 2009 is amended as follows.

22U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

24U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

26U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

34U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### **PART 4**U.K.Employment income exemption

37U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### **PART 5**U.K.Commencement

38U.K.The amendments made by this Schedule come into force in accordance with provision made by the Treasury by order made by statutory                        instrument.

 Section 64

## SCHEDULE 24U.K.EMI options and entrepreneurs' relief etc

### Entrepreneurs' relief to apply to shares acquired under EMI optionU.K.

1(1)In Chapter 3 of Part 5 of TCGA 1992 (entrepreneurs' relief) section 169I (material disposal of business assets) is amended                        as follows.U.K.

(2)In subsection (5) for “or B” substitute “ , B, C or D ”.

(3)After subsection (7) insert—

“(7A)Condition C is that—                  

(a)the assets disposed of are relevant EMI shares,                  

(b)the option grant date is, or is before, the first date of the period of 1 year ending with the date of the disposal, and                  

(c)throughout that period of 1 year—                  

(i)the company is either a trading company or the holding company of a trading group, and                  

(ii)the individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more                           companies which are members of the trading group.                  

(7B)Condition D is that—                  

(a)the assets disposed of are relevant EMI shares acquired by the individual before the cessation date,                  

(b)the option grant date is, or is before, the first date of the period of 1 year ending with the cessation date,                  

(c)the conditions in paragraph (c) of subsection (7A) are met throughout that period of 1 year, and                  

(d)the cessation date is within the period of 3 years ending with the date of the disposal.                  

(7C)In this section “relevant EMI shares” means—                  

(a)shares of a company acquired by an individual to which subsection (7D) applies, or                  

(b)shares of a company to which subsection (7F) applies.                  

(7D)This subsection applies to shares of a company acquired by an individual if the individual—                  

(a)acquires them on or after 6 April 2013, and                  

(b)acquires them as a result of the exercise of a qualifying option within the meaning given by section 527(4) of ITEPA 2003                           (enterprise management incentives) where the option is exercised on or before the tenth anniversary of the date mentioned                           in section 529(2) of that Act.                  

(7E)Subsection (7D) does not apply to shares acquired as a result of the exercise of a qualifying option if—                  

(a)a disqualifying event (see section 533 of ITEPA 2003) occurs in relation to the option before its exercise, and                  

(b)it is exercised later than the period mentioned in section 532(1)(b) of ITEPA 2003.                  

(7F)This subsection applies to shares of a company if—                  

(a)the shares are the new holding in a case in which section 127 applies in relation to an individual,                  

(b)the original shares in that case are relevant EMI shares (whether by virtue of subsection (7D) or this subsection), and                  

(c)that case is one in which section 127 applies by virtue only of—                  

(i)section 126, or                  

(ii)subject to subsection (7G), section 135(3).                  

(7G)Subsection (7F)(c)(ii) applies only if—                  

(a)the exchange of shares in question is a qualifying exchange of shares as defined in paragraph 40 of Schedule 5 to ITEPA 2003,                           and                  

(b)when the exchange occurs, the independence requirement (see paragraph 9 of Schedule 5 to ITEPA 2003) and the trading activities                           requirement (see paragraphs 13 and 14 of that Schedule) are met in relation to the new company (see paragraph 40(1)(a) of                           that Schedule).                  

(7H)In this section “the original relevant EMI shares”, in relation to shares which are relevant EMI shares by virtue of subsection (7F), means the shares originally acquired                           by the individual to which subsection (7D) applied.                  

(7I)If the shares disposed of are relevant EMI shares by virtue of subsection (7F), in relation to times before the reorganisation                           mentioned in section 127, in subsection (7A)(c) references to the company are to be read as references to (if different)—                  

(a)the company whose shares are the original relevant EMI shares, or                  

(b)if there has been more than one reorganisation since the original relevant EMI shares were acquired—                  

(i)the company whose shares are the original relevant EMI shares, or                  

(ii)if at the time in question the individual is holding relevant EMI shares which are shares of another company, that other company.                  

This subsection is subject to subsection (7N).                  

(7J)If the shares disposed of are relevant EMI shares by virtue of subsection (7F), the question of whether the requirement of                           subsection (7B)(a) is met is to be determined by reference to the date of the acquisition of the original relevant EMI shares.                  

(7K)Subject to what follows, in subsections (7A)(b) and (7B)(b) “the option grant date” means the date on which the qualifying option in question was granted.                  

(7L)Subsections (7M) and (7N) apply if the qualifying option is a replacement option for the purposes of the EMI code (see paragraph                           41 of Schedule 5 to ITEPA 2003).                  

(7M)In subsections (7A)(b) and (7B)(b) “the option grant date” means—                  

(a)the date on which the old option was granted, or                  

(b)if the old option was also a replacement option, the date on which the earlier old option was granted,                  

and so on.                  

(7N)In relation to any time during the currency of an old option taken into account under subsection (7M), in subsection (7A)(c)                           references to the company are to be read as references to the company whose shares were the subject of the old option.                  

(7O)In subsection (7B) “the cessation date” means the date on which the company—                  

(a)ceases to be a trading company without continuing to be or becoming a member of a trading group, or                  

(b)ceases to be a member of a trading group without continuing to be or becoming a trading company.                  

(7P)Subsections (7Q) and (7R) apply in relation to a disposal of relevant EMI shares if—                  

(a)the shares were acquired as a result of the exercise of a qualifying option where—                  

(i)a disqualifying event (see section 533 of ITEPA 2003) occurs in relation to the option before its exercise, but                  

(ii)it is exercised within the period mentioned in section 532(1)(b) of ITEPA 2003, or                  

(b)if the shares are relevant EMI shares by virtue of subsection (7F), the original relevant EMI shares were acquired as mentioned                           in paragraph (a).                  

(7Q)Subsection (7A)(b) has effect as if the reference to the date of the disposal were a reference to the date of the disqualifying                           event.                  

(7R)If the disqualifying event is within section 534(1)(c) of ITEPA 2003, subsection (7B)(a) has effect as if the reference to                           the cessation date were a reference to the first day after the period mentioned in section 532(1)(b) of that Act if that day                           is later than the cessation date.”                  

### Identification of shares acquired under EMI optionU.K.

2U.K.Chapter 1 of Part 4 of TCGA 1992 (general provision relating to shares etc) is amended as follows.

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

“(4)Subsection (5) applies if an individual—                  

(a)acquires shares (“the relevant shares”) of the same class, on the same day and in the same capacity, and                  

(b)some of the relevant shares are relevant EMI shares (as defined by section 169I(7C) to (7G)).                  

(5)This section has effect as if—                  

(a)paragraph (a) of subsection (1) required the relevant EMI shares to be treated as acquired by the individual by a single transaction                           separate from the remainder of the relevant shares (which are also to be treated by virtue of that paragraph as acquired by                           the individual by a single transaction), and                  

(b)subsection (1) required the relevant EMI shares to be treated as disposed of after the remainder of the relevant shares.”                  

4(1)Section 106A (identification of securities for capital gains tax purposes) is amended as follows.U.K.

(2)In subsection (5)—

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

(b)after paragraph (a) insert—

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

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

(3)After subsection (6) insert—

“(6A)Subject to subsections (4) and (5) above, a company's shares which are disposed of shall be identified—                  

(a)with relevant EMI shares, rather than with other shares, and                  

(b)with relevant EMI shares acquired at an earlier time rather than with relevant EMI shares acquired at a later time.                  

(6B)No shares identified with relevant EMI shares by virtue of subsection (6A)(a) or (b) above shall be regarded as forming part                           of an existing section 104 holding or as constituting a section 104 holding.”                  

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

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

### Commencement and transitional provisionU.K.

5(1)The amendments made by paragraphs 1 to 4 above have effect in relation to disposals of shares on or after 6 April 2013.U.K.

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

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

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

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

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

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

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

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

“(6A)Subject to subsections (4) and (5) above, a company's shares which are disposed of shall be identified—                  

(a)with shares which are not relevant EMI shares, rather than with relevant EMI shares, and                  

(b)with relevant EMI shares acquired at a later time rather than with relevant EMI shares acquired at an earlier time.                  

(6B)No shares identified with relevant EMI shares by virtue of subsection (6A)(b) above shall be regarded as forming part of an                           existing section 104 holding or as constituting a section 104 holding.”                  

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

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

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

 Section 65

## SCHEDULE 25U.K.Charge on certain high value disposals by companies etc

### **PART 1**U.K.Taxation of Chargeable Gains Act 1992

1U.K.TCGA 1992 is amended as follows.

2(1)Section 1 (the charge to tax) is amended as follows.U.K.

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

(3)After subsection (2) insert—

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

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

3U.K.In section 2 (persons and gains chargeable to capital gains tax, and allowable losses), after subsection (7) insert—

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

4U.K.After section 2 insert—

#### “2BPersons chargeable to capital gains tax on ATED-related gains

#### 2C“Relevant high value disposal”

#### 2D“The threshold amount”

#### 2ERestriction of losses

#### 2FTapering relief for gains

5U.K.In section 4 (rates of capital gains tax), after subsection (3) insert—

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

6U.K.In section 8 (company's total profits to include chargeable gains), after subsection (4) insert—

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

7U.K.In section 13 (attribution of gains to members of non-resident companies), after subsection (1) insert—

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

8U.K.In section 16 (computation of losses), in subsection (3) after “section” insert “ 2B, ”.

9U.K.In Part 2, after Chapter 4 insert—

#### “CHAPTER 5U.K.Computation of gains and losses: relevant high value disposals

##### 57AGains and losses on relevant high value disposals

10U.K.After section 100 insert—

#### “100AExemption for certain EEA UCITS

11(1)Section 161 (appropriations to and from stock) is amended as follows.U.K.

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

(3)After subsection (3) insert—

“(3ZA)But if the person—                  

(a)meets the requirement of paragraph (a) or (b) of subsection (3), and                  

(b)(ignoring any election under this section) would be treated under subsection (1) as making a relevant high value disposal                           on which an ATED-related gain chargeable to, or loss allowable for the purposes of, capital gains tax under section 2B would                           accrue,                  

the person may not elect under subsection (3) but may elect for subsection (3ZB) to apply.                  

(3ZB)Subject to subsection (4), where an election is made for this subsection to apply—                  

(a)a gain or loss accruing on the disposal under subsection (1) which is not ATED-related is not a chargeable gain or an allowable                           loss,                  

(b)the market value of the asset at the time of the appropriation is, for the purposes of computing the profits of the trade                           for the purposes of tax, to be treated as reduced by the amount of any gain, or increased by the amount of any loss, which                           would be a chargeable gain or allowable loss but for paragraph (a), and                  

(c)the chargeable gain or allowable loss which accrues on that disposal and is ATED-related is unaffected by the election.”                  

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

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

12U.K.In section 171 (transfers within a group: general provisions), in subsection (2), after paragraph (b) insert—

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

13U.K.After section 187 insert—

#### “187ADeemed disposal under section 185: ATED-related gains and losses

14U.K.In section 271 (miscellaneous exemptions)—

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

(b)in subsection (10), for the words after “above” substitute “—
          -  “investments” includes futures contracts and options contracts;                         
          -  “overseas pension scheme” has the same meaning as in Part 4 of the Finance Act 2004 (see section 150(7) of that Act).”                         

15U.K.In section 288 (interpretation), in subsection (1), at the appropriate places insert—

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

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

16U.K.After Schedule 4 insert—

#### “SCHEDULE 4ZZAU.K.relevant high value disposals: gains and losses

##### IntroductoryU.K.

1This Schedule applies for the purposes of determining in relation to a relevant high value disposal made by a person (“P”)—

(a)whether a gain or loss which is ATED-related accrues to P on the disposal, and                  

(b)whether a gain or loss which is not ATED-related accrues to P on the disposal.                  

##### Assets held on 5 April 2013: no paragraph 5 electionU.K.

2If the interest disposed of was held by P on 5 April 2013—

(a)paragraph 3 applies for the purposes of computing the gain or loss accruing to P which is ATED-related, and                  

(b)paragraph 4 applies for the purposes of computing the gain or loss accruing to P which is not ATED-related.                  

3(1)An amount equal to the relevant fraction of the notional post-April 2013 gain or loss is the ATED-related gain or loss (as                           the case may be).                  

(2)“Notional post-April 2013 gain or loss” means the gain or loss which (in the absence of section 2B and this Schedule) would have accrued on the relevant high value                           disposal had P acquired the interest on 5 April 2013 for a consideration equal to its market value on that date.                  

(3)For the purposes of sub-paragraph (2), the amount of the gain or loss accruing to P is to be computed (whether or not that                           would otherwise be the case) as if P were within the charge to capital gains tax (but not within the charge to corporation                           tax on chargeable gains).                  

(4)“The relevant fraction” is—                  

where—                     

“CD” is the number of days in the relevant ownership period which are ATED chargeable days;                        

“TD” is the total number of days in the relevant ownership period.                        

(5)“The relevant ownership period” means the period beginning with 6 April 2013 and ending with the day before the day on which the relevant high value disposal                           occurs.                  

(6)“ATED chargeable day” means any day by virtue of which condition C in section 2C(4) is met in relation to the relevant high value disposal.                  

4(1)The gain or loss accruing on the relevant high value disposal which is not ATED-related is computed as follows.                  
          -  *Step 1* Determine the amount of the notional pre-April 2013 gain or loss.                         
          -  *Step 2* In a case where there is a notional post-April 2013 gain—                          (a)
determine the amount of that gain remaining after the deduction of the ATED-related gain determined under paragraph 3, and                                 
(b)
adjust that remaining gain by reducing it by the notional indexation allowance.                                 
 
          -  *Step 3* In a case where there is a notional post-April 2013 loss, determine the amount of that loss remaining after deduction of                              the ATED-related loss determined under paragraph 3.                         
          -  *Step 4* Add—                          (a)
the amount of any gain or loss determined under Step 1, and                                 
(b)
the amount of any adjusted gain determined under Step 2 or (as the case may be) any loss determined under Step 3,                                 
  (treating any amount which is a loss as a negative amount).                         

If the result is a positive amount, that amount is the gain on the relevant high value disposal which is not ATED-related.                  

If the result is a negative amount, that amount (expressed as a positive number) is the loss on the relevant high value disposal                        which is not ATED-related.                  

(2)“The notional pre-April 2013 gain or loss” means the gain or loss which would have accrued on 5 April 2013 had the interest been disposed of for a consideration equal                           to its market value on that date.                  

(3)For the purposes of sub-paragraph (2), the amount of the gain or loss accruing to P is to be computed (whether or not that                           would otherwise be the case) as if P were within the charge to corporation tax on chargeable gains (but not within the charge                           to capital gains tax).                  

(4)Paragraph 3(2) and (3) (meaning of “notional post-April 2013 gain or loss”) also applies for the purposes of this paragraph.                  

(5)“Notional indexation allowance” means the relevant fraction of an amount equal to the difference between—                  

(a)the indexation allowance which (in the absence of section 2B and this Schedule) would be made under Chapter 4 of Part 2 in                           determining the gain accruing on the relevant high value disposal were that gain being computed for corporation tax purposes,                           and                  

(b)the indexation allowance which is made under Chapter 4 of Part 2 in determining the notional pre-April 2013 gain.                  

(6)“The relevant fraction” is—                  

where “CD” and “TD” have the same meaning as in paragraph 3(4).                     

##### Election for paragraph 2 to 4 not to apply to a chargeable interestU.K.

5(1)A person may make an election under this paragraph for paragraphs 2 to 4 not to apply in relation to a chargeable interest                           held by (or any part of which is held by) the person on 5 April 2013.                  

(2)An election is irrevocable.                  

(3)An election must be made by being included in a tax return under the Management Act for the tax year in which the first relevant                           high value disposal by the person of the chargeable interest (or any part of it) on or after 6 April 2013 occurs.                  

(4)The reference in sub-paragraph (3) to an election being included in a return includes an election being included by virtue                           of an amendment of the return.                  

(5)All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise,                           as are required to give effect to an election.                  

(6)In this paragraph “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act).                  

##### Cases where election made or assets acquired after 5 April 2013U.K.

6(1)This paragraph applies if—                  

(a)an election is made by P under paragraph 5 in respect of the chargeable interest which (or a part of which) is the subject                           of the relevant high value disposal, or                  

(b)the chargeable interest (or part) disposed of by the relevant high value disposal was not held by P throughout the period                           beginning with 5 April 2013 and ending with the disposal.                  

(2)The ATED-related gain or loss accruing on the relevant high value disposal is computed as follows.                  
          -  *Step 1* Determine the amount of the gain or loss which would accrue to P, ignoring section 2B and this Schedule (but not the remainder                              of this Step). For this purpose, the amount of the gain or loss is to be computed (whether or not that would otherwise be                              the case) as if P were within the charge to capital gains tax (but not within the charge to corporation tax on chargeable                              gains).                         
          -  *Step 2* An amount equal to the relevant fraction of that gain or loss is the ATED-related gain or loss accruing on the relevant high                              value disposal.                         

(3)The gain or loss accruing on the relevant high value disposal which is not ATED-related is to be computed as follows.                  
          -  *Step 1* In a case where there is a gain under Step 1 of sub-paragraph (2)—                          (a)
determine the amount of the gain remaining after the deduction of the ATED-related gain, and                                 
(b)
adjust the remaining gain by reducing it by an amount equal to the notional indexation allowance.                                 
  That adjusted gain is the gain accruing on the relevant high value disposal which is not ATED-related.                         
          -  *Step 2* In a case where there is a loss under Step 1 of sub-paragraph (2), determine the amount of the loss remaining after deduction                              of the ATED-related loss. That remaining loss is the loss accruing on the relevant high value disposal which is not ATED-related.                         

(4)“Notional indexation allowance” means the relevant fraction of the indexation allowance which would be made under Chapter 4 of Part 2 in determining the                           gain under Step 1 in sub-paragraph (2) were that gain being computed for corporation tax purposes.                  

(5)Subject to sub-paragraph (6), “the relevant fraction”—                  

(a)in sub-paragraph (2) has the same meaning as in paragraph 3(4), and                  

(b)in sub-paragraph (4) has the same meaning as in paragraph 4(6).                  

(6)For the purpose of determining the relevant fraction under sub-paragraph (5), paragraph 3(5) has effect as if the relevant                           ownership period began on the day on which P acquired the interest or, if later, 31 March 1982.                  

##### Adjustments of ATED chargeable daysU.K.

7(1)This paragraph applies where, as a result of a claim under section 106(3) of the Finance Act 2013 (adjustment of chargeable                           amount), or an amendment of or adjustment to such a claim, there is an alteration in the number of ATED chargeable days.                  

(2)All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise,                           as are required to give effect to any change in liability to tax as a result of that alteration.”                  

17U.K.In Schedule 7A (restriction on set-off of pre-entry losses), after paragraph 10 insert—

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

### **PART 2**U.K.Other amendments

#### Corporation Tax Act 2009U.K.

18U.K.In section 2 of CTA 2009 (charge to corporation tax), after subsection (2) insert—

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

#### Corporation Tax Act 2010U.K.

19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### **PART 3**U.K.Commencement

20U.K.The amendments made by this Schedule have effect in relation to disposals occurring on or after 6 April 2013.

 Section 71

## SCHEDULE 26U.K.Restrictions on buying capital allowances

### IntroductoryU.K.

1U.K.Chapter 16A of Part 2 of CAA 2001 (avoidance involving allowance buying) is amended as follows.

### Restrictions where certain conditions metU.K.

2(1)Section 212B (circumstances where Chapter 16A applies) is amended as follows.U.K.

(2)For subsection (1)(d) substitute—

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

(3)For subsection (4) substitute—

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

3U.K.After section 212L insert—

#### “Limiting conditionsU.K.

##### 212LALimiting conditions

4U.K.In consequence of the amendments made by paragraphs 2 and 3, the heading to Chapter 16A becomes “ Restrictions on allowance buying ”.

### Extension of restrictions to other qualifying activitiesU.K.

5(1)Section 212B (circumstances where Chapter 16A applies) is amended as follows.U.K.

(2)In subsection (1)—

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

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

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

6(1)Section 212C (when there is a a qualifying change in relation to C) is amended as follows.U.K.

(2)In subsection (4)—

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

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

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

7(1)Section 212I (relevant percentage share) is amended as follows.U.K.

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

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

8U.K.In section 212J(1) (relevant excess of allowances) for “trade” substitute “ activity ”.

9U.K.In section 212K(2), (3), (4) and (5) (relevant tax written-down value) for “trade” substitute “ activity ”.

10U.K.In section 212N(2), (3) and (4) (old and new accounting periods) for “trade” substitute “ activity ”.

11(1)Section 212P (effect of excess on pools) is amended as follows.U.K.

(2)In subsection (3)—

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

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

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

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

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

(3)In subsection (4)—

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

(b)omit “trade”,

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

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

12(1)Section 212Q (when there are postponed capital allowances) is amended as follows.U.K.

(2)In subsection (3)—

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

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

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

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

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

(3)In subsection (4)—

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

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

### CommencementU.K.

13(1)The amendments made by this Schedule have effect in relation to a qualifying change if the relevant day (within the meaning                        of Chapter 16A of Part 2 of CAA 2001) is on or after 20 March 2013.U.K.

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

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

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

 Section 74

## SCHEDULE 27U.K.Community investment tax relief

### Income tax: carry forward of reliefU.K.

1U.K.Part 7 of ITA 2007 (community investment tax relief) is amended as follows.

2U.K.In section 335 (form and amount of CITR) in subsection (3) for “this purpose” substitute “ the purposes of this section and section 335A ”.

3U.K.After section 335 insert—

#### “335ACarry forward of CITR

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

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

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

(2)For subsection (3) substitute—

“(3)Subsections (3A) to (3H) apply if—                  

(a)the disposal is a qualifying disposal, and                  

(b)the investor has made a claim under section 335 in respect of the former investment for a tax year (“tax year X”).                  

(3A)Subsection (3B) applies if the total of the following CITR does not exceed A—                  

(a)any CITR attributable to the former investment in respect of tax year X given under section 335, and                  

(b)any CITR attributable to the former investment in respect of later tax years given under section 335A where tax year X is                           the tax year mentioned in section 335A(1)(a).                  

(3B)All CITR falling within subsection (3A)(a) or (b) must be withdrawn.                  

(3C)If the total of the CITR falling within subsection (3A)(a) or (b) exceeds A, that total must be reduced by A.                  

(3D)For the purposes of subsection (3C) CITR given in a later tax year must be reduced before CITR given in an earlier tax year.                  

(3E)For the purposes of subsections (3A) and (3C) “A” is an amount equal to 5% of the amount or value of the consideration (if                           any) which the investor receives for the former investment.                  

(3F)If—                  

(a)the total of the CITR falling within subsection (3A)(a) or (b)(“B”) is less than                  

(b)the amount (“C”) which is equal to 5% of the invested amount in respect of the former investment for tax year X,                  

“A” is to be reduced by multiplying it by the fraction—                  

(3G)If the amount of CITR attributable to the former investment in respect of a tax year has been reduced before the CITR is obtained,                           the amount referred to in subsection (3F) as B is to be treated for the purposes of that subsection as the amount it would                           have been without the reduction.                  

(3H)Subsection (3G) does not apply to a reduction by virtue of section 358 (attribution: bonus shares).”                  

(3)Omit subsections (5) to (7).

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

### Corporation tax: carry forward of reliefU.K.

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

8(1)Section 220 (form and amount of CITR) is amended as follows.U.K.

(2)For subsection (3) substitute—

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

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

9U.K.After section 220 insert—

#### “220ACarry forward of CITR

10U.K.In section 240 (attribution of CITR) after subsection (4) insert—

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

11(1)Section 244 (disposal of securities or shares during 5 year period) is amended as follows.U.K.

(2)For subsection (3) substitute—

“(3)Subsections (3A) to (3H) apply if—                  

(a)the disposal is a qualifying disposal, and                  

(b)the investor has made a claim under section 220 in respect of the former investment for an accounting period (“period X”).                  

(3A)Subsection (3B) applies if the total of the following CITR does not exceed A—                  

(a)any CITR attributable to the former investment in respect of period X given under section 220, and                  

(b)any CITR attributable to the former investment in respect of later accounting periods given under section 220A where period                           X is the accounting period mentioned in section 220A(1)(a).                  

(3B)All CITR falling within subsection (3A)(a) or (b) must be withdrawn.                  

(3C)If the total of the CITR falling within subsection (3A)(a) or (b) exceeds A, that total must be reduced by A.                  

(3D)For the purposes of subsection (3C) CITR given in a later accounting period must be reduced before CITR given in an earlier                           accounting period.                  

(3E)For the purposes of subsections (3A) and (3C) “A” is an amount equal to 5% of the amount or value of the consideration (if                           any) which the investor receives for the former investment.                  

(3F)If—                  

(a)the total of the CITR falling within subsection (3A)(a) or (b)(“B”) is less than                  

(b)the amount (“C”) which is equal to 5% of the invested amount in respect of the former investment for period X,                  

“A” is to be reduced by multiplying it by the fraction—                  

(3G)If the amount of CITR attributable to the former investment in respect of an accounting period has been reduced before the                           CITR is obtained, the amount referred to in subsection (3F) as B is to be treated for the purposes of that subsection as the                           amount it would have been without the reduction.                  

(3H)Subsection (3G) does not apply to a reduction by virtue of section 241 (attribution: bonus shares).”                  

(3)Omit subsections (5) to (7).

12U.K.The amendments made by paragraphs 7 to 11 above have effect in relation to investments made in accounting periods beginning                        on or after 1 April 2013.

### Corporation tax: limit on State aidU.K.

13(1)In Part 7 of CTA 2010 (community investment tax relief) after section 220A (as inserted by paragraph 9 above) insert—U.K.

#### “220BLimit on State aid

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

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

 Section 75

## SCHEDULE 28U.K.Lease premium relief

### Income taxU.K.

1U.K.ITTOIA 2005 is amended as follows.

2U.K.In section 61 (tenants occupying land for purposes of trade treated as incurring expenses) after subsection (5) insert—

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

3U.K.In section 292 (tenants under taxed leases treated as incurring expenses) after subsection (4) insert—

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

(4B)This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 303 in determining                           the effective duration of the lease.                  

(4C)This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 243 of CTA                           2009 in determining the effective duration of the lease for the purposes of Chapter 4 of Part 4 of that Act.”                  

4U.K.The amendments made by paragraphs 2 and 3 above have effect in relation to leases granted on or after 6 April 2013.

### Corporation taxU.K.

5U.K.CTA 2009 is amended as follows.

6U.K.In section 63 (tenants occupying land for purposes of trade treated as incurring expenses) after subsection (5) insert—

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

7U.K.In section 232 (tenants under taxed leases treated as incurring expenses) after subsection (4) insert—

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

(4B)This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 243 in determining                           the effective duration of the lease.                  

(4C)This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 303 of ITTOIA                           2005 in determining the effective duration of the lease for the purposes of Chapter 4 of Part 3 of that Act.”                  

8U.K.The amendments made by paragraphs 6 and 7 above have effect in relation to leases granted on or after 1 April 2013.

 Section 77

## SCHEDULE 29U.K.Manufactured payments

### **PART 1**U.K.Income tax

1U.K.Before Part 11A of ITA 2007 insert—

#### **“PART 11ZA**U.K.Manufactured payments

##### 614ZAOverview of Part

##### 614ZBKey definitions

##### 614ZCTreatment of payer of manufactured payment

##### 614ZDTreatment of recipient of manufactured payment

### **PART 2**U.K.Corporation tax

2U.K.Before Part 18 of CTA 2010 insert—

#### **“PART 17A**U.K.Manufactured dividends

##### 814AOverview of Part

##### 814BKey definitions

##### 814CTreatment of payer of manufactured dividend

##### 814DTreatment of recipient of manufactured dividend

### **PART 3**U.K.Consequential etc amendments

#### IntroductoryU.K.

3U.K.The following amendments are in consequence of, or otherwise connected with, the amendments made by Parts 1 and 2.

#### TCGA 1992U.K.

4U.K.TCGA 1992 is amended as follows.

5U.K.In section 263B (stock lending arrangements), for subsection (7) substitute—

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

6U.K.Omit section 263D (gains accruing to persons paying manufactured dividends).

7U.K.In section 263F (power to modify repo provisions: non-standard repo cases)—

(a)in subsection (1)—

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

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

(b)in subsection (2), omit “or 263D”.

8U.K.In section 263G (power to modify repo provisions: redemption arrangements)—

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

(b)in subsection (2), omit “or 263D”.

9U.K.In section 263H (sections 263F and 263G: supplementary provisions), in subsection (3)(b) omit “or 263D”.

10(1)Section 263I (powers about manufactured overseas dividend) is amended as follows.U.K.

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

“(a)pays or receives an amount (a “manufactured overseas dividend”) which is representative of an overseas dividend on overseas                           securities where the payment or receipt is required to be made under an arrangement for the transfer of the securities, or                  

(b)is treated as doing so for any purposes of the Tax Acts.”                  

(3)For subsection (6) substitute—

“(6)In this section—                  

(a)“overseas securities” means shares, stock or other securities issued by—                  

(i)a government, local authority or other public authority of a territory outside the United Kingdom, or                  

(ii)another body of persons not resident in the United Kingdom,                  

(b)“overseas securities” includes shares in a company which is not resident in the United Kingdom,                  

(c)“overseas dividend” means any interest, dividend or other annual payment payable in respect of overseas securities, and                  

(d)“securities” includes loan stock or any similar security.”                  

#### FA 2004U.K.

11U.K.In Schedule 24 to FA 2004 (manufactured dividends), omit paragraph 3(1) and (3).

#### ITTOIA 2005U.K.

12U.K.ITTOIA 2005 is amended as follows.

13U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15U.K.Omit section 397B (tax credits under section 397A: manufactured overseas dividends).

#### ITA 2007U.K.

16U.K.ITA 2007 is amended as follows.

17U.K.In section 2 (overview of Act)—

(a)omit subsection (11), and

(b)before subsection (11A) insert—

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

18U.K.Omit the following provisions (which deal with manufactured payments and repos)—

(a)sections 565 to 595,

(b)section 596(1) to (4), and

(c)section 606(8).

19U.K.In section 647 (makers of manufactured payments), for subsection (6) substitute—

“(6)In this section “manufactured payments contract” means a contract under which—                  

(a)the seller is required to pay another person an amount which is representative of a periodical payment of interest on UK securities                           under an arrangement between them for the transfer of the securities, or                  

(b)the seller is required to pay another person an amount which is representative of an overseas dividend on overseas securities                           under an arrangement between them for the transfer of the securities.                  

(7)In this section—                  

(a)“overseas securities” means shares, stock or other securities issued by—                  

(i)a government, local authority or other public authority of a territory outside the United Kingdom, or                  

(ii)another non-UK resident body of persons,                  

and includes shares in a non-UK resident company,                  

(b)“overseas dividend” means any interest, dividend or other annual payment payable in respect of overseas securities, and                  

(c)“UK securities” means securities of—                  

(i)the government of the United Kingdom,                  

(ii)a local authority in the United Kingdom,                  

(iii)another public authority in the United Kingdom, or                  

(iv)a UK resident company or other UK resident body,                  

but does not include shares in a UK resident company.”                  

20U.K.In section 658 (powers to modify: supplementary), for subsection (5) substitute—

“(5)Subsections (6) to (10) apply for the purposes of sections 656 and 657 and this section.                  

(6)“UK shares” means shares in a UK resident company.                  

(7)“UK securities” means securities of—                  

(a)the government of the United Kingdom,                  

(b)a local authority in the United Kingdom,                  

(c)another public authority in the United Kingdom, or                  

(d)a UK resident company or other UK resident body.                  

(8)But “UK securities” does not include UK shares.                  

(9)“Overseas securities” means shares, stock or other securities issued by—                  

(a)a government, local authority or other public authority of a territory outside the United Kingdom, or                  

(b)another non-UK resident body of persons.                  

(10)“Overseas securities” includes shares in a non-UK resident company.”                  

21U.K.In section 918(1) (manufactured dividends on UK shares: REITs), for paragraph (a) substitute—

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

22U.K.In section 919 (manufactured interest on UK securities)—

(a)for subsection (1) substitute—

“(1)This section applies if—                  

(a)a person pays a manufactured payment as mentioned in section 614ZC(1),                  

(b)the amount payable is representative of interest on UK securities (“manufactured interest”), and                  

(c)the person —                  

(i)is UK resident, or                  

(ii)pays the manufactured interest in the course of a trade carried on in the United Kingdom through a branch or agency.”,                  

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

(c)after subsection (5) insert—

“(6)In subsection (1) “UK securities” means securities of—                  

(a)the government of the United Kingdom,                  

(b)a local authority in the United Kingdom,                  

(c)another public authority in the United Kingdom, or                  

(d)a UK resident company or other UK resident body.                  

(7)But “UK securities” does not include shares in a UK resident company.                  

(8)In this section “securities” includes loan stock or any similar security.”                  

23U.K.Omit section 920 (foreign payers of manufactured interest: the reverse charge).

24U.K.In section 921 (cases where interest on underlying securities paid gross), in subsection (3), for the words from “ “securities””                        to the end substitute “ “manufactured interest” has the same meaning as in section 919. ”

25U.K.Omit sections 922 to 925 (manufactured overseas dividends).

26U.K.In section 925A(2) (creditor repos), for “to 925” substitute “ , 919 and 921 ”.

27U.K.Omit section 925B (debtor repos).

28U.K.In section 925C (actual payments ignored)—

(a)in the heading, omit “or 925B”,

(b)omit “or 925B(2)”, and

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

29U.K.In section 926 (interpretation of Chapter 9 of Part 15), omit subsections (1) and (1A).

30U.K.In Schedule 1 (minor and consequential amendments), omit paragraph 335(1) to (4) and (6) to (8).

31U.K.In Schedule 2 (transitionals and savings), omit paragraphs 108 to 111 (and the headings “Part 12”, “Manufactured payments                        and repos” and “Tax credits: stock lending arrangements and repos” immediately preceding paragraph 108).

32U.K.In Schedule 4 (index of defined expressions), omit the entries for— “ buying back securities, in the context of a repo (in Part 11) ”, “ company UK REIT (in Chapter 2 of Part 11) ”, “ gross amount (in Chapter 2 of Part 11) ”, “ group (in Chapter 2 of Part 11) ”, “ group UK REIT (in Chapter 2 of Part 11) ”, “ manufactured dividend (in Chapter 2 of Part 11) ”, “ manufactured dividend (in Chapter 3 of Part 11) ”, “ manufactured interest (in Chapter 2 of Part 11) ”, “ manufactured overseas dividend (in Chapter 2 of Part 11) ”, “ overseas dividend (in Part 11) ”, “ overseas dividend (in Chapter 9 of Part 15) ”, “ overseas securities (in Part 11) ”, “ overseas tax (in Chapter 2 of Part 11) ”, “ overseas tax (in Chapter 9 of Part 15) ”, “ overseas tax credit (in Chapter 2 of Part 11) ”, “ prescribed (in Chapter 2 of Part 11) ”, “ principal company (in Chapter 2 of Part 11) ”, “ principal company (in Chapter 9 of Part 15) ”, “ property rental business (in Chapter 2 of Part 11) ”, “ property rental business (in Chapter 9 of Part 15) ”, “ related agreements (in Part 11) ”, “ relevant withholding tax (in Chapter 2 of Part 11) ”, “ repo (in Part 11) ”, “ the rules about manufactured payments (in Chapter 4 of Part 11) ”, “ stock lending arrangement (in Part 11) ”, “ trade carried on through a branch or agency (in Chapter 2 of Part 11) ”, “ transfer (in Chapter 2 of Part 11) ”, “ UK securities (in Part 11) ”, and “ UK shares (in Part 11) ”.

#### FA 2008U.K.

33(1)FA 2008 is amended as follows.U.K.

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

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

#### CTA 2009U.K.

34U.K.CTA 2009 is amended as follows.

35U.K.In section 539 (introduction to Chapter about manufactured interest), omit subsection (7).

36U.K.In section 540(3) (manufactured interest treated as interest under loan relationship), omit “and to section 799 of CTA 2010”.

37U.K.In section 550 (which makes provision about the effect of the sale of securities on a borrower)—

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

(b)after subsection (5A) insert—

“(5B)Nothing in subsection (3) entitles the borrower to double taxation relief in respect of any income payable in respect of overseas                           securities.                  

(5C)But nothing in subsection (3) affects the entitlement of the borrower to double taxation relief in respect of any overseas                           tax deducted from any amount representative of income payable in respect of overseas securities.                  

(5D)In subsection (5C) “overseas tax” means tax under the law of a territory outside the United Kingdom.”, and                  

(c)omit subsection (6).

38U.K.In section 1221(1) (amounts treated as expenses of management), for paragraph (i) substitute—

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

39U.K.In section 1248 (expenses in connection with arrangements for securing a tax advantage)—

(a)omit subsection (3), and

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

#### FA 2009U.K.

40U.K.In Schedule 19 to FA 2009 (income tax credits for foreign distributions), omit paragraphs 4 and 13(b).

#### CTA 2010U.K.

41U.K.CTA 2010 is amended as follows.

42U.K.In section 1 (overview of Act), in subsection (4)—

(a)omit paragraph (d), and

(b)before paragraph (e) insert—

“(da)manufactured dividends (see Part 17A),”.                  

43U.K.Omit Part 17 (manufactured payments and repos).

44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

45U.K.In Schedule 1 (minor and consequential amendments), omit paragraphs 259, 537, 538, 539(b) and (c), 635, 636 and 689(a) and                        (b)(i).

46U.K.In Schedule 2 (transitionals and savings), omit Part 17 (manufactured payments and repos).

47U.K.In Schedule 4 (index of defined expressions), omit the entries for—

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

#### TIOPA 2010U.K.

48(1)TIOPA 2010 is amended as follows.U.K.

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

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

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

#### FA 2011U.K.

49U.K.In Schedule 13 to FA 2011 (profits of foreign permanent establishments), omit paragraphs 22 to 24.

#### FA 2012U.K.

50(1)FA 2012 is amended as follows.U.K.

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

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

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

### **PART 4**U.K.Commencement

51U.K.The amendments made by Parts 1 and 2 of this Schedule have effect in relation to any payment representative of a dividend                        or interest which is made on or after 1 January 2014.

52U.K.The amendments made by Part 3 of this Schedule come into force on that date.

 Section 79

## SCHEDULE 30U.K.Close companies

### **PART 1**U.K.Amendments of Part 10 of CTA 2010

1U.K.Part 10 of CTA 2010 (close companies) is amended as follows.

2(1)In section 438 (overview), after subsection (2) insert—U.K.

“(2A)Chapter 3A imposes a charge to tax in connection with other arrangements involving close companies and participators.                  

(2B)Chapter 3B makes provision about the treatment of certain repayments and return payments made in respect of loans, advances                           and other arrangements.”                  

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

3(1)In section 455 (charge to tax in case of loan to participator), for subsection (1) substitute—U.K.

“(1)This section applies if a close company makes a loan or advances money to—                  

(a)a relevant person who is a participator in the company or an associate of such a participator,                  

(b)the trustees of a settlement one or more of the trustees or actual or potential beneficiaries of which is a participator in                           the company or an associate of such a participator, or                  

(c)a limited liability partnership or other partnership one or more of the partners in which is an individual who is—                  

(i)a participator in the company, or                  

(ii)an associate of an individual who is such a participator.”                  

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

4(1)In section 459(2) (application of other provisions where loan treated as made to participator), after “458” insert “ and 464C and 464D ”.U.K.

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

5(1)After Chapter 3 insert—U.K.

#### “CHAPTER 3AU.K.Charge to tax: other arrangements

##### 464ACharge to tax: arrangements conferring benefit on participator

##### 464BRelief in case of return payment to company

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

6(1)After Chapter 3A insert—U.K.

#### “CHAPTER 3BU.K.Repayments and return payments

##### 464CTreatment of certain repayments and return payments

##### 464DSection 464C: supplementary

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

7U.K.In section 465 (power to obtain information), after “Chapter 3” (in both places) insert “ or 3A ”.

### **PART 2**U.K.Other amendments

#### Taxes Management Act 1970U.K.

8U.K.TMA 1970 is amended as follows.

9U.K.In section 59E(11)(a) (provision as to when tax is due and payable)—

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

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

10U.K.In section 59F(6)(a) (arrangements for paying tax on behalf of group members)—

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

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

11(1)Section 109 (corporation tax on close company in connection with loans to participators etc) is amended as follows.U.K.

(2)In subsection (1)—

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

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

(3)For subsection (3) substitute—

“(3)For the purposes of section 87A of this Act as applied by subsection (1) above—                  

(a)the date when tax under section 455 of CTA 2010 became due and payable is that determined in accordance with subsection (3)                           of that section, and                  

(b)the date when tax under section 464A of CTA 2010 became due and payable is that determined in accordance with subsection (4)                           of that section.”                  

(4)After subsection (3A) insert—

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

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

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

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

12U.K.The amendments made by paragraphs 9 to 11 are treated as having come into force on 20 March 2013.

#### Finance Act 1998U.K.

13(1)Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.U.K.

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

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

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

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

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

“(4)In determining that amount no account is to be taken of—                  

(a)any relief under section 458 of the Corporation Tax Act 2010 (relief in respect of repayment, etc of loan) which is deferred                           under subsection (5) of that section, or                  

(b)any relief under section 464B of that Act (relief in respect of return payment) which is deferred under subsection (5) of                           that section.”                  

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

#### Income Tax (Trading and Other Income) Act 2005U.K.

14(1)In section 417 of ITTOIA 2005 (person liable for charge on release of loan or advance), for subsection (1) substitute—U.K.

“(1)The person liable for any tax charged under this Chapter is—                  

(a)in the case of a loan or advance made to a partnership, any partner who is an individual, and                  

(b)in any other case, the person to whom the loan or advance was made.                  

(1A)If more than one person is liable in a case within subsection (1)(a), the liability is to be apportioned between them in a                           just and reasonable manner.”                  

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

 Section 89

## SCHEDULE 31U.K.Miscellaneous amendments relating to decommissioning

### **PART 1**U.K.Abandonment guarantees and abandonment expenditure

#### Expenditure on abandonment guaranteesU.K.

1(1)In Part 2 of ITTOIA 2005 (trading income), Chapter 16A (oil activities) is amended as follows.U.K.

(2)In section 225N (expenditure on and under abandonment guarantees)—

(a)after subsection (1) insert—

“(1A)Subsection (2) also applies if expenditure incurred by a participator in an oil field would be so allowable as a result of                           section 3(1)(hh) of that Act but for the fact that the oil field is a non-taxable oil field within the meaning of Part 3 of                           FA 1993 (see section 185 of that Act).”;                  

(b)in subsection (2), for “that expenditure is so allowable” substitute “ the expenditure mentioned in subsection (1) or (1A) is or would be so allowable ”.

(3)In section 225R (introduction to sections 225S and 225T)—

(a)in paragraph (a) of subsection (1), omit the words from “, or would apply” to “made”;

(b)in paragraph (b) of that subsection, after “Schedule” insert “ , or would fall to be so attributed if a claim under paragraph 2A(2) of that Schedule were made ”;

(c)after subsection (1) insert—

“(1A)The condition in subsection (1)(b) is to be treated as met for the purposes of this section if it would be met but for the                           fact that the contributing participator is (or was) a participator in an oil field that is a non-taxable oil field within                           the meaning of Part 3 of FA 1993 (see section 185 of that Act).”;                  

(d)in subsection (2), before “attributed” insert “ or would be ”.

2(1)In Part 8 of CTA 2010 (oil activities), Chapter 4 (calculation of profits) is amended as follows.U.K.

(2)In section 292 (expenditure on and under abandonment guarantees)—

(a)after subsection (1) insert—

“(1A)Subsection (2) also applies if expenditure incurred by a participator in an oil field would be so allowable as a result of                           section 3(1)(hh) of that Act but for the fact that the oil field is a non-taxable oil field within the meaning of Part 3 of                           FA 1993 (see section 185 of that Act).”;                  

(b)in subsection (2), for “that expenditure is so allowable” substitute “ the expenditure mentioned in subsection (1) or (1A) is or would be so allowable ”.

(3)In section 296 (introduction to sections 297 and 298)—

(a)in paragraph (a) of subsection (1), omit the words from “, or would apply” to “made”;

(b)in paragraph (b) of that subsection, after “Schedule” insert “ , or would fall to be so attributed if a claim under paragraph 2A(2) of that Schedule were made ”;

(c)after subsection (1) insert—

“(1A)The condition in subsection (1)(b) is to be treated as met for the purposes of this section if it would be met but for the                           fact that the contributing participator is (or was) a participator in an oil field that is a non-taxable oil field within                           the meaning of Part 3 of FA 1993 (see section 185 of that Act).”;                  

(d)in subsection (2), before “attributed” insert “ or would be ”.

#### Expenditure under abandonment guaranteesU.K.

3U.K.In Schedule 3 to OTA 1975 (petroleum revenue tax: miscellaneous provisions), in paragraph 8 (certain subsidised expenditure                        to be disregarded), after sub-paragraph (1) insert—

“(1A)But sub-paragraph (1) above does not apply to any expenditure for which the relevant participator is liable that has been                           or is to be met directly or indirectly out of a payment made by the guarantor under an abandonment guarantee.                  

(1B)In sub-paragraph (1A) above—                  
          -  “abandonment guarantee” has the same meaning as it has for the purposes of section 3 of this Act (see section 104 of the Finance Act 1991), and                         
          -  “the guarantor” and “the relevant participator” have the same meaning as in section 104 of that Act.”                         

4U.K.In Schedule 5 to OTA 1975 (allowance of expenditure), in paragraph 2C(2), in the definition of “sum in default”, for the words                        from “less the aggregate of” to the end substitute “ less so much of that payment as has been made by the defaulter ”.

5(1)Part 3 of FA 1991 (oil taxation) is amended as follows.U.K.

(2)Omit section 105 (restriction of expenditure relief by reference to payments under abandonment guarantees).

(3)Omit section 106 (relief for reimbursement expenditure under abandonment guarantees).

6(1)In Part 2 of ITTOIA 2005 (trading income), Chapter 16A (oil activities) is amended as follows.U.K.

(2)In section 225N (expenditure on and under abandonment guarantees), omit subsections (3) and (4).

(3)Omit section 225O (relief for reimbursement expenditure under abandonment guarantees).

7(1)In Part 8 of CTA 2010 (oil activities), Chapter 4 (calculation of profits) is amended as follows.U.K.

(2)In section 292 (expenditure on and under abandonment guarantees), omit subsections (3) and (4).

(3)Omit section 293 (relief for reimbursement expenditure under abandonment guarantees).

#### Reimbursement by defaulter in respect of abandonment expenditureU.K.

8U.K.In Part 3 of FA 1991, omit section 108 (reimbursement by defaulter in respect of certain abandonment expenditure).

9U.K.In Part 2 of ITTOIA 2005, omit section 225T (reimbursement by defaulter in respect of certain abandonment expenditure).

10U.K.In Part 8 of CTA 2010, omit section 298 (reimbursement by defaulter in respect of certain abandonment expenditure).

#### Consequential amendmentsU.K.

11(1)Section 104 of FA 1991 is amended as follows.U.K.

(2)In subsection (1), omit “and sections 105 and 106 below”.

(3)In subsection (2), omit “and section 106 (but not section 105) below”.

12U.K.In FA 2008, omit section 105.

13U.K.In Part 2 of ITTOIA 2005, Chapter 16A is amended as follows.

14(1)Section 225N is amended as follows.U.K.

(2)Omit subsection (5).

(3)In subsection (6), in the definition of “abandonment guarantee”—

(a)for “section 105 of FA 1991” substitute “ section 3 of OTA 1975 ”, and

(b)for “that Act” substitute “ FA 1991 ”.

(4)The heading of that section becomes “ **Expenditure on abandonment guarantees** ”.

15U.K.Omit sections 225P and 225Q.

16U.K.In section 225R (introduction to sections 225S and 225T)—

(a)in subsection (1), for “Sections 225S and 225T apply” substitute “ Section 225S applies ”;

(b)the heading of section 225R becomes “ **Introduction to section 225S** ”.

17U.K.In Part 8 of CTA 2010, Chapter 4 is amended as follows.

18(1)Section 292 is amended as follows.U.K.

(2)Omit subsection (5).

(3)In subsection (6), in the definition of “abandonment guarantee”—

(a)for “section 105 of FA 1991” substitute “ section 3 of OTA 1975 ”, and

(b)for “that Act” substitute “ FA 1991 ”.

(4)The heading of that section becomes “ **Expenditure on abandonment guarantees** ”.

19U.K.Omit sections 294 and 295.

20U.K.In section 296 (introduction to sections 297 and 298)—

(a)in subsection (1), for “Sections 297 and 298 apply” substitute “ Section 297 applies ”;

(b)the heading of section 296 becomes “ **Introduction to section 297** ”.

### **PART 2**U.K.Receipts arising from decommissioning

#### Calculation of profits chargeable to corporation tax and supplementary chargeU.K.

21U.K.In Chapter 4 of Part 8 of CTA 2010 (oil activities: calculation of profits), after section 298 insert—

##### “Receipts arising from decommissioningU.K.

###### 298AReceipts arising from decommissioning

#### Calculation of profits chargeable to income taxU.K.

22U.K.In Chapter 16A of Part 2 of ITTOIA 2005 (trading income: oil activities), after section 225U insert—

##### “Receipts arising from decommissioningU.K.

###### 225VReceipts arising from decommissioning

### **PART 3**U.K.Commencement

23U.K.The amendments made by this Schedule have effect in relation to expenditure incurred on or after the day on which this Act                        is passed.

 Section 93

## SCHEDULE 32U.K.Restrictions on allowances for certain oil-related expenditure

### **PART 1**U.K.Decommissioning expenditure

1U.K.CAA 2001 is amended as follows.

2U.K.After section 165 insert—

#### “Restrictions on allowances: anti-avoidanceU.K.

##### 165ADecommissioning services supplied by connected person

##### 165BRestriction on allowance available

##### 165CAllowance in respect of certain services related to decommissioning

##### 165DAllowance where decommissioning undertaken for other participators in oil field

##### 165ETransaction to obtain tax advantage

3U.K.In section 26(5), at the end insert “ and sections 165A to 165E (restrictions on allowances: anti-avoidance). ”

4U.K.In section 57(3), after the reference to section 70DA insert— “ sections 165A to 165E (restrictions on allowances: anti-avoidance); ”.

5U.K.In section 161C(3), for “and 164(4)” substitute “ , 164(4) and 165A to 165E ”.

6U.K.In section 164(5A), at the end insert “ and sections 165A to 165E. ”

7U.K.After section 165(3) insert—

“(3A)Subsection (3) is subject to sections 165A to 165E.”                  

8U.K.The amendments made by this Part have effect in relation to expenditure incurred on decommissioning carried out on or after                        the day on which this Act is passed.

### **PART 2**U.K.Expenditure on site restoration

9U.K.After section 416ZB of CAA 2001 (inserted by section 92) insert—

#### “416ZCSite restoration services supplied by connected person

#### 416ZDRestriction on allowance available

#### 416ZEAllowance where site restoration undertaken for other participators in oil field

10U.K.In section 395(3) of that Act (provisions limiting “qualifying expenditure”) for “Chapter 4 contains” substitute “ Chapters 4 and 5 contain ”.

11U.K.The amendments made by this Part have effect in relation to expenditure incurred on restoration carried out on or after the                        day on which this Act is passed.

### **PART 3**U.K.Amendments of TIOPA 2010

12U.K.Part 4 of TIOPA 2010 (transfer pricing) is amended as follows.

13U.K.In section 147(6) (list of exceptions to the basic rule stated in that section), after paragraph (b) insert—

“(ba)section 206A (modification of basic rule where allowances restricted for certain oil-related expenditure),”.                  

14U.K.After section 206 insert—

#### “206AModification of basic rule where allowances restricted for certain expenditure

15U.K.In section 213 (effect of Part 4 on capital allowances), after subsection (2) insert—

“(3)But a claim under section 174 may not be made if the claim would affect the operation of sections 165A to 165E or 416ZC to                           416ZE of CAA 2001.”                  

16U.K.The amendments made by this Part have effect for accounting periods ending on or after the day on which this Act is passed.

 Section 162

## SCHEDULE 33U.K.Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals

### **PART 1**U.K.Returns

#### Contents of returnU.K.

1(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision about—U.K.

(a)the form and content of a return;

(b)the method of delivering a return.

(2)Regulations under sub-paragraph (1) may make different provision for different purposes.

(3)Every return must include a declaration by the person making it to the effect that the return is correct and complete to the                        best of the person's knowledge.

(4)A return is treated as containing any information provided by the person making the return for the purpose of completing the                        return.

2U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

#### Amendment of return by chargeable personU.K.

3(1)A person who has delivered a return may amend the return by notice to an officer of Revenue and Customs.U.K.

(2)The Commissioners for Her Majesty's Revenue and Customs may require that notices under this paragraph—

(a)are in a specified form, or

(b)contain specified information.

(3)An amendment under this paragraph must be made by the end of the next chargeable period after the chargeable period to which                        the return relates (but see the exception that follows).

(4)If a return is delivered on or after 1 January in the chargeable period next after that to which it relates, the latest time                        for amending the return under this paragraph is the end of the period of 3 months after the day on which the return is delivered.

#### Correction of return by HMRCU.K.

4(1)An officer of Revenue and Customs may correct any obvious error or omission in a return.U.K.

(2)A correction under this paragraph—

(a)is made by notice to the chargeable person, and

(b)is regarded as effecting an amendment of the return.

(3)The reference in sub-paragraph (1) to an error includes, for instance, an arithmetical mistake or an error of principle.

(4)A correction under this paragraph must be made within the 9 months beginning with—

(a)the day on which the return was delivered, or

(b)if the correction is needed as a result of an amendment under paragraph 3, the day on which the amendment was made.

(5)A correction under this paragraph has no effect if the chargeable person—

(a)amends the return so as to reject the correction, or

(b)gives a notice rejecting the correction in the special period mentioned in sub-paragraph (6).

(6)A notice is given in the “special period” if it is given—

(a)after the end of the period within which the chargeable person may amend the return, but

(b)before the end of the 3 months beginning with the date of issue of the notice of correction.

(7)A notice under sub-paragraph (5)(b) must be given to HMRC.

### **PART 2**U.K.Duty to keep and preserve records

#### Duty to keep and preserve recordsU.K.

5(1)A person who is required to deliver a return for a chargeable period must—U.K.

(a)keep any records that may be needed to enable the person to deliver a correct and complete return, and

(b)preserve those records in accordance with this paragraph.

(2)The records must be preserved until the end of the later of the relevant day and the date on which—

(a)an enquiry into the return is completed, or

(b)if there is no enquiry, an officer of Revenue and Customs no longer has power to enquire into the return.

(3)“The relevant day” means—

(a)the sixth anniversary of the last day of the chargeable period, or

(b)any earlier day that may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs.

(4)Different days may be specified for different purposes under sub-paragraph (3)(b).

(5)The records required to be kept and preserved under this paragraph include—

(a)details of any relevant transaction (including any contract or conveyance and any supporting maps, plans or similar documents                        and records of relevant payments, receipts and financial arrangements);

(b)records of any valuation of the single-dwelling interest relevant to its value on any day in the chargeable period.

(6)The Commissioners for Her Majesty's Revenue and Customs may by regulations—

(a)provide that the records required to be kept under this paragraph do, or do not, include records specified in the regulations;

(b)specify supporting documents that are required to be kept under this paragraph.

(7)Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners                        for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).

(8)“Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.

#### Preservation of information etcU.K.

6U.K.The duty under paragraph 5 to preserve records may be satisfied—

(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 for Her Majesty's Revenue and Customs.

#### Penalty for failure to keep and preserve recordsU.K.

7(1)A person who fails to comply with paragraph 5 in relation to a chargeable period is liable to a penalty not exceeding £3,000,                        subject to the following exception.U.K.

(2)No penalty is incurred if an officer of Revenue and Customs is satisfied that any facts that it is reasonable to require should                        be proved to HMRC, and that would have been proved by the records, are proved by other documentary evidence provided to them.

### **PART 3**U.K.Enquiry into return

#### Notice of enquiryU.K.

8(1)An officer of Revenue and Customs may enquire into a return if sub-paragraph (2) has been complied with.U.K.

(2)Notice of the intention to make an enquiry must be given—

(a)to the person by whom or on whose behalf the return was delivered (“the relevant person”);

(b)before the end of the period of 12 months after the relevant date.

(3)The relevant date is—

(a)the filing date, if the return was delivered on or before that date;

(b)the date on which the return was delivered, if the return was delivered after the filing date;

(c)the date on which the amendment was made, if the return is amended under paragraph 3 (amendment by person making the return).

(4)A return that has been the subject of one notice under this paragraph may not be the subject of another, except a notice given                        in consequence of an amendment (or another amendment) of the return under paragraph 3.

(5)A notice under this paragraph is referred to as a “notice of enquiry”.

#### Scope of enquiryU.K.

9(1)An enquiry extends to anything contained in the return, or required to be contained in the return, that relates—U.K.

(a)to the question whether the relevant person is chargeable to tax with respect to the interest to which the return relates                        for the chargeable period concerned, or

(b)to the amount of tax chargeable on the relevant person with respect to that interest for that period.

(2)Sub-paragraph (3) applies if the notice of enquiry is given as a result of the amendment of a return under paragraph 3 (amendment                        by person making the return)—

(a)at a time when it is no longer possible to give a notice of enquiry under paragraph 8(3)(a) or (b), or

(b)after an enquiry into the return has been completed.

(3)The enquiry is limited to—

(a)matters to which the amendment relates, and

(b)matters affected by the amendment.

#### Amendment of self assessment during enquiry to prevent loss of taxU.K.

10(1)If at a time when an enquiry is in progress into a return an officer of Revenue and Customs forms the opinion—U.K.

(a)that the amount stated in the self assessment contained in the return as the amount of tax payable is insufficient, and

(b)that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

the officer may by notice in writing to the relevant person amend the assessment to make good the deficiency.

(2)If the enquiry is one that is limited by paragraph 9(2) and (3) to matters arising from an amendment of the return, sub-paragraph                        (1) above applies only so far as the deficiency is attributable to the amendment.

(3)For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—

(a)beginning with the day on which the notice of enquiry is given, and

(b)ending with the day on which the enquiry is completed.

#### Referral of questions to tribunal during enquiryU.K.

11(1)At any time when an enquiry is in progress into a return any question arising in connection with the subject-matter of the                        return may be referred to the tribunal for determination.U.K.

(2)Notice of the referral must be given to the tribunal jointly by the relevant person and an officer of Revenue and Customs.

(3)More than one notice of referral may be given under this paragraph in relation to an enquiry.

(4)For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—

(a)beginning with the day on which the notice of enquiry is given, and

(b)ending with the day on which the enquiry is completed.

#### Withdrawal of notice of referralU.K.

12U.K.An officer of Revenue and Customs or the relevant person may withdraw a notice of referral under paragraph 11.

#### Effect of referral on enquiryU.K.

13(1)While proceedings on a referral under paragraph 11 are in progress in relation to an enquiry—U.K.

(a)no closure notice may be given in relation to the enquiry, and

(b)no application may be made for a direction to give a closure notice.

(2)Proceedings on a referral are “in progress” where—

(a)notice of referral has been given and has not been withdrawn, and

(b)the questions referred have not been finally determined.

(3)A question referred has been “finally determined” when—

(a)it has been determined by the tribunal, and

(b)there is no further possibility of the determination being varied or set aside (disregarding any power to grant permission                        to appeal out of time).

#### Effect of determinationU.K.

14(1)A determination under paragraph 11 is binding on the parties to the referral in the same way, and to the same extent, as a                        decision on a preliminary issue in an appeal.U.K.

(2)The officer of Revenue and Customs conducting the enquiry must take the determination into account—

(a)in reaching conclusions on the enquiry, and

(b)in the formulation of any amendments of the return that may be required to give effect to those conclusions.

(3)The question determined may not be reopened on an appeal, except to the extent that it could be reopened if it had been determined                        as a preliminary issue in that appeal.

#### Tribunal to which referrals are madeU.K.

15(1)Where the question to be referred under paragraph 11 is of the market value of any single-dwelling interest, the referral                        is to be made to—U.K.

(a)the Upper Tribunal, if the land is in England and Wales;

(b)the Lands Tribunal for Scotland, if the land is in Scotland;

(c)the Lands Tribunal for Northern Ireland, if the land is in Northern Ireland.

(2)In any other case a referral under paragraph 11 is to be made to—

(a)the First-tier Tribunal, or

(b)where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

(3)References to “the tribunal” in paragraphs 11 and 13 are to be read accordingly.

#### Completion of enquiryU.K.

16(1)An enquiry under paragraph 8 is completed when an officer of Revenue and Customs informs the relevant person by a notice (a                        “closure notice”) that the enquiry is complete and states the conclusions reached in the enquiry.U.K.

(2)A closure notice must either—

(a)state that in the officer's opinion no amendment of the return is required, or

(b)make the amendments of the return required to give effect to the officer's conclusions.

(3)A closure notice takes effect when it is issued.

#### Direction to complete enquiryU.K.

17(1)The relevant person may apply to the tribunal for a direction that a closure notice is to be given within a specified period.U.K.

(2)The tribunal hearing the application must give a direction unless satisfied that HMRC have reasonable grounds for not giving                        a closure notice within that period.

(3)In this paragraph “the tribunal” means—

(a)the First-tier Tribunal, or

(b)where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

### **PART 4**U.K.HMRC determination where no return delivered

#### Determination of tax chargeable if no return deliveredU.K.

18(1)This paragraph applies where condition A or condition B is met.U.K.

(2)Condition A is that—

(a)an officer of Revenue and Customs has reason to believe that a person (“P”) is chargeable to tax for a chargeable period in                        respect of a single-dwelling interest,

(b)P has not made an annual tax on enveloped dwellings return for the period in respect of the interest, and

(c)the relevant filing date has passed.

(3)Condition B is that—

(a)an officer of Revenue and Customs has reason to believe that additional tax is payable by a person (“P”) under section 163(2)                        for a chargeable period in respect of a single-dwelling interest,

(b)P has not made a return of the adjusted chargeable amount for the period in respect of the interest, and

(c)the relevant filing date has passed.

(4)“The relevant filing date” means the date by which the officer believes a return was required to be delivered.

(5)The officer may make a determination (an “HMRC determination”) to the best of the officer's information and belief of the                        amount of tax to which P is chargeable for the period concerned with respect to the interest.

(6)Notice of the determination must be given to P and must state the date on which it is issued.

(7)No HMRC determination may be made more than 4 years after the end of the chargeable period to which it relates.

#### Determination to have effect as a self assessmentU.K.

19(1)A determination under paragraph 18 has effect for enforcement purposes as if it were a self assessment made by P.U.K.

(2)In sub-paragraph (1) “for enforcement purposes” means for the purposes of section 165 and Schedule 12 to FA 2003 (collection and recovery of tax etc).

(3)Nothing in this paragraph affects any liability of a person to a penalty for failure to deliver a return.

#### Determination superseded by actual self assessmentU.K.

20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### **PART 5**U.K.HMRC assessments

#### Assessment where loss of tax discoveredU.K.

21(1)Sub-paragraph (2) applies if an officer of Revenue and Customs discovers that—U.K.

(a)an amount of tax that ought to have been assessed under this Part of this Act as tax chargeable on a person for a chargeable                        period with respect to a single-dwelling interest has not been assessed,

(b)an assessment of the tax chargeable on a person for a chargeable period in respect of a single-dwelling interest is or has                        become insufficient, or

(c)relief has been given that is or has become excessive.

(2)An officer of Revenue and Customs may make an assessment (a “discovery assessment”) in the amount or further amount that ought                        in the officer's opinion to be charged in order to make good to the Crown the loss of tax.

(3)The functions of an officer of Revenue and Customs under this paragraph are also exercisable by the Commissioners for Her                        Majesty's Revenue and Customs.

#### Assessment to recover excessive repayment of taxU.K.

22(1)If an amount of tax has been, but ought not to have been, repaid to a person that amount may be assessed and recovered as                        if it were unpaid tax.U.K.

(2)If the repayment was made with interest, the amount assessed and recovered may include the amount of interest that ought not                        to have been paid.

#### References to “the taxpayer”U.K.

23U.K.In paragraphs 24 to 27 “taxpayer” means—

(a)in relation to an assessment under paragraph 21, the chargeable person;

(b)in relation to an assessment under paragraph 22, the person mentioned in paragraph 22(1).

#### Conditions for making assessment where return has been deliveredU.K.

24(1)If the taxpayer has delivered a return in respect of the interest in question for the chargeable period in question, an assessment                        under paragraph 21 or 22 may only be made in the two cases specified in sub-paragraphs (2) and (3). See also the further restriction                        in sub-paragraph (7).U.K.

(2)The first case is where the situation mentioned in paragraph 21(1) or 22(1) was brought about carelessly or deliberately by—

(a)the taxpayer,

(b)a person acting on behalf of the taxpayer, or

(c)a person who was a partner of the taxpayer at the relevant time.

(3)The second case is where it could not reasonably have been expected that an officer of Revenue and Customs in possession of                        the information made available to HMRC before the relevant time would be aware at the relevant time of the situation mentioned                        in paragraph 21(1) or 22(1).

(4)In sub-paragraph (3) “the relevant time” means the time HMRC—

(a)ceased to be entitled to give a notice of enquiry into the return, or

(b)completed their enquiries into the return.

(5)For this purpose information is regarded as made available to HMRC if—

(a)it is contained in a return delivered by the taxpayer,

(b)it is contained in any documents produced or information provided to an officer of Revenue and Customs for the purposes of                        an enquiry into any such return,

(c)it is information the existence and relevance of which officers of Revenue and Customs could reasonably have been expected                        to infer from information made available as mentioned in paragraph (a) or (b), or

(d)it is information the existence and relevance of which was notified to an officer of Revenue and Customs by the taxpayer or                        a person acting on the taxpayer's behalf.

(6)In sub-paragraph (5)(c) and (d) “relevance” means relevance as regards the situation mentioned in paragraph 21(1) or 22(1).

(7)No assessment may be made under paragraph 21 or 22 if—

(a)the situation mentioned in paragraph 21(1) or 22(1) is attributable to a mistake in the return as to the basis on which the                        tax liability ought to have been calculated, and

(b)the return was in fact made on the basis prevailing, or in accordance with the practice generally prevailing, at the time                        it was made.

#### Time limit for assessmentsU.K.

25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Losses brought about carelessly or deliberatelyU.K.

26(1)This paragraph applies for the purposes of paragraphs 24 and 25.U.K.

(2)A loss of tax is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about                        that loss.

(3)Sub-paragraph (4) applies where—

(a)information is provided to HMRC,

(b)the person who provided the information, or the person on whose behalf the information was provided, discovers some time later                        that the information was inaccurate, and

(c)that person fails to take reasonable steps to inform HMRC.

(4)Any loss of tax brought about by the inaccuracy is to be treated as having been brought about carelessly by that person.

(5)References to a loss of tax brought about deliberately by a person include a loss of tax brought about as a result of a deliberate                        inaccuracy in a document given to HMRC by or on behalf of that person.

#### Assessment procedureU.K.

27(1)Notice of an assessment must be served on the taxpayer.U.K.

(2)The notice must state—

(a)the tax due,

(b)the date on which the notice is issued, and

(c)the time within which any appeal against the assessment must be made.

(3)After notice of the assessment has been served on the taxpayer, the assessment may not be altered except in accordance with                        the express provisions of this Part of this Act.

(4)Where an officer of Revenue and Customs has decided to make an assessment to tax, and has taken all other decisions needed                        for arriving at the amount of the assessment, the officer may entrust to some other officer of Revenue and Customs the responsibility                        for completing the assessing procedure, whether by means involving the use of a computer or otherwise, including responsibility                        for serving notice of the assessment.

### **PART 6**U.K.Relief in case of overpaid tax or excessive assessment

#### Relief in case of double assessmentU.K.

28(1)A person who believes that tax has been assessed on that person more than once in respect of the same matter may make a claim                        to the Commissioners for Her Majesty's Revenue and Customs for relief against any double charge.U.K.

(2)Schedule 11A to FA 2003 (claims not included in returns) applies in relation to a claim under sub-paragraph (1) as it applies                        to a claim such as is mentioned in paragraph 1 of that Schedule.

#### Claim for relief for overpaid tax etcU.K.

29(1)This paragraph applies where—U.K.

(a)a person has paid an amount by way of tax but believes the tax was not chargeable, or

(b)a person has been assessed as chargeable to an amount of tax, or a determination has been made that a person is chargeable                        to an amount of tax but the person believes the tax is not chargeable.

(2)The person may make a claim to the Commissioners for Her Majesty's Revenue and Customs for the amount to be repaid or discharged.

(3)Where this paragraph applies, the Commissioners for Her Majesty's Revenue and Customs are not liable to give relief, except                        as provided in this Schedule or by or under any other provision of this Part of this Act.

(4)For the purposes of this paragraph and paragraphs 30 to 34, an amount paid by one person on behalf of another is treated as                        paid by the other person.

#### Cases in which Commissioners are not liable to give effect to a claimU.K.

30(1)The Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under paragraph 29 if or                        to the extent that the claim falls within a case described in this paragraph.U.K.

(2)Case A is where the amount of tax paid, or liable to be paid, is excessive because of—

(a)a mistake in a claim, or

(b)a mistake consisting of making, or failing to make, a claim.

(3)Case B is where the claimant is or will be able to seek relief by taking other steps under this Part of this Act.

(4)Case C is where the claimant—

(a)could have sought relief by taking such steps within a period that has now expired, and

(b)knew or ought reasonably to have known, before the end of that period, that such relief was available.

(5)Case D is where the claim is made on grounds that—

(a)have been put to a court or tribunal in the course of an appeal by the claimant relating to the amount paid or liable to be                        paid, or

(b)have been put to HMRC in the course of an appeal by the claimant relating to that amount that is treated as having been determined                        by a tribunal by virtue of paragraph 46 (settling of appeals by agreement).

(6)Case E is where the claimant knew, or ought reasonably to have known, of the grounds for the claim before the latest of the                        following—

(a)the date on which a relevant appeal in the course of which the ground could have been put forward was determined by a court                        or tribunal (or is treated as having been so determined);

(b)the date on which the claimant withdrew a relevant appeal to a court or tribunal;

(c)the end of the period in which the claimant was entitled to make a relevant appeal to a court or tribunal.

In this sub-paragraph “relevant appeal” means an appeal by the claimant relating to the amount paid or liable to be paid.                  

(7)Case F is where the amount in question was paid or is liable to be paid—

(a)in consequence of proceedings enforcing the payment of that amount brought against the claimant by HMRC, or

(b)in accordance with an agreement between the claimant and HMRC settling such proceedings.

(8)Case G is where—

(a)the amount paid, or liable to be paid, is excessive by reason of a mistake in calculating the claimant's liability to tax,                        and

(b)liability was calculated in accordance with the practice generally prevailing at the time.

(9)Case G does not apply where the amount paid, or liable to be paid, is tax which has been charged contrary to EU law.

(10)For the purposes of sub-paragraph (9), an amount of tax is charged contrary to EU law if, in the circumstances in question,                        the charge to tax is contrary to—

(a)the provisions relating to the free movement of goods, persons, services and capital in Titles II and IV of Part 3 of the                        Treaty on the Functioning of the European Union, or

(b)the provisions of any subsequent treaty replacing the provisions mentioned in paragraph (a).

#### Making a claimU.K.

31(1)A claim under paragraph 29 must be made within the period of 4 years after the end of the chargeable period to which the payment                        by way of tax, or the assessment or determination, relates.U.K.

(2)A claim under paragraph 29 may not be made by being included in a return.

(3)Schedule 11A to FA 2003 (claims not included in returns) applies in relation to a claim under paragraph 29 as it applies to                        a claim such as is mentioned in paragraph 1 of that Schedule.

#### The claimant: partnershipsU.K.

32(1)This paragraph is about the application of paragraph 29 in a case where either—U.K.

(a)(in a case falling within sub-paragraph (1)(a) of that paragraph) the person paid the amount in question in the capacity of                        a responsible partner or representative partner, or

(b)(in a case falling within sub-paragraph (1)(b) of that paragraph) the assessment was made on, or the determination related                        to the liability of, the person in such a capacity.

(2)In such a case, only a relevant person who has been nominated to do so by all of the relevant persons may make a claim under                        paragraph 29 in respect of the amount in question.

(3)The relevant persons are all the persons who would have been liable as responsible partners to pay the amount in question                        had the payment been due or (in a case falling within sub-paragraph (1)(b)) had the assessment or determination been correctly                        made.

#### Assessment of claimant in connection with claimU.K.

33(1)This paragraph applies where—U.K.

(a)a claim is made under paragraph 29 (relief for overpaid tax etc),

(b)the grounds for giving effect to the claim also provide grounds for a discovery assessment on the claimant in respect of single-dwelling                        interest, and

(c)such an assessment could be made but for a relevant restriction.

(2)In a case falling within paragraph 32(1)(a) or (b), the reference to the claimant in sub-paragraph (1)(b) of this paragraph                        includes any relevant person (as defined in paragraph 32(3)).

(3)The following are relevant restrictions—

(a)the restrictions in paragraph 24 (assessment where return has been delivered);

(b)the expiry of a time limit for making a discovery assessment.

(4)Where this paragraph applies—

(a)the relevant restrictions are to be disregarded, and

(b)the discovery assessment is not out of time if it is made before the final determination of the claim.

(5)A claim is not finally determined until it, or the amount to which it relates, can no longer be varied (whether on appeal                        or otherwise).

#### Contract settlementsU.K.

34(1)In paragraph 29(1)(a) the reference to an amount paid by a person by way of tax includes an amount paid by a person under                        a contract settlement in connection with tax believed to be due.U.K.

(2)Sub-paragraphs (3) to (6) apply if the person who paid the amount under the contract settlement (“the payer”) and the person                        from whom the tax was due (“the taxpayer”) are not the same person.

(3)In relation to a claim under paragraph 29 in respect of that amount—

(a)the references to the claimant in paragraph 30(5), (6) and (7) (Cases D, E and F) have effect as if they included the taxpayer,

(b)the reference to the claimant in paragraph 30(8) (case G) has effect as if it were a reference to the taxpayer,

(c)the reference to the claimant in paragraph 33(1)(b) has effect as if it were a reference to the taxpayer, and

(d)references to tax in Schedule 11A to FA 2003 (as it applies to a claim under paragraph 29) include the amount paid under the                        contract settlement.

(4)Sub-paragraph (5) applies where the grounds for giving effect to a claim by the payer in respect of the amount also provide                        grounds for a discovery assessment on the taxpayer in respect of any single-dwelling interest.

(5)The Commissioners for Her Majesty's Revenue and Customs may set any amount repayable to the payer as a result of the claim                        against any amount payable by the taxpayer as a result of the assessment.

(6)The obligations of the Commissioners for Her Majesty's Revenue and Customs and the taxpayer are discharged to the extent of                        any set-off under sub-paragraph (5).

(7)“Contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners for Her Majesty's                        Revenue and Customs under or by virtue of an enactment.

### **PART 7**U.K.Reviews and appeals

#### Right of appealU.K.

35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Notice of appealU.K.

36(1)Notice of an appeal under paragraph 35 must be given—U.K.

(a)in writing,

(b)within 30 days after the specified date,

(c)to HMRC.

(2)In sub-paragraph (1) “specified date” means—

(a)in relation to an appeal under paragraph 35(1)(a), the date on which the notice of amendment was issued;

(b)in relation to an appeal under paragraph 35(1)(b), the date on which the closure notice was issued;

(c)in relation to an appeal under paragraph 35(1)(c) the date on which the HMRC determination was issued;

(d)in relation to an appeal under paragraph 35(1)(d) or (e), the date on which the notice of assessment was issued.

(3)The notice of appeal must specify the grounds of appeal.

(4)Where a determination has been made under paragraph 18 as to the amount of tax to which a person is chargeable with respect                        to a single-dwelling interest, the only grounds on which an appeal lies under paragraph 35(1)(c) are—

(a)that the condition in section 94(2)(a) (nature and value of interest) is not met in relation to the interest in question on                        any day to which the determination relates,

(b)that the person, partnership or scheme that the determination identifies as meeting the ownership condition on one or more                        days does not meet that condition on any day in the chargeable period,

(c)if the tax is determined to be chargeable by virtue of section 94(5), that a person identified in the determination as one                        of the responsible partners is not a responsible partner in relation to any tax chargeable for the period in question, or

(d)if the tax is determined to be chargeable by virtue of section 94(6), that the person identified in the determination as the                        chargeable person in relation to the collective investment scheme concerned is not the chargeable person.

#### Late notice of appealU.K.

37(1)This paragraph applies in a case where—U.K.

(a)notice of appeal may be given to HMRC under this Schedule, but

(b)no notice is given before the relevant time limit.

(2)Notice may be given after the relevant time limit if—

(a)HMRC agree, or

(b)where HMRC do not agree, the tribunal gives permission.

(3)HMRC must agree to notice being given after the relevant time limit if the appellant has requested in writing that HMRC do                        so and HMRC are satisfied—

(a)that there was reasonable excuse for not giving the notice before the relevant time limit, and

(b)that the request has been made without unreasonable delay.

(4)If a request of the kind mentioned in sub-paragraph (3) is made, HMRC must notify the appellant whether or not HMRC agree                        to the request.

(5)In this paragraph “relevant time limit”, in relation to notice of appeal, means the time before which the notice must to be given (disregarding this paragraph).

#### Steps that may be taken following notice of appealU.K.

38(1)This paragraph applies if notice of appeal has been given to HMRC.U.K.

(2)In such a case—

(a)the appellant may notify HMRC that it requires them to review the matter in question (see paragraph 39),

(b)HMRC may notify the appellant of an offer to review the matter in question (see paragraph 40), or

(c)the appellant may notify the appeal to the tribunal.

(3)If the appellant notifies the appeal to the tribunal, the tribunal is to determine the matter in question.

(4)See paragraphs 43 and 44 for provision about the circumstances in which an appeal may be notified to the tribunal after a                        review has been required by the appellant or offered by HMRC.

(5)This paragraph does not prevent the matter in question from being dealt with in accordance with paragraph 46(1) and (2) (settling                        of appeals by agreement).

#### Right of appellant to require reviewU.K.

39(1)If the appellant notifies HMRC that it requires them to review the matter in question, HMRC must—U.K.

(a)notify the appellant of HMRC's view of the matter in question within the relevant period, and

(b)review the matter in question in accordance with paragraph 41.

(2)Sub-paragraph (1) does not apply if—

(a)the appellant has already given a notification under this paragraph in relation to the matter in question,

(b)HMRC have given a notification under paragraph 40 in relation to the matter in question, or

(c)the appellant has notified the appeal to the tribunal.

(3)In this paragraph “the relevant period” means—

(a)the period of 30 days beginning with the day on which HMRC receive the notification from the appellant, or

(b)such longer period as is reasonable.

#### Offer of review by HMRCU.K.

40(1)Sub-paragraphs (2) to (5) apply if HMRC notify the appellant of an offer to review the matter in question.U.K.

(2)The notification must include a statement of HMRC's view of the matter in question.

(3)If the appellant notifies HMRC within the acceptance period that it accepts the offer, HMRC must review the matter in question                        in accordance with paragraph 41.

(4)If the appellant does not accept the offer in accordance with sub-paragraph (3)—

(a)HMRC's view of the matter in question is treated as if it were contained in a settlement agreement (see paragraph 46(1));                        but

(b)paragraph 46(3) (right to withdraw from agreement) does not apply in relation to that notional agreement.

(5)Sub-paragraph (4) does not apply to the matter in question if, or to the extent that, the appellant notifies the appeal to                        the tribunal.

(See paragraph 44 for the circumstances in which the appellant may do so after accepting HMRC's offer of a review).

(6)HMRC may not take the action mentioned in sub-paragraph (1) at any time if before that time—

(a)HMRC have given a notification under this paragraph in relation to the matter in question,

(b)the appellant has given a notification under paragraph 39 in relation to the matter in question, or

(c)the appellant has notified the appeal to the tribunal.

(7)In this paragraph “acceptance period” means the period of 30 days beginning with the date of the document by which HMRC notify the appellant of the offer to review                        the matter in question.

#### Nature of reviewU.K.

41(1)This paragraph applies if HMRC are required by paragraph 39 or 40 to review the matter in question.U.K.

(2)The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.

(3)For the purpose of sub-paragraph (2), HMRC must, in particular, have regard to steps taken before the beginning of the review—

(a)by HMRC in deciding the matter in question, and

(b)by any person in seeking to resolve disagreement about the matter in question.

(4)The review must take account of any representations made by the appellant at a stage which gives HMRC a reasonable opportunity                        to consider them.

(5)The review may conclude that HMRC's view of the matter in question is to be—

(a)upheld,

(b)varied, or

(c)cancelled.

(6)HMRC must notify the appellant of the conclusions of the review and their reasoning within—

(a)the period of 45 days beginning with the relevant day, or

(b)such other period as may be agreed.

(7)In sub-paragraph (6) “relevant day” means—

(a)in a case where the appellant required the review, the day when HMRC notified the appellant of HMRC's view of the matter in                        question,

(b)in a case where HMRC offered the review, the day when HMRC received notification of the appellant's acceptance of the offer.

(8)If HMRC do not give notice of the conclusions of the review within the period specified in sub-paragraph (6), the review is                        treated as having concluded that HMRC's view of the matter in question is upheld.

(9)If sub-paragraph (8) applies, HMRC must notify the appellant of the conclusions which the review is treated as having reached.

#### Effect of conclusions of reviewU.K.

42(1)If HMRC give notice of the conclusions of a review (see paragraph 41)—U.K.

(a)the conclusions are to be treated as if they were contained in a settlement agreement (see paragraph 46(1)), but

(b)paragraph 46(3) (withdrawal from agreement) does not apply in relation to that notional agreement.

(2)Sub-paragraph (1) does not apply to the matter in question if, or to the extent that, the appellant notifies the appeal to                        the tribunal (see paragraphs 43 and 44).

#### Notifying appeal to tribunal after appellant has required reviewU.K.

43(1)Where HMRC have notified an appellant under paragraph 39(1)(a) of their view of a matter to which an appeal under paragraph                        35 relates, the appellant—U.K.

(a)may not notify the appeal to the tribunal before the beginning of the post-review period;

(b)may notify the appeal to the tribunal after the end of that period only if the tribunal gives permission.

(2)Except where sub-paragraph (3) applies, the post-review period is the period of 30 days beginning with the date of the document                        in which HMRC give notice of the conclusions of the review in accordance with paragraph 41(6).

(3)If the period specified in paragraph 41(6) ends without HMRC having given notice of the conclusions of the review, the post-review                        period is the period that—

(a)begins with the day following the last day of the period specified in paragraph 41(6), and

(b)ends 30 days after the date of the document in which HMRC give notice of the conclusions of the review in accordance with                        paragraph 41(9).

#### Notifying appeal to tribunal after HMRC have offered reviewU.K.

44(1)Where HMRC have offered to review the matter to which a notice of an appeal under paragraph 35 relates, the right of the appellant                        at any time to notify the appeal to the tribunal depends on whether or not the appellant has accepted the offer at that time.U.K.

(2)If the appellant has accepted the offer, the appellant—

(a)may not notify the appeal to the tribunal before the beginning of the post-review period;

(b)may notify the appeal to the tribunal after the end of that period only if the tribunal gives permission.

(3)If the appellant has not accepted the offer, the appellant—

(a)may notify the appeal to the tribunal within the acceptance period;

(b)may notify the appeal to the tribunal after the end of that period only if the tribunal gives permission.

(4)In this paragraph—
          -  “acceptance period” has the same meaning as in paragraph 40;                         
          -  “post-review period” has the same meaning as in paragraph 43.                         

#### Interpretation of paragraphs 38 to 44U.K.

45(1)In paragraphs 38 to 44—U.K.

(a)“matter in question” means the matter to which an appeal relates;

(b)a reference to a notification is to a notification in writing.

(2)In paragraphs 38 to 44, a reference to the appellant includes a person acting on behalf of the appellant except in relation                        to—

(a)notification of HMRC's view under paragraph 39(1)(a),

(b)notification by HMRC of an offer of review (and of their view of the matter) under paragraph 40,

(c)notification of the conclusions of a review under paragraph 41(6) or (9).

(3)But if a notification falling within any of the paragraphs of sub-paragraph (2) is given to the appellant, a copy of the notification                        may also be given to a person acting on behalf of the appellant.

#### Settling of appeals by agreementU.K.

46(1)In relation to an appeal of which notice has been given under paragraph 36, “settlement agreement” means an agreement between the appellant and an officer of Revenue and Customs that is—U.K.

(a)entered into before the appeal is determined, and

(b)to the effect that the decision appealed against should be upheld without variation, varied in a particular manner or discharged                        or cancelled.

(2)Where a settlement agreement is entered into in relation to an appeal, the consequences are to be the same (for all purposes)                        as if, at the time the agreement was entered into, the tribunal had decided the appeal and had upheld the decision without                        variation, varied it in that manner or discharged or cancelled it, as the case may be.

(3)Sub-paragraph (2) does not apply if, within 30 days from the date when the settlement agreement was entered into, the appellant                        gives notice in writing to HMRC that it wishes to withdraw from the agreement.

(4)Where a settlement agreement is not in writing—

(a)sub-paragraph (2) does not apply unless the fact that an agreement was entered into, and the terms agreed, are confirmed by                        notice in writing given by HMRC to the appellant or by the appellant to the HMRC, and

(b)the references in sub-paragraphs (2) and (3) to the time when the agreement was entered into are to be read as references                        to the time when the notice of confirmation was given.

(5)Sub-paragraph (6) applies where notice of an appeal has been given under paragraph 36 and—

(a)the appellant notifies HMRC, orally or in writing, that the appellant does not wish to proceed with the appeal, and

(b)HMRC do not, within 30 days after that notification, give the appellant notice in writing indicating that they are unwilling                        that the appeal should be withdrawn.

(6)Sub-paragraphs (1) to (4) have effect as if, at the date of the appellant's notification, the appellant and an officer of                        Revenue and Customs had agreed (orally or in writing, as the case may be) that the decision under appeal should be upheld                        without variation.

(7)References in this paragraph to an agreement being entered into with an appellant, and to the giving of notice or notification                        by or to the appellant, include references to an agreement being entered into, or notice or notification being given by or                        to, a person acting on behalf of the appellant in relation to the appeal.

#### Appeal does not postpone recovery of taxU.K.

47(1)Where there is an appeal under paragraph 35, the tax charged by the amendment or assessment in question remains due and payable                        as if there had been no appeal.U.K.

(2)Sub-paragraph (1) is subject to paragraphs 48 and 49.

#### Application for payment of tax to be postponedU.K.

48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Agreement to postpone payment of taxU.K.

49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Assessments and self assessmentsU.K.

50(1)This paragraph applies where an appeal under paragraph 35(1) has been notified to the tribunal.U.K.

(2)If the tribunal decides that the appellant is overcharged by a self assessment or any other assessment, the assessment must                        be reduced accordingly.

(3)If the tribunal does not so decide, the assessment is to stand good.

(4)If it appears to the tribunal that the appellant is undercharged to tax by a self assessment or any other assessment, the                        assessment must be increased accordingly.

#### Tribunal determinationsU.K.

51U.K.The determination of the tribunal in relation to any proceedings under this Part of this Schedule is to be final and conclusive                        except as otherwise provided in—

(a)sections 9 to 14 of the Tribunals, Courts and Enforcement Act 2007, or

(b)this Part of this Act.

#### Payment of tax where appeal has been determinedU.K.

52(1)On the determination of an appeal under paragraph 35 any tax overpaid must be repaid.U.K.

(2)On the determination of an appeal under paragraph 35, section 163(payment of tax) has effect in relation to any relevant tax                        as if—

(a)the tax were payable in accordance with an assessment under paragraph 22 issued on the date on which HMRC issues to the appellant                        a notice of the total amount payable in accordance with the determination, and

(b)there had been no appeal against that assessment.

(3)The reference in sub-paragraph (2) to “relevant tax” is to any tax payable in accordance with the determination, so far as                        it is tax—

(a)the payment of which had been postponed, or

(b)which would not have been charged by the amendment or assessment if there had been no appeal.

#### Payment of tax where there is a further appealU.K.

53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### References to “the tribunal”U.K.

54(1)In this Part of this Schedule “the tribunal” means—U.K.

(a)the First-tier Tribunal, or

(b)where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

(2)Sub-paragraph (1) does not apply so far as sub-paragraph (3) requires otherwise.

(3)Where the question in any dispute on any appeal under paragraph 35(1) is of the market value of any single-dwelling interest,                        that question is to be determined on a reference by—

(a)the Upper Tribunal, if the land is in England and Wales;

(b)the Lands Tribunal for Scotland, if the land is in Scotland;

(c)the Lands Tribunal for Northern Ireland, if the land is in Northern Ireland.

### **PART 8**U.K.Supplementary

#### Application of Schedule in cases involving joint liability to taxU.K.

55(1)This paragraph applies where—U.K.

(a)section 97(2) applies and the other persons mentioned in section 97(1)(b) include a company, or

(b)section 97(4) applies and P is a company.

(2)Any obligation to deliver a return with respect to the single-dwelling interest for the chargeable period concerned is a joint                        obligation of the persons who are jointly and severally liable under subsection (2) or (as the case may be) (4) of section                        97; and a single return is required.

#### PartnershipsU.K.

56U.K.In relation to a return delivered by the responsible partners for a partnership, anything required or authorised under section                        159 or 160 or this Schedule to be done by the responsible partners is required or authorised to be done by all the responsible                        partners.

#### Meaning of “return”U.K.

57U.K.In this Schedule “return”, except where the contrary is indicated, means an annual tax on enveloped dwellings return or a                        return of the adjusted chargeable amount.

#### Meaning of “filing date”U.K.

58U.K.“Filing date”, in relation to a return, means the day by the end of which the return is required to be delivered.

 Section 164

## SCHEDULE 34U.K.Annual tax on enveloped dwellings: information and enforcement

### **PART 1**U.K.Information and inspection powers

1U.K.Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.

2U.K.In paragraph 12A (powers to inspect property for valuation etc), in sub-paragraph (3)—

(a)omit the “or” after paragraph (d), and

(b)after paragraph (e) insert “, or 

(f)annual tax on enveloped dwellings.”                  

3U.K.After paragraph 21A insert—

#### “Annual tax on enveloped dwellings: taxpayer notices following returnU.K.

21B(1)Where a person has delivered, for a chargeable period with respect to a single-dwelling interest—                  

(a)an annual tax on enveloped dwellings return, or                  

(b)a return of the adjusted chargeable amount,                  

a taxpayer notice may not be given for the purpose of checking the person's annual tax on enveloped dwellings position as                        regards the matters dealt with in that return.                  

(2)Sub-paragraph (1) does not apply where, or to the extent that, any of conditions A to C is met.                  

(3)Condition A is that notice of enquiry has been given in respect of—                  

(a)the return, or                  

(b)a claim (or an amendment of a claim) made by the person in relation to the chargeable period,                  

and the enquiry has not been completed.                  

(4)In sub-paragraph (3) “notice of enquiry” means a notice under paragraph 8 of Schedule 33 to FA 2013 or paragraph 7 of Schedule 11A to FA 2003 (as applied by paragraphs                           28(2) and 31(3) of Schedule 33 to FA 2013).                  

(5)Condition B is that, as regards the person, an officer of Revenue and Customs has reason to suspect that—                  

(a)an amount that ought to have been assessed to annual tax on enveloped dwellings for the chargeable period may not have been                           assessed,                  

(b)an assessment to annual tax on enveloped dwellings for the chargeable period may be or have become insufficient, or                  

(c)relief from annual tax on enveloped dwellings for the chargeable period may be or have become excessive.                  

(6)Condition C is that the notice is given for the purpose of obtaining any information or document that is also required for                           the purpose of checking that person's position as regards a tax other than annual tax on enveloped dwellings.                  

(7)In this Schedule references to a “single-dwelling interest” are to be read in accordance with section 108 of FA 2013.”                  

4U.K.In paragraph 37 (partnerships), after sub-paragraph (2A) insert—

“(2B)Where, in respect of a single-dwelling interest (see paragraph 21B(7)) to which one or more companies are or were entitled                           as members of a partnership, any member of the partnership has—                  

(a)delivered an annual tax on enveloped dwellings return or a return of the adjusted chargeable amount under Part 3 of FA 2013,                           or                  

(b)made a claim under that Part of that Act,                  

paragraph 21B (restrictions where taxpayer has delivered return) has effect as if that return had been delivered, or that                        claim had been made, by each member of the partnership.”                  

5U.K.In paragraph 63(1) (meaning of “tax” in the Schedule), after paragraph (h) insert—

“(ha)annual tax on enveloped dwellings,”.                  

### **PART 2**U.K.Penalties

#### Errors in returnsU.K.

6U.K.In Schedule 24 to FA 2007 (penalties for errors), in the Table in paragraph 1, after the entry relating to stamp duty reserve                        tax insert—

#### Failure to make returnsU.K.

7(1)In Schedule 55 to FA 2009 (penalty for failure to make returns etc), in the Table in paragraph 1, after item 11 insert—U.K.

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

#### Failure to make payments on timeU.K.

8U.K.Paragraphs 9 to 12 contain amendments and modifications of Schedule 56 to FA 2009 (penalty for failure to make payments on                        time).

9(1)The Table in paragraph 1 of that Schedule is amended as follows.U.K.

(2)After item 10 insert—

(3)After item 15 insert—

(4)In item 17, in the second column, for “or 10” substitute “ , 10 or 10A ” and in the third column for “15” substitute “ 15A ”.

10(1)Until paragraphs 2(13)(a) and 2(14)(a) of Schedule 11 to F(No. 3)A 2010 (which amend items 23 and 24) come into force, paragraph                        1 of Schedule 56 to FA 2009 has effect as if—U.K.

(a)in item 23 the references in the second and third columns to items 1 to 6, 9 or 10 included item 10A, and

(b)in item 24 the reference in the second column to items 1 to 6, 9 or 10 included item 10A.

(2)With effect from the coming into force of paragraphs 2(13)(a) and 2(14)(a) of Schedule 11 to F(No. 3)A 2010, paragraph 1 of                        Schedule 56 to FA 2009 is amended as follows—

(a)in item 23, in the second and third columns, for “9, 10” substitute “ 9 to 10A ”;

(b)in item 24, in the second column, for “9, 10” substitute “ 9 to 10A ”.

11U.K.Until paragraph 3 of Schedule 11 to F(No. 3)A 2010 comes into force, paragraph 2(c) has effect as if the reference in that                        paragraph to items 1 to 10 were to items 1 to 10A.

12U.K.Schedule 56 to FA 2009, as amended by paragraph 9, is taken to have come into force for the purposes of annual tax on enveloped                        dwellings on the date on which this Act is passed.

 Section 168

## SCHEDULE 35U.K.Annual tax on enveloped dwellings: miscellaneous amendments and transitory provision

### **PART 1**U.K.Miscellaneous amendments

#### Provisional collection of taxesU.K.

1U.K.In section 1(1) of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions),                        after “stamp duty land tax,” insert “ annual tax on enveloped dwellings, ”.

#### Disclosure of tax avoidance schemesU.K.

2U.K.In section 318(1) of FA 2004 (disclosure of tax avoidance schemes: interpretation), in the definition of “tax”—

(a)omit the “or” after paragraph (f), and

(b)after paragraph (g) insert “, or 

(h)annual tax on enveloped dwellings.”                  

#### Definitions relating to charitiesU.K.

3U.K.In paragraph 7 of Schedule 6 to FA 2010 (definition of “charity”, “charitable company” and “charitable trust”)—

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

(b)after paragraph (h) insert “, and 

(i)annual tax on enveloped dwellings.”                  

### **PART 2**U.K.Transitory provision: the first chargeable period

4U.K.In relation to the chargeable period beginning on 1 April 2013, section 159(annual tax on enveloped dwellings return) has                        effect as if subsections (2) and (3) of that section provided as follows—

“(2)A return under subsection (1) must be delivered by the end of 1 October 2013 if the days on which the person is within the                           charge with respect to the interest include 1 April 2013.                  

(3)If the days on which the person is within the charge with respect to the interest do not include 1 April 2013, the return                           must be delivered—                  

(a)by the end of 1 October 2013, or                  

(b)by the end of the period of 30 days beginning with the first day in the chargeable period on which the person is within the                           charge with respect to the interest,                  

whichever is the later.”                  

5U.K.In relation to the chargeable period beginning on 1 April 2013, section 163(payment of tax) has effect as if subsection (1)                        of that section provided as follows—

“(1)Tax charged on a person under section 99 with respect to a single-dwelling interest must be paid—                  

(a)by the end of 31 October 2013, or                  

(b)if later, by the end of the filing date for the return.”                  

 Section 176

## SCHEDULE 36U.K.Treatment of liabilities for inheritance tax purposes

### IHTA 1984U.K.

1U.K.IHTA 1984 is amended as follows.

2(1)Section 162 (liabilities) is amended as follows.U.K.

(2)In subsection (4), after “possible” insert “ and to the extent that it is not taken to reduce value in accordance with section 162B ”.

(3)In subsection (5), after “possible” insert “ and to the extent that it is not taken to reduce value in accordance with section 162B ”.

3U.K.After section 162 insert—

#### “162ALiabilities attributable to financing excluded property

#### 162BLiabilities attributable to financing certain relievable property

#### 162CSections 162A and 162B: supplementary provision

4U.K.After section 175 (estate on death: liability to make future payments etc) insert—

#### “175ADischarge of liabilities after death

### CommencementU.K.

5(1)Subject to sub-paragraph (2), the amendments made by this Schedule have effect in relation to transfers of value made, or                        treated as made, on or after the day on which this Act is passed.U.K.

(2)Section 162B of IHTA 1984 (inserted by paragraph 3) only has effect in relation to liabilities incurred on or after 6 April                        2013.

(3)For the purposes of sub-paragraph (2), where a liability is incurred under an agreement—

(a)if the agreement was varied so that the liability could be incurred under it, the liability is to be treated as having been                        incurred on the date of the variation, and

(b)in any other case, the liability is to be treated as having been incurred on the date the agreement was made.

 Section 190

## SCHEDULE 37U.K.Vehicle licences for disabled people

1U.K.VERA 1994 is amended as follows.

2(1)Section 19 (rebates) is amended as follows.U.K.

(2)In subsection (3), after paragraph (c) insert—

“(ca)a qualifying application for a vehicle licence for the vehicle is made,”.                  

(3)After that subsection insert—

“(3ZA)An application for a vehicle licence is a qualifying application for the purposes of subsection (3)(ca) if—                  

(a)paragraph 1ZA of Schedule 1 applies to the vehicle when the application is made, but                  

(b)that paragraph did not apply to the vehicle when the licence which is unexpired when the application is made was taken out.”                  

3(1)Section 22ZA (nil licences for vehicles for disabled persons: information) is amended as follows.U.K.

(2)In subsection (1)(b), at the beginning insert “ falls within subsection (1A) or ”.

(3)After subsection (1) insert—

“(1A)Information falls within this subsection if it is—                  

(a)the name, date of birth or national insurance number of a person who is in receipt of a relevant payment, or would be in receipt                           of such a payment but for—                  

(i)regulations under section 86(1) of the Welfare Reform Act 2012 (treatment as in-patient in hospital or similar institution),                           or                  

(ii)corresponding provision having effect in relation to personal independence payment in Northern Ireland;                  

(b)in the case of a person who is or would be in receipt of personal independence payment attributable to entitlement to the                           mobility component, the rate of the payment to which the person is or would be entitled;                  

(c)in the case of a person who has ceased or will cease to receive a relevant payment, the date on which the person ceased or                           will cease to receive it and the reason for the person ceasing to receive it.                  

(1B)In subsection (1A) “relevant payment” means—                  

(a)personal independence payment attributable to entitlement to the mobility component, and                  

(b)armed forces independence payment.”                  

(4)In subsections (2) and (4), and in the heading, omit “nil”.

(5)For subsection (5) substitute—

“(5)In this section “relevant licence functions” means functions relating to applications for, and the issue of—                  

(a)vehicle licences in respect of vehicles to which paragraph 1ZA of Schedule 1 applies, and                  

(b)nil licences in respect of vehicles that are exempt vehicles under paragraph 19 of Schedule 2 or paragraph 7 of Schedule 4.”                  

4U.K.In section 62(1) (definitions), at the appropriate places insert—

““armed forces independence payment” means armed forces independence payment under a scheme established under section 1 of the Armed Forces (Pensions and Compensation)                        Act 2004,”, and                  

““personal independence payment” means personal independence payment under—                  

(a)the Welfare Reform Act 2012, or                  

(b)the corresponding provision having effect in Northern Ireland,”.                  

5U.K.In Schedule 1 (annual rates of duty), in Part 1 after paragraph 1 insert—

“1ZA(1)The annual rate of vehicle excise duty applicable to a vehicle to which this paragraph applies is 50 per cent of the rate                           which (but for this paragraph) would be applicable.                  

(2)This paragraph applies to a vehicle when it is being used, or kept for use, by or for the purposes of a disabled person who                           is in receipt of personal independence payment by virtue of entitlement to the mobility component at the standard rate if—                  

(a)the vehicle is registered under this Act in the name of the disabled person, and                  

(b)no other vehicle registered in his or her name under this Act is—                  

(i)a vehicle for which a vehicle licence taken out at a rate of duty reduced in accordance with sub-paragraph (1) is in force,                           or                  

(ii)an exempt vehicle under paragraph 19 of Schedule 2 or paragraph 7 of Schedule 4.                  

(3)This paragraph has effect as if a person were in receipt of personal independence payment by virtue of entitlement to the                           mobility component at the standard rate in any case where the person would be in receipt of that payment by virtue of that                           entitlement but for—                  

(a)regulations under section 86(1) of the Welfare Reform Act 2012 (treatment as in-patient in hospital or similar institution),                           or                  

(b)corresponding provision having effect in Northern Ireland.                  

(4)For the purposes of sub-paragraph (2), a vehicle is to be treated as registered under this Act in the name of a person in                           receipt of personal independence payment by virtue of entitlement to the mobility component at the standard rate if it is                           so registered in the name of—                  

(a)an appointee, or                  

(b)a person nominated for the purposes of this paragraph by the person or an appointee.                  

(5)In sub-paragraph (4) “appointee” means a person appointed pursuant to regulations made under (or having effect as if made under) the Social Security Administration                           Act 1992 or the Social Security Administration (Northern Ireland) Act 1992 to exercise any of the rights and powers of a person                           in receipt of personal independence payment.”                  

6(1)In Schedule 2 (exempt vehicles), paragraph 19 is amended as follows.U.K.

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

“(b)no other vehicle registered in his or her name under this Act is—                  

(i)a vehicle for which a vehicle licence taken out at a rate of vehicle excise duty reduced in accordance with paragraph 1ZA(1)                           of Schedule 1 is in force, or                  

(ii)an exempt vehicle under this paragraph or paragraph 7 of Schedule 4.”                  

(3)In sub-paragraph (2), after paragraph (a) insert—

“(aa)he or she is in receipt of personal independence payment by virtue of entitlement to the mobility component at the enhanced                           rate,                  

(ab)he or she is in receipt of armed forces independence payment,”.                  

(4)After sub-paragraph (2A) insert—

“(2B)This paragraph has effect as if a person were in receipt of personal independence payment by virtue of entitlement to the                           mobility component at the enhanced rate in any case where the person would be in receipt of that payment by virtue of that                           entitlement but for—                  

(a)regulations under section 86(1) of the Welfare Reform Act 2012 (treatment as in-patient in hospital or similar institution),                           or                  

(b)corresponding provision having effect in Northern Ireland.”                  

(5)In sub-paragraph (3), for “person in receipt of a disability living allowance by virtue of entitlement to the mobility component                        at the higher rate, or of a mobility supplement,” substitute “ disabled person who satisfies sub-paragraph (2) by virtue of paragraph (a), (aa), (ab) or (b) of that sub-paragraph ”.

(6)In sub-paragraph (4)(a), after “disability living allowance,” insert “ personal independence payment or armed forces independence payment, ”.

7U.K.The amendments made by this Schedule are treated as having come into force on 8 April 2013.

 Section 192

## SCHEDULE 38U.K.Valuation of certain supplies of fuel

### IntroductoryU.K.

1U.K.VATA 1994 is amended as follows.

### Valuation of supplies for private useU.K.

2U.K.In Schedule 6 (valuation: special cases), before paragraph 1 insert—

#### **“PART 1**U.K.Valuation of supplies of fuel for private use

##### Option for valuation on flat-rate basisU.K.

A1(1)This paragraph applies if, in a prescribed accounting period, supplies of goods by a taxable person (“P”) arise by virtue                           of paragraph 5(1) of Schedule 4 (but otherwise than for a consideration) where road fuel which is or has previously been supplied                           to or imported or manufactured by P in the course of P's business is provided for, or appropriated to, private use.                  

(2)For this purpose “road fuel is provided for, or appropriated to, private use” if—                  

(a)it is provided or to be provided by P—                  

(i)to an individual for private use in the individual's own car or a car allocated to the individual, and                  

(ii)by reason of the individual's employment,                  

(b)where P is an individual, it is appropriated or to be appropriated by P for private use in P's own car, or                  

(c)where P is a partnership, it is provided or to be provided to any of the individual partners for private use in that partner's                           own car.                  

(3)P may opt for all supplies of goods within sub-paragraph (1) made by P in the prescribed accounting period to be valued on                           the flat-rate basis.                  

(4)On the flat-rate basis, the value of all supplies made to any one individual in respect of any one car is that determined                           in accordance with an order under paragraph B1.                  

B1(1)The Treasury must, by order, make provision about the valuation of supplies on the flat-rate basis.                  

(2)In particular, an order under this paragraph must—                  

(a)set out a table (“the base valuation table”) by reference to which the value of supplies is to be determined until such time                           as the base valuation table is replaced under paragraph (b),                  

(b)provide that at regular intervals—                  

(i)the amounts specified in the base valuation table are to be revalorised by the Commissioners in accordance with the order,                           and                  

(ii)a table (an “updated valuation table”) containing the revalorised amounts is to take effect (and replace any existing table)                           in accordance with the order, and                  

(c)require the Commissioners to publish any updated valuation table before it takes effect, together with a statement specifying                           the date from which it has effect.                  

(3)An order under this paragraph may provide for the base valuation table and any updated valuation table to be implemented or                           supplemented by either or both of the following—                  

(a)rules set out in the order which explain how the value is to be determined by reference to any table;                  

(b)notes set out in the order with respect to the interpretation or application of any table or any rules or notes.                  

(4)Rules or notes may make different provision for different circumstances or cases.                  

##### InterpretationU.K.

C1(1)For the purposes of this Part of this Schedule—                  

(a)any reference to an individual's own car is to be construed as including any car of which for the time being the individual                           has the use, other than a car allocated to the individual,                  

(b)subject to sub-paragraph (2), a car is at any time to be taken to be allocated to an individual if at that time it is made                           available (without any transfer of the property in it) either to the individual or to any other person, and is so made available                           by reason of the individual's employment and for private use, and                  

(c)fuel provided by an employer to an employee and fuel provided to any person for private use in a car which, by virtue of paragraph                           (b), is for the time being taken to be allocated to the employee is to be taken to be provided to the employee by reason of                           the employee's employment.                  

(2)For the purposes of this Part of this Schedule, in any prescribed accounting period a car is not regarded as allocated to                           an individual by reason of the individual's employment if—                  

(a)in that period it was made available to, and actually used by, more than one of the employees of one or more employers and,                           in the case of each of them, it—                  

(i)was made available to that employee by reason of the employment, but                  

(ii)was not in that period ordinarily used by any one of them to the exclusion of the others,                  

(b)in the case of each of the employees, any private use of the car made by the employee in that period was merely incidental                           to the employee's other use of it in that period, and                  

(c)in that period it was not normally kept overnight on or in the vicinity of any residential premises where any of the employees                           was residing, except while being kept overnight on premises occupied by the person making the car available to them.                  

(3)In this Part of this Schedule—                  
          -  “employment” includes any office, and related expressions are to be construed accordingly;                         
          -  “car” means a motor car as defined by paragraph 1A(4) and (5);                         
          -  “road fuel” means hydrocarbon oil as defined by the Hydrocarbon Oil Duties Act 1979 (see section 1(2) of that Act) on which duty has                              been or is required to be paid in accordance with that Act.                         

(4)The Treasury may, by order, amend the definition of “road fuel” in sub-paragraph (3).                  

PART 2 Other provisions ”.                  

3U.K.In paragraph 6 of that Schedule (valuation of supplies of goods by virtue of paragraph 5(1) of Schedule 4 etc), in sub-paragraph                        (1), after “except where” insert “ the person making the supply opts under paragraph A1(3) above for valuation on the flat-rate basis or ”.

4U.K.Omit sections 56 and 57 (fuel for private use).

5U.K.In section 97(4) (orders subject to affirmative procedure), in paragraph (f)—

(a)after “paragraph” insert “ B1, C1(4), ”, and

(b)after “1A(7)” insert “ , 2A(4) ”.

### Supplies to employees etc at less than open market valueU.K.

6U.K.After paragraph 2 of Schedule 6 insert—

“2A(1)This paragraph applies if—                  

(a)a taxable person (“P”) makes a supply of road fuel for a consideration,                  

(b)the recipient of the supply is—                  

(i)connected with P, or                  

(ii)an employee or partner of P or a person who is connected with such an employee or partner,                  

(c)the value of the supply would (in the absence of this paragraph) be less than its open market value, and                  

(d)the recipient of the supply is not entitled to credit for the whole of the input tax arising on the supply.                  

(2)The value of the supply is to be taken to be an amount equal to its open market value.                  

(3)For the purposes of this paragraph—                  

(a)“road fuel” means hydrocarbon oil as defined by the Hydrocarbon Oil Duties Act 1979 (see section 1(2) of that Act) on which duty has                           been or is required to be paid in accordance with that Act, and                  

(b)any question whether a person is connected with another is to be determined in accordance with section 1122 of the Corporation                           Tax Act 2010.                  

(4)The Treasury may, by order, amend the definition of “road fuel” in sub-paragraph (3)(a).”                  

### Commencement and transitional provisionU.K.

7(1)The amendments made by paragraphs 2 to 4 come into force in relation to prescribed accounting periods beginning on or after                        1 February 2014.U.K.

(2)Subject to that, section 56 of VATA 1994 has effect on and after 11 December 2012 as if in subsection (2) of that section                        for the words after “it is supplied” there were substituted “ for consideration. ”

8(1)The amendment made by paragraph 6 is to be treated as coming into force on 11 December 2012 and has effect in relation to—U.K.

(a)supplies of goods on or after the commencement day, and

(b)supplies of goods in the period beginning with 11 December 2012 and ending immediately before the commencement day, if and                        to the extent that the goods are not made available before the end of that period to the person to whom they are supplied.

(2)“The commencement day” means the day on which this Act is passed.

 Section 195

## SCHEDULE 39U.K.Stamp duty land tax: transactions entered into before completion of contract

1U.K.Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

2U.K.For section 45 (contract and conveyance: effect of transfer of rights) substitute—

### “45Transactions entered into before completion of contract

3U.K.After Schedule 2 insert—

### “SCHEDULE 2AU.K.Transactions entered into before completion of contract

#### Pre-completion transactionsU.K.

1(1)This Schedule applies where—                  

(a)a person (“the original purchaser”) enters into a contract (“the original contract”) for the acquisition by that person of                           a chargeable interest under which the acquisition is to be completed by a conveyance, and                  

(b)there is a pre-completion transaction.                  

(2)A transaction is a “pre-completion transaction” for the purposes of sub-paragraph (1) if—                  

(a)as a result of the transaction a person other than the original purchaser (“the transferee”) becomes entitled to call for a conveyance to that person of the whole or part of the subject-matter of the original contract,                           and                  

(b)immediately before the transaction took place a person was entitled under the original contract to call for a conveyance of                           the whole or part of that subject-matter.                  

(3)A transaction that effects a person's acquisition of the whole or part of the subject-matter of the original contract is not                           a pre-completion transaction.                  

(4)The grant or assignment of an option is not a pre-completion transaction.                  

(5)The fact that a transaction has the effect of discharging the original contract does not prevent that transaction from being                           a pre-completion transaction.                  

(6)The reference in sub-paragraph (1)(a) to a contract does not include a contract that is an assignment of rights in relation                           to another contract.                  

(7)In this Schedule references to “part of the subject-matter of the original contract”—                  

(a)are to a chargeable interest that is the same as the chargeable interest referred to in sub-paragraph (1)(a) except that it                           relates to part only of the land concerned, and                  

(b)also include, so far as is appropriate, interests or rights appurtenant or pertaining to the chargeable interest.                  

(8)This Schedule does not apply where paragraph 12B of Schedule 17A (assignment of agreement for lease) applies.                  

#### Other key expressionsU.K.

2(1)A pre-completion transaction is an “assignment of rights” if the entitlement of the transferee referred to in paragraph 1(2)(a)                           is an entitlement to exercise rights under the original contract.                  

(2)A pre-completion transaction other than an assignment of rights is referred to in this Schedule as a “free-standing transfer”.                  

(3)In this Schedule “the transferor”, in relation to a pre-completion transaction, means a party to the pre-completion transaction who immediately before the                           pre-completion transaction took place was entitled to call for a conveyance of (what became) the subject-matter of the pre-completion                           transaction.                  

(4)References in this Schedule to the “subject-matter” of a pre-completion transaction—                  

(a)are to the chargeable interest the conveyance of which the transferee is entitled to call for as a result of the pre-completion                           transaction, and                  

(b)include, so far as appropriate, any interest or right appurtenant or pertaining to the chargeable interest.                  

#### Tax not charged on transferee by reason of the pre-completion transactionU.K.

3The transferee is not regarded as entering into a land transaction by reason of the pre-completion transaction.

#### Assignments of rights: application of rules about completion and considerationU.K.

4(1)This paragraph applies if the pre-completion transaction is an assignment of rights.                  

(2)If the subject-matter of the original contract is conveyed to the transferee, the conveyance is taken to effect the completion                           of the original contract (despite section 44(10)).                  

(3)Sub-paragraphs (4) to (6) apply if—                  

(a)the subject-matter of the original contract is conveyed to the transferee, or                  

(b)the original contract is substantially performed by the transferee.                  

(4)The transferee is taken to be the purchaser under the land transaction effected as mentioned in section 44(3), or treated                           as effected under section 44(4).                  

(5)For the purpose of determining the chargeable consideration for that land transaction, the land transaction is taken to give                           effect to a contract the consideration under which is—                  

(a)the consideration under the original contract, and                  

(b)the consideration for the assignment of rights.                  

Paragraph 1 of Schedule 4 has effect accordingly (but this sub-paragraph does not allow any amount of consideration given                        by a person to be counted twice in determining the chargeable consideration).                  

(6)In any case in which there is a relevant connection between parties as mentioned in paragraph 12(2) (minimum consideration                           rule), the chargeable consideration for the land transaction mentioned in sub-paragraph (4) of this paragraph is calculated                           (regardless of whether the consideration is taken to be the amount in paragraph (a), (b) or (c) of sub-paragraph 12(2)), as                           if in paragraph 1(1) of Schedule 4 the words, “or a person connected with him” were omitted.                  

(7)The original contract is said to be “substantially performed by the transferee” where a land transaction is treated under                           section 44(4) as effected by reason of—                  

(a)the transferee under the assignment of rights, or a person connected with the transferee, taking possession of the whole,                           or substantially the whole, of the subject-matter of the original contract, or                  

(b)a substantial amount of the consideration being paid or provided by the transferee or a person connected with the transferee,                           or                  

(c)consideration paid or provided by a person within paragraph (b) amounting, when taken together with consideration paid or                           provided by another person, to a substantial amount of the consideration.                  

(8)References in sub-paragraph (7) to possession and to the payment or provision of a substantial amount of the consideration                           are to be read in accordance with section 44(6) and (7).                  

(9)In sub-paragraph (5) “the consideration”—                  

(a)in relation to the land transaction, means (what is to be taken to be) the consideration for the acquisition of the subject-matter                           of the land transaction;                  

(b)in relation to the original contract, means the consideration for the acquisition of the subject-matter of that contract;                  

(c)in relation to the assignment of rights, means the consideration for the transferee's acquisition of the rights to which that                           contract relates.                  

#### Assignment of rights: transferor treated as making separate acquisitionU.K.

5(1)Where paragraph 4(4) to (6) applies (assignment of rights: original contract completed or substantially performed) this Part                           of this Act has effect as if—                  

(a)the effective date of the land transaction mentioned in paragraph 4(4) (“the transferee's land transaction”) were also the                           effective date of another land transaction (a “notional land transaction”), and                  

(b)the original purchaser were the purchaser under that notional land transaction.                  

The notional land transaction is referred to below as “associated with” the assignment of rights under which the original purchaser is the transferor.                  

(2)Where sub-paragraph (1) applies and the assignment of rights mentioned in paragraph 4(1) (“the implemented assignment of rights”)                           was preceded by one or more related assignments of rights, then for the purposes of this Part of this Act there is taken to                           be, for each assignment of rights (other than the first) in the chain formed by the implemented assignment of rights and those                           preceding assignments of rights, an additional land transaction in the case of which—                  

(a)the effective date is the effective date of the transferee's land transaction, and                  

(b)the purchaser is the transferor under that assignment of rights.                  

The additional land transaction is referred to below as “associated with” the assignment of rights.                  

(3)For the purpose of determining the chargeable consideration for the notional land transaction, Schedule 4 has effect as if                           paragraph 1(1) of that Schedule provided that the chargeable consideration is (except as otherwise expressly provided) the                           total of amounts A and B.                  

(4)For the purpose of determining the chargeable consideration for any additional land transaction, Schedule 4 has effect as                           if paragraph 1(1) of that Schedule provided that the chargeable consideration is (except as otherwise expressly provided)                           the total of amounts A, B and C.                  

(5)For the purposes of sub-paragraphs (3) and (4)—                  
          -  A is the total amount of any consideration in money or money's worth given (whether directly or indirectly) by any of the                              following as consideration under the original contract—                          (a)
the transferee under the assignment of rights with which the notional land transaction or (as the case requires) the additional                                       land transaction is associated;                                 
(b)
where that assignment of rights is one in a chain of successive transactions that are pre-completion transactions in relation                                       to the original contract (all having at least part of their subject-matter in common), the transferee under any subsequent                                       pre-completion transaction in that chain;                                 
(c)
a person connected with a person falling within paragraph (a) or (b);                                 
 
          -  B is the total amount of any other consideration in money or money's worth given as consideration under the original contract                              (directly or indirectly) by—                          (a)
the purchaser (under the notional land transaction or, as the case requires, the additional land transaction), or                                 
(b)
a person connected with the purchaser;                                 
 
          -  C is the amount of any consideration in money or money's worth given for the preceding assignment of rights by—                          (a)
the purchaser (under the additional land transaction), or                                 
(b)
a person connected with the purchaser.                                 
 

(6)In the definition of amount C, “the preceding assignment of rights” means the assignment of rights as a result of which the purchaser became entitled to call for a conveyance of (what became)                           the subject-matter of the assignment of rights associated with the additional land transaction.                  

(7)In sub-paragraph (2) “related assignment of rights” means a transaction that is an assignment of rights in relation to the original contract and has some subject-matter in                           common with the implemented assignment of rights.                  

#### Paragraph 5: effect of rescission etc following substantial performanceU.K.

6(1)This paragraph applies where paragraph 5(1) (transferor treated as making separate acquisition) applies by virtue of the substantial                           performance by the transferee of the original contract.                  

(2)If the original contract is (to any extent) subsequently rescinded or annulled, or is for any other reason not carried into                           effect, the tax paid by virtue of paragraph 5(1), and any tax paid by virtue of paragraph 5(2), must (to that extent) be repaid                           by HMRC.                  

(3)Repayment under sub-paragraph (2) must be claimed by amendment of the land transaction return made in respect of the notional                           or additional land transaction.                  

#### Assignment of rights relating to part only of subject-matter of original contractU.K.

7Where the transferee under the assignment of rights referred to in paragraph 4(1) is entitled to call for the conveyance of                           part, but not the whole, of the subject-matter of the original contract—

(a)paragraph 4 applies as if the original contract, so far as relating to that part of its subject-matter, were a separate contract,                           and                  

(b)the references in paragraph 5 to the original contract are to be read accordingly.                  

#### Assignment of rights: references to “the vendor”U.K.

8(1)This paragraph applies where—                  

(a)the pre-completion transaction is an assignment of rights, and                  

(b)either the subject-matter of the original contract is conveyed to the transferee or the original contract is substantially                           performed by the transferee.                  

(2)This paragraph does not apply if the original contract is itself a free-standing transfer. See paragraphs 10 and 11 for the                           treatment of such cases.                  

(3)In relation to a relevant land transaction, the general rule is that references in this Part of this Act to the vendor are                           to be read as references to the vendor under the original contract (but see sub-paragraphs (4) and (5)).                  

(4)In cases where the original contract was substantially performed before the transferee became entitled to call for a conveyance                           of the whole or part of the subject-matter of the original contract, references in this Part of this Act to the vendor are                           to be read as references to the person who was the purchaser under the original contract when it was substantially performed.                  

(5)In relation to a relevant land transaction, references to the vendor in the specified provisions (see sub-paragraph (6)) are                           to be read as including—                  

(a)the vendor under the original contract, and                  

(b)the transferor under any relevant assignment of rights.                  

(6)The specified provisions are—                  

(a)section 61(1)(a) (compliance with planning obligations: conditions for exemption);                  

(b)section 66(1) and (2) (transfers involving public bodies);                  

(c)paragraph 8(1)(a) of Schedule 4 (debt as consideration);                  

(d)paragraph 10(2)(c) of Schedule 4 (carrying out of works);                  

(e)paragraph 16 of Schedule 4 (indemnity given by vendor).                  

(7)The following are “relevant land transactions”—                  

(a)the land transaction effected by the conveyance mentioned in sub-paragraph (1)(b) or treated as effected by the substantial                           performance mentioned in that provision;                  

(b)the notional land transaction mentioned in paragraph 5(1)(b) and any additional land transaction under paragraph 5(2).                  

(8)In determining under section 108(1) whether or not a relevant land transaction such as is mentioned in sub-paragraph (7)(a)                           is linked to another transaction, it may be assumed that any of the following is the vendor under the relevant land transaction—                  

(a)the vendor (determined in accordance with sub-paragraph (3)), or                  

(b)the transferor under any relevant assignment of rights.                  

(9)The following are “relevant assignments of rights” in relation to a relevant land transaction—                  

(a)the assignment of rights mentioned in sub-paragraph (1)(a);                  

(b)any other transaction that is an assignment of rights in relation to the original contract and has some subject-matter in                           common with the assignment of rights mentioned in paragraph (a).                  

#### Free-standing transfers: consideration and substantial performanceU.K.

9(1)This paragraph applies where the pre-completion transaction is a free-standing transfer.                  

(2)If the transferee acquires the subject-matter of the free-standing transfer, the consideration for the transaction effecting                           that acquisition is taken to include the consideration given for the free-standing transfer (if that would not otherwise be                           the case).                  

(3)References in sub-paragraph (2) to an acquisition include an acquisition deemed to take place under section 44(4) (and the                           reference to the transaction effecting that acquisition is read accordingly).                  

(4)An action taken by the transferee (or an assignee of the transferee) that would, if taken by the original purchaser, constitute                           (for the purposes of section 44(5)) the taking of possession of the whole or substantially the whole of the subject-matter                           of the original contract is treated as effecting the substantial performance of the original contract.                  

(5)If a transaction that is a free-standing transfer in relation to a contract is also a free-standing transfer in relation to                           another contract (in particular, where there have been successive free-standing transfers), each of those contracts may be                           regarded as “the original contract” for the purposes of separate applications of sub-paragraph (4).                  

(6)In sub-paragraph (4)—                  

(a)the reference to the transferee includes a person connected with the transferee, and                  

(b)the reference to an assignee of the transferee includes a person connected with such a person.                  

(7)References in this paragraph to an assignee of the transferee are to a person who, as a result of a transaction that is an                           assignment of rights in relation to the free-standing transfer, is entitled to call for a conveyance of the whole or part                           of the subject-matter of the free-standing transfer.                  

#### Meaning of “the vendor”: cases involving free-standing transfersU.K.

10(1)This paragraph applies where—                  

(a)a land transaction is effected, or treated as effected, by an acquisition falling within paragraph 9(2) (read with paragraph                           9(3)), or                  

(b)paragraph 8(1) (meaning of “vendor” where the transferee is the assignee under an assignment of rights) would apply but for                           paragraph 8(2) (exclusion of cases where the original contract is itself a free-standing transfer).                  

(2)In this paragraph “the relevant land transaction” means the land transaction—                  

(a)mentioned in sub-paragraph (1)(a), or                  

(b)in a case falling within sub-paragraph (1)(b), effected by the conveyance to the transferee of the subject-matter of the original                           contract or the substantial performance by the transferee of the original contract.                  

(3)References in this paragraph to “the specified transaction” are to—                  

(a)the free-standing transfer mentioned in paragraph 9(2), or                  

(b)the original contract the subject-matter of which is conveyed to the transferee or which is substantially performed by the                           transferee.                  

(4)The general rule is that in relation to the relevant land transaction references in this Part of this Act to “the vendor”                           are to be read as references to the vendor or (as the case may be) transferor under the first appropriate transaction (but                           see sub-paragraph (5)).                  

(5)In relation to the relevant land transaction, references to the vendor in the specified provisions (see sub-paragraph (6))                           are to be read as including—                  

(a)the vendor under the first appropriate transaction, and                  

(b)each person who is the transferor in the case of a relevant pre-completion transaction.                  

(6)The specified provisions are—                  

(a)section 61(1)(a) (compliance with planning obligations: conditions for exemption);                  

(b)section 66(1) and (2) (transfers involving public bodies);                  

(c)paragraph 8(1)(a) of Schedule 4 (debt as consideration);                  

(d)paragraph 10(2)(c) of Schedule 4 (carrying out of works);                  

(e)paragraph 16 of Schedule 4 (indemnity given by vendor).                  

(7)In determining under section 108(1) whether or not the relevant land transaction is linked to another transaction it may be                           assumed that any of the following is the vendor under the relevant land transaction—                  

(a)the vendor (determined under sub-paragraph (4)), or                  

(b)the transferor under any relevant pre-completion transaction.                  

(8)The following are “relevant pre-completion transactions” in relation to the relevant land transaction—                  

(a)the specified transaction;                  

(b)any other transaction that is a pre-completion transaction in relation to the original contract and has some subject-matter                           in common with the specified transaction.                  

#### Paragraph 10: “the first appropriate transaction” and “the original contract”U.K.

11(1)Subject to the following provisions of this paragraph, “the first appropriate transaction” means the original contract.                  

(2)If the original contract is not performed at the same time as, and in connection with the performance of, the specified transaction,                           “the first appropriate transaction” means a transaction that is a pre-completion transaction in relation to the original contract and meets the following conditions.                  

(3)The conditions are that the pre-completion transaction—                  

(a)is performed at the time when the specified transaction is performed and (if it is not itself the specified transaction) is                           performed in connection with the performance of the specified transaction,                  

(b)is a transaction on which the entitlement of the transferee to call for the conveyance of the subject-matter of the specified                           transaction depends, and                  

(c)is not preceded by another pre-completion transaction meeting the conditions in paragraphs (a) and (b).                  

(4)For the purposes of this paragraph—                  

(a)a contract for a land transaction is taken to be “performed” when it is substantially performed or completed (whichever is                           earlier);                  

(b)a free-standing transfer other than a contract is taken to be “performed” when the transferee under that free-standing transfer                           (or an assignee of that transferee, as defined in paragraph 9(7)) acquires the subject-matter of that free-standing transfer.                  

(5)Where the specified transaction is a pre-completion transaction in relation to each of two or more contracts such as are mentioned                           in paragraph 1(1)(a) that together form a series of such contracts (each having some subject-matter in common with all the                           others), references in paragraph 10 and this paragraph to “the original contract” are to be read as references to the first                           contract in that series.                  

(6)In this paragraph “the specified transaction” has the meaning given by paragraph 10(3).                  

#### Minimum consideration ruleU.K.

12(1)This paragraph applies where either of the following provisions applies—                  

(a)paragraph 4(3) (assignment of rights: chargeable interest acquired or treated as acquired by transferee);                  

(b)paragraph 9(2) (free-standing transfers: chargeable interest acquired or treated as acquired by transferee).                  

(2)If there is a relevant connection between parties, then for the purposes of paragraph 1(1) of Schedule 4 the consideration                           given by the purchaser for the subject-matter of the land transaction referred to in paragraph 4(4) or 9(2) is taken to be—                  

(a)the amount that it would be apart from this sub-paragraph, or                  

(b)(if higher) the first minimum amount, or                  

(c)(if higher than both those amounts) the second minimum amount.                  

(3)There is a “relevant connection between parties” if—                  

(a)the persons who are the transferor and transferee in relation to the pre-completion transaction mentioned in paragraph 4(1)                           or 9(1) (“the implemented transaction”) are connected with each other, or are not acting at arm's length, or                  

(b)sub-paragraph (4) applies.                  

(4)This sub-paragraph applies if—                  

(a)the implemented transaction is one in a chain of successive transactions (all having at least part of their subject-matter                           in common) that are pre-completion transactions in relation to the original contract, and                  

(b)a person who is the transferor in relation to a pre-completion transaction that precedes the implemented transaction in the                           chain of transactions is connected with, or not acting at arm's length in relation to, the transferee under the implemented                           transaction.                  

(5)Where the implemented transaction is a pre-completion transaction in relation to—                  

(a)a contract for a land transaction that is not itself a free-standing transfer in relation to any other contract, and                  

(b)a contract, or two or more successive contracts, that are themselves free-standing transfers in relation to the contract mentioned                           in paragraph (a),                  

references in this paragraph to “the original contract” are to the contract mentioned in paragraph (a) (and do not include                        any contract mentioned in paragraph (b)).                  

#### The first minimum amountU.K.

13(1)“The first minimum amount” means—                  

(a)if the chargeable interest acquired (or treated as acquired) under the land transaction referred to in paragraph 4(4) or 9(2)                           is the whole subject-matter of the original contract, the amount of any consideration (in money or money's worth) agreed to                           be given, under the terms of the original contract, for the acquisition of that subject-matter, or                  

(b)if paragraph (a) does not apply, so much of the amount mentioned in paragraph (a) as is referable, on a just and reasonable                           apportionment, to the chargeable interest mentioned in that paragraph.                  

This is subject to sub-paragraph (2).                  

(2)If conditions A to C are met, “the first minimum amount” means the amount of any consideration (in money or money's worth) agreed, under the terms of the transfer to the first T,                           to be given in respect of the subject-matter of that transaction (including any consideration relating to an obligation of                           the transferor under the transfer to the first T).                  

(3)The conditions mentioned in sub-paragraph (2) are as follows.                  
          -  Condition A is that the pre-completion transaction referred to in paragraph 4(4) or 9(2) is one of a chain of successive transactions                              (all having at least part of their subject-matter in common) that are pre-completion transactions in relation to the original                              contract.                         
          -  Condition B is that a person (“T”) is the transferor under a pre-completion transaction that forms part of that chain and                              T is connected with, or not acting at arm's length in relation to—                          (a)
the transferee under that transaction, or                                 
(b)
the transferee under a subsequent transaction in the chain.                                 
 
          -  Condition C is that having regard to all the circumstances it would not be reasonable to conclude that the obtaining of a                              tax advantage (for any person) was the main purpose, or one of main purposes, of T in entering into—                          (a)
any pre-completion transaction in the chain, or                                 
(b)
any arrangements of which such a transaction forms part.                                 
 

(4)Where conditions A to C are met, “the first T” means—                  

(a)if condition B is met in relation to only one pre-completion transaction, T, or                  

(b)if condition B is met in relation to more than one pre-completion transaction in the chain, the transferor in relation to                           the first of the pre-completion transactions in relation to which condition B is met.                  

(5)In this paragraph “the transfer to the first T” means—                  

(a)the pre-completion transaction under which the first T is the transferee, or                  

(b)the original contract (if T is the original purchaser).                  

(6)In this paragraph—                  

(a)references to “the original contract” are to be read in accordance with paragraph 12(5) (and references to the original purchaser                           are to be read accordingly);                  

(b)“tax advantage” has the same meaning as in paragraph 18.                  

#### The second minimum amountU.K.

14(1)In paragraph 12 “the second minimum amount” means the total of the net amounts of consideration given by the relevant parties.                  

(2)The net amount of consideration given by any relevant party is—                  

where—                     

CP is the total amount of consideration given by the party for the acquisition of the chargeable interest or as consideration                              for a pre-completion transaction;                        

CR is the total of any amounts of consideration given to the party by another relevant party (or other relevant parties) as                              consideration for the acquisition of the chargeable interest or as consideration for a pre-completion transaction.                        

If CR is greater than CP, the net amount of consideration given by the relevant party is taken to be zero.                     

(3)Except where sub-paragraph (4) applies, the relevant parties for the purposes of this paragraph are—                  

(a)the original purchaser, and                  

(b)the transferee.                  

(4)If the pre-completion transaction referred to in paragraph 4(4) or 9(2) (“the implemented transaction”) is one in a chain                           of successive transactions (having at least part of their subject-matter in common) that are pre-completion transactions in                           relation to the original contract, only the following are relevant parties—                  

(a)the persons who are the transferor and transferee in relation to the implemented transaction;                  

(b)a person who is the transferor in relation to preceding transaction, if that person is connected with, or not acting at arm's                           length in relation to, the transferee under the implemented transaction,                  

(c)the transferee under a pre-completion transaction, if the transferor is a relevant party (whether by virtue of this paragraph                           (c) or otherwise).                  

(5)For the purposes of sub-paragraph (2)—                  

(a)amounts given by a person connected with a relevant party are treated as given by the relevant party;                  

(b)amounts given to a person connected with a relevant party are treated as given to the relevant party.                  

References in this paragraph to a person connected with a relevant party do not include a person who is a relevant party.                  

(6)If the subject-matter of the implemented transaction is not the whole subject-matter of the original contract—                  

(a)the amounts that are taken for the purposes of sub-paragraph (2) to be given “for the acquisition of the chargeable interest”                           are to be determined on a just and reasonable basis, and                  

(b)only so much of the consideration for a preceding transaction as is referable, on a just and reasonable apportionment, to                           the subject-matter of the implemented transaction is taken into account under sub-paragraph (2).                  

(7)In this paragraph—                  

(a)references to “the original contract” are to be read in accordance with paragraph 12(5) (and references to “the original purchaser”                           are to be read accordingly);                  

(b)“preceding transaction” means a pre-completion transaction that precedes the implemented transaction in a chain of successive pre-completion transactions                           (all having at least part of their subject-matter in common).                  

#### Relief for transferor: assignment of rightsU.K.

15(1)This paragraph applies where—                  

(a)a person would, in the absence of this paragraph, be liable to pay tax in respect of a notional land transaction deemed to                           take place under paragraph 5(1) or an additional land transaction deemed to take place under paragraph 5(2), and                  

(b)the original contract had not been substantially performed when the assignment of rights mentioned in paragraph 4(1) was entered                           into.                  

(2)If the purchaser claims relief under this paragraph in respect of the notional land transaction or additional land transaction,                           no liability to tax arises in respect of that transaction.                  

(3)Sub-paragraph (2) does not apply if the land transaction mentioned in paragraph 4(4) is exempt from charge by virtue of any                           of sections 71A to 73 (which relate to alternative property finance).                  

(4)Relief under this section must be claimed in a land transaction return or an amendment of such a return.                  

#### Relief for original purchaser: qualifying subsalesU.K.

16(1)This paragraph applies if—                  

(a)the pre-completion transaction is a qualifying subsale,                  

(b)the original purchaser would, in the absence of this paragraph, be liable to pay tax in respect of a land transaction effected                           by the completion of the original contract or deemed to be effected by the substantial performance of the original contract,                  

(c)the performance of the qualifying subsale takes place at the same time as, and in connection with, the performance of the                           original contract, and                  

(d)relief is claimed in respect of the land transaction mentioned in paragraph (b).                  

(2)If the subject-matter of the qualifying subsale is the whole of the subject-matter of the original contract, no liability                           to tax arises in respect of the land transaction.                  

(3)If the subject-matter of the qualifying subsale is part (but not the whole) of the subject-matter of the original contract,                           the amount of the consideration for the land transaction is taken to be—                  

(a)the amount that it would be apart from this subsection, less                  

(b)so much of that amount as is referable to the subject-matter of the qualifying subsale.                  

(4)The amount mentioned in sub-paragraph (3)(a) may be reduced more than once under sub-paragraph (3) if there is more than one                           qualifying subsale.                  

(5)Sub-paragraphs (2) to (4) do not apply if—                  

(a)the original contract had been substantially performed when the qualifying subsale was entered into, or                  

(b)the transaction effected, or deemed to be effected, by the performance of the qualifying subsale is exempt from charge by                           virtue of any of sections 71A to 73.                  

(6)Relief under this section must be claimed in a land transaction return or an amendment of a land transaction return.                  

(7)For the purposes of this paragraph a contract for a land transaction is taken to be “performed” when it is substantially performed                           or completed (whichever is earlier).                  

(8)A pre-completion transaction is a “qualifying subsale” if it is a contract under which the original purchaser contracts to                           sell the whole or part of the subject-matter of the original contract to the transferee.                  

#### Application of paragraph 16 to successive subsalesU.K.

17If a transaction is a qualifying subsale in relation to more than one contract such as is mentioned in paragraph 1(1)(a),                           paragraph 16 is to be applied separately in relation to each such original contract for the purpose of determining what relief,                           if any, may be available with respect to the land transaction in question.

#### Tax avoidance arrangementsU.K.

18(1)Relief may not be claimed—                  

(a)under paragraph 15 if the assignment of rights referred to in sub-paragraph (1)(b) of that paragraph forms part of any tax                           avoidance arrangements, or                  

(b)under paragraph 16 if the qualifying subsale referred to in sub-paragraph (1)(c) of that paragraph forms part of any tax avoidance                           arrangements.                  

(2)Arrangements are “tax avoidance arrangements” if, having regard to all the circumstances, it would be reasonable to conclude                           that the obtaining of a tax advantage for the original purchaser or any other person was the main purpose, or one of the main                           purposes, of the original purchaser in entering into the arrangements.                  

(3)In this paragraph “tax advantage” means—                  

(a)a relief from tax or increased relief from tax,                  

(b)a repayment of tax or increased repayment of tax,                  

(c)the avoidance or reduction of a charge to tax, or                  

(d)the avoidance of a possible assessment to tax.                  

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

(5)Nothing in paragraphs 12 to 14 (minimum consideration rule) or this paragraph affects the breadth of the application of sections                           75A to 75C (anti-avoidance).                  

#### Exclusion of transactions from duty to make returns etcU.K.

19(1)The Treasury may by regulations amend this Schedule, or any provision of this Part of this Act relating to the making of returns,                           so as to—                  

(a)exempt relevant purchasers of any specified description, or in specified circumstances, from the duty to deliver a land transaction                           return,                  

(b)provide for relief under paragraph 15 or 16 to be available without a claim in the case of any specified class of transactions,                           or                  

(c)provide that paragraph 5 does not apply in specified cases.                  

(2)In this paragraph “relevant purchaser” means a person who is the transferor under a pre-completion transaction.                  

#### Connected personsU.K.

20Section 1122 of CTA 2010 (connected persons) applies for the purposes of this Schedule.

#### Interpretation of ScheduleU.K.

21(1)In this Schedule—                  
          -  “assignment of rights” has the meaning given by paragraph 2(1);                         
          -  “contract” includes any agreement;                         
          -  “conveyance” includes any instrument;                         
          -  “free-standing transfer” has the meaning given by paragraph 2(2);                         
          -  “pre-completion transaction” (in relation to a contract such as is mentioned in paragraph 1(1)) has the meaning given by paragraph                              1(2);                         
          -  “qualifying subsale” has the meaning given by paragraph 16(8);                         
          -  “the transferee”, in relation to a pre-completion transaction, has the meaning given by paragraph 1(2)(a);                         
          -  “the transferor”, in relation to a pre-completion transaction, has the meaning given by paragraph 2(3).                         

(2)In this Schedule—                  

(a)references to “the original contract” are to be read in accordance with paragraph 1(1)(a);                  

(b)references to “the original purchaser” are to be read in accordance with paragraph 1(1)(a) and see also sub-paragraph (3);                  

(c)references to “part of the subject-matter of the original contract” are to be read in accordance with paragraph 1(7);                  

(d)references to the “subject-matter” of a pre-completion transaction are to be read in accordance with paragraph 2(4);                  

(e)references to substantial performance of the original contract “by the transferee” (in cases involving an assignment of rights)                           are to be read in accordance with paragraph 4(7).                  

(3)For any one contract for the acquisition of a chargeable interest there is only one original purchaser (disregarding cases                           involving joint purchasers).”                  

4U.K.In section 57A (sale and leaseback arrangements), in subsection (3)(c)—

(a)omit “section 45 (contract and conveyance: effect of transfer of rights) or”, and

(b)after the second occurrence of “transfer of rights)” insert “ or a pre-completion transaction within the meaning of Schedule 2A (transactions entered into before completion of contract)                           ”.

5U.K.In section 77 (notifiable transactions), in subsection (1)—

(a)omit the “or” after paragraph (c), and

(b)after paragraph (d) insert, “or 

(e)a notional or additional land transaction under paragraph 5 of Schedule 2A.”                  

6U.K.In section 79(2) (registration of land transactions etc)—

(a)omit paragraph (a)(i) and the “or” after it, and

(b)after paragraph (b) insert—

“(ba)under paragraph 5 of Schedule 2A (transactions entered into before completion of contract),”.                  

7U.K.In section 119 (meaning of “effective date” of a transaction), in subsection (2), at the appropriate place insert— “ paragraph 5 of Schedule 2A, ”.

8U.K.In section 121 (index of defined expressions), in the entry for “vendor”, in the second column, for “sections 45(5A) and 45A(9)”                        substitute “ section 45A(9) and paragraphs 8, 10 and 11 of Schedule 2A ”.

9U.K.In Schedule 6B (transfers involving multiple dwellings), in paragraph 7(6), in the definition of “relevant deeming provision”,                        after “45A” insert “ or paragraph 5(1) or (2) of Schedule 2A ”.

10U.K.In paragraph 12B of Schedule 17A (assignment of agreement for lease), in sub-paragraph (1) for “section 45 (contract and conveyance:                        effect of transfer of rights)” substitute “ Schedule 2A (transactions entered into before completion of contract) ”.

11U.K.The amendments made by this Schedule have effect in relation to transfers of rights (see section 45 of FA 2003) and pre-completion                        transactions (see paragraph 3) entered into on or after the day on which this Act is passed.

 Section 196

## SCHEDULE 40U.K.Stamp duty land tax: relief from 15% rate

1U.K.Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

### Amendments of FA 2003U.K.

2(1)Schedule 4A (higher rate for certain transactions) is amended as follows.U.K.

(2)In paragraph 2(6) (treatment of certain transactions as two separate chargeable transactions) for “and 5” substitute “ , 5 to 5K and 6A to 6H ”.

(3)For paragraph 5 (property developers) and the cross-heading preceding it substitute—

#### “Businesses of letting, trading in or redeveloping propertiesU.K.

5(1)Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest                           that is acquired exclusively for one or more of the following purposes—                  

(a)exploitation as a source of rents or other receipts (other than excluded rents) in the course of a qualifying property rental                           business;                  

(b)development or redevelopment and resale in the course of a property development trade;                  

(c)resale in the course of a property development trade (in a case where the chargeable transaction is part of a qualifying exchange);                  

(d)resale (as stock of the business) in the course of a property trading business.                  

(2)A chargeable interest does not count as being acquired exclusively for one or more of those purposes if it is intended that                           a non-qualifying individual will be permitted to occupy the dwelling.                  

(3)In this paragraph—                  
          -  “excluded rents” has the same meaning as in section 133 of the Finance Act 2013;                         
          -  “property development trade” means a trade that—                          (a)
consists of or includes buying and developing or redeveloping for resale residential or non-residential property, and                                 
(b)
is run on a commercial basis and with a view to profit;                                 
 
          -  “part of a qualifying exchange” is to be construed in accordance with section 139(4) of the Finance Act 2013;                         
          -  “property trading business” means a business that—                          (a)
consists of or includes activities in the nature of a trade of buying and selling dwellings, and                                 
(b)
is run on a commercial basis and with a view to profit;                                 
 
          -  “qualifying property rental business” has the same meaning as in section 133 of the Finance Act 2013.”                         

(4)After paragraph 5 insert—

#### “Meaning of “non-qualifying individual”U.K.

5A(1)In paragraph 5 “non-qualifying individual”, in relation to a chargeable transaction, means any of the following—                  

(a)the purchaser (other than a purchaser entering into the transaction as a member of a partnership);                  

(b)a purchaser who enters into the transaction as a member of a partnership and has a major share in the partnership,                  

(c)an individual (a “connected person”) who is connected with the purchaser;                  

(d)a relevant settlor;                  

(e)the spouse or civil partner of a connected person or of a relevant settlor;                  

(f)a relative of a connected person or of a relevant settlor, or the spouse or civil partner of a relative of a connected person                           or of a relevant settlor;                  

(g)a relative of the spouse or civil partner of a connected person or of a relevant settlor;                  

(h)the spouse or civil partner of a person falling within paragraph (g);                  

(i)an individual who is a major participant in a relevant collective investment scheme or is connected with a major participant                           in a relevant collective investment scheme.                  

(2)A member of a partnership has a “major share” in the partnership if the member is entitled to a 50% or greater share—                  

(a)in the income profits of the partnership, or                  

(b)in the partnership's assets.                  

(3)A collective investment scheme is a “relevant collective investment scheme” for the purposes of sub-paragraph (1)(i) if the purchaser under the chargeable transaction referred to in that sub-paragraph                           acquires the subject-matter of the transaction for the purposes of that scheme.                  

(4)An individual who participates in a collective investment scheme is a “major participant” in the scheme if the individual—                  

(a)is entitled to a share of at least 50% either of all the profits or income arising from the scheme or of any profits or income                           arising from the scheme that may be distributed to participants, or                  

(b)would in the event of the winding up of the scheme be entitled to 50% or more of the assets of the scheme that would then                           be available for distribution among the participants.                  

(5)The reference in sub-paragraph (4)(a) to profits or income arising from a collective investment scheme is to profits or income                           arising from the acquisition, holding, management or disposal of the property subject to the scheme.                  

(6)In this paragraph—                  
          -  “participant”, in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and                              Markets Act 2000;                         
          -  “relative” means brother, sister, ancestor or lineal descendant;                         
          -  “relevant settlor”, in relation to a chargeable transaction, means an individual who is a settlor in relation to a relevant settlement (as                              defined in sub-paragraph (7));                         
          -  “settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).                         

(7)Where a person, in the capacity of trustee of a settlement, is connected with a person who is the purchaser under a chargeable                           transaction, that settlement is a “relevant settlement” in relation to the chargeable transaction.                  

(8)In sub-paragraph (7) “trustee” is to be read in accordance with section 1123(3) of CTA 2010 (“connected persons”: supplementary).                  

(9)In this paragraph “the purchaser”, in relation to a chargeable transaction, is to be read as a reference to any of the purchasers (if there are more than                           one).                  

(10)Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this paragraph, but for those                           purposes—                  

(a)subsections (7) and (8) of that section (application of rules about connected persons to partnerships) are to be disregarded,                           and                  

(b)subsections (2) to (7) of section 172 of the Finance Act 2013 apply as they apply for the purposes of Part 3 of that Act.                  

#### Trades involving making a dwelling available to the publicU.K.

5B(1)Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest                           in relation to which the conditions in sub-paragraph (2) are met.                  

(2)The conditions are that—                  

(a)the higher threshold interest is acquired with the intention that it will be exploited as a source of income in the course                           of a qualifying trade, and                  

(b)reasonable commercial plans have been formulated to carry out that intention without delay (except so far as delay may be                           justified by commercial considerations or cannot be avoided).                  

(3)“Qualifying trade”, in relation to a higher threshold interest, means a trade that—                  

(a)is carried on on a commercial basis and with a view to profit, and                  

(b)involves, in its normal course, offering the public the opportunity to make use of, stay in or otherwise enjoy the dwelling                           as customers of the trade on at least 28 days in any calendar year.                  

(4)For the purposes of sub-paragraph (3), persons are not considered to have the opportunity to make use of, stay in or otherwise                           enjoy a dwelling unless the areas that they have the opportunity to make use of, stay in or otherwise enjoy include a significant                           part of the interior of the dwelling.                  

(5)The size (relative to the size of the whole dwelling), nature and function of any relevant area or areas in a dwelling are                           taken into account in determining whether they form a significant part of the interior of the dwelling.                  

#### Financial institutions acquiring dwellings in the course of lendingU.K.

5C(1)Sub-paragraph (2) applies to a chargeable transaction if the purchaser is a financial institution carrying on a business that                           involves the lending of money.                  

(2)Paragraph 3 does not apply to the chargeable transaction so far as its subject-matter consists of a higher threshold interest                           that is acquired in the course of that business—                  

(a)for the purpose of resale in the course of the business and,                  

(b)in connection with those lending activities.                  

#### Dwellings for occupation by certain employees etcU.K.

5D(1)Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest                           in relation to which the conditions in sub-paragraph (2) are met. Those conditions can only be met if the purchaser, or a                           relevant group member, carries on or is to carry on a relievable trade.                  

(2)The conditions are that—                  

(a)the interest is acquired for the purpose of making the dwelling available to one or more qualifying employees or qualifying                           partners for use as living accommodation, and                  

(b)the dwelling is to be made available as mentioned in paragraph (a) for purposes that are solely or mainly purposes of the                           relievable trade.                  

(3)For the purposes of the relief under this paragraph it does not matter whether or not the individuals mentioned in sub-paragraph                           (2)(a) are identified at the time of the chargeable transaction.                  

(4)“Relievable trade” means a trade that is carried on on a commercial basis and with a view to profit.                  

(5)In this paragraph references to making a dwelling available to a qualifying employee or qualifying partner include making                           it available to persons who are to share the accommodation with a qualifying employee or qualifying partner as that individual's                           family.                  

(6)Where the purchaser is a company, “relevant group member” means a company which is a member of the same group of companies as the purchaser for the purposes mentioned in paragraph                           1(2) of Schedule 7 (group relief).                  

#### More about the condition in paragraph 5D(2)(a)U.K.

5E(1)In a case where the person carrying on the relievable trade mentioned in paragraph 5D(1) carries it on in partnership with                           one or more other persons, “qualifying partner” means any individual who is a member of the partnership.                  

(2)“Qualifying employee” means an individual employed for the purposes of the qualifying trade.                  

(3)In a case falling within sub-paragraph (1), the condition in paragraph 5D(2)(a) is taken not to be met if the individuals,                           or a class of individuals, to whom it is proposed to make the dwelling available for use as living accommodation include,                           or are likely to include, a member of the partnership who is (or will at the relevant time be) entitled to a 10% or greater                           share—                  

(a)in the income profits of the partnership, or                  

(b)in any company beneficially entitled to the higher threshold interest mentioned in paragraph 5D(1), or                  

(c)in that higher threshold interest.                  

(4)In addition, the condition in paragraph 5D(2)(a) is taken not to be met if the individuals, or a class of individuals, to                           whom it is proposed to make the dwelling available for use as living accommodation include, or are likely to include, an individual                           employed for the purposes of the trade in question who is (or will at the relevant time be)—                  

(a)entitled to a 10% or greater share—                  

(i)in the income profits of the trade, or                  

(ii)in any company that is beneficially entitled to the higher threshold interest, or                  

(iii)in that higher threshold interest, or                  

(b)employed to provide excluded domestic services.                  

(5)The reference in sub-paragraph (4)(b) to an individual employed to provide excluded domestic services is to an individual                           the duties of whose employment include the provision of services in connection with the (actual or intended) occupation, by                           an individual to whom sub-paragraph (6) applies, of the dwelling mentioned in paragraph 5D(2)(a) (“the relevant dwelling”),                           or a linked dwelling.                  

(6)This sub-paragraph applies to any individual who is connected with a person who is or is to be beneficially entitled to the                           higher threshold interest.                  

(7)The following are “linked” dwellings for the purposes of sub-paragraph (5)—                  

(a)if the conditions in section 116(2) of the Finance Act 2013 are met in relation to the relevant dwelling and another dwelling,                           that other dwelling;                  

(b)a dwelling that is linked to the relevant dwelling, as described in section 117(1) of the Finance Act 2013.                  

(8)For the purposes of sub-paragraphs (3)(c) and (4)(a) persons who are entitled to a chargeable interest as beneficial joint                           tenants (or, in Scotland, as joint owners) are taken to be entitled to the chargeable interest as beneficial tenants in common                           (or, in Scotland, as owners in common) in equal shares.                  

(9)Section 147 of the Finance Act 2013 (meaning of “10% or greater share in a company”) applies for the purposes of this paragraph                           as for the purposes of section 146 of that Act.                  

(10)In this paragraph references to employment include the holding of an office.                  

#### FarmhousesU.K.

5F(1)Paragraph 3 does not apply to a chargeable transaction so far as its subject-matter consists of a higher threshold interest                           in or over a dwelling—                  

(a)that is, or is to be, a farmhouse, and                  

(b)in relation to which the conditions in sub-paragraph (3) are met.                  

(2)The reference in sub-paragraph (1) to a dwelling that “is or is to be a farmhouse” is to a dwelling that forms part of land                           that is to be occupied, or to continue to be occupied, for the purposes of a qualifying trade of farming.                  

(3)The conditions are that—                  

(a)the dwelling is to be occupied for the purposes of that trade by a qualifying farm worker,                  

(b)reasonable commercial plans have been formulated under which such occupation is either to continue from the effective date                           of the chargeable transaction or to begin without delay (except so far as delay may be justified by commercial considerations                           or cannot be avoided), and                  

(c)occupation of the farmhouse by a qualifying farm worker is then expected to continue as part of the normal way in which the                           trade is, or is to be, carried on.                  

(4)In sub-paragraph (3) “qualifying farm worker” means an individual who occupies the dwelling for the purposes of the trade mentioned in that sub-paragraph and has a substantial                           involvement—                  

(a)in the day-to-day work of the trade, or                  

(b)in the direction and control of the conduct of the trade.                  

(5)“Qualifying trade of farming” means a trade of farming that is carried on—                  

(a)on a commercial basis, and                  

(b)with a view to profit.                  

(6)A person occupying part of a dwelling is regarded as occupying the dwelling for the purposes of this paragraph.                  

(7)In this paragraph—                  

(a)“farming” has the same meaning as in the Corporation Tax Acts (see section 1125 of CTA 2010), except that in this paragraph “farming” includes market gardening;                  

(b)“market gardening” has the same meaning as in the Corporation Tax Acts (see section 1125(5) of CTA 2010).                  

#### Withdrawal of reliefU.K.

5G(1)Sub-paragraph (2) applies where relief under paragraph 5 has been allowed in respect of a higher threshold interest forming                           the whole or part of the subject-matter of a chargeable transaction.                  

(2)The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction                           (“the control period”) a requirement in sub-paragraph (3) is not met.                  

(3)The requirements are that—                  

(a)the higher threshold interest (if still held by the purchaser) is held exclusively for one or more of the purposes mentioned                           in paragraph 5(1),                  

(b)any chargeable interest derived from the higher threshold interest that may be held by the purchaser is held exclusively for                           one or more of those purposes, and                  

(c)(if the higher threshold interest or a chargeable interest derived from it is held by the purchaser) no non-qualifying individual                           is permitted to occupy the dwelling.                  

(4)The requirements in sub-paragraph (3)(a) and (b) do not apply in relation to times when, because of a change of circumstances                           that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the purposes for which the higher threshold                           interest was acquired to be carried out.                  

(5)Sub-paragraph (6) applies if a higher threshold interest was acquired for a purpose mentioned in paragraph 5(1) but at some                           time in the control period the activity in question (for instance, exploitation of the interest as mentioned in paragraph                           5(1)(a))—                  

(a)has not yet begun, or                  

(b)has ceased.                  

(6)For the purposes of sub-paragraph (3), the interest is taken to be held for the purpose in question only if reasonable steps                           are being taken to ensure that the purpose in question is carried out.                  

(7)In this paragraph “non-qualifying individual” (in relation to the chargeable transaction mentioned in sub-paragraph (1)) has                           the meaning given by paragraph 5A.                  

5H(1)This paragraph applies where relief under paragraph 5B (trades involving making a dwelling open to the public) has been allowed                           in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.                  

(2)The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction                           (“the control period”) a requirement in sub-paragraph (3) is not met.                  

(3)The requirements are that—                  

(a)the higher threshold interest (if still held by the purchaser), is being exploited as a source of income in the course of                           a qualifying trade, and                  

(b)any chargeable interest derived from that interest that may be held by the purchaser is being exploited as mentioned in paragraph                           (a).                  

(4)The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the purchaser's control, it is not reasonable to expect the chargeable interest concerned to be exploited                           in the manner specified.                  

(5)Sub-paragraph (6) applies if at some time in the control period the higher threshold interest, or a chargeable interest derived                           from it—                  

(a)has not begun to be exploited as mentioned in sub-paragraph (3), or                  

(b)has ceased to be so exploited.                  

(6)The requirements in sub-paragraph (3) are treated as being met if reasonable steps are being taken to ensure that the chargeable                           interest in question begins to be exploited as mentioned in that sub-paragraph, or that such exploitation of the interest                           is resumed.                  

5I(1)This paragraph applies where relief under paragraph 5C (financial institutions acquiring dwellings in the course of lending)                           has been allowed in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable                           transaction.                  

(2)The relief is withdrawn if any requirement in sub-paragraph (3) is not met at any time in the period of three years beginning                           with the effective date of the chargeable transaction (“the control period”) (but see sub-paragraphs (4) and (5)).                  

(3)The requirements are that—                  

(a)the purchaser continues to be a financial institution carrying on a business that involves the lending of money, and                  

(b)the interest is held for the purpose of resale in the course of the business.                  

(4)The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—                  

(a)the higher threshold interest, or                  

(b)a chargeable interest that is derived from the higher threshold interest.                  

(5)The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.                  

5J(1)This paragraph applies where relief under paragraph 5D (dwellings for occupation by certain employees etc) has been allowed                           in respect of a higher threshold interest forming the whole or part of the subject-matter of a chargeable transaction.                  

(2)The relief is withdrawn if any requirement in sub-paragraph (3) is not met at any time in the period of three years beginning                           with the effective date of the chargeable transaction (“the control period”) (but see sub-paragraphs (4) and (5)).                  

(3)The requirements are that—                  

(a)the purchaser, or a relevant group member (as defined in paragraph 5D(6)), carries on a trade on a commercial basis and with                           a view to profit,                  

(b)the dwelling is made available as mentioned in paragraph 5D(2)(a), and                  

(c)the dwelling is made so available for purposes that are solely or mainly purposes of the trade mentioned in paragraph (a)                           of this sub-paragraph.                  

(4)The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—                  

(a)the higher threshold interest, or                  

(b)a chargeable interest that is derived from the higher threshold interest.                  

(5)The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.                  

(6)Sub-paragraph (7) applies if at some time in the control period the dwelling—                  

(a)has not begun to be made available as mentioned in sub-paragraph (3)(b) and (c), or                  

(b)has ceased to be so made available.                  

(7)The requirements in paragraphs (b) and (c) of sub-paragraph (3) are treated as being met if reasonable steps are being taken                           to ensure that the dwelling will begin to be, or will return to being, available as mentioned in those paragraphs.                  

5K(1)This paragraph applies where relief under paragraph 5F (farmhouses) has been allowed in respect of a higher threshold interest                           forming the whole or part of the subject-matter of a chargeable transaction.                  

(2)The relief is withdrawn if at any time in the period of three years beginning with the effective date of the chargeable transaction                           (“the control period”) the requirements in sub-paragraph (3) are not met (but see sub-paragraphs (4) and (5)).                  

(3)The requirements are that—                  

(a)the land mentioned in paragraph 5F(2) is occupied for the purposes of a qualifying trade of farming, and                  

(b)the dwelling is occupied for the purposes of that trade by a qualifying farm worker.                  

(4)The requirements in sub-paragraph (3) apply only to times in the control period when the purchaser holds—                  

(a)the higher threshold interest, or                  

(b)a chargeable interest that is derived from the higher threshold interest.                  

(5)The requirements in sub-paragraph (3) do not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the purchaser's control, it is not reasonable to expect those requirements to be met.                  

(6)Sub-paragraph (7) applies if at some time in the control period a requirement in sub-paragraph (3)—                  

(a)has not begun to be met, or                  

(b)has ceased to be met.                  

(7)The requirement is treated as being met if reasonable steps are being taken to ensure that the requirement begins to be met,                           or is again met.”                  

(5)After paragraph 6 insert—

#### “Modifications for cases involving alternative finance arrangementsU.K.

6A(1)This paragraph applies where—                  

(a)section 71A (land sold to financial institution and leased to person), section 72 (land in Scotland sold to financial institution                           and leased to person) or section 73 (land sold to financial institution and re-sold to person) applies, and                  

(b)the major interest in land purchased under the first transaction consists of or includes a higher threshold interest.                  

(2)In this paragraph “the first transaction” means—                  

(a)where section 71A applies, the transaction mentioned in section 71A(1)(a);                  

(b)where section 72 applies, the transaction mentioned in section 72(1)(a);                  

(c)where section 73 applies, the transaction mentioned in section 73(1)(a)(i).                  

(3)The condition in paragraph 3(3) is treated as being met with respect to the first transaction only if that condition is met                           with respect to the second transaction.                  

(4)If the second transaction would qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) and 5F(1) (disregarding the                           exemptions in sections 71A(3), 72(3) and 73(3) and assuming, for this purpose, that the subject-matter of the second transaction                           is a higher threshold interest), the first transaction is taken to qualify for relief under the same provision (and accordingly                           paragraph 3 does not apply in relation to the first transaction).                  

(5)The first transaction does not qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) or 5F(1) except in accordance                           with sub-paragraph (4).                  

(6)In this paragraph “the second transaction” has the same meaning as in section 71A, 72 or 73 (as the case requires).                  

6B(1)This paragraph applies where section 72A (land in Scotland sold to financial institution and person in common) applies and                           the major interest in land purchased under the transaction mentioned in section 72A(1)(a) (“the first transaction”) consists                           of or includes a higher threshold interest.                  

(2)In determining whether or not the first transaction meets the condition in paragraph 3(3) it is to be assumed that the financial                           institution referred to in section 72A(1) is not one of the persons acquiring the major interest in land under that transaction.                  

(3)Paragraphs 5 to 5F have effect in relation to the first transaction as they would have effect if the financial institution                           were not a purchaser under that transaction.                  

#### Paragraphs 6A and 6B: application where transaction is split under paragraph 2(3)U.K.

6C(1)Where paragraph 6A or 6B (“the modifying paragraph”) applies and the first transaction (within the meaning of that paragraph)                           is treated under paragraph 2(3) as two separate chargeable transactions, references in the modifying paragraph to the first                           transaction include those separate transactions.                  

(2)If the subject-matter of the second transaction (within the meaning of paragraph 6A) includes a chargeable interest other                           than a higher threshold interest, that fact is ignored in determining for the purposes of paragraph 6A—                  

(a)whether that transaction meets the condition in paragraph 3(3), or                  

(b)whether it would qualify for relief under any of paragraphs 5(1), 5B(1), 5D(1) and 5F(1).                  

#### Alternative finance arrangements: withdrawal of reliefU.K.

6D(1)This paragraph applies where relief under paragraph 5 (businesses of letting, trading in or redeveloping properties) has been                           allowed, in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.                  

(2)The relief is withdrawn if at any time in the period of three years beginning with the effective date of the first transaction                           (“the control period”) a relevant requirement is not met.                  

(3)The relevant requirements are that—                  

(a)any relevant interest (see sub-paragraphs (5) and (6)) held by the relevant person is held by that person exclusively for                           one or more of the purposes mentioned in paragraph 5(1), and                  

(b)(if a relevant interest is held by the relevant person) no non-qualifying individual is permitted to occupy the dwelling.                  

(4)For the purposes of sub-paragraph (3)(a) and (b) it does not matter whether the relevant interest is held by the relevant                           person—                  

(a)jointly or (in Scotland) in common, or                  

(b)otherwise.                  

(5)In relation to relief allowed in accordance with sub-paragraph 6A(4), “relevant interest” means any of the following—                  

(a)the interest acquired under the second transaction (within the meaning of paragraph 6A);                  

(b)any interest transferred to the relevant person as a result of the exercise of the right mentioned in section 71A(1)(d) or                           72(1)(c);                  

(c)any chargeable interest derived from an interest such as is mentioned in paragraph (a) or (b).                  

(6)In relation to relief allowed in accordance with paragraph 6B(3), “relevant interest” means any of the following—                  

(a)the interest purchased under the first transaction (within the meaning of paragraph 6B);                  

(b)any interest transferred to the relevant person as a result of the exercise of the right mentioned in section 72A(1)(c);                  

(c)any chargeable interest derived from an interest such as is mentioned in paragraph (a) or (b).                  

(7)In this paragraph—                  
          -  “non-qualifying individual” (in relation to the chargeable transaction mentioned in sub-paragraph (1)) has the meaning given                              by paragraph 5A;                         
          -  “the relevant person” means the person (other than the financial institution) who entered into the arrangements in question as mentioned in section                              71A(1), 72(1), 72A(1) or 73(1).                         

6E(1)The requirement in paragraph 6D(3)(a) does not apply in relation to times when, because of a change of circumstances that                           is unforeseen and beyond the relevant person's control, it is not reasonable to expect the interest in question to be held                           for the purpose for which the relevant person acquired that person's initial interest.                  

(2)Sub-paragraph (3) applies if the relevant person's initial interest was acquired by the relevant person for a purpose mentioned                           in paragraph 5(1), but at some time in the control period the activity in question (for instance, exploitation as mentioned                           in paragraph 5(1)(a))—                  

(a)has not begun in the case of a relevant interest, or                  

(b)has ceased in the case of a relevant interest.                  

(3)For the purposes of paragraph 6D(3)(a) the relevant interest is taken to be held for the purpose in question only if reasonable                           steps are being taken to ensure that the purpose in question is carried out.                  

(4)In this paragraph—                  

(a)“the control period”, “relevant interest” and “the relevant person” have the same meaning as in paragraph 6D;                  

(b)references to the relevant person's “initial interest” are to the interest mentioned in sub-paragraph (5)(a) or (6)(a) of                           paragraph 6D (as the case requires).                  

6F(1)This paragraph applies where relief under paragraph 5B (trades involving making a dwelling open to the public) has been allowed,                           in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.                  

(2)The relief is withdrawn if at any time in the period of three years beginning with the effective date of the first transaction                           (“the control period”) the requirement in sub-paragraph (3) is not met.                  

(3)The requirement is that the dwelling is being exploited as a source of income in the course of a qualifying trade.                  

(4)The requirement in sub-paragraph (3) does not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the relevant person's control, it is not reasonable to expect the interest in question to be exploited                           as mentioned in that sub-paragraph.                  

(5)Sub-paragraph (6) applies if at some time in the control period that person—                  

(a)has not begun to exploit the interest as a source of income in the course of a relevant trade, or                  

(b)has ceased so to exploit it.                  

(6)The requirement in sub-paragraph (3) is treated as being met if reasonable steps are being taken to ensure that the relevant                           interest begins to be exploited as mentioned in that sub-paragraph, or that such exploitation of the interest is resumed.                  

(7)In this paragraph—                  

(a)“the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1),                           72A(1) or 73(1);                  

(b)references to a major interest in land include an undivided share in a major interest in land.                  

6G(1)This paragraph applies where relief under paragraph 5D (dwellings for occupation by certain employees etc) has been allowed,                           in accordance with paragraph 6A(4) or 6B(3), with respect to the purchase of a major interest in land.                  

(2)The relief is withdrawn if at any time in the control period when the relevant person holds a relevant interest (whether jointly,                           or in common, or otherwise) any requirement in sub-paragraph (4) is not met.                  

(3)In sub-paragraph (2) “the control period” means the three years beginning with the effective date of the first transaction.                  

(4)The requirements are that—                  

(a)the relevant person, or a relevant group member, carries on a qualifying trade,                  

(b)the dwelling is made available as mentioned in paragraph 5D(2)(a), and                  

(c)the dwelling is made so available for purposes that are solely or mainly purposes of the trade mentioned in sub-paragraph                           (a).                  

(5)The requirements in sub-paragraph (4) do not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the relevant person's control, it is not reasonable to expect those requirements to be met.                  

(6)Sub-paragraph (7) applies if at some time in the control period the relevant interest—                  

(a)has not begun to be made available as mentioned in sub-paragraph (4)(b) and (c), or                  

(b)has ceased to be so made available.                  

(7)The requirements in paragraphs (b) and (c) of sub-paragraph (4) are treated as being met if reasonable steps are being taken                           to ensure that the dwelling will begin to be, or will return to being, made available as mentioned in those paragraphs.                  

(8)Where the relevant person is a company, “relevant group member” means a company which is a member of the same group of companies as the relevant person for the purposes mentioned in paragraph                           1(2) of Schedule 7.                  

(9)In this paragraph—                  

(a)“relevant interest” has the same meaning as in paragraph 6D;                  

(b)“the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1),                           72A(1) or 73(1);                  

(c)references to a major interest in land include an undivided share in a major interest in land.                  

6H(1)This paragraph applies where relief under paragraph 5F (farmhouses) has been allowed, in accordance with paragraph 6A(4) or                           6B(3), in relation to the purchase of a major interest in land.                  

(2)The relief is withdrawn if at any time in the control period when the relevant person holds a relevant interest (whether jointly,                           or in common, or otherwise) any requirement in sub-paragraph (4) is not met.                  

(3)In sub-paragraph (2) “the control period” means the three years beginning with the effective date of the first transaction.                  

(4)The requirements are that—                  

(a)the land mentioned in paragraph 5F(2) is occupied for the purposes of a qualifying trade of farming, and                  

(b)the dwelling is occupied for the purposes of that trade by a qualifying farm worker.                  

(5)The requirements in sub-paragraph (4) do not apply in relation to times when, because of a change of circumstances that is                           unforeseen and beyond the relevant person's control, it is not reasonable to expect those requirements to be met.                  

(6)Sub-paragraph (7) applies if at some time in the control period a requirement in sub-paragraph (4)—                  

(a)has not begun to be met, or                  

(b)has ceased to be met.                  

(7)The requirement is treated as being met if reasonable steps are being taken to ensure that the requirement begins to be met,                           or is again met.                  

(8)In this paragraph—                  

(a)“the relevant interest” has the same meaning as in paragraph 6D;                  

(b)“the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1), 72(1),                           72A(1) or 73(1);                  

(c)references to a major interest in land include an undivided share in a major interest in land.”                  

(6)In paragraph 9 (interpretation), at the appropriate places insert—

““financial institution” has the same meaning as in sections 71A to 73B (see section 73BA);”                  

““property development trade” has the meaning given by paragraph 5(3);”                  

““property rental business” has the meaning given by section 133(4) of the Finance Act 2013;”                  

““property trading business” has the meaning given by paragraph 5(3);”                  

““qualifying farm worker” has the meaning given by paragraph 5F(4);”                  

““qualifying trade” has the meaning given by paragraph 5B(3);”                  

““qualifying trade of farming” has the meaning given by paragraph 5F(5);”.                  

### Minor and consequential amendmentsU.K.

3(1)Section 81 (further return where relief withdrawn) is amended as follows.U.K.

(2)After subsection (1) insert—

“(1A)Where relief is withdrawn to any extent under any of paragraphs 5G to 5K of Schedule 4A (higher rate for certain transactions)                           the purchaser must deliver a further return before the end of the period of 30 days after the relevant date.                  

(1B)In subsection (1A) “the relevant date” means—                  

(a)in the case of relief under paragraph 5 of Schedule 4A (businesses of letting, trading in or redeveloping properties), the                           first day in the period mentioned in paragraph 5G(2) on which a requirement under paragraph 5G(3) was not met in the case                           of the chargeable interest in question;                  

(b)in the case of relief under paragraph 5B of that Schedule (trades involving making a dwelling available to the public), the                           first day in the period mentioned in paragraph 5H(2) on which a requirement under paragraph 5H(3) was not met in the case                           of the chargeable interest in question;                  

(c)in the case of relief under paragraph 5C of that Schedule (financial institutions acquiring dwellings in the course of lending),                           the first day in the period mentioned in paragraph 5I(2) on which a requirement under paragraph 5I(3) was not met in the case                           of the chargeable interest in question;                  

(d)in the case of relief under paragraph 5D of that Schedule (dwellings for occupation by certain employees etc), the first day                           in the period mentioned in paragraph 5J(2) on which a requirement under paragraph 5J(3) was not met in the case of the chargeable                           interest in question;                  

(e)in the case of relief under paragraph 5F of that Schedule (farmhouses), the first day in the period mentioned in paragraph                           5K(2) on which a requirement under paragraph 5K(3) was not met in the case of the chargeable interest in question.”                  

(3)In subsection (2A), for “Tax” substitute “ Where subsection (1) applies any tax ”.

(4)In subsection (3) for “this section” substitute “ subsection (1) ”.

(5)After subsection (4) insert—

“(5)The provisions of Schedule 10 apply to a return under subsection (1A) as they apply to a return under section 76, but with                           the adaptation that references to the effective date of the transaction are to be read as references to the relevant date                           (as defined in subsection (1B)).”                  

4U.K.After section 81 insert—

#### “81ZAAlternative finance arrangements: return where relief withdrawn

5U.K.In section 85 (liability for tax), after subsection (2) insert—

“(3)Where relief given in respect of a transaction entered into under alternative finance arrangements is withdrawn to any extent                           under any of paragraphs 6D, 6F, 6G and 6H of Schedule 4A (higher rate: alternative finance arrangements)—                  

(a)subsection (1) does not apply in relation to the additional tax payable as a result of the withdrawal of the relief, and                  

(b)the relevant person is liable to pay that additional tax.                  

(4)In subsection (3) “the relevant person” means the person (other than the financial institution) who entered into the arrangements in question.”                  

6U.K.In section 86 (payment of tax), after subsection (2) insert—

“(2A)Tax payable as a result of a withdrawal of relief under any of paragraphs 6D, 6F, 6G and 6H of Schedule 4A (higher rate: alternative                           finance arrangements) must be paid not later than the filing date for the return relating to the withdrawal (see section 81ZA(1)).”                  

7U.K.In the table in section 122 (index of defined expressions), in second column of the entry for “settlement”, after “paragraph                        1(1)” insert “ (except as otherwise expressly provided) ”.

### Application of amendmentsU.K.

8U.K.The amendments made by paragraphs 1 to 7 have effect in relation to transactions with an effective date on or after the day                        on which this Act is passed.

### Transactions to which section 29 of the Scotland Act 2012 appliesU.K.

9(1)In relation to transactions in relation to which section 29 of the Scotland Act 2012 (disapplication of UK stamp duty land                        tax) has effect, FA 2003 as amended by this Schedule has effect subject to the following further amendments.U.K.

(2)In section 81ZA, in subsection (6), in the definition of “alternative finance arrangements”, omit “72, 72A”.

(3)In Schedule 4A—

(a)in paragraph 6A—

(i)in sub-paragraph (1)(a), omit “section 72 (land in Scotland sold to financial institution and leased to person)”,

(ii)omit sub-paragraph (2)(b),

(iii)in sub-paragraph (4), omit “, 72(3)”, and

(iv)in sub-paragraph (6), omit “, 72”,

(b)omit paragraph 6B,

(c)in paragraph 6C—

(i)in sub-paragraph (1), omit “or 6B (“the modifying paragraph”)” and for “in the modifying paragraph” substitute “ in paragraph 6A ”, and

(ii)accordingly, in the heading omit “and 6B”,

(d)in paragraph 6D—

(i)in sub-paragraph (1), omit “or 6B(3)”,

(ii)in sub-paragraph (3)(a), omit “and (6)”,

(iii)in sub-paragraph (5)(b), omit “or 72(1)(c)”,

(iv)omit sub-paragraph (6), and

(v)in sub-paragraph (7), in the definition of “relevant person”, omit “, 72(1), 72A(1)”,

(e)in paragraph 6E(4)(b), for “sub-paragraph (5)(a) or (6)(a) of paragraph 6D (as the case requires)” substitute “ paragraph 6D(5)(a) ”,

(f)in paragraph 6F—

(i)in sub-paragraph (1), omit “or 6B(3)”, and

(ii)in sub-paragraph (7)(a), omit “, 72(1), 72A(1)”,

(g)in paragraph 6G—

(i)in sub-paragraph (1), omit “or 6B(3)”, and

(ii)in sub-paragraph (9)(b), omit “72(1), 72A(1)”, and

(h)in paragraph 6H—

(i)in sub-paragraph (1), omit “or 6B(3), and

(ii)in sub-paragraph (8)(b), omit “72(1), 72A(1)”.

 Section 197

## SCHEDULE 41U.K.Stamp duty land tax on leases

### IntroductionU.K.

1U.K.Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

### Leases that continue after a fixed termU.K.

2(1)In Schedule 17A (further provisions about leases), paragraph 3 (leases that continue after a fixed term) is amended as follows.U.K.

(2)In sub-paragraph (3)—

(a)after “continuation of the lease” insert “ for a period (or further period) of one year ”, and

(b)in paragraph (a), for “that term” substitute “ that one year period ”.

(3)After that sub-paragraph insert—

“(3A)But no tax or additional tax is payable in respect of a transaction as a result of the continuation of a lease for a period                           (or further period) of one year under sub-paragraph (2) if, during that one year period, the tenant under the lease is granted                           a new lease of the same or substantially the same premises in circumstances where paragraph 9A applies.”                  

(4)After sub-paragraph (3A) insert—

“(3B)Sub-paragraph (2) is subject to paragraph 3A.”                  

(5)In sub-paragraph (4), for the words from “the day” to the end substitute “ the last day of the one year period for which the lease is continued or (as the case may be) further continued. ”

(6)After sub-paragraph (5) insert—

“(6)Where—                  

(a)a lease would be treated as continuing for a period (or further period) of one year under sub-paragraph (2), but                  

(b)(ignoring that sub-paragraph) the lease actually terminates at a time during that period,                  

the lease is to be treated as continuing under sub-paragraph (2) only until that time; and the references in sub-paragraphs                        (3) and (4) to that one year period are accordingly to be read as references to so much of that year as ends with that time.”                  

3U.K.After that paragraph insert—

“3A(1)This paragraph applies where—                  

(a)(ignoring this paragraph) paragraph 3 would apply to treat a lease (“the original lease”) as if it were a lease for a fixed                           term one year longer than the original term,                  

(b)during that one year period the tenant under that lease is granted a new lease of the same or substantially the same premises,                  

(c)the term of the new lease begins during that one year period, and                  

(d)paragraph 9A (backdated lease granted to tenant holding over) does not apply.                  

(2)Paragraph 3 does not apply to treat the lease as continuing after the original term.                  

(3)The term of the new lease is treated for the purposes of this Part as beginning immediately after the original term.                  

(4)Any rent which, in the absence of this paragraph, would be payable under the original lease in respect of that one year period                           is to be treated as payable under the new lease (and paragraph 1A of Schedule 5 does not apply to it).                  

(5)Where the fixed term of a lease has previously been extended (on one or more occasions) under paragraph 3, this paragraph                           applies as if references to the original term were references to the fixed term as previously so extended.”                  

4U.K.In section 87 (interest on unpaid tax), in subsection (3)—

(a)after paragraph (aa) insert—

“(aaa)in the case of an amount payable under paragraph 3(3) of Schedule 17A (leases that continue after a fixed term) by reason                           of the continuation of a lease for a period (or further period) under paragraph 3(2) or (6) of that Schedule, the final day                           of the period (or further period),” and                  

(b)in paragraph (ab) omit “3(3) or” and “leases that continue after a fixed term and”.

5U.K.In section 119 (meaning of “effective date” of a transaction), in subsection (2), at the appropriate place in the list insert—                        “ paragraph 3(4) of Schedule 17A (leases that continue after a fixed term), ”.

### Agreement for lease and assignment of agreement for leaseU.K.

6(1)Schedule 17A is amended as follows.U.K.

(2)In paragraph 12A (agreement for lease), for sub-paragraph (3) substitute—

“(3)Where a lease (“the actual lease”) is subsequently granted in pursuance of the agreement, the notional lease is to be treated                           for the purposes of this Part as if it were a lease granted—                  

(a)on the date the agreement was substantially performed,                  

(b)for a term which begins with that date and ends at the end of the term of the actual lease, and                  

(c)in consideration of the total rent payable over that term and any other consideration given for the notional lease or the                           actual lease.                  

(3A)Where sub-paragraph (3) applies the grant of the actual lease is disregarded for the purposes of this Part except section                           81A (return or further return in consequence of later linked transaction).                  

(3B)For the purposes of section 81A—                  

(a)the grant of the notional lease and the grant of the actual lease are linked (whether or not they would be linked by virtue                           of section 108),                  

(b)the lessee under the actual lease (rather than the lessee under the notional lease) is liable for any tax or additional tax                           payable in respect of the notional lease as a result of sub-paragraph (3), and                  

(c)the reference in section 81A(1)(a) to “the purchaser under the earlier transaction” is to be read, in relation to the notional                           lease, as a reference to the lessee under the actual lease.”                  

(3)In paragraph 19 (missives of let)—

(a)for sub-paragraph (2) substitute—

“(2)Where in Scotland there is a lease constituted by concluded missives of let (“the first lease”) and at some later time a lease                           is executed (“the second lease”), the first lease is to be treated for the purposes of this Part as if it were a lease granted—                  

(a)on the date the missives of let were concluded,                  

(b)for a period which begins with that date and ends at the end of the period of the second lease, and                  

(c)in consideration of the total rent payable over that period and any other consideration given for the first lease or the second                           lease.                  

(2A)Where sub-paragraph (2) applies the grant of the second lease is disregarded for the purposes of this Part except section                           81A (return or further return in consequence of later linked transaction).                  

(2B)For the purposes of section 81A—                  

(a)the grant of the first lease and the grant of the second lease are linked (whether or not they would be linked by virtue of                           section 108),                  

(b)the lessee under the second lease (rather than the lessee under the first lease) is liable for any tax or additional tax payable                           in respect of the first lease lease as a result of sub-paragraph (2), and                  

(c)the reference in section 81A(1)(a) to “the purchaser under the earlier transaction” is to be read, in relation to the first                           lease, as a reference to the lessee under the second lease.”,                  

(b)for sub-paragraph (4) substitute—

“(4)Where sub-paragraph (3) applies and at some later time a lease (“the actual lease”) is executed, this Part applies as if the                           notional lease were a lease granted—                  

(a)on the date the agreement was substantially performed,                  

(b)for a period which begins with that date and ends at the end of the period of the actual lease, and                  

(c)in consideration of the total rent payable over that period and any other consideration given for the agreement or the actual                           lease.                  

(4A)Where sub-paragraph (4) applies the grant of the second lease is disregarded for the purposes of this Part except section                           81A (return or further return in consequence of later linked transaction).”                  

(4B)For the purposes of section 81A—                  

(a)the grant of the notional lease and the grant of the actual lease are linked (whether or not they would be linked by virtue                           of section 108),                  

(b)the lessee under the actual lease (rather than the lessee under the notional lease) is liable for any tax or additional tax                           payable in respect of the notional lease as a result of sub-paragraph (4), and                  

(c)the reference in section 81A(1)(a) to “the purchaser under the earlier transaction” is to be read, in relation to the notional                           lease, as a reference to the lessee under the actual lease.”                  

(4)Accordingly, in Schedule 25 to FA 2006, paragraphs 4 and 5 are omitted.

### Abnormal rent increasesU.K.

7(1)In Schedule 17A, omit paragraphs 14 and 15 (abnormal increases in rent after fifth year).U.K.

(2)Accordingly, the following are also repealed—

(a)in Schedule 25 to FA 2006, paragraphs 7, 8 and 9(5), and

(b)in Schedule 3 to the Scotland Act 2012, paragraph 27(9).

### CommencementU.K.

8(1)The amendments made by paragraph 2(2), (3), (5) and (6) have effect in relation to any one year period for which a lease is                        continued, or further continued, which begins on or after the commencement day (including any period which would be one year                        but for paragraph 3(6) of Schedule 17A to FA 2003).U.K.

(2)The amendments made by paragraphs 2(4), 3 and 5 have effect if the one year period mentioned in paragraph 3A(1)(b) of Schedule                        17A to FA 2003 begins on or after the commencement day.

(3)The amendments made by paragraph 4 have effect in relation to amounts payable in consequence of any period for which a lease                        is continued, or further continued, which begins on or after the commencement day.

(4)The amendments made by paragraph 6 have effect if the effective date of the actual lease or, as the case may be, second lease                        falls on or after the commencement day.

(5)The amendments made by paragraph 7 have effect in relation to any increase in rent that takes effect on or after the commencement                        day.

(6)“The commencement day” means the day on which this Act is passed.

 Section 200

## SCHEDULE 42U.K.Climate change levy: supplies subject to carbon price support rates etc

### **PART 1**U.K.Earlier provision not to have effect

1(1)On and after 26 March 2013, Schedule 6 to FA 2000 (climate change levy) has effect as if neither—U.K.

(a)Schedule 20 to FA 2011, nor

(b)Parts 1 and 2 of Schedule 32 to FA 2012,

had ever been enacted.

(2)Accordingly—

(a)in FA 2011, section 78 and Schedule 20 are omitted, and

(b)in FA 2012, Parts 1 and 2 of Schedule 32 are omitted.

(3)The amendments made by sub-paragraph (2) are treated as having come into force on 26 March 2013.

### **PART 2**U.K.New provision having effect from 1 April 2013

#### New provisionU.K.

2U.K.Schedule 6 to FA 2000 (climate change levy) is amended as follows.

3U.K.In paragraph 4 (definition of “taxable supply”) in sub-paragraph (2)(b) after “24” insert “ , 24A, 24B, 24C, 42D ”.

4U.K.In paragraph 5 (supplies of electricity) after sub-paragraph (2) insert—

“(2A)Levy is chargeable on a supply of electricity if—                  

(a)the supply is made by an exempt unlicensed electricity supplier who is an auto-generator or who is of a description prescribed                           by regulations made by the Treasury,                  

(b)the electricity was produced in a generating station owned by the supplier using commodities which were the subject of a deemed                           supply under paragraph 24A or which would have been the subject of such a supply had the reference in paragraph 24A(1)(a)                           to Great Britain been a reference to the United Kingdom instead,                  

(c)the supply is not a deemed supply under paragraph 23(3), and                  

(d)the person to whom the supply is made is not an electricity utility.”                  

5U.K.In paragraph 6 (supplies of gas) in sub-paragraph (2A) after “24” insert “ , 24A, 24B, 24C, 42D ”.

6(1)Paragraph 14 (exemption for supplies to electricity producers) is amended as follows.U.K.

(2)In sub-paragraphs (2)(b) and (3)(b) after “electricity” insert “ in a small generating station ”.

(3)After sub-paragraph (3) insert—

“(3ZA)Sub-paragraph (1) does not exempt a supply where the person to whom the supply is made—                  

(a)uses the commodity supplied in producing electricity in a stand-by generator, and                  

(b)uses the electricity produced otherwise than in exemption-retaining ways.”                  

(4)After sub-paragraph (3A) insert—

“(3B)Paragraph 24A makes provision under which carbon price support rate commodities intended to be used in a generating station                           may be the subject of a deemed taxable supply (and, accordingly, this paragraph needs to be read subject to that paragraph).”                  

(5)Omit sub-paragraphs (4) and (5).

7U.K.In paragraph 15 (exemption for supplies to combined heat and power stations) after sub-paragraph (4) insert—

“(4A)Paragraph 24B makes provision under which carbon price support rate commodities intended to be used in a combined heat and                           power station may be the subject of a deemed taxable supply (and, accordingly, this paragraph needs to be read subject to                           that paragraph).”                  

8(1)Paragraph 17 (exemption: self-supplies by electricity producers) is amended as follows.U.K.

(2)After sub-paragraph (1) insert—

“(1A)The supply is exempt from levy if it is a supply of electricity produced in—                  

(a)a fully exempt combined heat and power station,                  

(b)a partly exempt combined heat and power station,                  

(c)a stand-by generator, or                  

(d)a small generating station.                  

(1B)Sub-paragraph (1A)(d) applies only if the producer is—                  

(a)an auto-generator, or                  

(b)an exempt unlicensed electricity supplier of a description prescribed by regulations made by the Treasury.”                  

(3)In sub-paragraph (2) for the words from “If” to “unless—” substitute “ This paragraph does not exempt the supply if— ”.

(4)Omit sub-paragraphs (3) and (4).

9U.K.In paragraph 21 (regulations to avoid double charges to levy) after sub-paragraph (2) insert—

“(2A)In sub-paragraph (2)(b) “taxable supply” does not include a deemed supply under paragraph 24A, 24B, 24C or 42D.”                  

10U.K.In Part 2 after paragraph 24 insert—

##### “Deemed taxable supply: commodities to be used in producing electricityU.K.

24A(1)Sub-paragraph (2) applies if—                  

(a)a quantity of a carbon price support rate commodity is brought onto, or arrives at, a site in Great Britain at which a generating                           station is situated,                  

(b)that quantity of the commodity is intended to be used for producing electricity in the station,                  

(c)the station is neither a fully exempt combined heat and power station nor a partly exempt combined heat and power station,                           and                  

(d)the station is neither a small generating station nor a stand-by generator.                  

(2)For the purposes of this Schedule the owner of the station is deemed to make a taxable supply to himself of that quantity                           of the commodity.                  

(3)In sub-paragraph (1)(a) the reference to a commodity being brought onto, or arriving at, a site covers (in particular) gas                           in a gaseous state arriving at the site through a pipe.                  

(4)For the purposes of sub-paragraph (1) it does not matter—                  

(a)if the quantity of the commodity is not the subject of an actual supply made to the owner of the station, or                  

(b)if the commodity's availability for use in the station is subject to any condition.                  

##### Deemed taxable supply: commodities to be used in combined heat and power stationU.K.

24B(1)Sub-paragraph (2) applies if—                  

(a)a quantity of a carbon price support rate commodity is brought onto, or arrives at, the CHPQA site of a fully exempt combined                           heat and power station or a partly exempt combined heat and power station in Great Britain,                  

(b)that quantity of the commodity is intended to be used in the station for producing outputs of the station, and                  

(c)the station is not a small generating station.                  

(2)For the purposes of this Schedule the operator of the station is deemed to make a taxable supply to himself of that quantity                           of the commodity so far as that quantity is referable to the production of electricity.                  

(3)For the purposes of sub-paragraph (2) the extent to which a quantity of a commodity is referable to the production of electricity                           is to be determined in accordance with regulations under paragraph 24D(1).                  

(4)In sub-paragraph (1)(a) the reference to a commodity being brought onto, or arriving at, the CHPQA site of a station covers                           (in particular) gas in a gaseous state arriving at the CHPQA site through a pipe.                  

(5)In sub-paragraph (1)(b) “outputs” has the meaning given by paragraph 148(9).                  

(6)For the purposes of sub-paragraph (1) it does not matter—                  

(a)if the quantity of the commodity is not the subject of an actual supply made to the operator of the station, or                  

(b)if the commodity's availability for use in the station is subject to any condition.                  

(7)In this paragraph “CHPQA site”, in relation to a fully exempt combined heat and power station or a partly exempt combined heat and power station, means                           the site of the scheme in relation to which the station's CHPQA certificate was issued.                  

24C(1)This paragraph applies if—                  

(a)a determination (“the initial determination”) is made under regulations falling within paragraph 24B(3) that—                  

(i)none of a quantity of a carbon price support rate commodity is, or                  

(ii)a proportion of such a quantity is not,                  

referable to the production of electricity,                  

(b)as a result of the initial determination, the quantity or proportion of a quantity is determined not to be the subject of                           a deemed supply under paragraph 24B, and                  

(c)it is later determined that, contrary to the initial determination, the quantity or proportion of a quantity—                  

(i)was referable to the production of electricity, and                  

(ii)accordingly, should have been determined to be the subject of a deemed supply under paragraph 24B.                  

(2)For the purposes of this Schedule—                  

(a)the operator of the station in question is deemed to make a taxable supply to himself of the quantity or proportion of a quantity,                           and                  

(b)the amount payable by way of levy on the deemed supply is the amount which would have been payable in relation to the quantity                           or proportion of a quantity had it been determined to be the subject of a deemed supply as mentioned in sub-paragraph (1)(c)(ii).                  

##### Power to make regulations giving effect to paragraphs 24A to 24C etcU.K.

24D(1)The Commissioners may by regulations make provision for giving effect to paragraphs 24A to 24C and 42A to 42D.                  

(2)Regulations under sub-paragraph (1) may, in particular, include provision—                  

(a)for determining whether a deemed supply under paragraph 24A or 24B is made;                  

(b)for determining the quantity of any commodity which is the subject of such a deemed supply;                  

(c)for determining whether paragraph 42C(2) applies in relation to a deemed supply under paragraph 24A or 24B and, if it does,                           the reduction in the relevant carbon price support rate.                  

(3)Regulations under sub-paragraph (1) may include—                  

(a)provision in respect of calculations, measurements, data and procedures to be made or used;                  

(b)provision that, so far as framed by reference to any document, is framed by reference to that document as from time to time                           in force.”                  

11U.K.After paragraph 38 insert—

##### “Deemed supplies under paragraph 24A, 24B, 24C or 42DU.K.

38A(1)A deemed supply under paragraph 24A or 24B is treated as taking place when the quantity of the commodity is brought onto,                           or arrives at, the site at which the station is situated or the CHPQA site of the station (as the case may be).                  

(2)A deemed supply under paragraph 24C or 42D is treated as taking place upon the later determination.”                  

12(1)Paragraph 39 (regulations as to time of supply) is amended as follows.U.K.

(2)In sub-paragraph (1)(c) after “24” insert “ , 24A, 24B, 24C, 42D ”.

(3)In sub-paragraph (3) after “supply)” insert “ and 38A ”.

13U.K.In paragraph 42 (amount payable by way of levy) before sub-paragraph (2) insert—

“(1B)Sub-paragraph (1) does not apply to a deemed supply under paragraph 24A or 24B.”                  

14U.K.After paragraph 42 insert—

“42A(1)This paragraph applies to a deemed supply under paragraph 24A or 24B.                  

(2)The amount payable by way of levy on the deemed supply is the amount ascertained by applying the relevant carbon price support                           rate; and the levy payable on a fraction of a kilowatt hour, kilogram or gigajoule is that fraction of the levy payable on                           a kilowatt hour, kilogram or gigajoule.                  

(3)The carbon price support rates are as follows.                  

(4)Sub-paragraph (2) needs to be read with paragraphs 42B and 42C.                  

42B(1)This paragraph applies for the purposes of paragraph 42A(2) if the commodity deemed to be supplied is a quantity of a commodity                           falling within paragraph 3(1)(d) to (f).                  

(2)The number of gigajoules in the quantity supplied is to be determined by reference to the total gross calorific value of that                           quantity.                  

(3)Sub-paragraph (4) applies if there is included in that quantity any coal slurry taken from a slurry pit situated at the site                           of a coal mine (including a disused coal mine).                  

(4)The gross calorific value of the coal slurry is to be left out of account in determining the total gross calorific value of                           that quantity.                  

42C(1)Sub-paragraph (2) applies for the purposes of paragraph 42A(2) if, in the calendar year in which the deemed supply is treated                           as taking place, carbon capture and storage technology is operated in relation to carbon dioxide generated by the station                           in question in producing electricity.                  

(2)In relation to the deemed supply, only C% of the relevant carbon price support rate is to be applied (instead of the full                           rate).                  

(3)“C%” is 100% minus the station's carbon capture percentage for the calendar year.                  

(4)The station's “carbon capture percentage” for the calendar year is the percentage of the station's generated carbon dioxide                           for that year which, through the operation of the carbon capture and storage technology, is—                  

(a)captured, and                  

(b)then disposed of by way of permanent storage.                  

(5)The station's “generated carbon dioxide” for the calendar year is the amount of carbon dioxide generated in the year by the                           station from the use of carbon price support rate commodities in producing electricity.                  

(6)In this paragraph “carbon capture and storage technology” and “carbon dioxide” have the meaning given by section 7(3) and                           (4) of the Energy Act 2010.                  

(7)Sub-paragraph (8) applies for the purposes of sub-paragraph (4) in relation to any carbon dioxide if—                  

(a)the carbon dioxide is captured but then leaks out and therefore is not disposed of by way of permanent storage, but                  

(b)the leak does not occur—                  

(i)on the land on which the station is situated,                  

(ii)on any other land under the control of the station's owner or a person connected with the station's owner, or                  

(iii)from any pipeline or other facility or installation which is operated by the station's owner or a person connected with the                           station's owner.                  

Section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies for the purposes of paragraph (b).                  

(8)The carbon dioxide is to be treated as if it had been disposed of by way of permanent storage.                  

(9)If the percentage mentioned in sub-paragraph (4) is not a whole number, it is to be rounded to the nearest whole number (taking                           0.5% as nearest to the next whole number).                  

42D(1)This paragraph applies if—                  

(a)an amount is determined to be payable by way of levy on a deemed supply of a quantity of a commodity under paragraph 24A or                           24B, but                  

(b)it is later determined that that amount is too low.                  

(2)For the purposes of this Schedule—                  

(a)the person who made the deemed supply is deemed to make a further taxable supply to himself of the quantity of the commodity,                           and                  

(b)the amount payable by way of levy on that further deemed supply is—                  

(i)the total amount payable on the first deemed supply on the basis of the later determination mentioned in sub-paragraph (1)(b),                           less                  

(ii)the amount previously determined to be payable on the first deemed supply.”                  

15U.K.In paragraph 55 (notification of registrability) in sub-paragraph (1) after paragraph (a) insert—

“(aa)expects to be deemed to make a taxable supply to himself under paragraph 24A or 24B, or”.                  

16U.K.In paragraph 62 (tax credits) in sub-paragraph (1) after paragraph (b) insert—

“(ba)a quantity of a carbon price support rate commodity is the subject of a deemed supply under paragraph 24A or 24B but afterwards                           the quantity—                  

(i)is not used as mentioned in paragraph 24A(1)(b) or 24B(1)(b) (as the case may be), and                  

(ii)is removed from the site at which the station is situated or from the CHPQA site of the station (as the case may be);                  

(bb)after—                  

(i)a determination is made under regulations falling within paragraph 24B(3) that a quantity, or a proportion of a quantity,                           of a carbon price support rate commodity is referable to the production of electricity, and                  

(ii)it is accordingly determined that the quantity or proportion of a quantity is the subject of a deemed supply under paragraph                           24B,                  

it is determined that the quantity or proportion of a quantity was not referable to the production of electricity;                  

(bc)after an amount is determined to be payable by way of levy on a deemed supply under paragraph 24A or 24B, it is determined                           that that amount is too high;”.                  

17U.K.In paragraph 146 (regulations) in sub-paragraph (3)—

(a)for “14(3),” substitute “ 5(2A), 14(2), ”, and

(b)after “16,” insert “ 17(1B), ”.

18U.K.In paragraph 147 (definitions)—

(a)at the appropriate places, insert—

““carbon price support rate commodity” means any taxable commodity other than electricity;”,                  

““CHPQA certificate” has the same meaning as in the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations                        2001 (S.I. 2001/486);”,                  

““exempt unlicensed electricity supplier” has the meaning given by paragraph 152A;”,                  

““Great Britain” includes the territorial waters of the United Kingdom so far as adjacent to Great Britain;”,                  

““small generating station” has the meaning given by paragraph 152B;”, and                  

““stand-by generator” means a generating station which—                  

(a)is used to provide an emergency electricity supply to a building in the event of a failure of the building's usual electricity                           supply, and                  

(b)is not used for any other purpose;”, and                  

(b)in the definition of “prescribed”—

(i)for “14(3),” substitute “ 5(2A), 14(2), ”, and

(ii)after “16(3)” insert “ , 17(1B) ”.

19U.K.After paragraph 152 insert—

##### “Meaning of “exempt unlicensed electricity supplier”U.K.

152A(1)In this Schedule “exempt unlicensed electricity supplier” means a person—                  

(a)to whom an exemption from section 4(1)(c) of the Electricity Act 1989 (persons supplying electricity to premises) has been                           granted by an order under section 5 of that Act, or                  

(b)to whom an exemption from Article 8(1)(c) of the Electricity Supply (Northern Ireland) Order 1992 has been granted by an order                           under Article 9 of that Order,                  

except where the person is acting otherwise than for purposes connected with the carrying on of activities authorised by the                        exemption.                  

(2)Sub-paragraph (1) applies subject to—                  

(a)any direction under paragraph 151(1), and                  

(b)any regulations under paragraph 151(2).                  

##### Meaning of “small generating station”U.K.

152B(1)In this Schedule “small generating station” means a generating station the capacity of which for producing electricity is no more than 2 megawatts.                  

(2)Sub-paragraph (3) applies if a relevant station (“station X”) is one of a number of relevant stations which—                  

(a)are situated in the United Kingdom, and                  

(b)are owned by P or persons connected with P.                  

(3)In applying sub-paragraph (1) in relation to station X, the reference to the capacity of a generating station is to be read                           as a reference to the capacity of station X and all the other relevant stations mentioned in sub-paragraph (2) taken together.                  

(4)In sub-paragraphs (2) and (3) “relevant station” means a generating station which is neither an exempt CHP station nor a stand-by generator.                  

(5)For the purposes of sub-paragraph (2)(b)—                  

(a)“P” is the person who owns station X, and                  

(b)section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies.                  

(6)Sub-paragraph (7) applies if the scheme in relation to which the CHPQA certificate of an exempt CHP station (“station Y”)                           is issued covers other exempt CHP stations as well.                  

(7)In applying sub-paragraph (1) in relation to station Y, the reference to the capacity of a generating station is to be read                           as a reference to the capacity of station Y and all the other exempt CHP stations mentioned in sub-paragraph (6) taken together.                  

(8)In this paragraph “exempt CHP station” means a fully exempt combined heat and power station or a partly exempt combined heat and power station.”                  

20(1)Regulation 5 of the Climate Change Levy (Electricity and Gas) Regulations 2001 (S.I. 2001/1136) is amended as follows.U.K.

(2)In paragraph (1) for “paragraph 14(2) of the Act (exemption: certain supplies to electricity producers)” substitute “ paragraphs 5(2A), 14(2) and 17(1B) of the Act (which contain references to exempt unlicensed electricity suppliers) ”.

(3)In paragraph (2)(a) for “14(4)” substitute “ 152A(1) ”.

(4)The amendments made by this paragraph are to be treated as having been made by the Treasury under the powers to make regulations                        conferred by paragraphs 5(2A), 14(2) and 17(1B) of Schedule 6 to FA 2000.

#### CommencementU.K.

21U.K.The amendments made by this Part of this Schedule are treated as having come into force on 26 March 2013.

22(1)The amendments made by paragraph 6(2) and (3) above have effect for the purpose of determining if a supply of gas or electricity                        is exempt from levy where the gas or electricity is actually supplied on or after 1 April 2013.“Gas” means gas in a gaseous state that is of a kind supplied by a gas utility.U.K.

(2)Those amendments are to have effect for the purpose of determining if any other supply is exempt from levy where the supply                        is treated as taking place on or after 1 April 2013.

(3)The amendments made by paragraph 8 above have effect for the purpose of determining if a supply of electricity is exempt from                        levy where the electricity is caused to be consumed on or after 1 April 2013.

(4)The amendment made by paragraph 10 above has effect in relation to carbon price support rate commodities which are brought                        onto, or arrive at, sites on or after 1 April 2013.

### **PART 3**U.K.Carbon price support rates from 1 April 2014

23(1)In paragraph 42A of Schedule 6 to FA 2000 (as inserted by paragraph 14 above) for sub-paragraph (3) substitute—U.K.

“(3)The carbon price support rates are as follows.                  

(2)The amendment made by this paragraph has effect in relation to supplies treated as taking place on or after 1 April 2014 but                        before 1 April 2015.

### **PART 4**U.K.Carbon price support rates from 1 April 2015

24(1)In paragraph 42A of Schedule 6 to FA 2000 (as inserted by paragraph 14 above) for sub-paragraph (3) substitute—U.K.

“(3)The carbon price support rates are as follows.                  

(2)The amendment made by this paragraph has effect in relation to supplies treated as taking place on or after 1 April 2015.

 Section 209

## SCHEDULE 43U.K.General anti-abuse rule: procedural requirements

### The GAAR Advisory PanelU.K.

1(1)In this Part “the GAAR Advisory Panel” means the panel of persons established by the Commissioners for the purposes of the general anti-abuse rule.U.K.

(2)In this Schedule “the Chair” means any member of the GAAR Advisory Panel appointed by the Commissioners to chair it.

### Meaning of “designated HMRC officer”U.K.

2U.K.In this Schedule a “designated HMRC officer” means an officer of Revenue and Customs who has been designated by the Commissioners for the purposes of the general anti-abuse                        rule.

### Notice to taxpayer of proposed counteraction of tax advantageU.K.

3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

4(1)If a notice is given to the taxpayer under paragraph 3, the taxpayer has 45 days beginning with the day on which the notice                        is given to send written representations in response to the notice to the designated HMRC officer.U.K.

(2)The designated officer may, on a written request made by the taxpayer, extend the period during which representations may                        be made.

### Referral to GAAR Advisory PanelU.K.

5U.K.If no representations are made in accordance with paragraph 4, a designated HMRC officer must refer the matter to the GAAR                        Advisory Panel.

6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

7U.K.If the matter is referred to the GAAR Advisory Panel, the designated HMRC officer must at the same time provide it with—

(a)a copy of the notice given to the taxpayer under paragraph 3,

(b)a copy of any representations made in accordance with paragraph 4 and any comments that the officer has on those representations,                        and

(c)a copy of the notice given to the taxpayer under paragraph 8.

8U.K.If the matter is referred to the GAAR Advisory Panel, the designated HMRC officer must at the same time give the taxpayer                        a notice which—

(a)specifies that the matter is being referred,

(b)is accompanied by a copy of any comments provided to the GAAR Advisory Panel under paragraph 7(b), and

(c)informs the taxpayer of the period under paragraph 9 for making representations, and of the requirement under that paragraph                        to send any representations to the officer.

9(1)The taxpayer has 21 days beginning with the day on which a notice is given under paragraph 8 to send the GAAR Advisory Panel                        written representations about—U.K.

(a)the notice given to the taxpayer under paragraph 3, or

(b)any comments provided under paragraph 7(b).

(2)The GAAR Advisory Panel may, on a written request made by the taxpayer, extend the period during which representations may                        be made.

(3)The taxpayer must send a copy of any representations to the designated HMRC officer at the same time as the representations                        are sent to the GAAR Advisory Panel.

(4)If no representations were made in accordance with paragraph 4, the designated HMRC officer—

(a)may provide the GAAR Advisory Panel with comments on any representations made under this paragraph, and

(b)if comments are provided, must at the same time send a copy of them to the taxpayer.

### Decision of GAAR Advisory Panel and opinion noticesU.K.

10(1)If the matter is referred to the GAAR Advisory Panel, the Chair must arrange for a sub-panel consisting of 3 members of the                        GAAR Advisory Panel (one of whom may be the Chair) to consider it.U.K.

(2)The sub-panel may invite the taxpayer or the designated HMRC officer (or both) to supply the sub-panel with further information                        within a period specified in the invitation.

(3)Invitations must explain the effect of sub-paragraph (4) or (5) (as appropriate).

(4)If the taxpayer supplies information to the sub-panel under this paragraph, the taxpayer must at the same time send a copy                        of the information to the designated HMRC officer.

(5)If the designated HMRC officer supplies information to the sub-panel under this paragraph, the officer must at the same time                        send a copy of the information to the taxpayer.

11(1)Where the matter is referred to the GAAR Advisory Panel, the sub-panel must produce—U.K.

(a)one opinion notice stating the joint opinion of all the members of the sub-panel, or

(b)two or three opinion notices which taken together state the opinions of all the members.

(2)The sub-panel must give a copy of the opinion notice or notices to—

(a)the designated HMRC officer, and

(b)the taxpayer.

(3)An opinion notice is a notice which states that in the opinion of the members of the sub-panel, or one or more of those members—

(a)the entering into and carrying out of the tax arrangements is a reasonable course of action in relation to the relevant tax                        provisions—

(i)having regard to all the circumstances (including the matters mentioned in subsections (2)(a) to (c) and (3) of section 207),                        and

(ii)taking account of subsections (4) to (6) of that section, or

(b)the entering into or carrying out of the tax arrangements is not a reasonable course of action in relation to the relevant                        tax provisions having regard to those circumstances and taking account of those subsections, or

(c)it is not possible, on the information available, to reach a view on that matter,

and the reasons for that opinion.

(4)For the purposes of the giving of an opinion under this paragraph, the arrangements are to be assumed to be tax arrangements.

(5)In this Part, a reference to any opinion of the GAAR Advisory Panel about any tax arrangements is a reference to the contents                        of any opinion notice about the arrangements.

### Notice of final decision after considering opinion of GAAR Advisory PanelU.K.

12(1)A designated HMRC officer who has received a notice or notices under paragraph 11 must, having considered any opinion of the                        GAAR Advisory Panel about the tax arrangements, give the taxpayer a written notice setting out whether the tax advantage arising                        from the arrangements is to be counteracted under the general anti-abuse rule.U.K.

(2)If the notice states that a tax advantage is to be counteracted, it must also set out—

(a)the adjustments required to give effect to the counteraction, and

(b)if relevant, any steps that the taxpayer is required to take to give effect to it.

### Notices may be given on assumption that tax advantage does ariseU.K.

13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

 Section 216

## SCHEDULE 44U.K.Trusts with vulnerable beneficiary

### Inheritance Tax Act 1984U.K.

1U.K.IHTA 1984 is amended as follows.

2(1)Section 71A (trusts for bereaved minors) is amended as follows.U.K.

(2)For subsection (3)(c)(ii) substitute—

“(ii)if any of the income arising from any of the settled property is applied for the benefit of a beneficiary, it is applied for                           the benefit of the bereaved minor.”                  

(3)In subsection (4), before paragraph (a) insert—

“(za)the trustees' having powers that enable them to apply otherwise than for the benefit of the bereaved minor amounts (whether                           consisting of income or capital, or both) not exceeding the annual limit,”.                  

(4)After subsection (4) insert—

“(4A)For the purposes of this section and section 71B, the “annual limit” is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the period in question.                  

(4B)For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.                  

(4C)The Treasury may by order made by statutory instrument—                  

(a)specify circumstances in which subsection (4)(za) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (4A).                  

(4D)An order under subsection (4C) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(4E)A statutory instrument containing an order under subsection (4C) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

3(1)Section 71B (charge to tax on property to which section 71A applies) is amended as follows.U.K.

(2)In subsection (1), after “(2)” insert “ , (2B) ”.

(3)After subsection (2) insert—

“(2A)Subsection (2B) applies in a case in which—                  

(a)an amount is paid or applied otherwise than for the benefit of the bereaved minor, and                  

(b)the exemptions provided by subsection (2) of this section and subsections (3) and (4) of section 70 do not apply.                  

(2B)In such a case, tax is not charged under this section in respect of whichever is the lower of the following amounts—                  

(a)the amount paid or applied, and                  

(b)the annual limit.”                  

4(1)Section 71D (age 18-to-25 trusts) is amended as follows.U.K.

(2)For subsection (6)(c)(ii) substitute—

“(ii)if any of the income arising from any of the settled property is applied for the benefit of a beneficiary, it is applied for                           the benefit of B.”                  

(3)After that subsection insert—

“(6A)Where the income arising from the settled property is held on trusts of the kind described in section 33 of the Trustee Act                           1925 (protective trusts), paragraphs (b) and (c) of subsection (6) have effect as if for “living and under the age of 25,”                           there were substituted “under the age of 25 and the income arising from the settled property is held on trust for B,”.                  

(4)In subsection (7), before paragraph (a) insert—

“(za)the trustees' having powers that enable them to apply otherwise than for the benefit of B amounts (whether consisting of income                           or capital, or both) not exceeding the annual limit,”.                  

(5)After that subsection insert—

“(7A)For the purposes of this section and section 71E, the “annual limit” is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the period in question.                  

(7B)For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.                  

(7C)The Treasury may by order made by statutory instrument—                  

(a)specify circumstances in which subsection (7)(za) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (7A).                  

(7D)An order under subsection (7C) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(7E)A statutory instrument containing an order under subsection (7C) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

5(1)Section 71E (charge to tax on property to which section 71D applies) is amended as follows.U.K.

(2)In subsection (1), for “(4)” substitute “ (4A) ”.

(3)After subsection (4) insert—

“(4A)If an amount is paid or applied otherwise than for the benefit of B and the exemptions provided by subsections (2) to (4)                           do not apply, tax is not charged under this section in respect of whichever is the lower of the following amounts—                  

(a)the amount paid or applied, and                  

(b)the annual limit.”                  

6(1)Section 89 (trusts for disabled persons) is amended as follows.U.K.

(2)For subsection (1)(b) substitute—

“(b)which secure that, if any of the settled property or income arising from it is applied during the disabled person's life for                           the benefit of a beneficiary, it is applied for the benefit of the disabled person.”                  

(3)For subsection (3) substitute—

“(3)The trusts on which the settled property is held are not to be treated as falling outside subsection (1) by reason only of—                  

(a)the trustees' having powers that enable them to apply otherwise than for the benefit of the disabled person amounts (whether                           consisting of income or capital, or both) not exceeding the annual limit,                  

(b)the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),                  

(c)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by proviso (a) of subsection (1) of that section,                  

(d)the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision                           for Northern Ireland),                  

(e)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by subsection (1)(a) of that section, or                  

(f)the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).                  

(3A)For the purposes of this section, the “annual limit” is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the period in question.                  

(3B)For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.                  

(3C)The Treasury may by order made by statutory instrument—                  

(a)specify circumstances in which subsection (3)(a) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (3A).                  

(3D)An order under subsection (3C) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(3E)A statutory instrument containing an order under subsection (3C) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

(4)In subsection (4), for the words following “into settlement,” substitute “ was a disabled person ”.

(5)For subsections (5) and (6) substitute—

“(4A)In this section “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.”                  

7(1)Section 89A (self-settlement by person with condition expected to lead to disability) is amended as follows.U.K.

(2)In subsection (1)(b), for the words following “A becoming” substitute “ a person falling within any paragraph of the definition of “disabled person” in paragraph 1 of Schedule 1A to the Finance                           Act 2005 ”.

(3)In subsection (2), after “settled property” insert “ or income arising from it ”.

(4)For subsections (5) and (6) substitute—

“(5)For the purposes of subsection (1)(b), assume—                  

(a)that A will meet any conditions as to residence or presence that are required to establish entitlement to the allowance, payment                           or increased pension in question,                  

(b)that there will be no provision made by regulations under any of the following—                  

(i)sections 67(1) and (2), 72(8), 104(3) and 113(2) of SSCBA 1992,                  

(ii)sections 67(1) and (2), 72(8), 104(3) and 113(2) of SSCB(NI)A 1992, and                  

(iii)sections 85 and 86 of WRA 2012 and the corresponding provision having effect in Northern Ireland, and                  

(c)that A will not be prevented from receiving the allowance, payment or increased pension in question by any of the following—                  

(i)section 113(1) of SSCBA 1992,                  

(ii)section 113(1) of SSCB(NI)A 1992,                  

(iii)section 87 of WRA 2012 and the corresponding provision having effect in Northern Ireland,                  

(iv)articles 61 and 64 of the Personal Injuries (Civilians) Scheme 1983 (S.I. 1983/686),                  

(v)article 53 of the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 2006 (S.I. 2006/606),                           and                  

(vi)article 42 of the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 (S.I. 2011/517).”                  

(5)Before subsection (7) insert—

“(6A)The trusts on which the settled property is held are not to be treated as falling outside subsection (2) by reason only of—                  

(a)the trustees' having powers that enable them to apply otherwise than for the benefit of the disabled person amounts (whether                           consisting of income or capital, or both) not exceeding the annual limit,                  

(b)the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),                  

(c)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by proviso (a) of subsection (1) of that section,                  

(d)the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision                           for Northern Ireland),                  

(e)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by subsection (1)(a) of that section, or                  

(f)the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).                  

(6B)For the purposes of this section, the “annual limit” is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the period in question.                  

(6C)For those purposes the annual limit applies in relation to each period of 12 months that begins on 6 April.                  

(6D)The Treasury may by order made by statutory instrument—                  

(a)specify circumstances in which subsection (6A)(a) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (6B).                  

(6E)An order under subsection (6D) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(6F)A statutory instrument containing an order under subsection (6D) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

(6)For subsection (8) substitute—

“(8)In this section—                  
          -  “SSCBA 1992” means the Social Security Contributions and Benefits Act 1992,                         
          -  “SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and                         
          -  “WRA 2012” means the Welfare Reform Act 2012.”                         

(7)In the heading, for the words following “**person**” substitute “ **expected to fall within the definition of “disabled person”** ”.

8(1)Section 89B (meaning of “disabled person's interest”) is amended as follows.U.K.

(2)For subsection (2) substitute—

“(2)In subsection (1)(c) “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.”                  

(3)After that subsection insert—

“(2A)Where the income arising from the settled property is held on trusts of the kind described in section 33 of the Trustee Act                           1925 (protective trusts), subsection (1)(d)(v) has effect as if for “A's life” there were substituted “ the period during which the income from the property is held on trust for A ”.”                  

9(1)The amendments made by paragraphs 2 to 8 have effect in relation to property transferred into settlement on or after 8 April                        2013.U.K.

(2)Nothing in paragraphs 6 to 8 is to be read as preventing property transferred into a relevant settlement on or after 8 April                        2013 from being property to which section 89 or 89A of IHTA 1984 applies.

10(1)In section 89B (meaning of “disabled person's interest”), in subsection (1)(c) after “2006” insert “ if the trusts on which the settled property is held secure that, if any of the settled property is applied during the disabled                           person's life for the benefit of a beneficiary, it is applied for the benefit of the disabled person ”.U.K.

(2)After that section insert—

#### “89CDisabled person's interest: powers of advancement etc

(3)The amendments made by this paragraph have effect in relation to property transferred into settlement on or after the day                        on which this Act is passed.

(4)Nothing in this paragraph is to be read as preventing property transferred into a settlement to which sub-paragraph (5) applies                        from being settled property for the purposes of section 89B(1)(c) or (d) of IHTA 1984.

(5)This sub-paragraph applies to a settlement—

(a)created before the day on which this Act is passed the trusts of which have not been altered on or after that day, or

(b)arising on or after the day on which this Act is passed under the will of a testator, if—

(i)the will was executed before the day on which this Act is passed and its provisions, so far as relating to the settlement,                        have not been altered on or after that day, or

(ii)the will was executed or confirmed on or after the day on which this Act is passed and its provisions, so far as relating                        to the settlement, are in the same terms as those contained in a will executed by the same testator before that day.

### Taxation of Chargeable Gains Act 1992U.K.

11U.K.TCGA 1992 is amended as follows.

12(1)Section 169D (exceptions to rules on gifts to settlor-interested settlements etc) is amended as follows.U.K.

(2)For subsection (3) substitute—

“(3)The first condition is that, immediately after the making of the disposal, the settled property is held on trusts which secure                           that, during the lifetime of a disabled person—                  

(a)if any of the property is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit, and                  

(b)either—                  

(i)the disabled person is entitled to all of the income (if there is any) arising from any of the property, or                  

(ii)if any such income is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit.”                  

(3)After subsection (4) insert—

“(4A)Where the income arising from the settled property is held on trusts of the kind described in section 33 of the Trustee Act                           1925 (protective trusts), subsection (3) has effect as if the reference to the lifetime of a disabled person were a reference                           to the period during which the income is held on trust for the disabled person.                  

(4B)The trusts on which the settled property is held are not to be treated as falling outside subsection (3) by reason only of—                  

(a)the trustees' having powers that enable them to apply in any tax year otherwise than for the benefit of the disabled person                           amounts (whether consisting of income or capital, or both) not exceeding the annual limit,                  

(b)the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),                  

(c)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by proviso (a) of subsection (1) of that section,                  

(d)the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision                           for Northern Ireland),                  

(e)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by subsection (1)(a) of that section, or                  

(f)the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).                  

(4C)For the purposes of this section, the “annual limit” for a tax year is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the tax year in question.                  

(4D)The Treasury may by order—                  

(a)specify circumstances in which subsection (4B)(a) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (4C).                  

(4E)An order under subsection (4D) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(4F)A statutory instrument containing an order under subsection (4D) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

(4)For subsections (7) to (9) substitute—

“(7)In this section “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.”                  

(5)Omit subsection (10).

(6)The amendments made by this paragraph have effect in relation to disposals to the trustees of a settlement on or after 8 April                        2013.

(7)But if the settlement is a relevant settlement, nothing in this paragraph is to be read as preventing section 169D(2) of TCGA                        1992 from applying in relation to the disposal.

13(1)Paragraph 1 of Schedule 1 (application of exempt amount and reporting limits in cases involving settled property) is amended                        as follows.U.K.

(2)In sub-paragraph (1)—

(a)for “mentally disabled person or a person in receipt of attendance allowance or of a disability living allowance by virtue                        of entitlement to the care component at the highest or middle rate” substitute “ disabled person ”, and

(b)for paragraphs (a) and (b) substitute—

“(a)if any of the property is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit, and                  

(b)either—                  

(i)the disabled person is entitled to all of the income (if there is any) arising from any of the property, or                  

(ii)if any such income is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit,”.                  

(3)After that sub-paragraph insert—

“(1A)The trusts on which settled property is held are not to be treated as falling outside sub-paragraph (1) by reason only of—                  

(a)the trustees' having powers that enable them to apply in any tax year otherwise than for the benefit of the disabled person                           amounts (whether consisting of income or capital, or both) not exceeding the annual limit,                  

(b)the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),                  

(c)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by proviso (a) of subsection (1) of that section,                  

(d)the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision                           for Northern Ireland),                  

(e)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by subsection (1)(a) of that section, or                  

(f)the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).                  

(1B)For the purposes of this paragraph, the “annual limit” for a tax year is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the tax year in question.                  

(1C)The Treasury may by order—                  

(a)specify circumstances in which sub-paragraph (1A)(a) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in sub-paragraph (1B).                  

(1D)An order under sub-paragraph (1C) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(1E)A statutory instrument containing an order under sub-paragraph (1C) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

(4)In sub-paragraph (2), for the words from the beginning to “that sub-paragraph” substitute “ The reference in sub-paragraph (1) ”.

(5)In sub-paragraph (6), for the definitions of “mentally disabled person”, “attendance allowance” and “disability living allowance”                        substitute—

““disabled person” has the meaning given by Schedule 1A to the Finance Act 2005; and”.                  

(6)The amendments made by this paragraph have effect in relation to the tax year 2013-14 and subsequent tax years.

(7)But if the settlement is a relevant settlement, nothing in this paragraph is to be read as preventing sections 3(1) to (5C)                        and 3A of TCGA 1992 from applying in relation to the settlement as provided by paragraph 1(1) of Schedule 1 to that Act.

### Finance Act 2005U.K.

14U.K.FA 2005 is amended as follows.

15(1)Section 34 (disabled persons) is amended as follows.U.K.

(2)In subsection (2), for paragraph (b) substitute—

“(b)either—                  

(i)that the disabled person is entitled to all the income (if there is any) arising from any of the property, or                  

(ii)if any such income is applied for the benefit of a beneficiary, it is applied for the benefit of the disabled person.”                  

(3)For subsection (3) substitute—

“(3)The trusts on which property is held are not to be treated as failing to secure that the conditions in subsection (2) are                           met by reason only of—                  

(a)the trustees' having powers that enable them to apply in any tax year otherwise than for the benefit of the disabled person                           amounts (whether consisting of income or capital, or both) not exceeding the annual limit,                  

(b)the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),                  

(c)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by proviso (a) of subsection (1) of that section,                  

(d)the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision                           for Northern Ireland),                  

(e)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by subsection (1)(a) of that section, or                  

(f)the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).                  

(3B)For the purposes of this section, the “annual limit” for a tax year is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the tax year in question.                  

(3C)The Treasury may by order made by statutory instrument—                  

(a)specify circumstances in which subsection (3)(a) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (3B).                  

(3D)An order under subsection (3C) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(3E)A statutory instrument containing an order under subsection (3C) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

16(1)Section 35 (relevant minors) is amended as follows.U.K.

(2)For subsection (3)(c)(ii) substitute—

“(ii)if any such income is applied for the benefit of a beneficiary, it is applied for the benefit of the relevant minor.”                  

(3)For subsection (4) substitute—

“(4)Trusts to which subsection (2) applies are not to be treated as failing to secure that the conditions in subsection (3) are                           met by reason only of—                  

(a)the trustees' having powers that enable them to apply in any tax year otherwise than for the benefit of the relevant minor                           amounts (whether consisting of income or capital, or both) not exceeding the annual limit,                  

(b)the trustees' having the powers conferred by section 32 of the Trustee Act 1925 (powers of advancement),                  

(c)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by proviso (a) of subsection (1) of that section,                  

(d)the trustees' having the powers conferred by section 33 of the Trustee Act (Northern Ireland) 1958 (corresponding provision                           for Northern Ireland),                  

(e)the trustees' having those powers but free from, or subject to a less restrictive limitation than, the limitation imposed                           by subsection (1)(a) of that section, or                  

(f)the trustees' having powers to the like effect as the powers mentioned in any of paragraphs (b) to (e).                  

(4B)For the purposes of this section, the “annual limit” for a tax year is whichever is the lower of the following amounts—                  

(a)£3,000, and                  

(b)3% of the amount that is the maximum value of the settled property during the tax year in question.                  

(4C)The Treasury may by order made by statutory instrument—                  

(a)specify circumstances in which subsection (4)(a) is, or is not, to apply in relation to a trust, and                  

(b)amend the definition of “the annual limit” in subsection (4B).                  

(4D)An order under subsection (4C) may—                  

(a)make different provision for different cases, and                  

(b)contain transitional and saving provision.                  

(4E)A statutory instrument containing an order under subsection (4C) may not be made unless a draft of the instrument has been                           laid before, and approved by a resolution of, the House of Commons.”                  

17U.K.For section 38 substitute—

#### “38Meaning of “disabled person”

18U.K.The amendments made by paragraphs 15 to 17 have effect for the tax year 2013-14 and subsequent tax years.

19U.K.After Schedule 1 insert—

 Section 38

#### “SCHEDULE 1AU.K.Meaning of “disabled person”

#####  “Disabled person” U.K.

1“Disabled person” means—

(a)a person who by reason of mental disorder within the meaning of the Mental Health Act 1983 is incapable of administering his                           or her property or managing his or her affairs,                  

(b)a person in receipt of attendance allowance,                  

(c)a person in receipt of a disability living allowance by virtue of entitlement to the care component at the highest or middle                           rate,                  

(d)a person in receipt of personal independence payment by virtue of entitlement to the daily living component,                  

(e)a person in receipt of an increased disablement pension,                  

(f)a person in receipt of constant attendance allowance, or                  

(g)a person in receipt of armed forces independence payment.                  

##### Attendance allowanceU.K.

2A person is to be treated as a disabled person under paragraph 1(b) if he or she satisfies HMRC that he or she would be entitled                           to receive attendance allowance but for—

(a)the conditions as to residence and presence prescribed under section 64(1) of SSCBA 1992 or section 64(1) of SSCB(NI)A 1992,                  

(b)provision made by regulations under section 67(1) or (2) of SSCBA 1992 or section 67(1) or (2) of SSCB(NI)A 1992 (non-satisfaction                           of conditions for attendance allowance where person is undergoing treatment for renal failure in hospital or is provided with                           certain accommodation), or                  

(c)section 113(1) of SSCBA 1992 or section 113(1) of SSCB(NI)A 1992 or provision made by regulations under section 113(2) of                           SSCBA 1992 or section 113(2) of SSCB(NI)A 1992 (general provisions as to disqualification and suspension).                  

##### Disability living allowanceU.K.

3A person is to be treated as a disabled person under paragraph 1(c) if he or she satisfies HMRC that he or she would be entitled                           to receive a disability living allowance by virtue of entitlement to the care component at the highest or middle rate but                           for—

(a)the conditions as to residence and presence prescribed under section 71(6) of SSCBA 1992 or section 71(6) of SSCB(NI)A 1992,                  

(b)provision made by regulations under section 72(8) of SSCBA 1992 or section 72(8) of SSCB(NI)A 1992 (no payment of disability                           allowance for persons for whom certain accommodation is provided), or                  

(c)section 113(1) of SSCBA 1992 or section 113(1) of SSCB(NI)A 1992 or provision made by regulations under section 113(2) of                           SSCBA 1992 or section 113(2) of SSCB(NI)A 1992 (general provisions as to disqualification and suspension).                  

##### Personal independence paymentU.K.

4A person is to be treated as a disabled person under paragraph 1(d) if he or she satisfies HMRC that he or she would be entitled                           to receive personal independence payment by virtue of entitlement to the daily living component but for—

(a)the conditions as to residence and presence prescribed under section 77(3) of WRA 2012 or the corresponding provision having                           effect in Northern Ireland,                  

(b)provision made by regulations under section 85 of WRA 2012 (exclusion of certain care home residents) or the corresponding                           provision having effect in Northern Ireland,                  

(c)provision made by regulations under section 86 of WRA 2012 (exclusion of certain hospital in-patients) or the corresponding                           provision having effect in Northern Ireland, or                  

(d)section 87 of WRA 2012 (exclusion of prisoners and detainees) or the corresponding provision having effect in Northern Ireland.                  

##### Increased disablement pensionU.K.

5A person is to be treated as a disabled person under paragraph 1(e) if he or she satisfies HMRC that he or she would be entitled                           to receive an increased disablement pension but for—

(a)conditions as to residence and presence that have effect in relation to increased disablement pension by virtue of regulations                           under section 104(3) of SSCBA 1992 or section 104(3) of SSCB(NI)A 1992 (application of attendance allowance provisions),                  

(b)provision made under section 67(1) or (2) of SSCBA 1992 or section 67(1) or (2) of SSCB(NI)A 1992 (non-satisfaction of conditions                           for attendance allowance where person is undergoing treatment for renal failure in hospital or is provided with certain accommodation)                           that has effect in relation to increased disablement pension by virtue of such regulations, or                  

(c)section 113(1) of SSCBA 1992 or section 113(1) of SSCB(NI)A 1992 or provision made by regulations under section 113(2) of                           SSCBA 1992 or section 113(2) of SSCB(NI)A 1992 (general provisions as to disqualification and suspension).                  

##### Constant attendance allowanceU.K.

6A person is to be treated as a disabled person under paragraph 1(f) if he or she satisfies HMRC that he or she would be entitled                           to receive constant attendance allowance but for—

(a)article 61 (residence outside United Kingdom) or article 64 (maintenance in hospital or institution) of the Personal Injuries                           (Civilians) Scheme 1983 (S.I. 1983/686), or                  

(b)article 53 (maintenance in hospital or institution) of the Naval, Military and Air Forces etc. (Disablement and Death) Service                           Pensions Order 2006 (S.I. 2006/606).                  

##### Armed forces independence paymentU.K.

7A person is to be treated as a disabled person under paragraph 1(g) if he or she satisfies HMRC that he or she would be entitled                           to receive armed forces independence payment but for article 42 of the Armed Forces and Reserve Forces (Compensation Scheme)                           Order 2011 (S.I. 2011/517) (cessation of payment on admission to Royal Hospital, Chelsea).

##### InterpretationU.K.

8In this Schedule—
          -  “armed forces independence payment” means armed forces independence payment under a scheme established under section 1 of the Armed Forces (Pensions and Compensation)                              Act 2004,                         
          -  “attendance allowance” means an allowance under section 64 of SSCBA 1992 or section 64 of SSCB(NI)A 1992,                         
          -  “constant attendance allowance” means an allowance under—                          (a)
article 14 of the Personal Injuries (Civilians) Scheme 1983 (S.I. 1983/686), or                                 
(b)
article 8 of the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 2006 (S.I. 2006/606),                                 
 
          -  “disability living allowance” means a disability living allowance under section 71 of SSCBA 1992 or section 71 of SSCB(NI)A 1992,                         
          -  “HMRC” means Her Majesty's Revenue and Customs,                         
          -  “increased disablement pension” means an increase of disablement pension under—                          (a)
section 104 of SSCBA 1992, or                                 
(b)
section 104 of SSCB(NI)A 1992,                                 
 
          -  “personal independence payment” means personal independence payment under—                          (a)
WRA 2012, or                                 
(b)
the corresponding provision having effect in Northern Ireland,                                 
 
          -  “SSCBA 1992” means the Social Security Contributions and Benefits Act 1992,                         
          -  “SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992,                         
          -  “WRA 2012” means the Welfare Reform Act 2012.”                         

### Interpretation: relevant settlementU.K.

20(1)In this Schedule, “relevant settlement” means—U.K.

(a)a settlement created before 8 April 2013 the trusts of which have not been altered on or after that date, or

(b)a settlement arising on or after 8 April 2013 under the will of a testator, if—

(i)the will was executed before 8 April 2013 and its provisions, so far as relating to the settlement, have not been altered                        on or after that date, or

(ii)the will was executed or confirmed on or after 8 April 2013 and its provisions, so far as relating to the settlement, are                        in the same terms as those contained in a will executed by the same testator before that date.

(2)In this Schedule a reference to a will includes a reference to a codicil.

 Section 218

## SCHEDULE 45U.K.Statutory residence test

### **PART 1**U.K.The rules

#### IntroductionU.K.

1(1)This Part of this Schedule sets out the rules for determining for the purposes of relevant tax whether individuals are resident                        or not resident in the UK.U.K.

(2)The rules are referred to collectively as “the statutory residence test”.

(3)The rules do not apply in determining for the purposes of relevant tax whether individuals are resident or not resident in                        England, Wales, Scotland or Northern Ireland specifically (rather than in the UK as a whole).

(4)“Relevant tax” means—

(a)income tax,

(b)capital gains tax, and

(c)(so far as the residence status of individuals is relevant to them) inheritance tax and corporation tax.

(5)Key concepts used in the rules are defined in Part 2 of this Schedule.

#### Interpretation of enactmentsU.K.

2(1)In enactments relating to relevant tax, a reference to being resident (or not resident) in the UK is, in the case of individuals,                        a reference to being resident (or not resident) in the UK in accordance with the statutory residence test.U.K.

(2)Sub-paragraph (1) applies even if the reference relates to the tax liability of an actual or deemed person that is not an                        individual (for example, where the liability of another person depends on the residence status of an individual).

(3)An individual who, in accordance with the statutory residence test, is resident (or not resident) in the UK “for” a tax year                        is taken for the purposes of any enactment relating to relevant tax to be resident (or not resident) there at all times in                        that tax year.

(4)But see Part 3 of this Schedule (split year treatment) for cases where the effect of sub-paragraph (3) is relaxed in certain                        circumstances.

(5)This Schedule has effect subject to any express provision to the contrary in (or falling to be recognised and acknowledged                        in law by virtue of) any enactment.

#### The basic ruleU.K.

3U.K.An individual (“P”) is resident in the UK for a tax year (“year X”) if—

(a)the automatic residence test is met for that year, or

(b)the sufficient ties test is met for that year.

4U.K.If neither of those tests is met for that year, P is not resident in the UK for that year.

#### The automatic residence testU.K.

5U.K.The automatic residence test is met for year X if P meets—

(a)at least one of the automatic UK tests, and

(b)none of the automatic overseas tests.

#### The automatic UK testsU.K.

6U.K.There are 4 automatic UK tests.

7U.K.The first automatic UK test is that P spends at least 183 days in the UK in year X.

8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

9(1)The third automatic UK test is that—U.K.

(a)P works sufficient hours in the UK, as assessed over a period of 365 days,

(b)during that period, there are no significant breaks from UK work,

(c)all or part of that period falls within year X,

(d)more than 75% of the total number of days in the 365-day period on which P does more than 3 hours' work are days on which                        P does more than 3 hours' work in the UK, and

(e)at least one day which falls in both that period and year X is a day on which P does more than 3 hours' work in the UK.

(2)Take the following steps to work out, for any given period of 365 days, whether P works “sufficient hours in the UK” as assessed                        over that period—
          -  *Step 1* Identify any days in the period on which P does more than 3 hours' work overseas, including ones on which P also does work                           in the UK on the same day. The days so identified are referred to as “disregarded days”.                         
          -  *Step 2* Add up (for all employments held and trades carried on by P) the total number of hours that P works in the UK during the                           period, but ignoring any hours that P works in the UK on disregarded days. The result is referred to as P's “net UK hours”.                         
          -  *Step 3* Subtract from 365—                          (a)
the total number of disregarded days, and
(b)
any days that are allowed to be subtracted, in accordance with the rules in paragraph 28 of this Schedule, to take account                                    of periods of leave and gaps between employments.                                 
  The result is referred to as the “reference period”.                         
          -  *Step 4* Divide the reference period by 7. If the answer is more than 1 and is not a whole number, round down to the nearest whole                           number. If the answer is less than 1, round up to 1.                         
          -  *Step 5* Divide P's net UK hours by the number resulting from step 4.                          If the answer is 35 or more, P is considered to work “sufficient hours in the UK” as assessed over the 365-day period in question. 

(3)This paragraph does not apply to P if—

(a)P has a relevant job on board a vehicle, aircraft or ship at any time in year X, and

(b)at least 6 of the trips that P makes in year X as part of that job are cross-border trips that either begin in the UK, end                        in the UK or begin and end in the UK.

10(1)The fourth automatic UK test is that—U.K.

(a)P dies in year X,

(b)for each of the previous 3 tax years, P was resident in the UK by virtue of meeting the automatic residence test,

(c)even assuming P were not resident in the UK for year X, the tax year preceding year X would not be a split year as respects                        P (see Part 3 of this Schedule),

(d)when P died, either—

(i)P's home was in the UK, or

(ii)P had more than one home and at least one of them was in the UK, and

(e)if P had a home overseas during all or part of year X, P did not spend a sufficient amount of time there in year X.

(2)In relation to a home of P's overseas, P “spent a sufficient amount of time” there in year X if—

(a)there were at least 30 days in year X when P was present there on that day for at least some of the time (no matter how short                        a time), or

(b)P was present there for at least some of the time (no matter how short a time) on each day of year X up to and including the                        day on which P died.

(3)In sub-paragraph (2)—

(a)the reference to 30 days is to 30 days in aggregate, whether the days were consecutive or intermittent, and

(b)the reference to P being present at the home is to P being present there at a time when it was a home of P's.

(4)If P had more than one home overseas—

(a)each of those homes must be looked at separately to see if the requirement of sub-paragraph (1)(e) is met, and

(b)that requirement is then met so long as it is met in relation to each of them.

#### The automatic overseas testsU.K.

11U.K.There are 5 automatic overseas tests.

12U.K.The first automatic overseas test is that—

(a)P was resident in the UK for one or more of the 3 tax years preceding year X,

(b)the number of days in year X that P spends in the UK is less than 16, and

(c)P does not die in year X.

13U.K.The second automatic overseas test is that—

(a)P was resident in the UK for none of the 3 tax years preceding year X, and

(b)the number of days that P spends in the UK in year X is less than 46.

14(1)The third automatic overseas test is that—U.K.

(a)P works sufficient hours overseas, as assessed over year X,

(b)during year X, there are no significant breaks from overseas work,

(c)the number of days in year X on which P does more than 3 hours' work in the UK is less than 31, and

(d)the number of days in year X falling within sub-paragraph (2) is less than 91.

(2)A day falls within this sub-paragraph if—

(a)it is a day spent by P in the UK, but

(b)it is not a day that is treated under paragraph 23(4) as a day spent by P in the UK.

(3)Take the following steps to work out whether P works “sufficient hours overseas” as assessed over year X—
          -  *Step 1* Identify any days in year X on which P does more than 3 hours' work in the UK, including ones on which P also does work overseas                           on the same day. The days so identified are referred to as “disregarded days”.                         
          -  *Step 2* Add up (for all employments held and trades carried on by P) the total number of hours that P works overseas in year X, but                           ignoring any hours that P works overseas on disregarded days. The result is referred to as P's “net overseas hours”.                         
          -  *Step 3* Subtract from 365 (or 366 if year X includes 29 February)—                          (a)
the total number of disregarded days, and
(b)
any days that are allowed to be subtracted, in accordance with the rules in paragraph 28 of this Schedule, to take account                                    of periods of leave and gaps between employments.                                 
  The result is referred to as the “reference period”.                         
          -  *Step 4* Divide the reference period by 7. If the answer is more than 1 and is not a whole number, round down to the nearest whole                           number. If the answer is less than 1, round up to 1.                         
          -  *Step 5* Divide P's net overseas hours by the number resulting from step 4.                          If the answer is 35 or more, P is considered to work “sufficient hours overseas” as assessed over year X. 

(4)This paragraph does not apply to P if—

(a)P has a relevant job on board a vehicle, aircraft or ship at any time in year X, and

(b)at least 6 of the trips that P makes in year X as part of that job are cross-border trips that either begin in the UK, end                        in the UK or begin and end in the UK.

15(1)The fourth automatic overseas test is that—U.K.

(a)P dies in year X,

(b)P was resident in the UK for neither of the 2 tax years preceding year X or, alternatively, P's case falls within sub-paragraph                        (2), and

(c)the number of days that P spends in the UK in year X is less than 46.

(2)P's case falls within this sub-paragraph if—

(a)P was not resident in the UK for the tax year preceding year X, and

(b)the tax year before that was a split year as respects P because the circumstances of the case fell within Case 1, Case 2 or                        Case 3 (see Part 3 of this Schedule).

16(1)The fifth automatic overseas test is that—U.K.

(a)P dies in year X,

(b)P was resident in the UK for neither of the 2 tax years preceding year X because P met the third automatic overseas test for                        each of those years or, alternatively, P's case falls within sub-paragraph (2), and

(c)P would meet the third automatic overseas test for year X if paragraph 14 were read with the relevant modifications.

(2)P's case falls within this sub-paragraph if—

(a)P was not resident in the UK for the tax year preceding year X because P met the third automatic overseas test for that year,                        and

(b)the tax year before that was a split year as respects P because the circumstances of the case fell within Case 1 (see Part                        3 of this Schedule).

(3)The relevant modifications of paragraph 14 are—

(a)in sub-paragraph (1)(a) and (b) and sub-paragraph (3), for “year X” read “the period from the start of year X up to and including                        the day before the day of P's death”, and

(b)in step 3 of sub-paragraph (3), for “365 (or 366 if year X includes 29 February)” read “the number of days in the period from                        the start of year X up to and including the day before the day of P's death”.

#### The sufficient ties testU.K.

17(1)The sufficient ties test is met for year X if—U.K.

(a)P meets none of the automatic UK tests and none of the automatic overseas tests, but

(b)P has sufficient UK ties for that year.

(2)“UK ties” is defined in Part 2 of this Schedule.

(3)Whether P has “sufficient” UK ties for year X will depend on—

(a)whether P was resident in the UK for any of the previous 3 tax years, and

(b)the number of days that P spends in the UK in year X.

(4)The Tables in paragraphs 18 and 19 show how many ties are sufficient in each case.

#### Sufficient UK tiesU.K.

18U.K.The Table below shows how many UK ties are sufficient in a case where P was resident in the UK for one or more of the 3 tax                        years preceding year X—

19U.K.The Table below shows how many UK ties are sufficient in a case where P was resident in the UK for none of the 3 tax years                        preceding year X—

20(1)If P dies in year X, paragraph 18 has effect as if the words “More than 15 but” were omitted from the first column of the                        Table.U.K.

(2)In addition to that modification, if the death occurs before 1 March in year X, paragraphs 18 and 19 have effect as if each                        number of days mentioned in the first column of the Table were reduced by the appropriate number.

(3)The appropriate number is found by multiplying the number of days, in each case, by—

where “A” is the number of whole months in year X after the month in which P dies.

(4)If, for any number of days, the appropriate number is not a whole number, the appropriate number is to be rounded up or down                        as follows—

(a)if the first figure after the decimal point is 5 or more, round the appropriate number up to the nearest whole number,

(b)otherwise, round it down to the nearest whole number.

### **PART 2**U.K.Key concepts

#### IntroductionU.K.

21U.K.This Part of this Schedule defines some key concepts for the purposes of this Schedule.

#### Days spentU.K.

22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Days spent “in” a periodU.K.

24U.K.Any reference to a number of days spent in the UK “in” a given period is a reference to the total number of days spent there                        (in aggregate) in that period, whether continuously or intermittently.

#### HomeU.K.

25(1)A person's home could be a building or part of a building or, for example, a vehicle, vessel or structure of any kind.U.K.

(2)Whether, for a given building, vehicle, vessel, structure or the like, there is a sufficient degree of permanence or stability                        about P's arrangements there for the place to count as P's home (or one of P's homes) will depend on all the circumstances                        of the case.

(3)But somewhere that P uses periodically as nothing more than a holiday home or temporary retreat (or something similar) does                        not count as a home of P's.

(4)A place may count as a home of P's whether or not P holds any estate or interest in it (and references to “having” a home                        are to be read accordingly).

(5)Somewhere that was P's home does not continue to count as such merely because P continues to hold an estate or interest in                        it after P has moved out (for example, if P is in the process of selling it or has let or sub-let it, having set up home elsewhere).

#### WorkU.K.

26(1)P is considered to be “working” (or doing “work”) at any time when P is doing something—U.K.

(a)in the performance of duties of an employment held by P, or

(b)in the course of a trade carried on by P (alone or in partnership).

(2)In deciding whether something is being done in the performance of duties of an employment, regard must be had to whether,                        if value were received by P for doing the thing, it would fall within the definition of employment income in section 7 of                        ITEPA 2003.

(3)In deciding whether something is being done in the course of a trade, regard must be had to whether, if expenses were incurred                        by P in doing the thing, the expenses could be deducted in calculating the profits of the trade for income tax purposes.

(4)Time spent travelling counts as time spent working—

(a)if the cost of the journey could, if it were incurred by P, be deducted in calculating P's earnings from that employment under                        section 337, 338, 340 or 342 of ITEPA 2003 or, as the case may be, in calculating the profits of the trade under ITTOIA 2005,                        or

(b)to the extent that P does something else during the journey that would itself count as work in accordance with this paragraph.

(5)Time spent undertaking training counts as time spent working if—

(a)in the case of an employment held by P, the training is provided or paid for by the employer and is undertaken to help P in                        performing duties of the employment, and

(b)in the case of a trade carried on by P, the cost of the training could be deducted in calculating the profits of the trade                        for income tax purposes.

(6)Sub-paragraphs (4) and (5) have effect without prejudice to the generality of sub-paragraphs (2) and (3).

(7)Assume for the purposes of sub-paragraphs (2) to (5) that P is someone who is chargeable to income tax under ITEPA 2003 or                        ITTOIA 2005.

(8)A voluntary post for which P has no contract of service does not count as an employment for the purposes of this Schedule.

#### Location of workU.K.

27(1)Work is done where it is actually done, regardless of where the employment is held or the trade is carried on by P.U.K.

(2)But work done by way of or in the course of travelling to or from the UK by air or sea or via a tunnel under the sea is assumed                        to be done overseas even during the part of the journey in or over the UK.

(3)For these purposes, travelling to or from the UK is taken to—

(a)begin when P boards the aircraft, ship or train that is bound for a destination in the UK or (as the case may be) overseas,                        and

(b)end when P disembarks from that aircraft, ship or train.

(4)This paragraph is subject to express provisions in this Schedule about the location of work done by people with relevant jobs                        on board vehicles, aircraft or ships.

#### Rules for calculating the reference periodU.K.

28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Significant breaks from UK or overseas workU.K.

29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Relevant jobs on board vehicles, aircraft or shipsU.K.

30(1)P has a “relevant” job on board a vehicle, aircraft or ship if condition A and condition B are met.U.K.

(2)Condition A is that P either—

(a)holds an employment, the duties of which consist of duties to be performed on board a vehicle, aircraft or ship while it is                        travelling, or

(b)carries on a trade, the activities of which consist of work to be done or services to be provided on board a vehicle, aircraft                        or ship while it is travelling.

(3)Condition B is that substantially all of the trips made in performing those duties or carrying on those activities are ones                        that involve crossing an international boundary at sea, in the air or on land (referred to as “cross-border trips”).

(4)Sub-paragraph (2)(b) is not satisfied unless, in order to do the work or provide the services, P has to be present (in person)                        on board the vehicle, aircraft or ship while it is travelling.

(5)Duties or activities of a purely incidental nature are to be ignored in deciding whether the duties of an employment or the                        activities of a trade consist of duties or activities of a kind described in sub-paragraph (2)(a) or (b).

#### UK tiesU.K.

31(1)What counts as a “UK tie” depends on whether P was resident in the UK for one or more of the 3 tax years preceding year X.U.K.

(2)If P was resident in the UK for one or more of those 3 tax years, each of the following types of tie counts as a UK tie—

(a)a family tie,

(b)an accommodation tie,

(c)a work tie,

(d)a 90-day tie, and

(e)a country tie.

(3)Otherwise, each of the following types of tie counts as a UK tie—

(a)a family tie,

(b)an accommodation tie,

(c)a work tie, and

(d)a 90-day tie.

(4)In order to have the requisite number of UK ties for year X, each tie of P's must be of a different type.

#### Family tieU.K.

32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

33(1)This paragraph applies in deciding for the purposes (only) of paragraph 32(1)(b) whether a person with whom P has a relevant                        relationship (a “family member”) is someone who is resident in the UK for year X.U.K.

(2)A family tie based on the fact that a family member has, by the same token, a relevant relationship with P is to be disregarded                        in deciding whether that family member is someone who is resident in the UK for year X.

(3)A family member falling within sub-paragraph (4) is to be treated as being not resident in the UK for year X if the number                        of days that he or she spends in the UK in the part of year X outside term-time is less than 21.

(4)A family member falls within this sub-paragraph if he or she—

(a)is a child of P's who is under the age of 18,

(b)is in full-time education in the UK at any time in year X, and

(c)is resident in the UK for year X but would not be so resident if the time spent in full-time education in the UK in that year                        were disregarded.

(5)In sub-paragraph (4)—

(a)references to full-time education in the UK are to full-time education at a university, college, school or other educational                        establishment in the UK, and

(b)the reference to the time spent in full-time education in the UK is to the time spent there during term-time.

(6)For the purposes of this paragraph, half-term breaks and other breaks when teaching is not provided during a term are considered                        to form part of “term-time”.

#### Accommodation tieU.K.

34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Work tieU.K.

35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

36(1)This paragraph applies for the purposes of paragraph 35.U.K.

(2)It applies in cases where P has a relevant job on board a vehicle, aircraft or ship.

(3)When making a cross-border trip as part of that job—

(a)if the trip begins in the UK, P is assumed to do more than 3 hours' work in the UK on the day on which it begins,

(b)if the trip ends in the UK, P is assumed to do fewer than 3 hours' work in the UK on the day on which it ends.

(4)Those assumptions apply regardless of how late in the day the trip begins or ends (even if it begins or ends just before midnight).

(5)For the purposes of sub-paragraph (3)(a), it does not matter whether the trip ends on that same day.

(6)A day that falls within both paragraph (a) and paragraph (b) of sub-paragraph (3) is to be treated as if it fell only within                        paragraph (a).

(7)In the case of a cross-border trip to or from the UK that is undertaken in stages—

(a)the day on which the trip begins or, as the case may be, ends is the day on which the stage of the trip that involves crossing                        the UK border begins or ends, and

(b)accordingly, any day on which a stage is undertaken by P solely within the UK must (if it lasts for more than 3 hours) be                        counted separately as a day on which P does more than 3 hours' work in the UK.

#### 90-day tieU.K.

37U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

#### Country tieU.K.

38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### **PART 3**U.K.Split year treatment

#### IntroductionU.K.

39U.K.This Part of this Schedule—

(a)explains when, as respects an individual, a tax year is a split year,

(b)defines the overseas part and the UK part of a split year, and

(c)amends certain enactments to provide for special charging rules in cases involving split years.

40(1)The effect of a tax year being a split year is to relax the effect of paragraph 2(3) (which treats individuals who are UK                        resident “for” a tax year as being UK resident at all times in that year).U.K.

(2)When and how the effect of paragraph 2(3) is relaxed is defined in the special charging rules introduced by the amendments                        made by this Part.

(3)Subject to those special charging rules (and any other special charging rules for split years that may be introduced in the                        future), nothing in this Part alters an individual's residence status for a tax year or affects his or her liability to tax.

41U.K.This Part—

(a)does not apply in determining the residence status of personal representatives, and

(b)applies to only a limited extent in determining the residence status of the trustees of a settlement (see section 475 of ITA                        2007 and section 69 of TCGA 1992, as amended by this Part).

42U.K.The existence of special charging rules for cases involving split years is not intended to affect any question as to whether                        an individual would fall to be regarded under double taxation arrangements as a resident of the UK.

#### Definition of a “split year”U.K.

43(1)As respects an individual, a tax year is a “split year” if—U.K.

(a)the individual is resident in the UK for that year, and

(b)the circumstances of the case fall within—

(i)Case 1, Case 2 or Case 3 (cases involving actual or deemed departure from the UK), or

(ii)Case 4, Case 5, Case 6, Case 7 or Case 8 (cases involving actual or deemed arrival in the UK).

(2)The 8 Cases are described in paragraphs 44 to 51.

(3)In those paragraphs, the individual is referred to as “the taxpayer” and the tax year as “the relevant year”.

(4)In applying Part 2 of this Schedule to those paragraphs, for “P” read “the taxpayer”.

#### Case 1: starting full-time work overseasU.K.

44(1)The circumstances of a case fall within Case 1 if they are as described in sub-paragraphs (2) to (4).U.K.

(2)The taxpayer was resident in the UK for the previous tax year (whether or not it was a split year).

(3)There is at least one period (consisting of one or more days) that—

(a)begins with a day that—

(i)falls within the relevant year, and

(ii)is a day on which the taxpayer does more than 3 hours' work overseas,

(b)ends with the last day of the relevant year, and

(c)satisfies the overseas work criteria.

(4)The taxpayer is not resident in the UK for the next tax year because the taxpayer meets the third automatic overseas test                        for that year (see paragraph 14).

(5)A period “satisfies the overseas work criteria” if—

(a)the taxpayer works sufficient hours overseas, as assessed over that period,

(b)during that period, there are no significant breaks from overseas work,

(c)the number of days in that period on which the taxpayer does more than 3 hours' work in the UK does not exceed the permitted                        limit, and

(d)the number of days in that period falling within sub-paragraph (6) does not exceed the permitted limit.

(6)A day falls within this sub-paragraph if—

(a)it is a day spent by the taxpayer in the UK, but

(b)it is not a day that is treated under paragraph 23(4) as a day spent by the taxpayer in the UK.

(7)To work out whether the taxpayer works “sufficient hours overseas” as assessed over a given period, apply paragraph 14(3)                        but with the following modifications—

(a)for “P” read “the taxpayer”,

(b)for “year X” read “the period under consideration”,

(c)for “365 (or 366 if year X includes 29 February)” read “the number of days in the period under consideration”, and

(d)in paragraph 28(9)(b), as it applies for the purposes of step 3, for “30” read “the permitted limit”.

(8)The permitted limit is—

(a)for sub-paragraphs (5)(c) and (7)(d), the number found by reducing 30 by the appropriate number, and

(b)for sub-paragraph (5)(d), the number found by reducing 90 by the appropriate number.

(9)The appropriate number is the result of—

where—

“A” is—

30, for sub-paragraphs (5)(c) and (7)(d), or

90, for sub-paragraph (5)(d), and

“B” is the number of whole months in the part of the relevant year before the day mentioned in sub-paragraph (3)(a).

#### Case 2: the partner of someone starting full-time work overseasU.K.

45(1)The circumstances of a case fall within Case 2 if they are as described in sub-paragraphs (2) to (6).U.K.

(2)The taxpayer was resident in the UK for the previous tax year (whether or not it was a split year).

(3)The taxpayer has a partner whose circumstances fall within Case 1 for—

(a)the relevant year, or

(b)the previous tax year.

(4)On a day in the relevant year, the taxpayer moves overseas so the taxpayer and the partner can continue to live together while                        the partner is working overseas.

(5)In the part of the relevant year beginning with the deemed departure day—

(a)the taxpayer has no home in the UK at any time, or has homes in both the UK and overseas but spends the greater part of the                        time living in the overseas home, and

(b)the number of days that the taxpayer spends in the UK does not exceed the permitted limit.

(6)The taxpayer is not resident in the UK for the next tax year.

(7)If sub-paragraph (3)(a) applies, the “deemed departure day” is the later of—

(a)the day mentioned in sub-paragraph (4), and

(b)the first day of what is, for the partner, the overseas part of the relevant year as defined for Case 1 (see paragraph 53).

(8)If sub-paragraph (3)(b) applies, the “deemed departure day” is the day mentioned in sub-paragraph (4).

(9)The permitted limit is the number found by reducing 90 by the appropriate number.

(10)The appropriate number is the result of—

where—

“A” is 90, and

“B” is the number of whole months in the part of the relevant year before the deemed departure day.

#### Case 3: ceasing to have a home in the UKU.K.

46(1)The circumstances of a case fall within Case 3 if they are as described in sub-paragraphs (2) to (6).U.K.

(2)The taxpayer was resident in the UK for the previous tax year (whether or not it was a split year).

(3)At the start of the relevant year the taxpayer had one or more homes in the UK but—

(a)there comes a day in the relevant year when P ceases to have any home in the UK, and

(b)from then on, P has no home in the UK for the rest of that year.

(4)In the part of the relevant year beginning with the day mentioned in sub-paragraph (3)(a), the taxpayer spends fewer than                        16 days in the UK.

(5)The taxpayer is not resident in the UK for the next tax year.

(6)At the end of the period of 6 months beginning with the day mentioned in sub-paragraph (3)(a), the taxpayer has a sufficient                        link with a country overseas.

(7)The taxpayer has a “sufficient link” with a country overseas if and only if—

(a)the taxpayer is considered for tax purposes to be a resident of that country in accordance with its domestic laws, or

(b)the taxpayer has been present in that country (in person) at the end of each day of the 6-month period mentioned in sub-paragraph                        (6), or

(c)the taxpayer's only home is in that country or, if the taxpayer has more than one home, they are all in that country.

#### Case 4: starting to have a home in the UK onlyU.K.

47(1)The circumstances of a case fall within Case 4 if they are as described in sub-paragraphs (2) to (4).U.K.

(2)The taxpayer was not resident in the UK for the previous tax year.

(3)At the start of the relevant year, the taxpayer did not meet the only home test, but there comes a day in the relevant year                        when that ceases to be the case and the taxpayer then continues to meet the only home test for the rest of that year.

(4)For the part of the relevant year before that day, the taxpayer does not have sufficient UK ties.

(5)The “only home test” is met if—

(a)the taxpayer has only one home and that home is in the UK, or

(b)the taxpayer has more than one home and all of them are in the UK.

(6)Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those paragraphs) apply for the purposes of sub-paragraph                        (4) with the following adjustments—

(a)references in those paragraphs and that Part to year X are to be read as references to the part of the relevant year mentioned                        in sub-paragraph (4), and

(b)each number of days mentioned in the first column of the Table in paragraphs 18 and 19 is to be reduced by the appropriate                        number.

(7)The appropriate number is found by multiplying the number of days, in each case, by—

where “A” is the number of whole months in the part of the relevant year beginning with the day mentioned in sub-paragraph                        (3).                     

(8)Sub-paragraph (6)(a) does not apply to the references to year X in paragraphs 32(1)(b) and 33 of this Schedule (which relate                        to the residence status of family members) so those references must continue to be read as references to year X.

#### Case 5: starting full-time work in the UKU.K.

48(1)The circumstances of a case fall within Case 5 if they are as described in sub-paragraphs (2) and (3).U.K.

(2)The taxpayer was not resident in the UK for the previous tax year.

(3)There is at least one period of 365 days in respect of which the following conditions are met—

(a)the period begins with a day that—

(i)falls within the relevant year, and

(ii)is a day on which the taxpayer does more than 3 hours' work in the UK,

(b)in the part of the relevant year before the period begins, the taxpayer does not have sufficient UK ties,

(c)the taxpayer works sufficient hours in the UK, as assessed over the period,

(d)during the period, there are no significant breaks from UK work, and

(e)at least 75% of the total number of days in the period on which the taxpayer does more than 3 hours' work are days on which                        the taxpayer does more than 3 hours' work in the UK.

(4)To work out whether the taxpayer works “sufficient hours in the UK” as assessed over a given period, apply paragraph 9(2)                        but for “P” read “the taxpayer”.

(5)Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those paragraphs) apply for the purposes of sub-paragraph                        (3)(b) with the following adjustments—

(a)references in those paragraphs and that Part to year X are to be read as references to the part of the relevant year mentioned                        in sub-paragraph (3)(b), and

(b)each number of days mentioned in the first column of the Table in paragraphs 18 and 19 is to be reduced by the appropriate                        number.

(6)The appropriate number is found by multiplying the number of days, in each case, by—

where “A” is the number of whole months in the part of the relevant year beginning with the day on which the 365-day period                        in question begins.                     

(7)Sub-paragraph (5)(a) does not apply to the references to year X in paragraphs 32(1)(b) and 33 of this Schedule (which relate                        to the residence status of family members) so those references must continue to be read as references to year X.

#### Case 6: ceasing full-time work overseasU.K.

49(1)The circumstances of a case fall within Case 6 if they are as described in sub-paragraphs (2) to (4).U.K.

(2)The taxpayer—

(a)was not resident in the UK for the previous tax year because the taxpayer met the third automatic overseas test for that year                        (see paragraph 14), but

(b)was resident in the UK for one or more of the 4 tax years immediately preceding that year.

(3)There is at least one period (consisting of one or more days) that—

(a)begins with the first day of the relevant year,

(b)ends with a day that—

(i)falls within the relevant year, and

(ii)is a day on which the taxpayer does more than 3 hours' work overseas, and

(c)satisfies the overseas work criteria.

(4)The taxpayer is resident in the UK for the next tax year (whether or not it is a split year).

(5)A period “satisfies the overseas work criteria” if—

(a)the taxpayer works sufficient hours overseas, as assessed over that period,

(b)during that period, there are no significant breaks from overseas work,

(c)the number of days in that period on which the taxpayer does more than 3 hours' work in the UK does not exceed the permitted                        limit, and

(d)the number of days in that period falling within sub-paragraph (6) does not exceed the permitted limit.

(6)A day falls within this sub-paragraph if—

(a)it is a day spent by the taxpayer in the UK, but

(b)it is not a day that is treated under paragraph 23(4) as a day spent by the taxpayer in the UK.

(7)To work out whether the taxpayer works “sufficient hours overseas” as assessed over a given period, apply paragraph 14(3)                        but with the following modifications—

(a)for “P” read “the taxpayer”,

(b)for “year X” read “the period under consideration”,

(c)for “365 (or 366 if year X includes 29 February)” read “the number of days in the period under consideration”, and

(d)in paragraph 28(9)(b), as it applies for the purposes of step 3, for “30” read “the permitted limit”.

(8)The permitted limit is—

(a)for sub-paragraphs (5)(c) and (7)(d), the number found by reducing 30 by the appropriate number, and

(b)for sub-paragraph (5)(d), the number found by reducing 90 by the appropriate number.

(9)The appropriate number is the result of—

where—

“A” is—

30, for sub-paragraphs (5)(c) and (7)(d), or

90, for sub-paragraph (5)(d), and

“B” is the number of whole months in the part of the relevant year after the 365-day period in question ends.

#### Case 7: the partner of someone ceasing full-time work overseasU.K.

50(1)The circumstances of a case fall within Case 7 if they are as described in sub-paragraphs (2) to (6).U.K.

(2)The taxpayer was not resident in the UK for the previous tax year.

(3)The taxpayer has a partner whose circumstances fall within Case 6 for—

(a)the relevant year, or

(b)the previous tax year.

(4)On a day in the relevant year, the taxpayer moves to the UK so the taxpayer and the partner can continue to live together                        on the partner's return or relocation to the UK.

(5)In the part of the relevant year before the deemed arrival day—

(a)the taxpayer has no home in the UK at any time, or has homes in both the UK and overseas but spends the greater part of the                        time living in the overseas home, and

(b)the number of days that the taxpayer spends in the UK does not exceed the permitted limit.

(6)The taxpayer is resident in the UK for the next tax year (whether or not it is a split year).

(7)If sub-paragraph (3)(a) applies, the “deemed arrival day” is the later of—

(a)the day mentioned in sub-paragraph (4), and

(b)the first day of what is, for the partner, the UK part of the relevant year as defined for Case 6 (see paragraph 54).

(8)If sub-paragraph (3)(b) applies, the “deemed arrival day” is the day mentioned in sub-paragraph (4).

(9)The permitted limit is the number found by reducing 90 by the appropriate number.

(10)The appropriate number is the result of—

where—

“A” is 90, and

“B” is the number of whole months in the part of the relevant year beginning with the deemed arrival day.

#### Case 8: starting to have a home in the UKU.K.

51(1)The circumstances of a case fall within Case 8 if they are as described in sub-paragraphs (2) to (5).U.K.

(2)The taxpayer was not resident in the UK for the previous tax year.

(3)At the start of the relevant year, the taxpayer had no home in the UK but—

(a)there comes a day when, for the first time in that year, the taxpayer does have a home in the UK, and

(b)from then on, the taxpayer continues to have a home in the UK for the rest of that year and for the whole of the next tax                        year.

(4)For the part of the relevant year before the day mentioned in sub-paragraph (3)(a), the taxpayer does not have sufficient                        UK ties.

(5)The taxpayer is resident in the UK for the next tax year and that tax year is not a split year as respects the taxpayer.

(6)Paragraphs 17 to 20 (and Part 2 of this Schedule so far as it relates to those paragraphs) apply for the purposes of sub-paragraph                        (4) with the following adjustments—

(a)references in those paragraphs and that Part to year X are to be read as references to the part of the relevant year mentioned                        in sub-paragraph (4), and

(b)each number of days mentioned in the first column of the Table in paragraphs 18 and 19 is to be reduced by the appropriate                        number.

(7)The appropriate number is found by multiplying the number of days, in each case, by—

where “A” is the number of whole months in the part of the relevant year beginning with the day mentioned in sub-paragraph                        (3)(a).                     

(8)Sub-paragraph (6)(a) does not apply to the references to year X in paragraphs 32(1)(b) and 33 of this Schedule (which relate                        to the residence status of family members) so those references must continue to be read as references to year X.

#### General rules for construing Cases 1 to 8U.K.

52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### The overseas partU.K.

53(1)“The overseas part” of a split year is the part of that year defined below—U.K.

(a)for the Case in question, or

(b)if the taxpayer's circumstances fall within more than one Case, for the Case which has priority (see paragraphs 54 and 55).

(2)For Case 1, the overseas part is—

(a)if there is only one period falling within paragraph 44(3), the part beginning with the first day of that period, and

(b)if there is more than one such period, the part beginning with the first day of the longest of those periods.

(3)For Case 2, the overseas part is the part beginning with the deemed departure day as defined in paragraph 45(7) and (8).

(4)For Case 3, the overseas part is the part beginning with the day mentioned in paragraph 46(3)(a).

(5)For Case 4, the overseas part is the part before the day mentioned in paragraph 47(3).

(6)For Case 5, the overseas part is—

(a)if there is only one period falling within paragraph 48(3), the part before that period begins, and

(b)if there is more than one such period, the part before the first of those periods begins.

(7)For Case 6, the overseas part is—

(a)if there is only one period falling within paragraph 49(3), the part ending with the last day of that period, and

(b)if there is more than one such period, the part ending with the last day of the longest of those periods.

(8)For Case 7, the overseas part is the part before the deemed arrival day as defined in paragraph 50(7) and (8).

(9)For Case 8, the overseas part is the part before the day mentioned in paragraph 51(3)(a).

#### Priority between Cases 1 to 3U.K.

54(1)This paragraph applies to determine which Case has priority where the taxpayer's circumstances for the relevant year fall                        within two or all of the following—U.K.
          -  Case 1 (starting full-time work overseas); 
          -  Case 2 (the partner of someone starting full-time work overseas); 
          -  Case 3 (ceasing to have a home in the UK). 

(2)Case 1 has priority over Case 2 and Case 3.

(3)Case 2 has priority over Case 3.

#### Priority between Cases 4 to 8U.K.

55(1)This paragraph applies to determine which Case has priority where the taxpayer's circumstances for the relevant year fall                        within two or more of the following—U.K.
          -  Case 4 (starting to have a home in the UK only); 
          -  Case 5 (starting full-time work in the UK); 
          -  Case 6 (ceasing full-time work overseas); 
          -  Case 7 (the partner of someone ceasing full-time work overseas); 
          -  Case 8 (starting to have a home in the UK). 

(2)In this paragraph “the split year date” in relation to a Case means the final day of the part of the relevant year defined in paragraph 53(5) to (9) for that Case.

(3)If Case 6 applies—

(a)if Case 5 also applies and the split year date in relation to Case 5 is earlier than the split year date in relation to Case                        6, Case 5 has priority;

(b)otherwise, Case 6 has priority.

(4)If Case 7 (but not Case 6) applies—

(a)if Case 5 also applies and the split year date in relation to Case 5 is earlier than the split year date in relation to Case                        7, Case 5 has priority;

(b)otherwise, Case 7 has priority

(5)If two or all of Cases 4, 5 and 8 apply (but neither Case 6 nor Case 7), the Case which has priority is the one with the earliest                        split year date.

(6)But if, in a case to which sub-paragraph (5) applies, two or all of the Cases which apply share the same split year date and                        that date is the only, or earlier, split year date of the Cases which apply, the Cases with that split year date are to be                        treated as having priority.

#### The UK partU.K.

56U.K.“The UK part” of a split year is the part of that year that is not the overseas part.

#### Special charging rules for employment incomeU.K.

57U.K.ITEPA 2003 is amended as follows.

58(1)In section 15 (earnings for year when employee UK resident), for subsection (1) substitute—U.K.

“(1)This section applies to general earnings for a tax year for which the employee is UK resident except that, in the case of                           a split year, it does not apply to any part of those earnings that is excluded.                  

(1A)General earnings are “excluded” if they—                  

(a)are attributable to the overseas part of the split year, and                  

(b)are neither—                  

(i)general earnings in respect of duties performed in the United Kingdom, nor                  

(ii)general earnings from overseas Crown employment subject to United Kingdom tax.”                  

(2)After subsection (3) insert—

“(4)Any attribution required for the purposes of subsection (1A)(a) is to be done on a just and reasonable basis.                  

(5)The following provisions of Chapter 5 of this Part apply for the purposes of subsection (1A)(b) as for the purposes of section                           27(2)—                  

(a)section 28 (which defines “general earnings from overseas Crown employment subject to United Kingdom tax”), and                  

(b)sections 38 to 41 (which contain rules for determining the place of performance of duties of employment).                  

(6)Subject to any provision made in an order under section 28(5) for the purposes of subsection (1A)(b), provisions made in an                           order under that section for the purposes of section 27(2) apply for the purposes of subsection (1A)(b) too.”                  

59U.K.In section 22 (chargeable overseas earnings for year when remittance basis applies and employee outside section 26), for subsection                        (7) substitute—

“(7)Section 15(1) does not apply to general earnings within subsection (1).”                  

60(1)Section 23 (calculation of “chargeable overseas earnings”) is amended as follows.U.K.

(2)In subsection (3), for step 1 substitute— *“Step 1* Identify— 

(a)in the case of a tax year that is not a split year, the full amount of the overseas earnings for that year, and                  

(b)in the case of a split year, so much of the full amount of the overseas earnings for that year as is attributable to the UK                           part of the year.”                  

(3)In that subsection, in step 2, for “those earnings” substitute “ the earnings identified under step 1 ”.

(4)After that subsection insert—

“(4)Any attribution required for the purposes of step 1 or step 2 in subsection (3) is to be done on a just and reasonable basis.”                  

61(1)Section 24 (limit on chargeable overseas earnings where duties of associated employment performed in UK) is amended as follows.U.K.

(2)After subsection (2) insert—

“(2A)If the tax year is a split year as respects the employee, subsection (2) has effect as if for “the aggregate earnings for                           that year from all the employments concerned” there were substituted “ so much of the aggregate earnings for that year from all the employments concerned as is attributable to the UK part of                              that year ”.”                  

(3)After subsection (3) insert—

“(3A)Any attribution required for the purposes of subsection (2A) is to be done on a just and reasonable basis.”                  

62(1)Section 26 (foreign earnings for year when remittance basis applies and employee meets section 26A requirement) is amended                        as follows.U.K.

(2)In subsection (1), for the words from “if the general earnings” to the end substitute “if the general earnings meet all of the following conditions— 

(a)they are neither—                  

(i)general earnings in respect of duties performed in the United Kingdom, nor                  

(ii)general earnings from overseas Crown employment subject to United Kingdom tax, and                  

(b)if the tax year is a split year as respects the employee, they are attributable to the UK part of the year.”                  

(3)After subsection (5) insert—

“(5A)Any attribution required for the purposes of subsection (1)(b) is to be done on a just and reasonable basis.”                  

(4)For subsection (6) substitute—

“(6)Section 15(1) does not apply to general earnings within subsection (1).”                  

63U.K.In section 232 (giving effect to mileage allowance relief), after subsection (6) insert—

“(6A)If the earnings from which a deduction allowed under this section is deductible include earnings that are “excluded” within                           the meaning of section 15(1A)—                  

(a)the amount of the deduction allowed is a proportion of the amount that would be allowed under this section if the tax year                           were not a split year, and                  

(b)that proportion is equal to the proportion that the part of the earnings that is not “excluded” bears to the total earnings.”                  

64(1)Section 329 (deduction from earnings not to exceed earnings) is amended as follows.U.K.

(2)After subsection (1) insert—

“(1A)If the earnings from which a deduction allowed under this Part is deductible include earnings that are “excluded” within the                           meaning of section 15(1A)—                  

(a)the amount of the deduction allowed is a proportion of the amount that would be allowed under this Part if the tax year were                           not a split year, and                  

(b)that proportion is equal to the proportion that the part of the earnings that is not “excluded” bears to the total earnings.”                  

(3)In subsection (2), after “those earnings” insert “ (or, in a case within subsection (1A), the part of those earnings that is not “excluded”) ”.

(4)In subsection (3), after “the earnings” insert “ (or, in a case within subsection (1A), the part of the earnings that is not “excluded”) ”.

65(1)Section 394 (charge on employer-financed retirement benefits) is amended as follows.U.K.

(2)In subsection (4C), omit “or” at the end of paragraph (b) and after that paragraph insert—

“(ba)an amount which would count as employment income of the employee or former employee under that Chapter but for the application                           of section 554Z5 (overlap with earlier relevant step), or”.                  

(3)In that subsection, for paragraph (c) substitute—

“(c)an amount which would be within paragraph (a), (b) or (ba) apart from—                  

(i)the employee or former employee having been non-UK resident for any tax year, or                  

(ii)any tax year having been a split year as respects the employee or former employee.”                  

66(1)Section 421E (income relating to securities: exclusions about residence etc) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)Chapters 2, 3 and 4 do not apply in relation to employment-related securities if the acquisition occurs in a tax year that                           is not a split year as respects the employee and—                  

(a)the earnings from the employment for that tax year are not general earnings to which section 15, 22 or 26 applies (earnings                           for year when employee UK resident), or                  

(b)had there been any earnings from the employment for that tax year, they would not have been general earnings to which any                           of those sections applied.                  

(1A)Chapters 2, 3 and 4 do not apply in relation to employment-related securities if the acquisition occurs in the UK part of                           a tax year that is a split year as respects the employee and—                  

(a)the earnings from the employment attributable to that part of the year are not general earnings to which section 15, 22 or                           26 applies, or                  

(b)had there been any earnings from the employment attributable to that part of the year, they would not have been general earnings                           to which any of those sections applied.                  

(1B)Chapters 2, 3 and 4 do not apply in relation to employment-related securities if the acquisition occurs in the overseas part                           of a tax year that is a split year as respects the employee.”                  

(3)After subsection (2) insert—

“(2A)But Chapters 3A to 3D do apply in relation to employment-related securities in relation to which they are disapplied by subsection                           (2) if—                  

(a)the acquisition takes place in the overseas part of a tax year that is a split year as respects the employee,                  

(b)the tax year is a split year because the circumstances of the case fall within Case 1, Case 2 or Case 3 as described in Part                           3 of Schedule 45 to FA 2013 (split year treatment: cases involving actual or deemed departure from the United Kingdom), and                  

(c)had it not been a split year—                  

(i)the earnings from the employment for that tax year (or some of them) would have been general earnings to which section 15,                           22 or 26 applied, or                  

(ii)if there had been any earnings from the employment for that tax year, they (or some of them) would have been general earnings                           to which any of those sections applied.”                  

67U.K.In section 474 (cases where Chapter 5 of Part 7 does not apply), for subsection (1) substitute—

“(1)This Chapter (apart from sections 473 and 483) does not apply in relation to an employment-related securities option if the                           acquisition occurs in a tax year that is not a split year as respects the employee and—                  

(a)the earnings from the employment are not general earnings to which section 15, 22 or 26 applies (earnings for year when employee                           UK resident), or                  

(b)had there been any earnings from the employment, they would not have been general earnings to which any of those sections                           applied.                  

(1A)This Chapter (apart from sections 473 and 483) does not apply in relation to an employment-related securities option if the                           acquisition occurs in the UK part of a tax year that is a split year as respects the employee and—                  

(a)the earnings from the employment attributable to that part of the year are not general earnings to which section 15, 22 or                           26 applies (earnings for year when employee UK resident), or                  

(b)had there been any earnings from the employment attributable to that part of the year, they would not have been general earnings                           to which any of those sections applied.                  

(1B)This Chapter (apart from sections 473 and 483) does not apply in relation to an employment-related securities option if the                           acquisition occurs in the overseas part of a tax year that is a split year as respects the employee.”                  

68(1)Section 554Z4 (residence issues) is amended as follows.U.K.

(2)For subsections (3) to (5) substitute—

“(3)Subsection (4) applies if the value of the relevant step, or a part of it, is “for”—                  

(a)a tax year for which A is non-UK resident, or                  

(b)a tax year that is a split year as respects A.                  

(4)The value, or the part of it, is to be reduced—                  

(a)in a case within subsection (3)(a), by so much of the value, or the part of it, as is not in respect of UK duties, and                  

(b)in a case within subsection (3)(b), by so much of the value, or the part of it, as is both—                  

(i)attributable to the overseas part of the tax year, and                  

(ii)not in respect of UK duties.                  

(5)The extent to which—                  

(a)the value, or the part of it, is not in respect of UK duties, or                  

(b)so much of the value, or the part of it, as is attributable to the overseas part of the tax year is not in respect of UK duties,                  

is to be determined on a just and reasonable basis.”                  

(3)After subsection (5) insert—

“(5A)Any attribution required for the purposes of subsection (4)(b)(i) is to be done on a just and reasonable basis.                  

(5B)“UK duties” means duties performed in the United Kingdom.”                  

69U.K.In section 554Z6 (overlap with certain earnings), in subsection (1)(a), after “UK resident” insert “ (and, in the case of a tax year that is a split year as respects A, are not “excluded” by virtue of section 15(1A)(a) and                           (b)(i)) ”.

70U.K.In section 554Z9 (remittance basis: A is ordinarily UK resident), in subsection (5)—

(a)in paragraph (b), after “that income” insert “ (or of so much of it as is attributable to the UK part of the relevant tax year, if it was a split year as respects A) ”, and

(b)in paragraph (c), after “tax year” insert “ (or the UK part of it) ”.

71(1)Section 554Z10 (remittance basis: A is not ordinarily resident) is amended as follows.U.K.

(2)In subsection (1), for paragraph (a) substitute—

“(a)the value of the relevant step, or a part of it, is “for” a tax year (“the relevant tax year”) as determined under section                           554Z4,”.                  

(3)For subsection (2) substitute—

“(2)The overseas portion of (as the case may be)—                  

(a)A's employment income by virtue of section 554Z2(1), or                  

(b)the relevant part of A's employment income by virtue of that section,                  

is “taxable specific income” in a tax year so far as the overseas portion is remitted to the United Kingdom in that year.”                  

(4)After that subsection insert—

“(2A)The overseas portion” of A's employment income by virtue of section 554Z2(1), or of the relevant part of that income, is so                           much of that income, or of the relevant part of it, as is not in respect of UK duties.                  

(2B)“UK duties” means duties performed in the United Kingdom.”                  

(5)In subsection (3), for “this purpose” substitute “ the purposes of this section ”.

(6)For subsection (4) substitute—

“(4)The extent to which—                  

(a)the employment income, or the relevant part of it, is not in respect of UK duties, or                  

(b)so much of the employment income, or of the relevant part of it, as is attributable to the UK part of the relevant tax year                           is not in respect of UK duties,                  

is to be determined on a just and reasonable basis.”                  

#### Special charging rules for pension incomeU.K.

72. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### PAYE incomeU.K.

73(1)Section 690 of ITEPA 2003 (employee non-residents etc) is amended as follows.U.K.

(2)In subsection (1), omit “only”.

(3)After that subsection insert—

“(1A)This section also applies in relation to an employee in a tax year if it appears to an officer of Revenue and Customs that—                  

(a)the tax year is likely to be a split year as respects the employee, and                  

(b)the employee works or will work in the United Kingdom and also works or is likely to work outside the United Kingdom.”                  

#### Special charging rules for trading incomeU.K.

74U.K.ITTOIA 2005 is amended as follows.

75U.K.In section 6 (territorial scope of charge to tax), after subsection (2) insert—

“(2A)If the tax year is a split year as respects a UK resident individual, this section has effect as if, for the overseas part                           of that year, the individual were non-UK resident.”                  

76(1)Section 17 (effect of becoming or ceasing to be UK resident) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)This section applies if—                  

(a)an individual carries on a trade otherwise than in partnership, and                  

(b)there is a change of residence.                  

(1A)For the purposes of this section there is a “change of residence” if—                  

(a)the individual becomes or ceases to be UK resident, or                  

(b)a tax year is, as respects the individual, a split year.                  

(1B)The change of residence occurs—                  

(a)in a case falling within subsection (1A)(a), at the start of the tax year for which the individual becomes or ceases to be                           UK resident, and                  

(b)in a case falling within subsection (1A)(b), at the start of whichever of the UK part or the overseas part of the tax year                           is the later part.”                  

(3)In subsection (2), at the beginning insert “ If this section applies and the individual does not actually cease permanently to carry on the trade immediately before                           the change of residence occurs, ”.

77U.K.In section 243 (post-cessation receipts: extent of charge to tax), after subsection (5) insert—

“(6)If the tax year is a split year as respects a UK resident individual, this section has effect as if, for the overseas part                           of that year, the individual were non-UK resident.”                  

78U.K.In section 849 (calculation of firm's profits or losses), after subsection (3) insert—

“(3A)For any tax year that is a split year as respects the partner, this section has effect as if the partner were non-UK resident                           in the overseas part of the year.”                  

79(1)Section 852 (carrying on by partner of notional trade) is amended as follows.U.K.

(2)For subsection (6) substitute—

“(6)If there is a change of residence, the partner is treated as permanently ceasing to carry on one notional trade when that                           change of residence occurs and starting to carry on another immediately afterwards.”                  

(3)After subsection (7) insert—

“(8)Subsections (1A) and (1B) of section 17 apply for the purposes of subsection (6).”                  

80(1)Section 854 (carrying on by partner of notional business) is amended as follows.U.K.

(2)For subsection (5) substitute—

“(5)If there is a change of residence, the partner is treated as permanently ceasing to carry on one notional business when that                           change of residence occurs and starting to carry on another immediately afterwards.”                  

(3)After that subsection insert—

“(5A)Subsections (1A) and (1B) of section 17 apply for the purposes of subsection (5).”                  

#### Special charging rules for property incomeU.K.

81U.K.In section 270 of ITTOIA 2005 (profits of property businesses: income charged), after subsection (2) insert—

“(3)If, as respects an individual carrying on an overseas property business, the tax year is a split year—                  

(a)tax is charged under this Chapter on so much of the profits referred to in subsection (1) as arise in the UK part of the tax                           year, and                  

(b)the portion of the profits arising in the overseas part of the tax year is, accordingly, not chargeable to tax under this                           Chapter.                  

(4)In determining how much of the profits arise in the UK part of the tax year—                  

(a)determine first how much of the non-CAA profits arise in the UK part by apportioning the non-CAA profits between the UK part                           and the overseas part on a just and reasonable basis, and                  

(b)then adjust the portion of the non-CAA profits arising in the UK part by deducting any CAA allowances for the year and adding                           any CAA charges for the year.                  

(5)In subsection (4)—                  
          -  “CAA allowances” means allowances treated under section 250 or 250A of CAA 2001 (capital allowances for overseas property businesses) as                              an expense of the business;                         
          -  “CAA charges” means charges treated under either of those sections as a receipt of the business;                         
          -  “non-CAA profits” means profits before account is taken of any CAA allowances or CAA charges.”                         

#### Special charging rules for savings and investment incomeU.K.

82U.K.Part 4 of ITTOIA 2005 (savings and investment income) is amended as follows.

83U.K.In section 368 (territorial scope of charges in respect of savings and investment income), after subsection (2) insert—

“(2A)If income arising to an individual who is UK resident arises in the overseas part of a split year, it is to be treated for                           the purposes of this section as arising to a non-UK resident.”                  

84U.K.In section 465 (person liable for tax on gains from life insurance etc: individuals), after subsection (1) insert—

“(1A)But if the tax year is a split year as respects the individual, the individual is not liable for tax under this Chapter in                           respect of gains arising in the overseas part of that year (subject to section 465B).”                  

85U.K.In section 467 (person liable: UK resident trustees), in subsection (4), after paragraph (a) insert—

“(aa)is UK resident but the gain arises in the overseas part of a tax year that is, as respects the person who created the trusts,                           a split year,”.                  

86(1)Section 528 (reduction in amount charged under Chapter 9 of Part 4: non-UK resident policy holders) is amended as follows.U.K.

(2)The amendments made by sub-paragraphs (3) to (6) apply to section 528 as substituted by paragraph 3 of Schedule 8 to this                        Act, and have effect in relation to policies and contracts in relation to which that section as so substituted has effect.

(3)In subsection (1)(b), for the words from “on which” to the end substitute “ that are foreign days ”.

(4)After subsection (1) insert—

“(1A)Foreign days” are—                  

(a)days falling within any tax year for which the individual is not UK resident, and                  

(b)days falling within the overseas part of any tax year that is a split year as respects the individual.”                  

(5)In subsection (3), in the definition of “A”, for “days falling within subsection (1)(b)” substitute “ foreign days ”.

(6)In subsection (8), for “subsection (1)(b)” substitute “ subsection (1A)(a) and (b) ”.

(7)The amendments made by sub-paragraphs (8) to (10) apply to section 528 as in force immediately before the substitution mentioned                        in sub-paragraph (2) so far as that section as so in force continues to have effect after the substitution.

(8)In subsection (1), for the words from “the policy holder” to the end substitute “ there are one or more days in the policy period that are foreign days. ”

(9)After that subsection insert—

“(1A)Foreign days” are—                  

(a)days on which the policy holder is not UK resident, and                  

(b)days falling within the overseas part of any tax year that is a split year as respects the policy holder (if the policy holder                           is an individual).”                  

(10)In subsection (3), in the definition of “A”, for the words from “on which” to the end substitute “ in the policy period that are foreign days, and ”.

87(1)Section 528A (reduction in amount charged on basis of non-UK residence of deceased person), as inserted by paragraph 3 of                        Schedule 8 to this Act, is amended as follows.U.K.

(2)In subsection (1)(b), for the words from “on which” to the end substitute “ that were foreign days ”.

(3)In subsection (2)—

(a)in paragraph (b), for the words from “on which” to the end substitute “ that were foreign days, and ”, and

(b)for paragraph (c), substitute—

“(c)the deceased died—                  

(i)in a tax year for which the deceased was UK resident but not one that was a split year as respects the deceased, or                  

(ii)in the UK part of a tax year that was a split year as respects the deceased.”                  

(4)After that subsection insert—

“(2A)Foreign days” are—                  

(a)days falling within any tax year for which the deceased was not UK resident, and                  

(b)days falling within the overseas part of any tax year that was a split year as respects the deceased.”                  

(5)In subsection (4), in the definition of “A”, for the words from “are days falling” to the end substitute “ were foreign days, and ”.

(6)In subsection (8), for “subsection (1)(b) or (2)(b)” substitute “ subsection (2A)(a) and (b) ”.

88(1)Section 536 (top slicing relieved liability: one chargeable event) is amended as follows.U.K.

(2)The amendment made by sub-paragraph (3) applies to section 536 as amended by paragraph 5 of Schedule 8 to this Act, and has                        effect in accordance with paragraph 7 of that Schedule.

(3)For subsection (7) substitute—

“(7)If in the case of the individual the gain is reduced under section 528—                  

(a)divide the number of foreign days in the material interest period (as determined in accordance with that section, including                           subsections (7) and (8)) by 365,                  

(b)if the result is not a whole number, round it down to the nearest whole number, and                  

(c)reduce N, for steps 1 and 3 in subsection (1), by the number found by applying paragraphs (a) and (b).”                  

(4)The amendment made by sub-paragraph (5) applies to section 536 as in force immediately before it is amended by paragraph 5                        of Schedule 8 to this Act, so far as that section as so in force continues to have effect after it is so amended.

(5)For subsection (7) substitute—

“(7)If the gain is from such a policy—                  

(a)divide the number of foreign days in the policy period (as defined in section 528) by 365,                  

(b)if the result is not a whole number, round it down to the nearest whole number, and                  

(c)reduce N, for steps 1 and 3 in subsection (1), by the number found by applying paragraphs (a) and (b).”                  

#### Special charging rules for miscellaneous incomeU.K.

89U.K.In section 577 (territorial scope of charges in respect of miscellaneous income), after subsection (2) insert—

“(2A)If income arising to an individual who is UK resident arises in the overseas part of a split year, it is to be treated for                           the purposes of this section as arising to a non-UK resident.”                  

#### Special charging rules for relevant foreign income charged on remittance basisU.K.

90U.K.In section 832 of ITTOIA 2005 (relevant foreign income charged on remittance basis), for subsection (2) substitute—

“(2)For any tax year for which the individual is UK resident, income tax is charged on the full amount of so much (if any) of                           the relevant foreign income as is remitted to the United Kingdom—                  

(a)in that year, or                  

(b)in the UK part of that year, if that year is a split year as respects the individual.”                  

91(1)Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) is amended as follows in consequence of the amendment made by                        the preceding paragraph.U.K.

(2)In section 726 (non-UK domiciled individuals to whom remittance basis applies), after subsection (4) insert—

“(5)In the application of section 832 of ITTOIA 2005 to the foreign deemed income, subsection (2) of that section has effect with                           the omission of paragraph (b).”                  

(3)In section 730 (non-UK domiciled individuals to whom remittance basis applies), after subsection (4) insert—

“(5)In the application of section 832 of ITTOIA 2005 to the foreign deemed income, subsection (2) of that section has effect with                           the omission of paragraph (b).”                  

(4)In section 735 (non-UK domiciled individuals to whom remittance basis applies), after subsection (4) insert—

“(5)In the application of section 832 of ITTOIA 2005 to the foreign deemed income, subsection (2) of that section has effect with                           the omission of paragraph (b).”                  

#### Special charging rules for capital gainsU.K.

92U.K.TCGA 1992 is amended as follows.

93(1)Section 2 (persons and gains chargeable to capital gains tax, and allowable losses) is amended as follows.U.K.

(2)After subsection (1A) (inserted by Schedule 46 to this Act) insert—

“(1B)If the year is a split year as respects an individual, the individual is not chargeable to capital gains tax in respect of                           any chargeable gains accruing to the individual in the overseas part of that year.                  

(1C)But subsection (1B)—                  

(a)does not apply to chargeable gains in respect of which the individual would have been chargeable to capital gains tax under                           section 10, had the individual been not resident in the UK for the year, and                  

(b)is without prejudice to section 10A.”                  

(3)In subsection (2)—

(a)after “the year of assessment” insert “ or, where subsection (1B) applies, the UK part of that year ”, and

(b)in paragraph (a), after “that year of assessment” insert “ or that part (as the case may be) ”.

94(1)Section 3A (reporting limits) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a), after “year of assessment” insert “ or, if that year is a split year as respects the individual, the UK part of that year ”, and

(b)in paragraph (b), after “in that year” insert “ or, as the case may be, that part of the year ”.

(3)In subsection (2), after “year of assessment” insert “ (or the UK part of such a year) ”.

95(1)Section 12 (non-UK domiciled individuals to whom remittance basis applies) is amended as follows.U.K.

(2)After subsection (2) insert—

“(2A)If that tax year is a split year as respects the individual, the chargeable gains are treated as accruing to the individual                           in the part of the year (the overseas part or the UK part) in which the foreign chargeable gains are so remitted.”                  

(3)In subsection (3), after “that year” insert “ or, where applicable, that part of the year ”.

96U.K.In section 13 (attribution of gains to members of non-resident companies), after subsection (3) insert—

“(3A)Subsection (2) does not apply in the case of a participator who is an individual if—                  

(a)the tax year in which the chargeable gain accrues to the company is a split year as respects the participator, and                  

(b)the chargeable gain accrues to the company in the overseas part of that year.”                  

97U.K.In section 16 (computation of losses), after subsection (3) insert—

“(3A)If the person is an individual and the year is a split year as respects that individual, subsection (3) also applies to a                           loss accruing to the individual in the overseas part of that year.”                  

98U.K.In section 16ZB (individual who has made election under section 16ZA: foreign chargeable gains remitted in tax year after                        tax year in which accrue), in subsection (1)(c), after “tax year” insert “ or a part of the applicable tax year ”.

99(1)Section 16ZC (individual who has made election under section 16ZA and to whom remittance basis applies) is amended as follows.U.K.

(2)In subsection (3)—

(a)in paragraph (a), after “that year” insert “ or, if that year is a split year as respects the individual, in the UK part of that year ”, and

(b)in paragraph (b), after “that year” insert “ or they are so remitted in that year but it is a split year as respects the individual and they are so remitted in the overseas                           part of the year ”.

(3)In subsection (7), in the definition of “relevant allowable losses”, after “tax year” insert “ or a part of the tax year ”.

100U.K.In section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements), in subsection                        (4)(a), after “the year” insert “ or if, as respects the settlor, the year is a split year, in the UK part of that year ”.

101U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

#### Trustees of a settlementU.K.

102U.K.In section 69 of TCGA 1992 (trustees of settlements), after subsection (2D) insert—

“(2DA)A trustee who is resident in the United Kingdom for a tax year is to be treated for the purposes of subsections (2A) and (2B)                           as if he or she were not resident in the United Kingdom for that year if—                  

(a)the trustee is an individual,                  

(b)the individual becomes or ceases to be a trustee of the settlement during the tax year,                  

(c)that year is a split year as respects the individual, and                  

(d)in that year, the only period when the individual is a trustee of the settlement falls wholly within the overseas part of                           the year.                  

(2DB)Subsection (2DA) is subject to subsection (2D) and, accordingly, an individual who is treated under subsection (2DA) as not                           resident is, in spite of that, to be regarded as resident whenever the individual acts as mentioned in subsection (2D).”                  

103U.K.In section 475 of ITA 2007 (residence of trustees), after subsection (6) insert—

“(7)Subsection (8) applies if—                  

(a)an individual becomes or ceases to be a trustee of the settlement during a tax year,                  

(b)that year is a split year as respects the individual, and                  

(c)the only period in that year when the individual is a trustee of the settlement falls wholly within the overseas part of the                           year.                  

(8)The individual is to be treated for the purposes of subsections (4) and (5) as if he or she had been non-UK resident for the                           year (and hence for the period in that year when he or she was a trustee of the settlement).                  

(9)But subsection (8) is subject to subsection (6) and, accordingly, an individual who is treated under subsection (8) as having                           been non-UK resident is, in spite of that, to be treated as UK resident whenever the individual acts as mentioned in subsection                           (6).”                  

#### Definitions in enactments relating to income tax and CGTU.K.

104(1)Section 288 of TCGA 1992 (interpretation) is amended as follows.U.K.

(2)In subsection (1), insert the following definition in the appropriate place—
          -  ““split year”, as respects an individual, means a tax year that, as respects that individual, is a split year within the meaning                              of Part 3 of Schedule 45 to the Finance Act 2013 (statutory residence test: split year treatment);”.                         

(3)After subsection (1ZA) insert—

“(1ZB)A reference in this Act to “the overseas part” or “the UK part” of a split year is to be read in accordance with Part 3 of                           Schedule 45 to the Finance Act 2013 (statutory residence test: split year treatment).”                  

105U.K.In Part 2 of Schedule 1 to ITEPA 2003 (index of defined expressions), insert the following entries in the appropriate places—

106U.K.In Part 2 of Schedule 4 to ITTOIA 2005 (index of defined expressions), insert the following entries in the appropriate places—

107U.K.In section 989 of ITA 2007 (definitions for purposes of Income Tax Acts), insert the following definitions in the appropriate                        places—
          -  ““the overseas part”, in relation to a split year, has the meaning given in Part 3 of Schedule 45 to FA 2013 (statutory residence test: split                              year treatment);”,                         

““split year”, in relation to an individual, means a tax year that, as respects that individual, is a split year within the meaning of                        Part 3 of Schedule 45 to FA 2013 (statutory residence test: split year treatment);”, and                  

““the UK part”, in relation to a split year, has the meaning given in Part 3 of Schedule 45 to FA 2013 (statutory residence test: split                        year treatment);”.                  

108U.K.In Schedule 4 to that Act (index of defined expressions), insert the following entries in the appropriate places—

### **PART 4**U.K.Anti-avoidance

#### IntroductionU.K.

109U.K.This Part of this Schedule—

(a)explains when an individual is to be regarded for the purposes of certain enactments as temporarily non-resident,

(b)defines the year of departure and the period of return for the purposes of those enactments,

(c)makes consequential amendments to certain enactments containing special rules for temporary non-residents, and

(d)inserts some more special rules for temporary non-residents in certain cases.

#### Meaning of temporarily non-residentU.K.

110(1)An individual is to be regarded as “temporarily non-resident” if—U.K.

(a)the individual has sole UK residence for a residence period,

(b)immediately following that period (referred to as “period A”), one or more residence periods occur for which the individual does not have sole UK residence,

(c)at least 4 out of the 7 tax years immediately preceding the year of departure were either—

(i)a tax year for which the individual had sole UK residence, or

(ii)a split year that included a residence period for which the individual had sole UK residence, and

(d)the temporary period of non-residence is 5 years or less.

(2)Terms used in sub-paragraph (1) are defined below.

#### Residence periodsU.K.

111U.K.In relation to an individual, a “residence period” is—

(a)a tax year that, as respects the individual, is not a split year, or

(b)the overseas part or the UK part of a tax year that, as respects the individual, is a split year.

#### Sole UK residenceU.K.

112(1)An individual has “sole UK residence” for a residence period consisting of an entire tax year if—U.K.

(a)the individual is resident in the UK for that year, and

(b)there is no time in that year when the individual is Treaty non-resident.

(2)An individual has “sole UK residence” for a residence period consisting of part of a split year if—

(a)the residence period is the UK part of that year, and

(b)there is no time in that part of the year when the individual is Treaty non-resident.

(3)An individual is “Treaty non-resident” at any time if at the time the individual falls to be regarded as resident in a country                        outside the UK for the purposes of double taxation arrangements having effect at the time.

#### Temporary period of non-residenceU.K.

113U.K.In relation to an individual, “the temporary period of non-residence” is the period between—

(a)the end of period A, and

(b)the start of the next residence period after period A for which the individual has sole UK residence.

#### Year of departureU.K.

114U.K.“The year of departure” is the tax year consisting of or including period A.

#### Period of returnU.K.

115U.K.“The period of return” is the first residence period after period A for which the individual has sole UK residence.

#### Consequential amendments: income taxU.K.

116U.K.In ITEPA 2003, for section 576A substitute—

##### “576ATemporary non-residents

117U.K.In ITEPA 2003, for section 579CA substitute—

##### “579CATemporary non-residents

118U.K.In ITTOIA 2005, for section 832A substitute—

##### “832ASection 832: temporary non-residents

#### Consequential amendments: capital gains taxU.K.

119U.K.In TCGA 1992, for section 10A substitute—

##### “10ATemporary non-residents

##### 10AASection 10A: supplementary

120U.K.For section 86A of TCGA 1992 substitute—

##### “86AAttribution of gains to settlor in section 10A cases

121U.K.In section 96 (payment by and to companies), in subsection (9A), for the words from “which in his case” to the end substitute “for which he or she was not so resident if— 

(a)section 10A applies to him or her, and                  

(b)the year falls within the temporary period of non-residence.”                  

122(1)Section 279B (deferred unascertainable consideration: supplementary provisions) is amended as follows.U.K.

(2)In subsection (7), for “year of return” substitute “ period of return ”.

(3)In subsection (8)(a) and (b), for “year” substitute “ period ”.

123(1)Schedule 4C (transfers of value: attribution of gains to beneficiaries) is amended as follows.U.K.

(2)In paragraph 6(1)(b), for “year of return” substitute “ period of return ”.

(3)In paragraph 12(1)—

(a)for paragraph (a) substitute—

“(a)by virtue of section 10A, an amount of chargeable gains within section 86(1)(e) that accrued in a tax year (“year A”) to the                           trustees of a settlement would be treated as accruing to a person (“the settlor”) in the period of return, and”, and                  

(b)in paragraph (b), for “the intervening year” substitute “ year A ”.

(4)In paragraph 12(2), for “year of return” substitute “ period of return ”.

(5)In paragraph 12A(1)—

(a)for “year of return” substitute “ period of return ”, and

(b)for “an intervening year” substitute “ the temporary period of non-residence ”.

#### New special rule: lump sum payments under pension schemes etcU.K.

124U.K.ITEPA 2003 is amended as follows.

125U.K.In Chapter 2 of Part 6 (employer-financed retirement benefits), after section 394 insert—

##### “394ATemporary non-residents

126U.K.In Chapter 2 of Part 7A (employment income provided through third parties: treatment of relevant step for income tax purposes),                        after section 554Z4 insert—

##### “554Z4ATemporary non-residents

127U.K.In that Chapter, after section 554Z11 insert—

##### “554Z11ATemporary non-residents

128U.K.In that Chapter, in section 554Z12 (relevant step taken after A's death etc), after subsection (8) insert—

“(9)Section 554Z4A and section 554Z11A apply for the purposes of subsection (4) as for the purposes of section 554Z2 and section                           554Z9(2) or 554Z10(2) respectively (reading references in sections 554Z4A and 554Z11A to “A” as references to “the relevant                           person”).                  

(10)But those sections do not apply for the purposes of subsection (4) if the relevant person's temporary period of non-residence                           began before A died.”                  

129U.K.In Chapter 3 of Part 9 (United Kingdom pensions: general rules), after section 572 insert—

##### “572ATemporary non-residents

130(1)In Chapter 1 of Part 11 (pay as you earn: introduction), section 683 is amended as follows.U.K.

(2)After subsection (3) insert—

“(3ZA)PAYE employment income” for a tax year does not include any taxable specific income treated as paid or received in that tax                           year by section 394A or 554Z4A (temporary non-residents).”                  

(3)For subsection (3B) substitute—

“(3B)PAYE pension income” for a tax year does not include any taxable pension income that is treated as accruing in that tax year                           by section 572A or 579CA (temporary non-residents).”                  

#### New special rule: distributions to participators in close companies etcU.K.

131U.K.Part 4 of ITTOIA 2005 (savings and investment income) is amended as follows.

132U.K.In Chapter 1 (introduction), after section 368 insert—

##### “368AInterpretation of special rules for temporary non-residents

133U.K.In Chapter 3 (dividends etc from UK resident companies and tax credits etc in respect of certain distributions), after section                        401B insert—

##### “Anti-avoidanceU.K.

###### 401CTemporary non-residents

134U.K.In Chapter 4 (dividends from non-UK resident companies), after section 408 insert—

##### “Anti-avoidanceU.K.

###### 408ATemporary non-residents

135U.K.In Chapter 5 (stock dividends from UK resident companies), after section 413 insert—

##### “413ATemporary non-residents

136U.K.In Chapter 6 (release of loan to participator in close company), after section 420 insert—

##### “420ATemporary non-residents

137U.K.In Chapter 8 of Part 5 of that Act (income not otherwise charged), after section 689 insert—

##### “689ATemporary non-residents

138U.K.In Chapter 1 of Part 14 of ITA 2007 (limits on liability to income tax of non-UK residents), after section 812 insert—

##### “812ATemporary non-residents

#### New special rule: chargeable event gainsU.K.

139U.K.Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc) is amended as follows.

140U.K.After section 465A insert—

##### “465BTemporary non-residents

141U.K.In section 468 (non-UK resident trustees and foreign institutions), after subsection (6) insert—

“(7)This section does not apply if someone is liable under section 465B in respect of the gain.”                  

142U.K.In section 514 (chargeable events where transaction-related calculations show gains), after subsection (4) insert—

“(4A)Subsection (3)(b) includes a case where a person would be liable to tax on the gain under section 465B for the tax year in                           which the transaction occurs (because the transaction occurs in the year of return, as defined in that section).”                  

143U.K.In section 541 (calculation of deficiencies), in subsection (4)(b), after “that section” insert “ or formed part of the total income of that individual by virtue of section 465B for the tax year mentioned in section 539(1)                           ”.

144U.K.In section 552 of ICTA (information: duties of insurers), in subsection (13), for “section 541A” substitute “ section 465B or 541A ”.

### **PART 5**U.K.Miscellaneous

#### InterpretationU.K.

145U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

146U.K.In relation to an individual who carries on a trade—

(a)a reference in this Schedule to annual leave or parenting leave is to reasonable amounts of time off from work for the same                        purposes as the purposes for which annual leave or parenting leave is taken, and

(b)what are “reasonable amounts” is to be assessed having regard to the annual leave or parenting leave to which an employee                        might reasonably expect to be entitled if doing similar work.

147U.K.A reference in this Schedule to a number of days being less than a specified number includes a case where the number of days                        is zero.

#### Consequential amendmentsU.K.

148(1)TCGA 1992 is amended as follows.U.K.

(2)Omit section 9.

(3)In section 288 (interpretation)—

(a)in subsection (1), insert the following definition at the appropriate place—
          -  ““resident” means resident in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013;”, and                         

(b)in the Table in subsection (8), omit the entry for the expressions “resident” and “ordinarily resident”.

149U.K.In section 27 of ITEPA 2003 (UK-based earnings for year when employee not UK resident), in subsection (1), for “in which”                        substitute “ for which ”.

150U.K.In section 465 of ITTOIA 2005 (gains from contracts for life insurance etc: liability of individuals), in subsection (1),                        for “in the tax year” substitute “ for the tax year ”.

151(1)Chapter 4 of Part 2 of FA 2005 (trusts with vulnerable beneficiary) is amended as follows.U.K.

(2)In section 28 (vulnerable person's liability: VQTI), for subsection (4) substitute—

“(4)Where the vulnerable person is non-UK resident for the tax year, his or her income tax liability for the purposes of determining                           TLV1 and TLV2 is to be computed in accordance with the Income Tax Acts on the assumption that—                  

(a)he or she is UK resident for the tax year,                  

(b)that year is not, as respects him or her, a split year within the meaning of Part 3 of Schedule 45 to FA 2013, and                  

(c)he or she is domiciled in the United Kingdom throughout that year.”                  

(3)In section 30 (qualifying trusts gains: special capital gains tax treatment)—

(a)in subsection (2)(a) and (b), for “during” substitute “ for ”, and

(b)omit subsection (5).

(4)In section 31 (UK resident vulnerable persons: amount of relief), in subsection (1), for “during” substitute “ for ”.

(5)In section 32 (non-UK resident vulnerable persons: amount of relief), in subsection (1), for “during” substitute “ for ”.

(6)In section 41—

(a)in subsection (1), insert the following definitions in the appropriate places—
          -  ““non-UK resident” means not resident in the United Kingdom in accordance with the statutory residence test in Part 1 of Schedule 45 to FA                              2013,”, and                         

““UK resident” means resident in the United Kingdom in accordance with the statutory residence test in Part 1 of Schedule 45 to FA 2013.”, and                  

(b)omit subsection (2).

152(1)ITA 2007 is amended as follows.U.K.

(2)In section 809B (claim for remittance basis to apply), in subsection (1)(a), for “in that year” substitute “ for that year ”.

(3)In section 809D (application of remittance basis without claim where unremitted foreign income and gains under £2,000), in                        subsection (1)(a), for “in that year” substitute “ for that year ”.

(4)In section 809E (application of remittance basis without claim: other cases), in subsection (1)(a), for “in that year” substitute                        “ for that year ”.

(5)In section 810 (limits on liability to income tax of non-UK residents: overview of Chapter), after subsection (3) insert—

“(4)In relation to an individual—                  

(a)a reference in this Chapter to a non-UK resident's liability to income tax is a reference to the liability of someone who                           is non-UK resident for the tax year for which the liability arises, and                  

(b)accordingly, enactments under which income arising to a UK resident in the overseas part of a split year is treated as arising                           to a non-UK resident are of no relevance to this Chapter.”                  

(6)Omit sections 829 to 832.

#### CommencementU.K.

153(1)Parts 1 and 2 of this Schedule have effect for determining whether individuals are resident or not resident in the UK for                        the tax year 2013-14 or any subsequent tax year.U.K.

(2)Part 3 of this Schedule has effect in calculating an individual's liability to income tax or capital gains tax for the tax                        year 2013-14 or any subsequent tax year.

(3)Part 4 of this Schedule has effect if the year of departure (as defined in that Part) is the tax year 2013-14 or a subsequent                        tax year.

#### Transitional and saving provisionU.K.

154(1)This paragraph applies if—U.K.

(a)year X or, in Part 3 of this Schedule, the relevant year is the tax year 2013-14, 2014-15, 2015-16, 2016-17 or 2017-18, and

(b)it is necessary to determine under this Schedule whether an individual was resident or not resident in the UK for a tax year                        before the tax year 2013-14 (a “pre-commencement tax year”).

(2)The question under this Schedule is to be determined in accordance with the rules in force for determining an individual's                        residence for that pre-commencement tax year (and not in accordance with the statutory residence test).

(3)But an individual may by notice in writing to Her Majesty's Revenue and Customs elect, as respects one or more pre-commencement                        tax years, for the question under this Schedule to be determined instead in accordance with the statutory residence test.

(4)A notice under sub-paragraph (3)—

(a)must be given no later than the first anniversary of the end of year X or, in a Part 3 case, the relevant year, and

(b)is irrevocable.

(5)Unless, in relation to a pre-commencement tax year, an election is made under sub-paragraph (3) as respects that year—

(a)paragraph 10(b) of this Schedule has effect in relation to that year as if the words “by virtue of meeting the automatic residence                        test” were omitted,

(b)paragraph 16 of this Schedule has effect in relation to that year as if—

(i)in sub-paragraph (1)(b), the words “because P met the third automatic overseas test for each of those years” were omitted,                        and

(ii)in sub-paragraph (2)(a), the words “because P met the third automatic overseas test for that year” were omitted, and

(c)paragraph 49 of this Schedule has effect in relation to that year as if in sub-paragraph (2)(a) for the words from “because”                        to the end there were substituted “ in circumstances where the taxpayer was working overseas full-time for the whole of that year. ”

155(1)This paragraph applies if—U.K.

(a)year X or, for Part 3 of this Schedule, the tax year for which an individual's liability to tax is being calculated is the                        tax year 2013-14 or a subsequent tax year, and

(b)it is necessary to determine under a provision of this Schedule, or a provision inserted by Part 3 of this Schedule, whether                        a tax year before the tax year 2013-14 (a “pre-commencement tax year”) was a split year as respects the individual.

(2)The provision is to have effect as if—

(a)the reference to a split year were to a tax year to which the relevant ESC applied, and

(b)any reference to the UK part or the overseas part of such a year were to the part corresponding as far as possible, in accordance                        with the terms of the relevant ESC, to the UK part or the overseas part of a split year.

(3)Where the provision also refers to cases involving actual or deemed departure from the UK, the reference is to be read and                        given effect so far as possible in accordance with the terms of the relevant ESC.

(4)“The relevant ESC” means whichever of the extra-statutory concessions to which effect is given by Part 3 of this Schedule is relevant in the                        individual's case.

156(1)Sub-paragraph (2) applies in determining whether the test in paragraph 50(3) is met where the relevant year is the tax year                        2013-14.U.K.

(2)The circumstances of a partner of the taxpayer are to be treated as falling within Case 6 for the previous tax year if the                        partner was eligible for split year treatment in relation to that tax year under the relevant ESC on the grounds that he or                        she returned to the United Kingdom after a period working overseas full-time.

(3)Where the circumstances of a partner are treated as falling within Case 6 under sub-paragraph (2), the reference in paragraph                        50(7)(b) to the UK part of the relevant year as defined for Case 6 is a reference to the part corresponding, so far as possible,                        in accordance with the terms of the relevant ESC, to the UK part of that year.

(4)“The relevant ESC” means whichever of the extra-statutory concessions to which effect is given by Part 3 of this Schedule is relevant in the                        partner's case.

157(1)This paragraph applies in determining whether the test in paragraph 110(1)(c) is met in relation to a tax year before the                        tax year 2013-14 (a “pre-commencement tax year”).U.K.

(2)Paragraph 110(1) is to have effect as if for paragraph (c) there were substituted—

“(c)at least 4 out of the 7 tax years immediately preceding the year of departure was a tax year meeting the following conditions—                  

(i)the individual was resident in the UK for that year, and                  

(ii)there was no time in that year when the individual was Treaty non-resident (see paragraph 112(3)).”                  

(3)Whether an individual was resident in the UK for a pre-commencement tax year is to be determined in accordance with the rules                        in force for determining an individual's residence for that pre-commencement tax year (and not in accordance with the statutory                        residence test).

158(1)The existing temporary non-resident provisions, as in force immediately before the day on which this Act is passed, continue                        to have effect on and after that day in any case where the year of departure (as defined in Part 4 of this Schedule) is a                        tax year before the tax year 2013-14.U.K.

(2)Where those provisions continue to have effect by virtue of sub-paragraph (1)—

(a)the question of whether a person is or is not resident in the UK for the tax year 2013-14 or a subsequent tax year is to be                        determined for the purposes of those provisions in accordance with Part 1 of this Schedule, but

(b)the effect of Part 3 is to be ignored.

(3)The existing temporary non-resident provisions are—

(a)section 10A of TCGA 1992 (chargeable gains),

(b)section 576A of ITEPA 2003 (income withdrawals under certain foreign pensions),

(c)section 579CA of that Act (income withdrawals under registered pension schemes), and

(d)section 832A of ITTOIA (relevant foreign income charged on remittance basis).

159U.K.Section 13 of FA 2012 (Champions League final 2013) is to be read and given effect, on and after the day on which this Act                        is passed, as if section 218 and this Schedule had not been enacted.

 Section 219

## SCHEDULE 46U.K.Ordinary residence

### **PART 1**U.K.Income tax and capital gains tax: remittance basis of taxation

#### Remittance basis restricted to non-domsU.K.

1U.K.Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

2U.K.In section 809A (overview of Chapter), omit “or are not ordinarily UK resident”.

3U.K.In section 809B (claim for remittance basis to apply)—

(a)in subsection (1)(b), omit “or is not ordinarily UK resident in that year”, and

(b)omit subsection (2).

4U.K.In section 809D (application of remittance basis without claim where unremitted foreign income and gains under £2,000)—

(a)in subsection (1)(b), omit “or is not ordinarily UK resident in that year”, and

(b)in subsection (1A), omit “the individual is not domiciled in the United Kingdom in that year and”.

5U.K.In section 809E (application of remittance basis without claim: other cases), in subsection (1)(b), omit “or is not ordinarily                        UK resident in that year”.

#### Treatment of relevant foreign earningsU.K.

6U.K.ITEPA 2003 is amended as follows.

7(1)In section 22 (chargeable overseas earnings for year when remittance basis applies and employee ordinarily UK resident), in                        subsection (1), for paragraph (b) substitute—U.K.

“(b)the employee does not meet the requirement of section 26A for that year.”                  

(2)Accordingly—

(a)in the heading of that section, for “**ordinarily UK resident**” substitute “ **outside section 26** ”, and

(b)in the italicised heading before that section, for “*UK ordinarily resident employees*” substitute “ *employees outside section 26* ”.

8U.K.In section 23 (calculation of “chargeable overseas earnings”), in subsection (2), for paragraph (aa) substitute—

“(aa)the employee does not meet the requirement of section 26A for that year,”.                  

9(1)In section 26 (foreign earnings for year when remittance basis applies and employee not ordinarily UK resident), in subsection                        (1), for “is not ordinarily UK resident in” substitute “ meets the requirement of section 26A for ”.U.K.

(2)Accordingly—

(a)in the heading of that section, for “**not ordinarily UK resident**” substitute “ **meets section 26A requirement** ”, and

(b)in the italicised heading before that section, for “*not UK ordinarily resident*” substitute “ *who meet section 26A requirement* ”.

10U.K.After that section insert—

##### “26ASection 26: requirement for 3-year period of non-residence

11(1)Section 41C (foreign securities income) is amended as follows.U.K.

(2)In subsection (4), for paragraph (b) substitute—

“(b)the individual does not meet the requirement of section 26A for the year (reading references there to the employee as references                           to the individual),”.                  

(3)In subsection (6), for paragraph (b) substitute—

“(b)the individual meets the requirement of section 26A for the year (reading references there to the employee as references to                           the individual), and”.                  

12U.K.In section 271 (limited exemption of removal benefits and expenses: general), in subsection (2)—

(a)in paragraph (a), for “ordinarily UK resident” substitute “ outside section 26 ”, and

(b)in paragraph (b), for “not ordinarily UK resident” substitute “ meets section 26A requirement ”.

13(1)In section 554Z9 (remittance basis: A is ordinarily UK resident), in subsection (1), for paragraph (c) substitute—U.K.

“(c)A does not meet the requirement of section 26A for the relevant tax year (reading references there to the employee as references                           to A),”.                  

(2)Accordingly, in the heading of that section, for “**A is ordinarily UK resident**” substitute “ **A does not meet section 26A requirement** ”.

14(1)In section 554Z10 (remittance basis: A is not ordinarily resident), in subsection (1), for paragraph (c) substitute—U.K.

“(c)A meets the requirement of section 26A for the relevant tax year (reading references there to the employee as references to                           A).”                  

(2)Accordingly, in the heading of that section, for “**A is not ordinarily resident**” substitute “ **A meets section 26A requirement** ”.

15(1)Section 690 (employee non-resident etc) is amended as follows.U.K.

(2)In subsection (1), for paragraph (a) substitute—

“(a)is either non-UK resident for the tax year or is UK resident but meets the requirement of section 26A for the tax year, and”.                  

(3)In subsection (2A), for “but not ordinarily resident in a tax year” substitute “ for a tax year but not domiciled in the United Kingdom in that tax year ”.

#### Consequential amendmentsU.K.

16U.K.In section 266A of ICTA (life assurance premiums paid by employer), in subsection (8)—

(a)in paragraph (a), for “employee resident and ordinarily resident, but not domiciled, in UK” substitute “ remittance basis applies and employee outside section 26 ”, and

(b)in paragraph (b), for “employee resident, but not ordinarily resident, in UK” substitute “ remittance basis applies and employee meets section 26A requirement ”.

17U.K.In section 12 of TCGA 1992 (non-UK domiciled individuals to whom remittance basis applies), for subsection (1) substitute—

“(1)This section applies to foreign chargeable gains accruing to an individual in a tax year (“the foreign chargeable gains”)                           if section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for that year.”                  

18U.K.In section 87B of that Act (section 87: remittance basis), in subsection (1)—

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

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

(c)omit paragraph (c).

19U.K.In section 726 of ITA 2007 (non-UK domiciled individuals to whom remittance basis applies), for subsection (1) substitute—

“(1)This section applies in relation to income treated under section 721 as arising to an individual in a tax year (“the deemed                           income”) if section 809B, 809D or 809E (remittance basis) applies to the individual for that year.”                  

20U.K.In section 730 of that Act (non-UK domiciled individuals to whom remittance basis applies), for subsection (1) substitute—

“(1)This section applies in relation to income treated under section 728 as arising to an individual in a tax year (“the deemed                           income”) if section 809B, 809D or 809E (remittance basis) applies to the individual for that year.”                  

21U.K.In section 735 of that Act (non-UK domiciled individuals to whom remittance basis applies), for subsection (1) substitute—

“(1)This section applies in relation to income treated under section 732 as arising to an individual in a tax year (“the deemed                           income”) if section 809B, 809D or 809E (remittance basis) applies to the individual for that year.”                  

22U.K.In section 809F of that Act (effect on what is chargeable), in subsection (4), for “If the individual is not domiciled in                        the United Kingdom in that year, the” substitute “ The ”.

23U.K.In section 809YD of that Act (chargeable gains accruing on sales of exempt property), in subsection (3), omit “and P is not                        domiciled in the United Kingdom in that year”.

24U.K.In section 809Z7 of that Act (meaning of “foreign income and gains” etc)—

(a)in subsection (2)(d), omit “if the individual is not domiciled in the United Kingdom in that year,”, and

(b)in subsection (3)(a), for “is ordinarily UK resident in” substitute “ does not meet the requirement of section 26A of ITEPA 2003 for ”.

#### CommencementU.K.

25U.K.The amendments made by this Part of this Schedule have effect in relation to an individual's foreign income and gains for                        the tax year 2013-14 or any subsequent tax year.

#### SavingsU.K.

26(1)This paragraph applies to an individual who—U.K.

(a)was resident in the United Kingdom for the tax year 2012-13, but

(b)was not ordinarily resident there at the end of the tax year 2012-13.

(2)Enactments relating to income tax or capital gains tax have effect, in relation to any eligible foreign income and gains of                        the individual, as if the amendments made by this Part of this Schedule had not been made.

(3)“Eligible foreign income and gains” means—

(a)if the individual was resident in the United Kingdom for the tax year 2010-11 and the tax year 2011-12, foreign income and                        gains for the tax year 2013-14,

(b)if the individual was not resident in the United Kingdom for the tax year 2010-11 but was resident in the United Kingdom for                        the tax year 2011-12, foreign income and gains for the tax year 2013-14 and the tax year 2014-15, and

(c)if the individual was not resident in the United Kingdom for the tax year 2011-12, foreign income and gains for the tax year                        2013-14, the tax year 2014-15 and the tax year 2015-16.

(4)Where, by virtue of this paragraph, it is necessary to determine whether an individual is (or is not) ordinarily resident                        in the United Kingdom at a time on or after 6 April 2013, the question is to be determined as it would have been in the absence                        of this Schedule.

#### InterpretationU.K.

27U.K.References in this Part of this Schedule to an individual's “foreign income and gains” for a tax year are to be read in accordance                        with section 809Z7 of ITA 2007 (interpretation of remittance basis rules).

### **PART 2**U.K.Income tax: arising basis of taxation

#### ICTAU.K.

28U.K.In section 614 of ICTA (exemptions and reliefs in respect of income from investments etc of certain pension schemes)—

(a)in subsection (4), for “not domiciled, ordinarily resident or resident” substitute “ not domiciled and not resident ”, and

(b)in subsection (5), for “not domiciled, ordinarily resident or resident” substitute “ not domiciled and not resident ”.

#### ITEPA 2003U.K.

29U.K.ITEPA 2003 is amended as follows.

30U.K.In section 56 (application of Income Tax Acts in relation to deemed employment), in subsection (5)—

(a)for paragraph (a) substitute—

“(a)the worker being resident or domiciled outside the United Kingdom or meeting the requirement of section 26A,”, and                  

(b)in paragraph (b), omit “or ordinarily resident”.

31U.K.In section 61G (application of Income Tax Acts in relation to deemed employment), in subsection (5)—

(a)for paragraph (a) substitute—

“(a)the worker being resident or domiciled outside the United Kingdom or meeting the requirement of section 26A,”, and                  

(b)in paragraph (b), omit “or ordinarily resident”.

32U.K.In section 328 (the income from which deductions may be made), in subsection (5), omit the entry for Chapter 6 of Part 5 and                        the word “and” immediately preceding it.

33U.K.In section 341 (travel at start or finish of overseas employment), in subsection (3), for “resident and ordinarily resident                        in the United Kingdom” substitute “ UK resident ”.

34U.K.In section 342 (travel between employments where duties performed abroad), in subsection (6), for “resident and ordinarily                        resident in the United Kingdom” substitute “ UK resident ”.

35U.K.In section 370 (travel costs where duties performed abroad: employee's travel), in subsection (6), omit “in which the employee                        is ordinarily UK resident”.

36U.K.In section 376 (foreign accommodation and subsistence costs and expenses (overseas employments)), in subsection (1)(b), for                        “resident and ordinarily resident in the United Kingdom” substitute “ UK resident ”.

37(1)Section 378 (deductions from seafarers' earnings: eligibility) is amended as follows.U.K.

(2)In subsection (1), for “relevant taxable earnings or EEA-resident earnings” substitute “ relevant general earnings ”.

(3)For subsection (5) substitute—

“(5)Relevant general earnings” means—                  

(a)taxable earnings under section 15, 22 or 26, or                  

(b)general earnings—                  

(i)to which section 27 applies, and                  

(ii)which are for a period in which the employee is liable under the law of an EEA State (other than the United Kingdom) to tax                           in that State by reason of domicile or residence.”                  

(4)Omit subsection (6).

38(1)Section 413 (exception in certain cases of foreign service) is amended as follows.U.K.

(2)In subsection (2), after “subsection” (in the second place it occurs) insert “ (2A), ”.

(3)After that subsection insert—

“(2A)This subsection applies to service in or after the tax year 2013-14—                  

(a)to the extent that it consists of duties performed outside the United Kingdom in respect of which earnings would not be relevant                           earnings, or                  

(b)if a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter                           6 of Part 5 (deductions from seafarers' earnings).”                  

(4)In subsection (3), after “2003-04” insert “ but before the tax year 2013-14 ”.

(5)After that subsection insert—

“(3ZA)In subsection (2A)(a) “relevant earnings” means earnings for a tax year that are earnings to which section 15 applies and to which that section would apply even if                           the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year.”                  

39(1)In section 681A (foreign benefits of consular employees), for subsection (4) substitute—U.K.

“(4)Condition C is that—                  

(a)the officer or employee is a permanent employee of that state, or                  

(b)the officer or employee was non-UK resident for each of the 2 tax years preceding the tax year in which the officer or employee                           became a consular officer or employee in the United Kingdom of that state.”                  

(2)The amendment made by this paragraph does not apply to a person who became a consular officer or employee in the United Kingdom                        before 6 April 2013.

40(1)In Schedule 2 (approved share incentive plans), in paragraph 8(2), omit paragraph (b) and the “and” immediately before it.U.K.

(2)The amendments made by this paragraph do not apply to plans that have been approved before the day on which this Act is passed.

41(1)In Schedule 3 (approved SAYE option schemes), in paragraph 6(2)—U.K.

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

(b)omit paragraph (ca), including the “and” at the end of it.

(2)The amendments made by this paragraph do not apply to schemes that have been approved before the day on which this Act is                        passed.

42U.K.In Schedule 5 (enterprise management incentives), in paragraph 27(3)(b), omit “and ordinarily resident”.

#### ITTOIA 2005U.K.

43U.K.ITTOIA 2005 is amended as follows.

44U.K.In section 154A (certain non-UK residents with interest on 31⁄2% War Loan 1952 Or After), in subsection (1)(a), omit “ordinarily”.

45U.K.In section 459 (transfer of assets abroad), in subsection (2), for “an individual ordinarily UK resident” substitute “ a UK resident individual ”.

46U.K.In section 468 (non-UK resident trustees and foreign institutions), for subsection (2) substitute—

“(2)Chapter 2 of Part 13 of ITA 2007 (which prevents avoidance of tax where a UK resident individual benefits from a transfer                           of assets) applies with the modifications specified in subsection (3) or (4).”                  

47U.K.In section 569 (anti-avoidance: transfer of assets abroad), in subsection (2), for “an individual ordinarily UK resident”                        substitute “ a UK resident individual ”.

48(1)In section 636 (calculation of undistributed income), in subsection (2)(b), for “, resident and ordinarily resident” substitute                        “ and resident ”.U.K.

(2)The amendment made by this paragraph does not apply in calculating income arising under a settlement in tax years ending before                        6 April 2013.

49U.K.In section 648 (income arising under a settlement), in subsection (1)(b), for “, resident and ordinarily resident” substitute                        “ and resident ”.

50U.K.In section 651 (meaning of “UK estate” and “foreign estate”), in subsection (3), omit “or not ordinarily UK resident”.

51U.K.In section 664 (the aggregate income of the estate), in subsection (2)(b)(i), omit “who was ordinarily UK resident”.

52(1)Section 715 (interest from FOTRA securities held on trust) is amended as follows.U.K.

(2)In subsection (1)(b), for “person not ordinarily UK resident” substitute “ non-UK resident person ”.

(3)In subsection (2)—

(a)for “person not ordinarily UK resident” substitute “ non-UK resident person ”, and

(b)for “is ordinarily UK resident at the time when” substitute “ is UK resident for the tax year in which ”.

(4)In relation to a FOTRA security issued before 6 April 2013, the amendments made by this paragraph apply only if the security                        was acquired by the trust on or after that date.

53(1)In section 771 (relevant foreign income of consular officers and employees), for subsection (4) substitute—U.K.

“(4)Condition C is that—                  

(a)the officer or employee is a permanent employee of that state, or                  

(b)the officer or employee was non-UK resident for each of the 2 tax years preceding the tax year in which the officer or employee                           became a consular officer or employee in the United Kingdom of that state.”                  

(2)The amendment made by this paragraph does not apply to a person who became a consular officer or employee in the United Kingdom                        before 6 April 2013.

#### ITA 2007U.K.

54U.K.ITA 2007 is amended as follows.

55U.K.In section 465 (overview of Chapter 2 and interpretation), in subsection (4), omit “and ordinary residence”.

56(1)Section 475 (residence of trustees) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)This section applies for income tax purposes and explains how to work out, in relation to the trustees of a settlement, whether                           or not the single person mentioned in section 474(1) is UK resident.”                  

(3)In subsection (2), for “both UK resident and ordinarily UK resident” substitute “ UK resident ”.

(4)In subsection (3), for “both non-UK resident and not ordinarily UK resident” substitute “ non-UK resident ”.

57(1)Section 476 (how to work out whether settlor meets condition C) is amended as follows.U.K.

(2)In subsection (2)(b), omit “, ordinarily UK resident”.

(3)In subsection (3)(b), omit “, ordinarily UK resident”.

(4)The amendment made by sub-paragraph (2) does not apply if the person died before 6 April 2013.

(5)The amendment made by sub-paragraph (3) does not apply if the settlement was made before 6 April 2013.

58U.K.In section 643 (non-residents), in subsection (1), omit “and is not ordinarily UK resident during that year”.

59U.K.In section 718 (meaning of “person abroad” etc), in subsection (2)(b), for “neither UK resident nor ordinarily UK resident”                        substitute “ non-UK resident ”.

60U.K.In section 720 (charge to tax on income treated as arising under section 721), in subsection (1), omit “ordinarily”.

61(1)Section 721 (individuals with power to enjoy income as a result of relevant transactions) is amended as follows.U.K.

(2)In subsection (1), for “conditions A and B” substitute “ conditions A to C ”.

(3)After subsection (3) insert—

“(3A)Condition C is that the individual is UK resident for the tax year.”                  

(4)In subsection (5), for paragraph (b) substitute—

“(b)whether the individual is UK resident for the tax year in which the relevant transfer is made (if different from the tax year                           mentioned in subsection (1)), or”.                  

62U.K.In section 727 (charge to tax on income treated as arising under section 728), in subsection (1), omit “ordinarily”.

63(1)Section 728 (individuals receiving capital sums as a result of relevant transactions) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a), omit the “and” at the end of sub-paragraph (iii), and

(b)at the end of paragraph (b) insert “, and 

(c)the individual is UK resident for the tax year.”                  

(3)In subsection (3), for paragraph (b) substitute—

“(b)whether the individual is UK resident for the tax year in which the relevant transfer abroad is made (if different from the                           tax year mentioned in subsection (1)), or”.                  

64U.K.In section 732 (non-transferors receiving benefit as a result of relevant transactions), in subsection (1)(b), for “ordinarily                        UK resident receives a benefit” substitute “ UK resident for a tax year receives a benefit in that tax year ”.

65(1)In section 749 (restrictions on particulars to be provided by relevant lawyers), in subsection (2), omit “ordinarily”.U.K.

(2)The amendment made by this paragraph applies only if the transfer is made or, in the case of an associated operation, the                        transfer is made and the associated operation is effected on or after 6 April 2013.

66U.K.In section 812 (case where limit on liability of non-UK residents is not to apply), in subsection (1)(a), omit “ordinarily”.

67(1)In section 834 (residence of personal representatives), in subsection (3), omit “, ordinarily UK resident”.U.K.

(2)The amendment made by this paragraph does not apply if D died before 6 April 2013.

68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

70. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### CommencementU.K.

72(1)The amendments made by this Part of this Schedule have effect for the purposes of a person's liability to income tax for the                        tax year 2013-14 or any subsequent tax year.U.K.

(2)Sub-paragraph (1) is without prejudice to any provision in this Part of the Schedule about the application of a particular                        amendment.

#### SavingsU.K.

73(1)This paragraph applies to an individual who—U.K.

(a)was resident in the United Kingdom for the tax year 2012-13, but

(b)was not ordinarily resident there at the end of the tax year 2012-13.

(2)The provisions listed in sub-paragraph (3) have effect, in relation to such an individual and a qualifying tax year, as if                        the amendments made to or with respect to those provisions by this Part of this Schedule had not been made.

(3)The provisions are—

(a)section 413 of ITEPA 2003 (exception for payments and benefits on termination of employment etc in certain cases involving                        foreign service),

(b)section 414 of that Act (reduction in other cases of foreign service), and

(c)Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad).

(4)But, in the case of provisions within paragraph (a) or (b) of sub-paragraph (3), this paragraph applies only if service in                        the employment in question began before the start of the tax year 2013-14.

(5)The meaning of “qualifying tax year” depends on the individual's residence status—

(a)if the individual was resident in the United Kingdom for the tax year 2010-11 and the tax year 2011-12, “qualifying tax year” means the tax year 2013-14,

(b)if the individual was not resident in the United Kingdom for the tax year 2010-11 but was resident in the United Kingdom for                        the tax year 2011-12, “qualifying tax year” means each of the tax year 2013-14 and the tax year 2014-15, and

(c)if the individual was not resident in the United Kingdom for the tax year 2011-12, “qualifying tax year” means each of the tax year 2013-14, the tax year 2014-15 and the tax year 2015-16.

(6)Where, by virtue of this paragraph, it is necessary to determine whether an individual is (or is not) ordinarily resident                        in the United Kingdom at a time on or after 6 April 2013, the question is to be determined as it would have been in the absence                        of this Schedule.

### **PART 3**U.K.Capital gains tax: accruals basis of taxation

#### TCGA 1992U.K.

74U.K.TCGA 1992 is amended as follows.

75(1)Section 2 (persons and gains chargeable to capital gains tax, and allowable losses) is amended as follows.U.K.

(2)In subsection (1), for the words from “during any part” to the end substitute “ if the residence condition is met ”.

(3)After that subsection insert—

“(1A)The residence condition is—                  

(a)in the case of an individual, that the individual is resident in the United Kingdom for the year in question,                  

(b)in the case of personal representatives of a deceased person, that the single and continuing body mentioned in section 62(3)                           is resident in the United Kingdom,                  

(c)in the case of the trustees of a settlement, that the single person mentioned in section 69(1) is resident in the United Kingdom                           during any part of the year in question, and                  

(d)in any other case, that the person is resident in the United Kingdom when the gain accrues.”                  

76U.K.In section 10 (non-resident with United Kingdom branch or agency), in subsection (1), for “in which he is not resident and                        not ordinarily resident in the United Kingdom but” substitute “ if the residence condition is not met (see section 2(1A)) but the person ”.

77(1)Section 13 (attribution of gains to members of non-resident companies) is amended as follows.U.K.

(2)In subsection (2), omit “or ordinarily resident”.

(3)In subsection (10), for “neither resident nor ordinarily resident” substitute “ not resident ”.

(4)In subsection (13)(b), omit “or ordinarily resident”.

78U.K.In section 16 (computation of losses), in subsection (3), for “during no part of which he is resident or ordinarily resident                        in the United Kingdom” substitute “ where the residence condition is not met (see section 2(1A)) ”.

79U.K.In section 62 (death: general provisions), in subsection (3), omit “, ordinary residence,”.

80U.K.In section 65 (liability for tax of trustees or personal representatives), in subsection (3)(b), for “become neither resident                        nor ordinarily resident” substitute “ cease to be resident ”.

81U.K.In section 67 (provisions applicable where section 79 of the Finance Act 1980 has applied), in subsection (6)(a), in paragraph                        (b) of the substituted subsection (1), for “ becomes neither resident nor ordinarily resident ” substitute “ ceases to be resident ”.

82(1)Section 69 (trustees of settlements) is amended as follows.U.K.

(2)In subsection (2), omit “and ordinarily resident”.

(3)In subsection (2B)(c), omit “, ordinarily resident”.

(4)In subsection (2E), for the words from “and ordinarily resident” to the end substitute “ in the United Kingdom, then for the purposes of this Act it is treated as being not resident in the United Kingdom ”.

83U.K.In section 76 (disposal of interests in settled property), in subsection (1B)(a), for “neither resident nor ordinarily resident”                        substitute “ not resident ”.

84U.K.In section 80 (trustees ceasing to be resident in UK), in subsection (1), for “neither resident nor ordinarily resident” substitute                        “ not resident ”.

85(1)Section 81 (death of trustee: special rules) is amended as follows.U.K.

(2)In subsection (1)(b), omit “and ordinarily resident”.

(3)In subsection (3)(b), omit “and ordinarily resident”.

(4)In subsection (4)(b), omit “and ordinarily resident”.

(5)In subsection (5)(a), omit “and ordinarily resident”.

86U.K.In section 82 (past trustees: liability for tax), in subsection (3)(b), for “become neither resident nor ordinarily resident”                        substitute “ cease to be resident ”.

87U.K.In section 83 (trustees ceasing to be liable to UK tax), in subsection (1), omit “and ordinarily resident”.

88(1)Section 83A (trustees both resident and non-resident in a year of assessment) is amended as follows.U.K.

(2)In subsection (3)(a), omit “and ordinarily resident”.

(3)In subsection (4)—

(a)in paragraph (a), for “neither resident nor ordinarily resident” substitute “ not resident ”, and

(b)in paragraph (b), omit “and ordinarily resident”.

89U.K.In section 84 (acquisition by dual resident trustees), in subsection (1)(b), omit “and ordinarily resident”.

90U.K.In section 85 (disposal of interests in non-resident settlements), in subsection (1), for “neither resident nor ordinarily                        resident” substitute “ not resident ”.

91(1)Section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements) is amended as follows.U.K.

(2)In subsection (1)(c), for the words from “either resident” to the end substitute “ resident in the United Kingdom for the year ”.

(3)For subsection (2) substitute—

“(2)The condition as to residence is that—                  

(a)there is no time in the year when the trustees are resident in the United Kingdom, or                  

(b)there is such a time but, whenever the trustees are resident in the United Kingdom during the year, they fall to be regarded                           for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.”                  

(4)In subsection (3), omit “and ordinarily resident”.

92(1)Section 87 (non-UK resident settlements: attribution of gains to beneficiaries) is amended as follows.U.K.

(2)In subsection (1), for the words from “the trustees” to the end substitute “ there is no time in that year when the trustees are resident in the United Kingdom ”.

(3)In subsection (4)(a), omit “and ordinarily resident”.

93U.K.In section 88(1) (gains of dual resident settlements)—

(a)in paragraph (a), omit “and ordinarily resident”, and

(b)in paragraph (b), omit “and ordinary residence”.

94(1)Section 96 (payments by and to companies) is amended as follows.U.K.

(2)In subsection (3), omit “or ordinarily resident”.

(3)In subsection (4), in each of paragraphs (a) and (b), omit “or ordinarily resident”.

(4)In subsection (5)(b), omit “or ordinary residence”.

95U.K.In section 97 (supplementary provisions), in subsection (1)(a), for “neither resident nor ordinarily resident” substitute                        “ not resident ”.

96U.K.In section 99 (application of Act to unit trust schemes), in subsection (1)(c), omit “and ordinarily resident”.

97U.K.In section 106A(5A) (identification of securities: capital gains tax)—

(a)in paragraph (a), for “neither resident nor ordinarily resident” substitute “ not resident ”, and

(b)in paragraph (b), omit “or ordinarily resident”.

98(1)Section 159 (non-residents: roll-over relief) is amended as follows.U.K.

(2)In subsection (2)(b), omit “or ordinarily resident”.

(3)In subsection (5), in the definition of “dual resident”, omit “or ordinarily resident”.

99(1)Section 166 (gifts to non-residents) is amended as follows.U.K.

(2)In subsection (1), for “neither resident nor ordinarily resident” substitute “ not resident ”.

(3)In subsection (2)(a), omit “or ordinarily resident”.

100(1)Section 167 (gifts to foreign-controlled companies) is amended as follows.U.K.

(2)In subsection (2)(a), for “neither resident nor ordinarily resident” substitute “ not resident ”.

(3)In subsection (3), for the words from “or ordinarily resident” to “nor ordinarily resident” substitute “ in the United Kingdom is to be regarded as not resident ”.

101(1)Section 168 (emigration of donee) is amended as follows.U.K.

(2)In subsection (1)(b), for “becomes neither resident nor ordinarily resident” substitute “ ceases to be resident ”.

(3)In subsection (4), for “becoming neither resident nor ordinarily resident” substitute “ ceasing to be resident ”.

(4)In subsection (5)—

(a)in paragraph (a), for “becoming neither resident nor ordinarily resident” substitute “ ceasing to be resident ”, and

(b)in paragraph (b), omit “or ordinarily resident”.

102U.K.In section 169 (gifts into dual resident trusts), in subsection (3)(a), omit “and ordinarily resident”.

103U.K.In section 199 (exploration or exploitation assets: deemed disposals), in subsection (2), for “who is not resident and not                        ordinarily resident in the United Kingdom” substitute “ in respect of whom the residence condition (see section 2(1A)) is not met ”.

104(1)Section 261 (section 260 relief: gifts to non-residents) is amended as follows.U.K.

(2)In subsection (1), for “neither resident nor ordinarily resident” substitute “ not resident ”.

(3)In subsection (2)(a), omit “or ordinarily resident”.

105U.K.In Schedule 1 (application of exempt amount and reporting limits in cases involving settled property), in paragraph 2(7)(a),                        omit “and ordinarily resident”.

106(1)Schedule 4A (disposal of interest in settled property: deemed disposal of underlying assets) is amended as follows.U.K.

(2)In paragraph 5(1) and (2), omit “and ordinarily resident”.

(3)In paragraph 6(1)—

(a)for “in the relevant” substitute “ as respects the relevant ”, and

(b)for the words from “either” to the end substitute “ met the residence condition set out in section 2(1A) ”.

(4)If any of the previous 5 years of assessment mentioned in paragraph 6(1) of Schedule 4A ends before 6 April 2013, the test                        in that paragraph is to be applied, as respects any such year ending before that date, as if that paragraph had not been amended                        by sub-paragraph (3).

107(1)Schedule 4C (transfers of value: attribution of gains to beneficiaries) is amended as follows.U.K.

(2)In paragraph 1A(3), for the words from “the beneficiary” to the end substitute “ , as respects that year, the beneficiary meets the residence condition set out in section 2(1A) ”.

(3)In paragraph 4—

(a)in sub-paragraph (1), omit “and ordinarily resident”, and

(b)in sub-paragraph (2), omit “and ordinarily resident”.

(4)In paragraph 5(1)—

(a)in paragraph (a), omit “and ordinarily resident”, and

(b)in paragraph (b), omit “and ordinary residence”.

(5)In paragraph 9(3)(a)(i), omit “and ordinarily resident”.

(6)In paragraph 10(1), omit “and ordinarily resident”.

108(1)Schedule 5 (attribution of gains to settlors with interest in non-resident or dual resident settlement) is amended as follows.U.K.

(2)In paragraph 2A(4)—

(a)in paragraph (a), for “become on or after 17th March 1998 neither resident nor ordinarily resident” substitute “ cease on or after 17 March 1998 to be resident ”, and

(b)in paragraph (b), omit “and ordinarily resident”.

(3)In paragraph 9(4)—

(a)in paragraph (a), for “become on or after 19th March 1991 neither resident nor ordinarily resident” substitute “ cease on or after 19 March 1991 to be resident ”, and

(b)in paragraph (b), omit “and ordinarily resident”.

(4)The amendments made by this paragraph apply to changes in the residence status of trustees on or after 6 April 2013.

109(1)Schedule 5A (settlements with foreign element: information) is amended as follows.U.K.

(2)In paragraph 2(1)—

(a)in paragraph (c), for “neither resident nor ordinarily resident” substitute “ not resident ”, and

(b)in paragraph (d), omit “and ordinarily resident”.

(3)In paragraph 3—

(a)in sub-paragraph (1)—

(i)in paragraph (a), for “neither resident nor ordinarily resident” substitute “ not resident ”, and

(ii)in paragraph (b), omit “and ordinarily resident”, and

(b)in sub-paragraph (3), for “either resident or ordinarily resident” substitute “ resident ”.

(4)In paragraph 4—

(a)in sub-paragraph (1)—

(i)in paragraph (a), for “neither resident nor ordinarily resident” substitute “ not resident ”, and

(ii)in paragraph (b), omit “and ordinarily resident”, and

(b)in sub-paragraph (3), for “either resident or ordinarily resident” substitute “ resident ”.

(5)In paragraph 5(1)—

(a)in paragraph (a), for the words from “become” to “ordinarily resident” substitute “ cease at any time (the relevant time) on or after the commencement day to be resident ”, and

(b)in paragraph (b), omit “and ordinarily resident”.

(6)The amendments made by this paragraph apply as follows—

(a)the amendments made by sub-paragraph (2) apply in relation to transfers of property made on or after 6 April 2013,

(b)the amendments made by sub-paragraphs (3) and (4) apply in relation to settlements created on or after that date, and

(c)the amendments made by sub-paragraph (5) apply to changes in the residence status of trustees on or after that date.

110(1)Schedule 5B (enterprise investment scheme: re-investment) is amended as follows.U.K.

(2)In paragraph 1—

(a)in sub-paragraph (1)(d), omit “or ordinarily resident”, and

(b)in sub-paragraph (4)(a), omit “or ordinarily resident”.

(3)In paragraph 3(3)(b), omit “or ordinarily resident”.

(4)In paragraph 19(1), in the definition of “non-resident”, for “neither resident nor ordinarily resident” substitute “ not resident ”.

(5)The amendments made by this paragraph apply in cases where the accrual time is on or after 6 April 2013 (even if the qualifying                        investment was made before that date).

111U.K.In Schedule 7C (reliefs for transfers to approved share plans), in paragraph 8, for paragraph (a) substitute—

“(a)the claimant would be chargeable to capital gains tax under section 2(1) (persons and gains chargeable to capital gains tax)                           in respect of the gain, or”.                  

#### CommencementU.K.

112(1)The amendments made by this Part of this Schedule have effect in relation to a person's liability to capital gains tax for                        the tax year 2013-14 or any subsequent tax year.U.K.

(2)Sub-paragraph (1) is without prejudice to any provision in this Part of this Schedule about the application of a particular                        amendment.

### **PART 4**U.K.Other amendments

#### FA 1916U.K.

113U.K.In FA 1916, omit section 63 (exemption from taxation of municipal securities issued in America).

#### F(No.2)A 1931U.K.

114(1)In section 22 of F(No.2)A 1931 (provisions in cases where Treasury has power to borrow money), in subsection (1)(a) and (b),                        omit “ordinarily”.U.K.

(2)Nothing in sub-paragraph (1) limits the power conferred by section 60(1) of FA 1940.

(3)Subject to sub-paragraph (5), the amendment made by sub-paragraph (1) does not affect a pre-commencement security (nor the                        availability of the relevant exemption).

(4)Sub-paragraph (5) applies to a person who becomes the beneficial owner of a pre-commencement security (or an interest in such                        a security) on or after 6 April 2013.

(5)If obtaining the relevant exemption is conditional on being not ordinarily resident in the United Kingdom, any enactment conferring                        the exemption is to have effect (in relation to a person to whom this sub-paragraph applies) as if obtaining the exemption                        were conditional instead on being not resident in the United Kingdom.

(6)In this paragraph—
          -  “pre-commencement security” means a FOTRA security (as defined in section 713 of ITTOIA 2005) issued before the day on which this Act is passed;                         
          -  “the relevant exemption”, in relation to a pre-commencement security, means the exemption for which provision is made in the exemption condition                           (as defined in that section).                         

#### TMA 1970U.K.

115U.K.TMA 1970 is amended as follows.

116(1)In section 98 (special returns etc), in subsection (4E)(d), omit “ordinarily”.U.K.

(2)The amendment made by this paragraph takes effect on the coming into force of regulations made under section 17(3) of F(No.2)A                        2005 (authorised investment funds) by virtue of the amendment made by paragraph 136.

117U.K.In Schedule 1A (claims etc not included in returns), in paragraph 2(6), omit “or not ordinarily resident”.

#### IHTA 1984U.K.

118(1)Section 157 of IHTA 1984 (non-residents' bank accounts) is amended as follows.U.K.

(2)For subsection (2) substitute—

“(2)This section applies to a person who is not domiciled and not resident in the United Kingdom immediately before his death.”                  

(3)In subsection (3), for “, resident or ordinarily resident” substitute “ or resident ”.

(4)In subsection (4)—

(a)in paragraph (a), omit “or ordinarily resident”, and

(b)in paragraph (b), omit “or ordinarily resident” and “and ordinarily resident”.

(5)The amendments made by this paragraph do not apply if the person dies before 6 April 2013.

#### FA 2004U.K.

119U.K.Part 4 of FA 2004 (pension schemes etc) is amended as follows.

120U.K.In section 185G (disposal by person holding directly), in subsection (3)(a), omit “, ordinarily resident”.

121U.K.In section 205 (short service refund lump sum charge), in subsection (3), omit “, ordinarily resident”.

122U.K.In section 205A (serious ill-health lump sum charge), in subsection (3), omit “, ordinarily resident”.

123U.K.In section 206 (special lump sum death benefits charge), in subsection (3), omit “, ordinarily resident”.

124U.K.In section 207 (authorised surplus payments charge), in subsection (3), omit “, ordinarily resident”.

125U.K.In section 208 (unauthorised payments charge), in subsection (4), omit “, ordinarily resident”.

126U.K.In section 209 (unauthorised payments surcharge), in subsection (5), omit “, ordinarily resident”.

127U.K.In section 217 (persons liable to lifetime allowance charge), in subsection (5), omit “, ordinarily resident”.

128U.K.In section 237A (liability of individual to annual allowance charge), in subsection (2), omit “, ordinarily resident”.

129U.K.In section 237B (liability of scheme administrator), in subsection (8), omit “, ordinarily resident”.

130U.K.In section 239 (scheme sanction charge), in subsection (4), omit “, ordinarily resident”.

131U.K.In section 242 (de-registration charge), in subsection (3), omit “, ordinarily resident”.

132U.K.The amendments of Part 4 of FA 2004 made by this Part of this Schedule have effect in relation to the tax year 2013-14 and                        any subsequent tax year.

#### FA 2005U.K.

133(1)In section 30 of FA 2005 (qualifying trust gains: special capital gains tax treatment), in subsection (1), for paragraph (c)                        substitute—U.K.

“(c)the trustees are resident in the United Kingdom during any part of the tax year, and”.                  

(2)The amendment made by this paragraph has effect in relation to the tax year 2013-14 and any subsequent tax year.

#### F(No.2)A 2005U.K.

134U.K.F(No.2)A 2005 is amended as follows.

135(1)In section 7 (charge to income tax on lump sum), in subsection (3), omit “, ordinarily resident”.U.K.

(2)The amendment made by this paragraph has effect in relation to the tax year 2013-14 and any subsequent tax year.

136U.K.In section 18 (section 17(3): specific powers), in subsection (1)(f) and (g), omit “ordinarily”.

#### CTA 2009U.K.

137U.K.CTA 2009 is amended as follows.

138(1)In section 900 (which relates to roll-over relief for disposals of pre-FA 2002 assets), in subsection (2), omit “or ordinarily                        UK resident”.U.K.

(2)The amendment made by this paragraph applies in relation to gains accruing or treated as accruing on or after 6 April 2013.

139(1)In section 936 (meaning of “UK estate” and “foreign estate”), in subsection (3), omit “or not ordinarily UK resident”.U.K.

(2)The amendment made by this paragraph applies if the tax year in question begins on or after 6 April 2013.

140(1)In section 947 (aggregate income of the estate), in subsection (2)(b)(i), omit “who was ordinarily UK resident”.U.K.

(2)The amendment made by this paragraph applies if the tax year in question begins on or after 6 April 2013.

141(1)In section 1009 (conditions relating to employee's income tax position), in subsection (5)(a), omit “and ordinarily UK resident”.U.K.

(2)The amendment made by this paragraph applies in relation to shares acquired on or after 6 April 2013.

142(1)In section 1017 (condition relating to employee's income tax position), in subsection (4)(a), omit “and ordinarily UK resident”.U.K.

(2)The amendment made by this paragraph applies in relation to options obtained on or after 6 April 2013.

143(1)In section 1025 (additional relief available if shares acquired are restricted shares), in subsection (5)(a), omit “and ordinarily                        UK resident”.U.K.

(2)The amendment made by this paragraph applies in relation to restricted shares acquired on or after 6 April 2013.

144(1)In section 1032 (meaning of “chargeable event”), in subsection (5)(a), omit “and ordinarily UK resident”.U.K.

(2)The amendment made by this paragraph applies in relation to convertible shares acquired on or after 6 April 2013.

#### CTA 2010U.K.

145(1)Section 1034 of CTA 2010 (purchase by unquoted trading company of own shares: requirements as to residence) is amended as                        follows.U.K.

(2)In subsections (1) and (2), omit “and ordinarily resident”.

(3)In subsection (3), omit “and ordinary residence” in both places.

(4)Omit subsection (4).

(5)The amendments made by this paragraph do not apply in relation to a purchase by an unquoted trading company of its own shares                        if the purchase takes place before 6 April 2013.

#### TIOPA 2010U.K.

146U.K.In section 363A of TIOPA 2010 (residence of offshore funds which are undertakings for collective investment in transferable                        securities), in subsection (3), for “neither resident nor ordinarily resident” substitute “ not resident ”.

#### Constitutional Reform and Governance Act 2010U.K.

147(1)In section 41 of the Constitutional Reform and Governance Act 2010 (tax status of MPs and members of the House of Lords),                        in subsection (2), omit “, ordinarily resident”.U.K.

(2)The amendment made by this paragraph has effect for the purposes of a member's liability to income tax or capital gains tax                        for the tax year 2013-14 or any subsequent tax year.

 Section 220

## SCHEDULE 47U.K.Controlled foreign companies

### Relevant finance leases etcU.K.

1U.K.Part 9A of TIOPA 2010 (controlled foreign companies) is amended as follows.

2U.K.Chapter 5 (the CFC charge gateway: non-trading finance profits) is amended as follows.

3U.K.In section 371ED (arrangements in lieu of dividends) in subsection (1) omit “(other than a relevant finance lease)”.

4(1)Section 371EE (leases to UK resident companies etc) is amended as follows.U.K.

(2)In subsection (2)(b)(i) for “which is the subject of the lease” substitute “ (“the relevant asset”) which is the subject of the lease or making (directly or indirectly) an arrangement which would fall                           within subsection (3) ”.

(3)After subsection (2) insert—

“(3)An arrangement would fall within this subsection if—                  

(a)the arrangement would meet one or both of the following requirements—                  

(i)it would not be a relevant finance lease;                  

(ii)it would not involve the CFC, and                  

(b)under the arrangement the other company would (directly or indirectly) purchase rights to use the relevant asset.”                  

5U.K.Chapter 22 (supplementary provision) is amended as follows.

6U.K.In section 371VA (definitions) for the definition of “relevant finance lease” substitute—

““relevant finance lease” is to be read in accordance with section 371VIA,”.                  

7(1)Section 371VG (finance profits) is amended as follows.U.K.

(2)In subsection (1) for paragraph (b) substitute—

“(b)which are included in the CFC's assumed total profits for the accounting period in question and which—                  

(i)arise from a relevant finance lease, but                  

(ii)are not trading profits.”                  

(3)In subsection (4)(b) omit “an arrangement which would be”.

8(1)Section 371VH (interests in companies) is amended as follows.U.K.

(2)In subsection (9) omit the second sentence.

(3)After subsection (10) insert—

“(10A)For the purposes of subsection (9), if for any relevant period accounts for a loan creditor are not prepared in accordance                           with international accounting standards or UK generally accepted accounting practice, any question relating to generally accepted                           accounting practice is to be determined in relation to the loan creditor for that period by reference to generally accepted                           accounting practice in relation to accounts prepared in accordance with international accounting standards.”                  

9U.K.After section 371VI insert—

#### “371VIARelevant finance leases

### Limit on double taxation relief in cases involving qualifying loan relationships of CFCsU.K.

10U.K.Part 2 of TIOPA 2010 (double taxation relief) is amended as follows.

11U.K.Chapter 2 (double taxation relief by way of credit) is amended as follows.

12U.K.In section 42 (limit on credit against corporation tax) after subsection (4) insert—

“(5)See also section 49A which contains an additional limit on credit allowed in certain cases involving CFCs.”                  

13U.K.After section 49 insert—

#### “49ALimit on credit in cases involving qualifying loan relationships of CFCs

14(1)In Chapter 3 (miscellaneous provisions), section 112 (deduction from income for foreign tax (instead of credit against UK                        tax)) is amended as follows.U.K.

(2)After subsection (3) insert—

“(3A)Subsection (3B) applies if—                  

(a)the requirements of section 49A(1)(a) to (c) are met,                  

(b)amounts have been paid in respect of non-UK tax on loan relationship credits falling within section 49A(1)(c) which arise                           in an accounting period of the relevant UK company, and                  

(c)apart from subsection (3B), Z would exceed                  

where—                     

Z is—                        

the total amount of any reductions under subsection (1) for amounts paid in respect of that non-UK tax, less                              

the total amount of any increases under subsection (3) for payments made by reference to that non-UK tax, and                              

R and S have the same meaning as in section 49A(2).                              

R and S have the same meaning as in section 49A(2).                        

(3B)The total amount of the reductions under subsection (1) is to be reduced so that Z equals                  

(3)In subsection (6), for “subsection (1)” substitute “ this section ”.

### MiscellaneousU.K.

15U.K.In Part 6 of TIOPA 2010 (tax arbitrage), in section 236 (deduction schemes involving hybrid entities) for subsection (4) substitute—

“(4)Condition B is not met just because the party's profits or gains are subject to a charge under the law of a territory outside                           the United Kingdom (by whatever name known) which is similar to the CFC charge (see Part 9A).”                  

16U.K.Part 9A of TIOPA 2010 (controlled foreign companies) is amended as follows.

17U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18U.K.Chapter 9 (exemptions for profits from qualifying loan relationships) is amended as follows.

19U.K.In section 371IB (loans funded out of qualifying resources) after subsection (9) insert—

“(9A)Subsection (9) does not apply if the debt incurred by the member of the CFC group as mentioned in subsection (8) represents                           the principal on a loan made to the member to which subsection (9B) or (9D) applies.                  

(9B)This subsection applies to a loan if the member repays it within 48 hours of the loan being made.                  

(9C)But subsection (9B) does not apply to a loan if the repayment of the loan within the 48 hours occurs under, or is connected                           (directly or indirectly) with, an arrangement the main purpose, or one of the main purposes, of which is to ensure that subsection                           (9) does not apply because of—                  

(a)the loan, or                  

(b)any other debt which a member of the CFC group incurs (or is expected to incur) in the United Kingdom.                  

(9D)This subsection applies to a loan if—                  

(a)there is an issue of shares which meets the requirements of subsection (7)(c)(i) to (iii),                  

(b)the loan was made before the issue of shares but with the expectation that it would be repaid by the member out of funds deriving                           (directly or indirectly) from the issue of shares,                  

(c)the loan is repaid by the member out of such funds within the period of 6 months beginning with the day on which the loan                           was made, and                  

(d)the loan—                  

(i)was made by a person who was not a member of the CFC group, and                  

(ii)was not made (wholly or partly nor directly or indirectly) out of funds or other assets provided by a member of the CFC group.”                  

20(1)Section 371IE (matched interest) is amended as follows.U.K.

(2)In subsection (1)(d)(ii) after “include” insert “ some or all of ”.

(3)After subsection (7) insert—

“(7A)In subsection (6) the reference to the leftover profits is to those profits so far as they would be included in the relevant                           finance profits (see section 314A(1)(d)).”                  

### Commencement and transitional provisionU.K.

21U.K.The amendments made by this Schedule are treated as having come into force on 1 January 2013.

22(1)Section 371CE of TIOPA 2010 (as amended by paragraph 17 above) applies for accounting periods of CFCs beginning before 20                        March 2013 with the modifications set out in this paragraph. References below to subsections are to subsections of section                        371CE.U.K.

#### *Accounting periods ending before 20 March 2013*

(2)For accounting periods ending before 20 March 2013, subsection (4) applies as if paragraph (b) were omitted.

#### *Accounting periods ending on or after 20 March 2013*

(3)The following sub-paragraphs apply for accounting periods ending on or after 20 March 2013.

(4)A notice may be given under subsection (2)(b) even though the requirement of subsection (2)(a) is not met.

(5)If a notice is given under subsection (2)(b) in a case where the requirement of subsection (2)(a) is not met, the CFC's trading                        finance profits are to be apportioned on a just and reasonable basis between—

(a)the part of the accounting period falling before 20 March 2013 (“period A”), and

(b)the remaining part of the accounting period (“period B”).

(6)So far as the CFC's trading finance profits are apportioned to period A, they are to be treated as non-trading finance profits                        if the CFC is a group treasury company in period A (and subsection (3) applies to them accordingly).

(7)For the purpose of determining if the CFC is a group treasury company in period A, subsection (4) applies—

(a)as if references to the accounting period were to period A, and

(b)as if paragraph (b) were omitted.

(8)So far as the CFC's trading finance profits are apportioned to period B, they are to be treated as non-trading finance profits                        if the CFC is a group treasury company in period B (and subsection (3) applies to them accordingly).

(9)For the purpose of determining if the CFC is a group treasury company in period B, subsection (4) applies as if references                        to the accounting period were to period B.

 Section 224

## SCHEDULE 48U.K.Proceeds of crime: powers of officers of Revenue and Customs

### Proceeds of Crime Act 2002U.K.

1U.K.The Proceeds of Crime Act 2002 is amended in accordance with paragraphs 2 to 20.

2(1)Section 289 (searches) is amended as follows.U.K.

(2)In subsections (1), (1A)(a) and (2), for “a customs officer” substitute “ an officer of Revenue and Customs ”.

(3)In subsections (1C) and (1D), for “customs officer” substitute “ officer of Revenue and Customs ”.

(4)After subsection (5)(b) insert—

“(ba)are exercisable by an officer of Revenue and Customs only so far as the officer is exercising a function relating to a matter                           other than an excluded matter,”.                  

(5)After subsection (5) insert—

“(5A)The reference in subsection (5)(ba) to an excluded matter is to a matter specified in section 54(4)(b) of, or in any of paragraphs                           3, 5, 7, 10, 12 and 14 to 30 of Schedule 1 to, the Commissioners for Revenue and Customs Act 2005.”                  

3U.K.In section 290 (prior approval for search)—

(a)in subsection (4)(a), for “a customs officer, a customs officer” substitute “ an officer of Revenue and Customs, such an officer ”, and

(b)in subsection (6), for “customs officer” substitute “ officer of Revenue and Customs ”.

4U.K.In section 291(2) (report on exercise of powers), for “customs officer” substitute “ officer of Revenue and Customs ”.

5U.K.In section 292 (code of practice)—

(a)in subsection (1), for “customs officers” substitute “ officers of Revenue and Customs ”, and

(b)in subsection (6), for “a customs officer” substitute “ an officer of Revenue and Customs ”.

6(1)Section 294 (seizure of cash) is amended as follows.U.K.

(2)In subsections (1) and (2), for “A customs officer” substitute “ An officer of Revenue and Customs ”.

(3)After subsection (2) insert—

“(2A)The powers conferred by this section are exercisable by an officer of Revenue and Customs only so far as the officer is exercising                           a function relating to a matter other than an excluded matter.                  

(2B)But the powers may be exercised by the officer in reliance on a suspicion that relates to an excluded matter.                  

(2C)The reference in subsection (2A) to an excluded matter is to a matter specified in section 54(4)(b) of, or in any of paragraphs                           3, 5, 7, 10, 12 and 14 to 30 of Schedule 1 to, the Commissioners for Revenue and Customs Act 2005.”                  

7U.K.In section 295(1) (detention of seized cash), for “customs officer” substitute “ officer of Revenue and Customs ”.

8U.K.In section 296(2) (interest on cash), for “customs officer” substitute “ officer of Revenue and Customs ”.

9U.K.In section 297(4) (release of detained cash), for “A customs officer” substitute “ An officer of Revenue and Customs ”.

10U.K.In section 302(6) (compensation), for “a customs officer” substitute “ an officer of Revenue and Customs ”.

11U.K.In section 351(5) (person making application to vary or discharge order)—

(a)for “a customs officer” substitute “ an officer of Revenue and Customs ”, and

(b)for “customs officer” substitute “ officer of Revenue and Customs ”.

12(1)Section 352 (search and seizure warrants) is amended as follows.U.K.

(2)In subsection (5)—

(a)omit paragraph (a), and

(b)in paragraph (c), at the end insert “ , a confiscation investigation or a money laundering investigation ”.

(3)In subsection (7), omit “(a) or”.

13(1)Section 353 (requirements where production order not available) is amended as follows.U.K.

(2)In subsection (10)—

(a)omit paragraph (a), and

(b)in paragraph (c), at the end insert “ , a confiscation investigation or a money laundering investigation ”.

(3)In subsection (11), omit “(a) or”.

14(1)Section 369 (customer information orders: supplementary provisions) is amended as follows.U.K.

(2)In subsection (5)—

(a)for “a customs officer” substitute “ an officer of Revenue and Customs ”, and

(b)for “customs officer” substitute “ officer of Revenue and Customs ”.

(3)In subsection (7), for “a customs officer” substitute “ an officer of Revenue and Customs ”.

15U.K.In section 375(4) (account monitoring orders: supplementary provisions)—

(a)for “a customs officer” substitute “ an officer of Revenue and Customs ”, and

(b)for “customs officer” substitute “ officer of Revenue and Customs ”.

16U.K.After section 375B insert—

#### “Officers of Revenue and CustomsU.K.

##### 375CRestriction on exercise of certain powers conferred on officers of Revenue and Customs

17U.K.In section 377(1) (persons subject to code of practice), for paragraph (e) substitute—

“(e)officers of Revenue and Customs;”                  

18U.K.In section 378 (officers)—

(a)in subsection (1), for paragraph (d) substitute—

“(d)an officer of Revenue and Customs;”,                  

(b)in subsections (2)(c) and (6)(b), for “a customs officer” substitute “ an officer of Revenue and Customs ”, and

(c)in subsection (4), for paragraph (c) substitute—

“(c)an officer of Revenue and Customs;”                  

19U.K.After section 408B insert—

#### “Officers of Revenue and CustomsU.K.

##### 408CRestriction on exercise of certain powers conferred on officers of Revenue and Customs

20U.K.In section 412 (interpretation), in the entry relating to the meaning of references to a “constable”, for “a customs and excise                        officer” substitute “ an officer of Revenue and Customs ”.

### Commissioners for Revenue and Customs Act 2005U.K.

21U.K.In Schedule 2 to the Commissioners for Revenue and Customs Act 2005 (restrictions on functions of Commissioner and officers),                        omit—

(a)paragraphs 13 and 13A, and

(b)the italic heading immediately preceding those paragraphs.

### Relationship of provisions of 2005 Act with provisions of 2002 ActU.K.

22U.K.Nothing in section 6 or 7 of the Commissioners for Revenue and Customs Act 2005 (initial functions) restricts the functions                        in connection with which officers of Revenue and Customs may exercise a power under—

(a)Chapter 3 of Part 5 of the Proceeds of Crime Act 2002 (as amended by this Schedule), or

(b)Chapters 2 and 3 of Part 8 of that Act (as so amended).

### Consequential amendmentsU.K.

23U.K.In section 80(1) and (3) of the Serious Crime Act 2007 (amendment of sections 352(5) and 353(10) of the Proceeds of Crime                        Act 2002), omit paragraph (a) and the word “and” at the end of that paragraph.

24U.K.In Schedule 7 to the Policing and Crime Act 2009 (minor and consequential amendments), omit paragraph 116.

 Section 229

## SCHEDULE 49U.K.Corporation tax: deferral of payment of exit charge

### Amendments of TMA 1970U.K.

1U.K.TMA 1970 is amended in accordance with paragraphs 2 to 6.

2U.K.After section 59F insert—

#### “59FAExit charge payment plans

3U.K.Immediately before section 59G insert— “ *Managed payment plans* ”.

4(1)Section 109B (provision for securing payment by company of outstanding tax) is amended as follows.U.K.

(2)In subsection (1), at the end insert “ , subject to subsection (5A). ”

(3)In subsection (4)(b), at the end insert “ (which may include a proposal to enter into an exit charge payment plan in accordance with Schedule 3ZB). ”

(4)After subsection (5) insert—

“(5A)Condition D does not apply to the extent that payment of the tax is to be secured by the company entering into an exit charge                           payment plan in accordance with Schedule 3ZB.”                  

5(1)Section 109E (liability of other persons for unpaid tax) is amended as follows.U.K.

(2)After subsection (1) insert—

“(1A)The reference in subsection (1)(b) to the time when tax becomes payable is a reference to—                  

(a)in a case where an exit charge payment plan has been entered into in accordance with Schedule 3ZB in respect of the tax, the                           time when the tax becomes payable under the plan, and                  

(b)in any other case, the time when the tax becomes payable in accordance with section 59D or 59E.”                  

(3)In subsection (2), for “the time when the amount of the tax is finally determined” substitute “ the relevant time ”.

(4)After subsection (2) insert—

“(2A)In subsection (2) the “relevant time” means—                  

(a)in a case where an exit charge payment plan has been entered into in accordance with Schedule 3ZB in respect of the tax, the                           later of—                  

(i)the first day after the period of 12 months beginning immediately after the migration accounting period (as defined in Part                           1 or 2 of Schedule 3ZB, as the case may be), and                  

(ii)the date on which the tax is payable under the plan, and                  

(b)in any other case, the time when the amount of the tax is finally determined.”                  

6U.K.After Schedule 3ZA insert—

#### “SCHEDULE 3ZBU.K.Exit charge payment plans

##### **PART 1**U.K.company ceasing to be resident in UK

###### Circumstances in which exit charge payment plan may be entered intoU.K.

1(1)This Part of this Schedule and Part 3 of this Schedule apply where an eligible company—                  

(a)ceases to be resident in the United Kingdom,                  

(b)on ceasing to be so resident, becomes resident in another EEA state, and                  

(c)is liable to pay qualifying corporation tax in respect of the migration accounting period.                  

(2)The company may defer payment of some or all of the qualifying corporation tax if it enters into an exit charge payment plan                           in respect of it in accordance with this Schedule.                  

(3)The company may enter into an exit charge payment plan only if conditions A to C are met.                  

(4)Condition A is that before the end of the period of 9 months beginning immediately after the migration accounting period—                  

(a)an application to enter into the exit charge payment plan is made to Her Majesty's Revenue and Customs, and                  

(b)the application contains details of all the matters which are required by Part 3 of this Schedule to be specified in the plan.                  

(5)Condition B is that on ceasing to be resident in the United Kingdom, the company carries on a business in an EEA state.                  

(6)Condition C is that, on becoming resident in the other EEA state, the company is not treated as resident in a territory outside                           the European Economic Area for the purposes of any double taxation arrangements.                  

(7)In this paragraph—                  
          -  “double taxation arrangements” means arrangements which are made by two or more territories with a view to affording relief from double taxation and which                              have effect at the time when the company ceases to be resident in the United Kingdom;                         
          -  “eligible company” means a company that has a right to freedom of establishment protected by Article 49 of the Treaty on the functioning of                              the European Union or established by Article 31 of the Agreement on the European Economic Area.                         

(8)In this Part of this Schedule—                  

(a)references to the migration accounting period are to—                  

(i)in a case where an accounting period comes to an end on the company ceasing to be resident in the United Kingdom, that accounting                           period, and                  

(ii)in a case not falling within sub-paragraph (i), the accounting period during which the company ceases to be resident in the                           United Kingdom,                  

(b)references to a Part 1 company are to a company in relation to which this Part of this Schedule applies, and                  

(c)references to Part 3 of this Schedule are to Part 3 of this Schedule as it applies to a Part 1 company.                  

###### Qualifying corporation taxU.K.

2(1)The company is liable to pay qualifying corporation tax in respect of the migration accounting period if CT1 is greater than                           CT2 where—                  
          -  CT1 is the corporation tax which the company is liable to pay for the accounting period, and                         
          -  CT2 is the corporation tax which the company would be liable to pay for the accounting period if any income, profits, gains,                              losses or debits arising only by virtue of the exit charge provisions were ignored,                         

(CT2 will be zero if the company would not be liable to pay any corporation tax for the period).                  

(2)The amount of qualifying corporation tax which the company is liable to pay is the difference between CT1 and CT2.                  

(3)“Exit charge provisions” means—                  

(a)section 185 of the 1992 Act,                  

(b)section 187(4) of that Act, where that subsection applies by virtue of section 187(4)(c),                  

(c)section 162 of CTA 2009, where that section applies by virtue of section 41(2)(b) of that Act,                  

(d)section 333 of that Act,                  

(e)section 609 of that Act,                  

(f)section 859 of that Act, where that section applies by virtue of section 859(2)(a), and                  

(g)section 862 of that Act, where that section applies by virtue of section 862(1)(c).                  

(4)References in this Part of this Schedule and Part 3 of this Schedule to qualifying corporation tax are to be read in accordance                           with this paragraph.                  

###### Interpretation: exit charge assets and liabilitiesU.K.

3(1)This paragraph applies for the purposes of this Part of this Schedule and Part 3 of this Schedule.                  

(2)“Exit charge assets” and “exit charge liabilities” means assets or liabilities (as the case may be) in respect of which income, profits or gains arise in the migration accounting                           period by virtue of the exit charge provisions, and in particular—                  

(a)“TCGA or trading stock exit charge assets” means those exit charge assets, other than pre-FA 2002 intangible fixed assets, in respect of which income, profits or gains                           arise by virtue of the exit charge provision mentioned in paragraph 2(3)(a), (b) or (c),                  

(b)“financial exit charge assets or liabilities” means those exit charge assets or liabilities in respect of which income, profits or gains arise by virtue of the exit charge                           provision mentioned in paragraph 2(3)(d) or (e),                  

(c)“intangible exit charge assets” means—                  

(i)those exit charge assets in respect of which income, profits or gains arise by virtue of the exit charge provision mentioned                           in paragraph 2(3)(f) or (g), and                  

(ii)those exit charge assets which are pre-FA 2002 intangible fixed assets in respect of which income, profits or gains arise                           by virtue of the exit charge provision mentioned in paragraph 2(3)(a) or (b).                  

(3)In sub-paragraph (2)—                  

(a)“exit charge provisions” has the meaning given in paragraph 2(3);                  

(b)“pre-FA 2002 intangible fixed asset” means an intangible fixed asset which is a pre-FA 2002 asset (as defined in section 881 of CTA 2009).                  

##### **PART 2**U.K.Non-UK resident companies with UK permanent establishments

###### Circumstances in which exit charge payment plan may be entered intoU.K.

4(1)This Part of this Schedule and Part 3 of this Schedule apply where—                  

(a)at any time during an accounting period (“the migration accounting period”) an eligible company which is not resident in the                           United Kingdom carries on a trade in the United Kingdom through a permanent establishment there,                  

(b)one or more PE qualifying events occurs in respect of any assets or liabilities of the company as mentioned in sub-paragraph                           (4), and                  

(c)the company is liable to pay qualifying corporation tax in respect of the migration accounting period.                  

(2)The company may defer payment of some or all of the qualifying corporation tax if it enters into an exit charge payment plan                           in respect of it in accordance with this Schedule.                  

(3)The company may enter into an exit charge payment plan only if before the end of the period of 9 months beginning immediately                           after the migration accounting period—                  

(a)an application to enter into the exit charge payment plan is made to Her Majesty's Revenue and Customs, and                  

(b)the application contains details of all the matters which are required by Part 3 of this Schedule to be specified in the plan.                  

(4)For the purposes of this Part of this Schedule, a “PE qualifying event” occurs in respect of an asset or liability of a company                           if—                  

(a)an event occurs which triggers—                  

(i)a deemed disposal and reacquisition of the asset or liability under the exit charge provision mentioned in paragraph 5(3)(a),                           (c), (d) or (e), or                  

(ii)a valuation of the asset under the exit charge provision mentioned in paragraph 5(3)(b),                  

(b)the event—                  

(i)occurs during the migration accounting period, or                  

(ii)causes the migration accounting period to come to an end, and                  

(c)at the time of the event, the company is not treated as resident in a territory outside the European Economic Area for the                           purposes of any double taxation arrangements.                  

(5)In this Part of this Schedule, references to a PE qualifying asset or liability are to an asset or liability in respect of                           which a PE qualifying event occurs.                  

(6)In this paragraph “double taxation arrangements” and “eligible company” have the meanings given in paragraph 1(7).                  

(7)In this Part of this Schedule—                  

(a)references to the migration accounting period are to be read in accordance with this paragraph;                  

(b)references to a Part 2 company are to a company in relation to which this Part of this Schedule applies,                  

(c)references to Part 3 of this Schedule are to Part 3 of this Schedule as it applies to a Part 2 company, and                  

(d)“permanent establishment”, in relation to a company, is to be read in accordance with Chapter 2 of Part 24 of CTA 2010.                  

###### Qualifying corporation taxU.K.

5(1)The company is liable to pay qualifying corporation tax in respect of the migration accounting period if CT1 is greater than                           CT2 where—                  
          -  CT1 is the corporation tax which the company is liable to pay for the accounting period, and                         
          -  CT2 is the corporation tax which the company would be liable to pay for the accounting period if any income, profits, gains,                              losses or debits arising as a result of any PE qualifying events, and arising only by virtue of the exit charge provisions,                              were ignored,                         

(CT2 will be zero if the company would not be liable to pay any corporation tax for the period).                  

(2)The amount of qualifying corporation tax which the company is liable to pay is the difference between CT1 and CT2.                  

(3)Exit charge provisions means—                  

(a)section 25 of the 1992 Act,                  

(b)section 162 of CTA 2009, where that section applies by virtue of section 41(2)(b) of that Act,                  

(c)section 334 of that Act,                  

(d)section 610 of that Act, and                  

(e)section 859 of that Act, where that section applies by virtue of section 859(2)(b).                  

(4)References in this Part of this Schedule and Part 3 of this Schedule to qualifying corporation tax are to be read in accordance                           with this paragraph.                  

###### Interpretation: exit charge assets and liabilitiesU.K.

6(1)This paragraph applies for the purposes of this Part of this Schedule and Part 3 of this Schedule.                  

(2)“Exit charge assets” and “exit charge liabilities” means any PE qualifying assets or liabilities (as the case may be) in respect of which income, profits or gains arise in                           the migration accounting period by virtue of the exit charge provisions, and in particular—                  

(a)“TCGA or trading stock exit charge assets” means those exit charge assets, other than pre-FA 2002 intangible fixed assets, in respect of which income, profits or gains                           arise by virtue of the exit charge provision mentioned in paragraph 5(3)(a) or (b);                  

(b)“financial exit charge assets or liabilities” means those exit charge assets or liabilities in respect of which income, profits or gains arise by virtue of the exit charge                           provision mentioned in paragraph 5(3)(c) or (d);                  

(c)“intangible exit charge assets” means—                  

(i)those exit charge assets in respect of which income, profits or gains arise by virtue of the exit charge provision mentioned                           in paragraph 5(3)(e), and                  

(ii)those exit charge assets which are pre-FA 2002 intangible fixed assets in respect of which income, profits or gains arise                           by virtue of the exit charge provision mentioned in paragraph 5(3)(a).                  

(3)In sub-paragraph (2)—                  

(a)“exit charge provisions” has the meaning given in paragraph 5(3);                  

(b)“pre-FA 2002 intangible fixed asset” means an intangible fixed asset which is a pre-FA 2002 asset (as defined in section 881 of CTA 2009).                  

##### **PART 3**U.K.Entering into an exit charge payment plan

###### IntroductionU.K.

7(1)As to when this Part of this Schedule applies, see—                  

(a)Part 1 of this Schedule (companies ceasing to be resident in the United Kingdom), and                  

(b)Part 2 of this Schedule (companies with permanent establishments in the United Kingdom).                  

(2)In this Part of this Schedule, as it applies to a company in relation to which Part 1 of this Schedule applies, terms and                           expressions which are used in this Part and in that Part have the same meanings in this Part as in that Part.                  

(3)In this Part of this Schedule, as it applies to a company in relation to which Part 2 of this Schedule applies, terms and                           expressions which are used in this Part and in that Part have the same meanings in this Part as in that Part.                  

###### Entering into an exit charge payment planU.K.

8(1)A Part 1 company or a Part 2 company enters into an exit charge payment plan in respect of qualifying corporation tax in accordance                           with this Schedule if—                  

(a)the company agrees to pay, and an officer of Revenue and Customs agrees to accept payment of, the tax in accordance with the                           standard instalment method (see paragraph 13) or the realisation method (see paragraphs 14 to 17) or a combination of the                           two methods,                  

(b)the company agrees to pay interest on the tax in accordance with paragraph 9(3), and                  

(c)the plan meets the requirements set out in paragraphs 10 to 12 as to the matters that must be specified in it.                  

(2)The exit charge payment plan may, in the circumstances mentioned in sub-paragraph (3), contain appropriate provision regarding                           security for Her Majesty's Revenue and Customs in respect of the deferred payment of the tax.                  

(3)Those circumstances are where an officer of Her Majesty's Revenue and Customs considers that agreeing to accept payment of                           qualifying corporation tax in accordance with the plan would present a serious risk as to collection of the tax in the absence                           of provision regarding security in respect of that tax.                  

(4)An exit charge payment plan is void if any information furnished by the company in connection with the plan does not fully                           and accurately disclose all facts and considerations material to the decision of the officer of Revenue and Customs to accept                           payment of qualifying corporation tax in accordance with the plan.                  

###### Effect of exit charge payment planU.K.

9(1)This paragraph applies where an exit charge payment plan is entered into by a company in respect of qualifying corporation                           tax in accordance with this Schedule.                  

(2)As regards when the tax is payable—                  

(a)the plan does not prevent the tax becoming due and payable under section 59D or 59E, but                  

(b)the Commissioners for Her Majesty's Revenue and Customs—                  

(i)may not seek payment of the tax otherwise than in accordance with the plan;                  

(ii)may make repayments in respect of any amount of the tax paid, or any amount paid on account of the tax, before the plan is                           entered into.                  

(3)As regards interest—                  

(a)the tax carries interest in accordance with Part 9 as if the plan had not been entered into, and                  

(b)each time a payment is made under the plan, it is to be paid together with any interest payable on it.                  

(4)As regards penalties, the company will be liable to penalties for late payment of the tax only if it fails to make payments                           in accordance with the plan (see item 6ZA of the Table at the end of paragraph 1 of Schedule 56 to the Finance Act 2009).                  

(5)Qualifying corporation tax payable in accordance with an exit charge payment plan which is for the time being unpaid may be                           paid at any time before it becomes payable under the plan together with interest payable on it to the date of payment.                  

###### Content of exit charge payment planU.K.

10(1)An exit charge payment plan entered into by a Part 1 company must specify—                  

(a)the date on which the company ceased to be resident in the United Kingdom, and                  

(b)the EEA state in which the company has become resident.                  

(2)An exit charge payment plan entered into by a Part 2 company must specify—                  

(a)the EEA state in which the company is resident, and                  

(b)if the company has ceased to carry on a trade in the United Kingdom through a permanent establishment there, the date on which                           it ceased to do so.                  

(3)In either case an exit charge payment plan entered into by a company must also specify—                  

(a)the amount of qualifying corporation tax which, in the company's opinion, is payable by it in respect of the migration accounting                           period,                  

(b)the amount of that qualifying corporation tax which the company wishes to defer paying under the exit charge payment plan                           (“ECPP tax”), and                  

(c)whether the ECPP tax is to be paid in accordance with—                  

(i)the standard instalment method (see paragraph 13),                  

(ii)the realisation method (see paragraphs 14 to 17), or                  

(iii)a combination of the two methods.                  

(4)If the ECPP tax is to be paid in accordance with a combination of the two methods, the exit charge payment plan must also                           specify—                  

(a)in the case of each of the company's exit charge assets or liabilities (see paragraphs 3(2) or 6(2), as the case may be),                           the method in accordance with which the amount of ECPP tax attributable to the asset or liability (see sub-paragraph (6))                           is to be paid, and                  

(b)the amount of the ECPP tax specified under sub-paragraph (3)(b) that is to be paid in accordance with each method.                  

(5)But an exit charge payment plan may specify that any ECPP tax is to be paid in accordance with the standard instalment method                           only if—                  

(a)in the case of a plan entered into by a Part 1 company, the company's ceasing to be resident in the United Kingdom is not                           part of arrangements the main purpose of which, or one of the main purposes of which, is to defer the payment of any qualifying                           corporation tax payable by it;                  

(b)in the case of a plan entered into by a Part 2 company, none of the PE qualifying events occurring during the migration accounting                           period, or bringing that period to an end, is part of arrangements the main purpose of which, or one of the main purposes                           of which, is to defer the payment of any qualifying corporation tax payable by it.                  

(6)The amount of ECPP tax attributable to each exit charge asset or liability is—                  

where—                     

“A” is the income, profits or gains arising in respect of the asset or liability in the migration accounting period by virtue                              of the relevant exit charge provision only,                        

“B” is the total income, profits or gains arising in respect of all the exit charge assets and liabilities in the migration                              accounting period by virtue of the exit charge provisions only, and                        

“T” is the ECPP tax.                        

###### Content: realisation methodU.K.

11(1)This paragraph applies if, under an exit charge payment plan, the amount of ECPP tax attributable to any exit charge asset                           or liability is to be paid in accordance with the realisation method.                  

(2)The plan must specify—                  

(a)each such asset or liability (so far as not already specified under paragraph 10(4)(a)), and                  

(b)the amount of ECPP tax attributable to the asset or liability, calculated in accordance with paragraph 10(6).                  

(3)The plan must also include requirements as to the ongoing provision of information by the company to Her Majesty's Revenue                           and Customs in relation to the asset or liability.                  

###### Content: additional information relating to assets and liabilitiesU.K.

12(1)This paragraph applies if, under an exit charge payment plan, the amount of ECPP tax attributable to an exit charge asset                           or liability is to be paid in accordance with the realisation method.                  

(2)The plan must specify any additional information required by this paragraph in relation to the asset or liability.                  

(3)Sub-paragraph (4) applies in the case of a financial exit charge asset or liability if, immediately after the migration accounting                           period, the remaining term of the loan relationship or derivative contract in question is less than 10 years.                  

(4)The plan must specify, in relation to the asset or liability, how many years of the term of the loan relationship or derivative                           contract remain (rounded up to the nearest whole year).                  

(5)Sub-paragraph (6) applies in the case of an intangible exit charge asset if, immediately after the migration accounting period,                           the remaining useful life of the asset for accountancy purposes is less than 10 years.                  

(6)The plan must specify, in relation to the asset, how many years of the useful life of the asset remain (rounded up to the                           nearest whole year).                  

###### The standard instalment methodU.K.

13(1)This paragraph applies if, under an exit charge payment plan, some or all of the ECPP tax is to be paid in accordance with                           the standard instalment method.                  

(2)The amount of the ECPP tax that is to be paid in accordance with the standard instalment method is payable in 6 instalments                           of equal amounts as follows—                  

(a)the first instalment is due on the first day after the period of 9 months beginning immediately after the migration accounting                           period, and                  

(b)the other 5 instalments are due one on each of the first 5 anniversaries of that day.                  

(3)But if a relevant event occurs, the outstanding balance of the ECPP tax that is payable in accordance with the standard instalment                           method is payable on the date on which the next instalment of that tax would otherwise have been due under the plan.                  

(4)A “relevant event” means—                  

(a)the company becoming insolvent or entering into administration,                  

(b)the appointment of a liquidator,                  

(c)any event under the law of an EEA state outside the United Kingdom corresponding to an event specified in paragraph (a) or                           (b), or                  

(d)the company ceasing to be resident in an EEA state and, on so ceasing, not becoming resident in any other EEA state.                  

###### The realisation method: TCGA or trading stock exit charge assetsU.K.

14(1)This paragraph applies if—                  

(a)under an exit charge payment plan, the amount of ECPP tax attributable to an exit charge asset is to be paid in accordance                           with the realisation method, and                  

(b)the asset is a TCGA or trading stock exit charge asset (see paragraph 3(2)(a) or 6(2)(a), as the case may be).                  

(2)The amount of ECPP tax attributable to the asset under paragraph 10(6) is payable in relation to whichever is the first to                           occur of the following events—                  

(a)the disposal of that asset at any time after—                  

(i)the company ceases to be resident in the United Kingdom (in the case of a Part 1 company), or                  

(ii)the occurrence of the PE qualifying event in respect of the asset (in the case of a Part 2 company),                  

(b)the tenth anniversary of the end of the migration accounting period, or                  

(c)a relevant event (as defined in paragraph 13(4)).                  

(3)The date on which the amount is payable is—                  

(a)in a case falling within sub-paragraph (2)(a) or (b), the date of the event referred to, and                  

(b)in a case falling within sub-paragraph (2)(c), the relevant date or, if that date has already passed, the next anniversary                           of that date.                  

(4)In sub-paragraph (3)(b), “relevant date” means the first day after the period of 9 months beginning immediately after the migration accounting period.                  

(5)Section 21(2) of the 1992 Act (part disposals of assets) applies for the purposes of sub-paragraph (2)(a) as it applies for                           the purposes of that Act.                  

(6)Where part of an asset is disposed of at any time after the event mentioned in sub-paragraph (2)(a), the amount of ECPP tax                           attributable to the asset under paragraph 10(6) is to be apportioned on a just and reasonable basis for the purpose of applying                           this paragraph to the part of the asset disposed of and the part which remains undisposed of.                  

###### The realisation method: other exit charge assets and liabilitiesU.K.

15(1)This paragraph applies if—                  

(a)under an exit charge payment plan, the ECPP tax attributable to an exit charge asset or liability is to be paid in accordance                           with the realisation method, and                  

(b)the asset or liability is—                  

(i)a financial exit charge asset or liability, or                  

(ii)an intangible exit charge asset,                  

(see paragraph 3(2)(b) and (c) or 6(2)(b) and (c), as the case may be).                  

(2)The amount of ECPP tax attributable to any such asset or liability under paragraph 10(6) is payable in a number of annual                           instalments of equal amounts.                  

(3)The number of annual instalments is—                  

(a)in a case where a number of years is specified in the plan in relation to the asset or liability by virtue of paragraph 12(4)                           or (6), that number, and                  

(b)otherwise, 10.                  

(4)The instalments are due as follows—                  

(a)the first instalment is due on the first day after the period of 9 months beginning immediately after the migration accounting                           period, and                  

(b)the other instalments are due one on each of the subsequent anniversaries of that day (until they are all paid).                  

(5)But see paragraphs 16 and 17 for circumstances in which all or part of the outstanding balance of the amount of ECPP tax attributable                           to the asset or liability under paragraph 10(6) (“the outstanding balance in respect of the asset or liability”) becomes payable.                  

###### Outstanding balance becoming payable in fullU.K.

16(1)This paragraph applies where the amount of ECPP tax attributable to an asset or liability under paragraph 10(6) is payable                           in instalments in accordance with paragraph 15.                  

(2)All of the outstanding balance in respect of the asset or liability (as defined in paragraph 15(5)) is payable in accordance                           with sub-paragraph (3) if—                  

(a)a trigger event occurs in relation to the asset or liability (see sub-paragraph (4)), or                  

(b)a relevant event occurs (as defined in paragraph 13(4)),                  

before the last instalment is payable in accordance with paragraph 15.                  

(3)The outstanding balance is payable—                  

(a)in a case falling within sub-paragraph (2)(a), on the date of the trigger event, and                  

(b)in a case falling within sub-paragraph (2)(b), on the date on which the next instalment would otherwise have been due under                           the plan.                  

(4)For the purposes of this paragraph, a trigger event occurs in relation to an asset or liability if—                  

(a)in the case of a financial exit charge asset or liability, the company ceases to be party to the loan relationship or derivative                           contract in question, or                  

(b)in the case of an intangible fixed asset, the asset is disposed of.                  

###### Outstanding balance becoming payable in partU.K.

17(1)This paragraph applies where—                  

(a)the amount of ECPP tax attributable to an asset or liability under paragraph 10(6) is payable in instalments in accordance                           with paragraph 15, and                  

(b)a partial trigger event occurs in relation to the asset or liability (see sub-paragraph (4)) before the last instalment is                           payable.                  

(2)On the occurrence of that event, part of the outstanding balance in respect of the asset or liability (as defined in paragraph                           15(5)) is payable.                  

(3)The part payable under sub-paragraph (2) is so much of the outstanding balance in respect of the asset or liability as is                           attributable to the transaction mentioned in sub-paragraph (4)(a) or (b).                  

(4)For the purposes of sub-paragraph (2), a partial trigger event occurs in relation to an asset or liability if—                  

(a)in the case of a financial exit charge asset or liability—                  

(i)there is a disposal of rights or liabilities under the loan relationship or derivative contract in question which amounts                           to a related transaction (as defined in section 304 or 596 of CTA 2009 as the case may be), but                  

(ii)the transaction does not result in the company ceasing to be party to the relationship or contract, and                  

(b)in the case of an intangible exit charge asset, there is a transaction which—                  

(i)results in a reduction in the accounting value of the asset, but                  

(ii)does not result in the asset ceasing to be recognised in the company's balance sheet.                  

(5)Where part of the outstanding balance in respect of an asset or liability is paid in accordance with sub-paragraphs (2) and                           (3), the remaining instalments due under paragraph 15 in respect of the asset or liability continue to be payable so far as                           they relate to the remaining asset or liability (subject to paragraph 16 and this paragraph).                  

(6)In sub-paragraph (5), the “remaining asset or liability” means—                  

(a)in a case within sub-paragraph (4)(a), the loan relationship or derivative contract as it exists following the related transaction,                  

(b)in a case within sub-paragraph (4)(b), the asset as it continues to be recognised on the balance sheet following the transaction                           mentioned in that sub-paragraph.                  

(7)For the purposes of sub-paragraphs (3) and (5)—                  

(a)the outstanding balance in respect of the asset or liability, and                  

(b)the remaining instalments due under paragraph 15 in respect of the asset or liability,                  

are to be apportioned on a just and reasonable basis between the transaction mentioned in sub-paragraph (4)(a) or (b) and                        the remaining asset or liability.                  

(8)In relation to an intangible exit charge asset that has no balance sheet value (or no longer has a balance sheet value), sub-paragraph                           (4)(b) applies as if, immediately before the transaction, it did have a balance sheet value.”                  

### Amendments of FA 2009U.K.

7U.K.In Schedule 56 to FA 2009 (penalty for failure to make payments on time), in the Table at the end of paragraph 1, after entry                        6 insert—

### CommencementU.K.

8(1)The amendments made by this Schedule are treated as having come into force on 11 December 2012 in relation to an accounting                        period if the relevant day, in relation to that period, falls on or after 11 December 2012.U.K.

(2)In sub-paragraph (1) “the relevant day”, in relation to an accounting period, means the first day after the period of 9 months beginning immediately after the accounting                        period.

(3)But if the relevant day falls between 11 December 2012 and 31 March 2013 (inclusive), paragraphs 1(4) and 4(3) of Schedule                        3ZB to TMA 1970 (inserted by this Schedule) have effect as if, in each case, for “before the end of the period of 9 months                        beginning immediately after the migration accounting period” there were substituted “ on or before 31 March 2013 ”.

 Section 230

## SCHEDULE 50U.K.Penalties: late filing, late payment and errors

### Amendments to Schedule 24 to FA 2007: penalties for errorsU.K.

1(1)In Schedule 24 to FA 2007 (penalties for errors), paragraph 13 (procedure: assessment) is amended as follows.U.K.

(2)In sub-paragraph (1)(c), after “assessed” insert “ (subject to sub-paragraph (1ZB)) ”.

(3)After sub-paragraph (1) insert—

“(1ZA)Sub-paragraph (1ZB) applies where—                  

(a)a person is at any time liable for two or more penalties relating to PAYE returns, or for two or more penalties relating to                           CIS returns, and                  

(b)the penalties (“the relevant penalties”) are assessed in respect of more than one tax period (“the relevant tax periods”).                  

(1ZB)A notice under sub-paragraph (1) in respect of any of the relevant penalties may, instead of stating the tax period in respect                           of which the penalty is assessed, state the tax year or the part of a tax year to which the penalty relates.                  

(1ZC)For that purpose, a relevant penalty relates to the tax year or the part of a tax year in which the relevant tax periods fall.                  

(1ZD)For the purposes of sub-paragraph (1ZA)—                  
          -  “a PAYE return” means a return for the purposes of PAYE regulations;                         
          -  “a CIS return” means a return for the purposes of regulations under section 70(1)(a) of FA 2004 in connection with deductions on account                              of tax under the Construction Industry Scheme.”                         

### Amendments to Schedule 55 to FA 2009: penalty for failure to make returnsU.K.

2U.K.Schedule 55 (penalty for failure to make returns etc) to FA 2009 is amended in accordance with paragraphs 3 to 9.

3U.K.In paragraph 1 (returns etc in respect of which penalties are to be paid under that Schedule)—

(a)in the definition of “penalty date” in sub-paragraph (4), after “document” insert “ falling within any of items 1 to 3 and 5 to 13 in the Table ”;

(b)after sub-paragraph (4) insert—

“(4A)The Treasury may by order make such amendments to item 4 in the Table as they think fit in consequence of any amendment, revocation                           or re-enactment of the regulations mentioned in that item.”                  

4U.K.In the Table at the end of paragraph 1, in item 4 (annual return of payments for purposes of PAYE regulations etc), for the                        words in the third column substitute—

5U.K.In paragraph 2 (amount of penalty: occasional returns and returns for periods of 6 months or more), for “1 to 5” substitute                        “ 1 to 3, 5 ”.

6U.K.After paragraph 6A insert—

#### “Amount of penalty: real time information for PAYEU.K.

6BParagraphs 6C and 6D apply in the case of a return falling within item 4 in the Table.

6C(1)If P fails during a tax month to make a return on or before the filing date, P is liable to a penalty under this paragraph                           in respect of that month.                  

(2)But this is subject to sub-paragraphs (3) and (4).                  

(3)P is not liable to a penalty under this paragraph in respect of a tax month as a result of any failure to make a return on                           or before the filing date which occurs during the initial period.                  

(4)P is not liable to a penalty under this paragraph in respect of a tax month falling in a tax year if the month is the first                           tax month in that tax year during which P fails to make a return on or before the filing date (disregarding for this purpose                           any failure which occurs during the initial period).                  

(5)In sub-paragraphs (3) and (4) “the initial period” means the period which—                  

(a)begins with the day in the first tax year on which P is first required to make a return, and                  

(b)is of such duration as is specified in regulations made by the Commissioners,                  

and for this purpose “the first tax year” means the first tax year in which P is required to make returns.                  

(6)P may be liable under this paragraph to no more than one penalty in respect of each tax month.                  

(7)The penalty under this paragraph is to be calculated in accordance with regulations made by the Commissioners.                  

(8)Regulations under sub-paragraph (7) may provide for a penalty under this paragraph in respect of a tax month to be calculated                           by reference to either or both of the following matters—                  

(a)the number of persons employed by P, or treated as employed by P for the purposes of PAYE regulations;                  

(b)the number of previous penalties incurred by P under this paragraph in the same tax year.                  

(9)The Commissioners may by regulations disapply sub-paragraph (3) or (4) in such circumstances as are specified in the regulations.                  

(10)If P has elected under PAYE regulations to be treated as different employers in relation to different groups of employees,                           this paragraph applies to P as if—                  

(a)in respect of each group P were a different person, and                  

(b)each group constituted all of P's employees.                  

(11)Regulations made by the Commissioners under this paragraph may—                  

(a)make different provision for different cases, and                  

(b)include incidental, consequential and supplementary provision.                  

6D(1)P may be liable to one or more penalties under this paragraph in respect of extended failures.                  

(2)In this paragraph an “extended failure” means a failure to make a return on or before the filing date which continues after the end of the period of 3 months beginning                           with the day after the filing date.                  

(3)P is liable to a penalty or penalties under this paragraph if (and only if)—                  

(a)HMRC decide at any time that such a penalty or penalties should be payable in accordance with sub-paragraph (4) or (6), and                  

(b)HMRC give notice to P specifying the date from which the penalty, or each penalty, is payable.                  

(4)HMRC may decide under sub-paragraph (3)(a) that a separate penalty should be payable in respect of each unpenalised extended                           failure in the tax year to date.                  

(5)In that case the amount of the penalty in respect of each failure is 5% of any liability to make payments which would have                           been shown in the return in question.                  

(6)HMRC may decide under sub-paragraph (3)(a) that a single penalty should be payable in respect of all the unpenalised extended                           failures in the tax year to date.                  

(7)In that case the amount of the penalty in respect of those failures is 5% of the sum of the liabilities to make payments which                           would have been shown in each of the returns in question.                  

(8)For the purposes of this paragraph, an extended failure is unpenalised if a penalty has not already been imposed in respect                           of it under this paragraph (whether in accordance with sub-paragraph (4) or (6)).                  

(9)The date specified in the notice under sub-paragraph (3)(b) in relation to a penalty—                  

(a)may be earlier than the date on which the notice is given, but                  

(b)may not be earlier than the end of the period mentioned in sub-paragraph (2) in relation to the relevant extended failure.                  

(10)In sub-paragraph (9)(b) “the relevant extended failure” means—                  

(a)the extended failure in respect of which the penalty is payable, or                  

(b)if the penalty is payable in respect of more than one extended failure (in accordance with sub-paragraph (6)), the extended                           failure with the latest filing date.”                  

7U.K.In paragraph 18 (assessment), for sub-paragraph (5) substitute—

“(5)Sub-paragraph (6) applies if—                  

(a)an assessment in respect of a penalty is based on a liability to tax that would have been shown in a return, and                  

(b)that liability is found by HMRC to be excessive.                  

(6)HMRC may by notice to P amend the assessment so that it is based upon the correct amount.                  

(7)An amendment under sub-paragraph (6)—                  

(a)does not affect when the penalty must be paid;                  

(b)may be made after the last day on which the assessment in question could have been made under paragraph 19.”                  

8(1)Paragraph 19 (assessment) is amended as follows.U.K.

(2)In sub-paragraph (2) after “Date A is” insert “— 

(a)in the case of an assessment of a penalty under paragraph 6C, the last day of the period of 2 years beginning with the end                           of the tax month in respect of which the penalty is payable,                  

(b)in the case of an assessment of a penalty under paragraph 6D, the last day of the period of 2 years beginning with the filing                           date for the relevant extended failure (as defined in paragraph 6D(10)), and                  

(c)in any other case,”.                  

(3)In sub-paragraph (3)(a), after “return” insert “ or returns (as the case may be in relation to penalties under section 6C or 6D) ”.

9(1)Paragraph 27 (interpretation) is amended as follows.U.K.

(2)After sub-paragraph (2) insert—

“(2A)The Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.”                  

(3)After sub-paragraph (3) insert—

“(3A)Tax month” means the period beginning with the 6th day of a month and ending with the 5th day of the following month.”                  

### Amendments to Schedule 56 to FA 2009: penalty for failure to make payments on timeU.K.

10U.K.Schedule 56 (penalty for failure to make payments on time) to FA 2009 is amended in accordance with paragraphs 11 to 14.

11U.K.In paragraph 1 (penalty for failure to pay tax), in sub-paragraph (4), for the words from “the date on which” to the end substitute                        “ the day after the date specified in or for the purposes of column 4 of the Table in relation to that amount. ”

12(1)Paragraph 6 (amount of penalty: PAYE and CIS amounts) is amended as follows.U.K.

(2)For sub-paragraph (1) substitute—

“(1)P is liable to a penalty under this paragraph, in relation to each tax, each time that P makes a default in relation to a                           tax year.”                  

(3)In sub-paragraph (2)—

(a)in the opening words, after “default” insert “ in relation to a tax year ”;

(b)in paragraph (a), at the end insert “ of tax payable in relation to the tax year ”;

(c)in paragraph (b), at the end insert “ payable in relation to the tax year ”;

(d)in paragraph (c), at the end insert “ payable in relation to the tax year ”;

(e)in paragraph (d), at the end insert “ and due for the tax year ”.

(4)For sub-paragraphs (3) to (7) substitute—

“(3)But where a failure to make one of those payments (or to pay an amount comprising two or more of those payments) would, apart                           from this sub-paragraph, constitute the first default in relation to a tax year, that failure does not count as a default                           in relation to that year for the purposes of a penalty under this paragraph.                  

(4)The amount of the penalty for a default made in relation to a tax year is determined by reference to—                  

(a)the amount of the tax comprised in the default, and                  

(b)the number of previous defaults that P has made in relation to the same tax year.                  

(5)If the default is P's 1st, 2nd or 3rd default in relation to the tax year, P is liable, at the time of the default, to a penalty                           of 1% of the amount of tax comprised in the default.                  

(6)If the default is P's 4th, 5th or 6th default in relation to the tax year, P is liable, at the time of the default, to a penalty                           of 2% of the amount of tax comprised in the default.                  

(7)If the default is P's 7th, 8th or 9th default in relation to the tax year, P is liable, at the time of the default, to a penalty                           of 3% of the amount of tax comprised in the default.                  

(7A)If the default is P's 10th or subsequent default in relation to the tax year, P is liable, at the time of the default, to                           a penalty of 4% of the amount of tax comprised in the default.”                  

(5)In sub-paragraph (8), for paragraph (b) substitute—

“(b)a previous default counts for the purposes of sub-paragraphs (5) to (7A) even if it is remedied before the time of the default                           giving rise to the penalty.”                  

(6)After sub-paragraph (8) insert—

“(8A)Regulations made by the Commissioners for Her Majesty's Revenue and Customs may specify—                  

(a)circumstances in which, for the purposes of sub-paragraph (2), a payment of less than the full amount may be treated as a                           payment in full;                  

(b)circumstances in which sub-paragraph (3) is not to apply.                  

(8B)Regulations under sub-paragraph (8A) may—                  

(a)make different provision for different cases, and                  

(b)include incidental, consequential and supplementary provision.”                  

13U.K.After paragraph 9 insert—

#### “Interaction with other penalties and late payment surchargesU.K.

9AIn the application of the following provisions, no account shall be taken of a penalty under this Schedule—

(a)section 97A of TMA 1970 (multiple penalties),                  

(b)paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other penalties), and                  

(c)paragraph 15(1) of Schedule 41 to FA 2008 (interaction with other penalties).”                  

14(1)Paragraph 11 (assessment of penalty) is amended as follows.U.K.

(2)For sub-paragraph (4A) substitute—

“(4A)If an assessment in respect of a penalty is based on an amount of tax due or payable that is found by HMRC to be excessive,                           HMRC may by notice to P amend the assessment so that it is based upon the correct amount.                  

(4B)An amendment made under sub-paragraph (4A)—                  

(a)does not affect when the penalty must be paid;                  

(b)may be made after the last day on which the assessment in question could have been made under paragraph 12.”                  

(3)Omit sub-paragraph (5).

### Consequential amendmentU.K.

15U.K.In consequence of paragraph 7, paragraph 10 of Schedule 10 to the Finance (No. 3) Act 2010 is repealed.

### CommencementU.K.

16(1)The amendments made by paragraph 1 have effect in relation to any assessment of a penalty under Schedule 24 to FA 2007 made                        on or after the day on which this Act is passed.U.K.

(2)The amendments made by paragraphs 2 to 9 and 15 have effect for the tax year 2014-15 and subsequent tax years in relation                        to failures to make returns with a filing date (as defined in paragraph 1(4) of Schedule 55 to FA 2009) on or after 6 April                        2014.

(3)The amendments made by paragraphs 10 to 14 have effect for defaults made in relation to the tax year 2014-15 and subsequent                        tax years (see paragraph 6(2) of Sch.56 to FA 2009 (as amended by paragraph 12(3) of this Schedule) as to when a default is                        made in relation to a tax year).

 Section 233

## SCHEDULE 51U.K.Withdrawal of notice to file etc

### TMA 1970U.K.

1U.K.TMA 1970 is amended in accordance with paragraphs 2 to 5.

2(1)Section 7 (notice of liability to income tax and capital gains tax) is amended as follows.U.K.

(2)In subsection (1)—

(a)for paragraph (b) substitute—

“(b)falls within subsection (1A) or (1B),”, and                  

(b)for “six months from the end of that year” substitute “ the notification period ”.

(3)After subsection (1) insert—

“(1A)A person falls within this subsection if the person has not received a notice under section 8 requiring a return for the year                           of assessment of the person's total income and chargeable gains.                  

(1B)A person falls within this subsection if the person—                  

(a)has received a notice under section 8 requiring a return for the year of assessment of the person's total income and chargeable                           gains, and                  

(b)has received a notice under section 8B withdrawing the notice under section 8.                  

(1C)In subsection (1) “the notification period” means—                  

(a)in the case of a person who falls within subsection (1A), the period of 6 months from the end of the year of assessment, or                  

(b)in the case of a person who falls within subsection (1B)—                  

(i)the period of 6 months from the end of the year of assessment, or                  

(ii)the period of 30 days beginning with the day after the day on which the notice under section 8 was withdrawn,                  

whichever ends later.”                  

(4)In subsection (2), for the words from “shall have effect” to the end substitute “ and subsections (1A) to (1C) have effect as if references to a notice under section 8 were references to a notice under                           section 8A. ”

3U.K.After section 8A insert—

#### “8BWithdrawal by HMRC of notice under section 8 or 8A

4U.K.After section 12AA insert—

#### “12AAAWithdrawal by HMRC of notice under section 12AA

5U.K.In section 59B (payment of income and capital gains tax), after subsection (4) insert—

“(4ZA)In a case in which the notice required by section 7 was given following the receipt of a notice under section 8B, subsections                           (3) and (4) apply as if—                  

(a)the reference to the notice required by section 7 were a reference to the original notice required by that section, and                  

(b)the references to notice under section 8 or 8A were references to the original notice under that section.                  

(4ZB)In subsection (4ZA) the references to original notices are to notices given before the notice under section 8B.”                  

### FA 2008U.K.

6(1)Paragraph 7 of Schedule 41 to FA 2008 (potential lost revenue in respect of failure to comply with relevant obligation) is                        amended as follows.U.K.

(2)After sub-paragraph (1) insert—

“(1A)In the case of an obligation under section 7 of TMA 1970 which arises by virtue of subsection (1B) of that section, the potential                           lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year in question                           as is, by reason of the failure to comply with the obligation—                  

(a)where the period specified in subsection (1C)(b)(ii) of that section applies and ends after the relevant date, unpaid at the                           end of that period, or                  

(b)in any other case, unpaid on the relevant date.                  

(1B)For the purposes of sub-paragraph (1A) the relevant date is—                  

(a)31 January following the tax year, or                  

(b)if, after that date, HMRC refund a payment on account in respect of the tax year to P, the day after the refund is issued.”                  

(3)In sub-paragraph (2), after “and a tax year” insert “ (not falling within sub-paragraph (1A)) ”.

### FA 2009U.K.

7(1)Paragraph 3 of Schedule 53 to FA 2009 (late payment interest start date: amendments and discovery assessments etc) is amended                        as follows.U.K.

(2)In sub-paragraph (3)—

(a)for “as required” substitute “ in accordance with a requirement ”, and

(b)after “tax)” insert “ that arose by virtue of subsection (1A) of that section ”.

(3)After that sub-paragraph insert—

“(3A)In the case of a person (“P”) who failed to give notice in accordance with a requirement under section 7 of TMA 1970 that                           arose by virtue of subsection (1B) of that section, the reference in sub-paragraph (1)(c) to an assessment which ought to                           have been made by P is a reference to the assessment which P would have been required to make if no notice relating to the                           year of assessment concerned had been withdrawn under section 8B of that Act.”                  

8U.K.In Schedule 55 to that Act (penalty for failure to make returns etc), after paragraph 17 insert—

#### “Cancellation of penaltyU.K.

17A(1)This paragraph applies where—                  

(a)P is liable for a penalty under any paragraph of this Schedule in relation to a failure to make a return falling within item                           1 or 2 in the Table, and                  

(b)P makes a request under section 8B of TMA 1970 for HMRC to withdraw a notice under section 8 or 8A of that Act.                  

(2)The notice under section 8B of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from                           the date specified in the notice.                  

17B(1)This paragraph applies where—                  

(a)P is liable for a penalty under any paragraph of this Schedule in relation to a failure to make a return falling within item                           3 in the Table, and                  

(b)a request is made under section 12AAA of TMA 1970 for HMRC to withdraw a notice under section 12AA of that Act.                  

(2)The notice under section 12AAA of TMA 1970 may include provision under this paragraph cancelling liability to the penalty                           from the date specified in the notice.”                  

### CommencementU.K.

9(1)The amendments made by this Schedule have effect—U.K.

(a)in relation to a return under section 12AA of TMA 1970 for a partnership which includes one or more companies, in respect                        of a return for a relevant period beginning on or after 6 April 2012, and

(b)in relation to a return under that section for any other partnership, or a return under section 8 or 8A of that Act, in respect                        of a return for a year of assessment beginning on or after 6 April 2012.

(2)In sub-paragraph (1)(a), “relevant period” means a period in respect of which a return is required.