# Finance Act 2014

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U.K.

# Finance Act 2014

# 2014 CHAPTER 26

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 2014]

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.Charge, rates etc

#### Income taxU.K.

##### 1Charge, rates, basic rate limit and personal allowance for 2014-15U.K.

##### 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 4Indexation of limits and allowances under ITA 2007U.K.

#### Corporation taxU.K.

##### 5Charge for financial year 2015U.K.

##### 6Small profits rate and fractions for financial year 2014U.K.

##### 7Rates for ring fence profits and abolition of small profits rate for non-ring fence profitsU.K.

#### Capital gains taxU.K.

##### 8Annual exempt amount for 2014-15U.K.

##### 9Annual exempt amount for 2015-16 onwardsU.K.

#### Capital allowancesU.K.

##### 10Temporary increase in annual investment allowanceU.K.

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

#### Exemptions and reliefsU.K.

##### 11Tax relief for married couples and civil partnersU.K.

##### 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 13Relief for loan interest: loan to buy interest in close companyU.K.

##### 14Relief for loan interest: loan to buy interest in employee-controlled companyU.K.

#### Other provisionsU.K.

##### 15Restrictions on remittance basisU.K.

##### 16Treatment of agency workersU.K.

##### 17Recovery under PAYE regulations from certain company officersU.K.

##### 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 19Payments by employer on account of tax where deduction not possibleU.K.

##### 20PAYE obligations of UK intermediary in cases involving non-UK employerU.K.

##### 21Oil and gas workers on the continental shelf: operation of PAYEU.K.

##### 22Threshold for benefit of loan to be treated as earningsU.K.

##### 23Taxable benefits: cars, vans and related benefitsU.K.

##### 24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 25Cars and vans: payments for private useU.K.

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

#### 26Release of debts: stabilisation powers under Banking Act 2009U.K.

(1)Section 322 of CTA 2009 (release of debts: cases where credits not required to be brought into account) is amended as follows.                  

(2)In subsection (2), for “condition A, B or C” substitute “ any of conditions A to D ”.                  

(3)After subsection (5) insert—                  

“(5A)Condition D is that the liability is released in consequence of the exercise of a stabilisation power under Part 1 of the                           Banking Act 2009.”                  

(4)The amendments made by this section have effect in relation to releases of liabilities on or after 26 November 2013.                  

#### 27Holdings treated as rights under loan relationshipsU.K.

(1)CTA 2009 is amended as follows.                  

(2)In section 465(3) (list of provisions under which certain distributions are not excluded from Part 5) before paragraph (a)                        insert—                  

“(za)section 490(2) (holdings in OEICs, unit trusts and offshore funds treated as rights under creditor relationships),”.                  

(3)In section 490 (holding in an OEIC, unit trust or offshore fund treated as rights under a creditor relationship) for subsection (2) substitute—                  

“(2)The Corporation Tax Acts have effect for the accounting period in accordance with subsection (3) as if—                  

(a)the relevant holding were rights under a creditor relationship of the company, and                  

(b)any distribution in respect of the relevant holding were not a distribution (and accordingly is within Part 5).”                  

(4)Omit section 490(4) and (5) (which are superseded by the new section 490(2)(b)).                  

(5)For section 492 (rules about tax calculations in avoidance cases where holding comes within section 490) substitute—                  

##### “492Holding coming within section 490: calculation to undo avoidance

(1)Subsection (2) applies if—                  

(a)section 490 applies for an accounting period of a company to a relevant holding held by the company,                  

(b)a relevant fund enters into any arrangements, or arrangements are entered into that in whole or part relate to a relevant                           fund, and                  

(c)the main purpose or one of the main purposes of the arrangements is to obtain a tax advantage for a person.                  

(2)The company must make adjustments to counteract any tax advantage connected in any way with the relevant holding that would                           (ignoring this section) be obtained by the company, or any other person, directly or indirectly in consequence of the arrangements                           or their being entered into.                  

(3)The arrangements may be ones entered into at a time when the company does not hold the relevant holding; and any person referred                           to in subsection (1)(c) need not be identified when the arrangements are entered into.                  

(4)The adjustments required by subsection (2) are such as are just and reasonable.                  

(5)In this section—                  
          -  “arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction                              or two or more transactions, and                         
          -  “relevant fund” means—                          (a)
the open-ended investment company, unit trust scheme or offshore fund in which the relevant holding is held, or                                 
(b)
an open-ended investment company, unit trust scheme or offshore fund in which a relevant fund has a holding.”                                 
 

(6)In section 495 (meaning of “qualifying holdings”)—                  

(a)in subsection (1)—                  

(i)for “would itself fail” substitute “ itself fails ”, and                  

(ii)omit “, even on the assumption in subsection (2)”, and                  

(b)omit subsection (2).                  

(7)The amendments made by this section have effect in relation to accounting periods beginning on or after 1 April 2014.                  

(8)For the purposes of subsection (7), an accounting period beginning before, and ending on or after, 1 April 2014 is to be treated                        as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate                        accounting periods.                  

(9)An apportionment for the purposes of subsection (8) must be made in accordance with section 1172 of CTA 2010 (time basis)                        or, if that method produces a result that is unjust or unreasonable, on a just and reasonable basis.                  

#### 28De-grouping charges (loan relationships etc)U.K.

(1)CTA 2009 is amended as follows.                  

(2)In each of sections 345 and 346 (loan relationships: transferee leaving group)—                  

(a)in subsection (2), omit “If condition A or B is met,”, and                  

(b)omit subsections (3) to (5).                  

(3)In each of sections 631 and 632 (derivative contracts: transferee leaving group)—                  

(a)in subsection (2), omit “If condition A or B is met,”, and                  

(b)omit subsections (3) and (4).                  

(4)An amendment made by this section has effect where the cessation of membership of the relevant group occurs on or after 1                        April 2014.                  

#### 29Disguised distribution arrangements involving derivative contractsU.K.

(1)In Chapter 11 of Part 7 of CTA 2009 (derivative contracts: tax avoidance), after section 695 (but before the following italic                        heading) insert—                  

##### “695ADisguised distribution arrangements involving derivative contracts

(1)This section applies if—                  

(a)a company (“A”) is a party to arrangements involving one or more derivative contracts (each of which is referred to in this                           section as a “specified contract”),                  

(b)another company (“B”) is also a party to the arrangements (whether or not at the same time as A),                  

(c)A and B are members of the same group,                  

(d)the arrangements result in what is, in substance, a payment (directly or indirectly) from A to B of all or a significant part                           of the profits of the business of A or of a company which is a member of the same group as A or B (or both) (“the profit transfer”),                           and                  

(e)the arrangements are not arrangements of a kind which companies carrying on the same kind of business as A would enter into                           in the ordinary course of that business.                  

(2)No debits in respect of a specified contract, which—                  

(a)relate to the profit transfer, and                  

(b)apart from this section, would be brought into account by A or B for the purposes of this Part,                  

are to be so brought into account.                  

(3)Where one or more debits in respect of a specified contract are not brought into account by virtue of subsection (2), credits                           arising from the same contract which—                  

(a)relate to the same profit transfer, and                  

(b)apart from this section, would be brought into account by A or B for the purposes of this Part,                  

are not to be so brought into account to the extent that the total of those credits does not exceed the total of those debits.                  

(4)Subsection (3) does not apply to any credit which arises directly or indirectly in consequence of, or otherwise in connection                           with, arrangements the main purpose of which, or one of the main purposes of which, is the securing of a tax advantage for                           any person.                  

(5)For the purposes of this section a company is a member of the same group as another company if it is (or has been) a member                           of the same group at a time when the arrangements mentioned in subsection (1) have effect.                  

(6)In this section—                  
          -  “arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction                              or two or more transactions;                         
          -  “group” has the meaning given by section 357GD of CTA 2010;                         
          -  “tax advantage” has the meaning given by section 1139 of CTA 2010.”                         

(2)The amendment made by this section has effect in relation to accounting periods beginning on or after 5 December 2013.                  

This is subject to subsections (3) to (6).

(3)In the case of a company which has an accounting period beginning before 5 December 2013 and ending on or after that date                        (“the straddling period”), for the purposes of subsections (2) and (4) so much of the straddling period as falls before that                        date, and so much of that period as falls on or after that date, are treated as separate accounting periods.                  

(4)The amendment does not have effect in relation to debits, arising from a specified contract, which relate to the profit transfer                        and are or would be brought into account for an accounting period beginning on or after 5 December 2013 to the extent that                        the total of those debits does not exceed the amount (if any) by which—                  

(a)the total amount of credits arising from that contract which—                  

(i)relate to the profit transfer, and                  

(ii)are or would be brought into account for the purposes of Part 7 of CTA 2009 for any accounting period ending before 5 December                        2013, exceeds                  

(b)the total amount of debits arising from that contract which relate to the profit transfer and are or would be brought into                        account as mentioned in paragraph (a)(ii).                  

(5)In the case of credits to which subsection (6) applies, section 695A of CTA 2009 has effect as if—                  

(a)subsection (2) of that section applied to credits in respect of a specified contract as it applies to debits in respect of                        a specified contract,                  

(b)subsection (3) of that section were omitted, and                  

(c)in subsection (4) the reference to subsection (3) were to subsection (2).                  

(6)This subsection applies to credits which, had A or B had an accounting period beginning with 5 December 2013 and ending with                        22 January 2014, would have been brought into account for that period by A or (as the case may be) B for the purposes of Part                        7 of that Act (ignoring section 695A of CTA 2009).                  

#### 30Avoidance schemes involving the transfer of corporate profitsU.K.

(1)In Chapter 1 of Part 20 of CTA 2009 (general calculation rules: restriction on deductions), after section 1305 insert—                  

##### “1305AAvoidance schemes involving the transfer of corporate profits

(1)This section applies if—                  

(a)two companies (“A” and “B”) are party to any arrangements (whether or not at the same time),                  

(b)A and B are members of the same group,                  

(c)the arrangements result in what is, in substance, a payment (directly or indirectly) from A to B of all or a significant part                           of the profits of the business of A or of a company which is a member of the same group as A or B (or both) (“the profit transfer”),                           and                  

(d)the main purpose or one of the main purposes of the arrangements is to secure a tax advantage for any person involving the                           profit transfer (whether by circumventing section 695A (disguised distribution arrangements: derivative contracts) or otherwise).                  

(2)A's profits are to be calculated for corporation tax purposes as if the profit transfer had not occurred.                  

(3)Accordingly—                  

(a)if (apart from this section) an amount relating to the profit transfer would be brought into account by A as a deduction in                           that calculation, no deduction is allowed in respect of that amount, and                  

(b)A's profits are to be increased by so much of the amount of the profit transfer as is not an amount to which paragraph (a)                           applies (whether or not the profits transferred would be A's profits apart from the arrangements).                  

(4)For the purposes of this section a company is a member of the same group as another company if it is (or has been) a member                           of the same group at a time when the arrangements mentioned in subsection (1) have effect.                  

(5)Where in relation to arrangements involving one or more derivative contracts the requirements of section 695A(1)(a) to (e)                           are met, nothing in this section applies in relation to any debit in respect of any of those contracts.                  

(6)In this section—                  
          -  “arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction                              or two or more transactions;                         
          -  “group” has the meaning given by section 357GD of CTA 2010;                         
          -  “tax advantage” has the meaning given by section 1139 of CTA 2010.”                         

(2)The amendment made by this section has effect in relation to payments made on or after 19 March 2014.                  

#### 31R&D tax credits for small or medium-sized enterprisesU.K.

(1)In section 1058 of CTA 2009 (amount of tax credit), in subsection (1)(a), for “11%” substitute “ 14.5% ”.                  

(2)The amendment made by this section has effect in relation to expenditure incurred on or after 1 April 2014.                  

#### 32Film tax reliefU.K.

(1)Chapter 3 of Part 15 of CTA 2009 (film tax relief) is amended as follows.                  

(2)In section 1198 (UK expenditure), in subsection (1), for “25%” substitute “ 10% ”.                  

(3)In section 1202 (surrendering of loss and amount of film tax credit), for subsections (2) and (3) substitute—                  

“(2)If the company surrenders the whole or part of that loss, the amount of the film tax credit to which it is entitled for the                           accounting period is the sum of—                  

(a)25% of so much of the loss surrendered as does not exceed the unused 25% band, and                  

(b)20% of the remainder of that loss (if any).                  

(3)“The unused 25% band” means £20 million reduced (but not below zero) by the total amount previously surrendered under subsection (1) (if any).”                  

(4)The amendments made by subsections (2) and (3) have effect in relation to films the principal photography of which is not                        completed before such day as the Treasury may specify by order.                  

(5)A different day may be specified in relation to the amendments made by each subsection.                  

(6)A specified day may be before the day on which the order is made, but may not be before 1 April 2014.                  

(7)The Treasury may by order amend sections 1198(1) and 1202(2) and (3) of CTA 2009 (as amended and inserted by this section)                        in connection with an application for State aid approval.                  

(8)In this section “State aid approval” means approval that the provision made by this section, to the extent that it constitutes the granting of aid to which any                        of the provisions of Article 107 or 108 of the Treaty on the Functioning of the European Union applies, is, or would be, compatible                        with the internal market, within the meaning of Article 107 of that Treaty.                  

(9)An order under subsection (7) may—                  

(a)make incidental, supplemental, consequential, transitional or saving provision;                  

(b)contain provision having effect in relation to films mentioned in subsection (4).                  

Commencement Information

I1S. 32(2)(3) in force at 1.4.2014 for the purposes of the amendments made by those sub-sections by S.I. 2014/2880, **art. 2**

#### 33Television tax relief: activities to be treated as separate tradeU.K.

(1)Part 15A of CTA 2009 (television production) is amended as follows.                  

(2)In section 1216A (overview), in subsection (3)(a), for “its” substitute “ each qualifying ”.                  

(3)In section 1216B (activities of television production company treated as a separate trade)—                  

(a)in subsection (1), after the second “a” insert “ qualifying ”;                  

(b)in subsection (2), for “television” substitute “ qualifying relevant ”;                  

(c)at the end insert—                  

“(5)In this section “qualifying relevant programme” means a relevant programme in relation to which the conditions for television tax relief are met (see section 1216C(2)).”                  

#### 34Video games developmentU.K.

(1)Part 15B of CTA 2009 (video games development) is amended as follows.                  

(2)In section 1217A (overview), in subsection (3)(a), for “its” substitute “ each qualifying ”.                  

(3)In section 1217AE—                  

(a)in the heading, for “UK” substitute “ EEA ”;                  

(b)for subsection (1) substitute—                  

“(1)In this Part, “EEA expenditure”, in relation to a video game, means expenditure on goods or services that are provided from within the European Economic                           Area.”;                  

(c)in subsection (2), for “UK expenditure and non-UK expenditure” substitute “ EEA expenditure and non-EEA expenditure ”.                  

(4)In section 1217B (activities of video games development company treated as a separate trade)—                  

(a)in subsection (1), after the second “a” insert “ qualifying ”;                  

(b)in subsection (2), after the second “other” insert “ qualifying ”;                  

(c)at the end insert—                  

“(5)In this section “qualifying video game” means a video game in relation to which the conditions for video games tax relief are met (see section 1217C(2)).”                  

(5)In section 1217CF (additional deduction for qualifying expenditure)—                  

(a)after subsection (3) insert—                  

“(3A)But if the core expenditure on the video game includes sub-contractor payments which (in total) exceed £1 million, the excess                           is not “qualifying expenditure”.”;                  

(b)in subsection (4)(a), for “subsection (3)” substitute “ subsections (3) and (3A) ”;                  

(c)at the end insert—                  

“(5)In this section, “sub-contractor payment” means a payment made by the company to another person in respect of work on design, production or testing of the video game                           that is contracted out by the company to the person.”                  

(6)In the following provisions, for “UK expenditure” substitute “ EEA expenditure ”                  

(a)section 1217C(2)(c);                  

(b)the heading above section 1217CE;                  

(c)the heading of section 1217CE;                  

(d)section 1217CE(1);                  

(e)section 1217CG(1)(a) and (2)(a);                  

(f)the heading of section 1217EB;                  

(g)section 1217EB(1)(a) and (b) and (3).                  

(7)In Schedule 4 to CTA 2009 (index of defined expressions)—                  

(a)omit the entry for “UK expenditure (in Part 15B)”;                  

(b)at the appropriate place insert—                  

(8)The amendments made by this section have effect in relation to accounting periods beginning on or after the day specified                        in an order made by the Treasury under paragraph 3 of Schedule 17 to FA 2013 (and sub-paragraphs (3) and (4) of that paragraph                        apply accordingly).                  

#### 35Community amateur sports clubsU.K.

(1)Part 6 of CTA 2010 (charitable donations relief: payments to charity) is amended in accordance with subsections (2) to (7).                  

(2)In section 189 (relief for charitable donations), in subsection (5), after “subject to” insert “ Chapter 2A of this Part, ”.                  

(3)In section 192 (condition as to repayment), in subsection (6), omit the “and” at the end of paragraph (a) and after that paragraph                        insert—                  

“(aa)the repayment is not non-qualifying expenditure for the purposes of Chapter 9 of Part 13 (see section 661(5)), and”.                  

(4)In section 200 (company wholly owned by a charity), after subsection (4) insert—                  

“(4A)In the case of a charity which is a registered club, ordinary share capital of a company is treated as owned by a charity                           if the charity beneficially owns that share capital.”                  

(5)In section 202 (meaning of “charity”), before paragraph (b) insert—                  

“(aa)a registered club,”.                  

(6)After that section insert—                  

##### “202A“Registered club”

In this Chapter “registered club” has the meaning given by section 658(6) (clubs registered as community amateur sports clubs).”                  

(7)After Chapter 2 insert—                  

##### “CHAPTER 2AU.K.Payments to community amateur sports clubs: anti-abuse

###### 202BRestriction on relief for payments to community amateur sports clubs

(1)Subsection (2) applies if—                  

(a)one or more qualifying payments are made by a company to a registered club (“the club”) in an accounting period (“the current period”),                  

(b)the company is wholly owned, or controlled, by the club or by a number of charities which include the club, for all or part                           of that period, and                  

(c)inflated member-related expenditure is incurred by the company in that period.                  

(2)For the purposes of section 189 (relief for qualifying charitable donations), the total amount of those qualifying payments                           is treated as reduced (but not below nil) by the total amount of that inflated member-related expenditure.                  

(3)Subsection (4) applies if—                  

(a)the total amount of that expenditure exceeds the total amount of those payments, and                  

(b)the company made one or more qualifying payments to the club in an earlier accounting period ending not more than 6 years                           before the end of the current period.                  

(4)For the purposes of section 189, the total amount of the qualifying payments made in the earlier accounting period is treated                           as reduced (but not below nil) by the amount of the excess.                  

(5)If subsection (3)(b) applies in relation to more than one earlier accounting period—                  

(a)subsection (4) applies to treat amounts paid in later accounting periods as reduced in priority to amounts paid in earlier                           ones (until the excess is exhausted or all amounts have been reduced to nil), and                  

(b)in applying subsection (4) in relation to an accounting period, the reference to the excess is to be read as a reference to                           so much of it as exceeds the total amount of qualifying payments which, under that subsection, have previously been reduced                           to nil by the excess.                  

(6)For the purposes of subsections (3) and (4), a reference to the total amount of qualifying payments made in an earlier accounting                           period is to the total amount of those payments after—                  

(a)any reduction under subsection (2), and                  

(b)any previous reduction under subsection (4).                  

(7)Such adjustments must be made (whether by way of the making of assessments or otherwise) as may be required in consequence                           of subsections (4) to (6).                  

(8)Section 200 (company wholly owned by a charity) applies for the purposes of this section.                  

(9)For the purposes of this section, the club controls the company if it has the power to secure—                  

(a)by means of the holding of shares or the possession of voting power in relation to the company or any other company, or                  

(b)as a result of any powers conferred by the articles of association or other document regulating the company or any other company,                  

that the affairs of the company are conducted in accordance with the club's wishes.                  

(10)For the purposes of this section two or more charities (including the club) control the company if, acting together, they                           have the power to secure, as mentioned in paragraph (a) or (b) of subsection (9), that the affairs of the company are conducted                           in accordance with the wishes of those charities.                  

(11)In this section—                  
          -  “charity” has the same meaning as in Chapter 2,                         
          -  “qualifying payment” means a qualifying payment for the purposes of Chapter 2, and                         
          -  “registered club” has the same meaning as in Chapter 2,                         

and any reference to a member of the club includes a reference to a person connected with a member of the club.                  

###### 202C“Inflated member-related expenditure”

(1)This section applies for the purposes of section 202B.                  

(2)“Inflated member-related expenditure” means—                  

(a)employment expenditure incurred in respect of the employment of a member of the club, by the company, where that employment                           is otherwise than on an arm's length basis, or                  

(b)expenditure incurred on a supply of goods and services to the club by—                  

(i)a member of the club, or                  

(ii)a member-controlled body,                  

otherwise than on an arm's length basis.                  

(3)But if the features of an employment or supply which cause it to be otherwise than on an arm's length basis, when taken together,                           are more advantageous to the company than if the employment or supply had been on an arm's length basis, any expenditure incurred                           in respect of the employment or on the supply is not inflated member-related expenditure.                  

(4)A company is “member-controlled” if a member of the club has (or two or more members acting together have) the power to secure—                  

(a)by means of the holding of shares or the possession of voting power in relation to that or any other body corporate, or                  

(b)as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,                  

that the affairs of the company are conducted in accordance with the wishes of the member (or, as the case may be, members).                  

(5)A partnership is “member-controlled” if a member of the club has (or two or more members acting together have) the right to                           a share of more than half the assets, or of more than half the income, of the partnership.                  

(6)In this section any reference to a member of the club includes a reference to a person connected with a member of the club.                  

(7)For the purposes of subsection (2)(a), the Treasury may by regulations specify—                  

(a)descriptions of expenditure which is to be treated as employment expenditure incurred in respect of the employment of a member                           of a club;                  

(b)descriptions of expenditure which is not to be so treated.                  

(8)Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under                           subsection (7) if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of,                           the House of Commons.”                  

(8)Chapter 9 of Part 13 of that Act (other special types of company: community amateur sports clubs) is amended in accordance                        with subsections (9) to (12).                  

(9)After section 661D (but before the italic heading) insert—                  

##### “661ETax treatment of gifts of money from companies

If a registered club receives a gift of a sum of money from a company which is not a charity, the gift is treated as an amount                        in respect of which the registered club is chargeable to corporation tax, under the charge to corporation tax on income.”                  

(10)In section 664 (exemption for interest and gift aid income)—                  

(a)in subsection (1), omit the “and” after paragraph (a) and after paragraph (b) insert “, and                   

(c)its company gift income for that period,”,                  

(b)in that subsection, for “and gift aid income” substitute “ , gift aid income and company gift income ”, and                  

(c)in subsection (3), after “this section—” insert—                  

““company gift income”, in relation to a club, means gifts of money made to the club by companies which are not charities,”.                  

(11)In section 665A (claims in relation to interest and gift aid income), in subsection (1)(b) for “and gift aid” substitute “ , gift aid and company gift ”.                  

(12)Accordingly—                  

(a)in the italic heading before section 661D, omit “*qualifying for gift aid relief*”,                  

(b)in the heading for section 664, for “**and gift aid**” substitute “ **, gift aid and company gift** ”                  

(c)in the heading for section 665A, for “**and gift aid**” substitute “ **, gift aid and company gift** ”.                  

(13)The amendments made by this section have effect in relation to payments made on or after 1 April 2014.                  

(14)But the amendments made by subsections (1) to (7) are to be ignored for the purposes of section 199 of CTA 2010 (payment attributed                        to earlier accounting period) if the claim mentioned in subsection (1)(c) of that section is in respect of an accounting period                        ending before 1 April 2014.                  

(15)The earlier accounting periods mentioned in section 202B(3) of CTA 2010 (see subsection (7) of this section) do not include                        any accounting period ending before 1 April 2014.                  

#### 36Tax relief for theatrical productionU.K.

Schedule 4 contains provision about relief in respect of theatrical productions.

#### 37Changes in company ownershipU.K.

(1)Part 14 of CTA 2010 (change in company ownership) is amended as follows.                  

(2)In section 688 (meaning of “significant increase in the amount of a company's capital”), in subsection (2), for paragraph                        (b) and the “or” before it substitute “, and                   

(b)is at least 125% of amount A.”                  

(3)In section 723 (changes in indirect ownership), in subsection (1), after “section 724” insert “ or 724A ”.                  

(4)After section 724 insert—                  

##### “724ADisregard of change in parent company

(1)Where a new company (“N”) acquires all the issued share capital of another company (“C”), the resulting ownership change is                           disregarded for the purposes of Chapters 2 to 6 if, immediately after that acquisition (“the acquisition”), N—                  

(a)possesses all of the voting power in C,                  

(b)is beneficially entitled to 100% of any profits available for distribution to equity holders of C,                  

(c)would be beneficially entitled to 100% of any assets of C available for distribution to its equity holders in the event of                           a winding up of C or in any other circumstances, and                  

(d)meets the continuity requirements.                  

(2)“The resulting ownership change” means the change in the ownership of C by reason of Condition A in section 719 being met in relation to the acquisition.                  

(3)A company is “new” if, before the acquisition, it has neither—                  

(a)issued any shares other than subscriber shares, nor                  

(b)begun to carry on any trade or business.                  

(4)N meets the continuity requirements if, and only if—                  

(a)the consideration for the acquisition consists only of the issue of shares in N to the shareholders of C,                  

(b)immediately after the acquisition, each person who immediately before the acquisition was a shareholder of C is a shareholder                           of N,                  

(c)immediately after the acquisition, the shares in N are of the same classes as were the shares in C immediately before the                           acquisition,                  

(d)immediately after the acquisition, the number of shares of any particular class in N bears to all the shares in N the same                           proportion, or as nearly as may be the same proportion, as the number of shares of that class in C bore to all the shares                           in C immediately before the acquisition, and                  

(e)immediately after the acquisition, the proportion of shares of any particular class in N held by any particular shareholder                           is the same, or as nearly as may be the same, as the proportion of shares of that class in C held by that shareholder immediately                           before the acquisition.                  

(5)For the purposes of this section, N is treated as acquiring all the issued share capital of C for consideration consisting                           only of the issue of shares in N to the shareholders of C if, as a result of a scheme of reconstruction involving the cancellation                           of all shares in C and the issue of shares in N—                  

(a)N holds all the issued share capital of C by reason of that share capital being issued to N by C, and                  

(b)only shares in N are issued to the persons who were shareholders of C immediately before the shares in C were cancelled.                  

(6)In a case within subsection (5), subsection (4) applies as if any reference to immediately before the acquisition were a reference                           to immediately before the shares in C were cancelled.                  

(7)“Scheme of reconstruction” means a scheme carried out in pursuance of a compromise or arrangement—                  

(a)to which Part 26 of the Companies Act 2006 (arrangements and reconstructions) applies, or                  

(b)under any corresponding provision of the law of a country or territory outside the United Kingdom.                  

(8)Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of subsection                           (1)(b) and (c) as it applies for the purposes of section 151(4).”                  

(5)In section 726 (interpretation of Chapter), after “acquisition” insert “ and shareholder ”.                  

(6)The amendments made by this section have effect in relation to any change of ownership which occurs on or after 1 April 2014.                  

#### 38Transfer of deductions: research and development allowancesU.K.

(1)In section 730B(1) of CTA 2010 (interpretation of transfer of deductions provisions), in paragraph (a) of the definition of                        “deductible amount” after “trade,” insert “ other than an amount treated as such an expense by section 450(a) of CAA 2001 (research and development allowances treated                           as expenses in calculating profits of a trade), ”.                  

(2)The amendment made by this section has effect in relation to a qualifying change if the relevant day is on or after 1 April                        2014.                  

#### 39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 40Determination of beneficial entitlement for purposes of group reliefU.K.

(1)CTA 2010 is amended as follows.                  

(2)In section 169 (interpretation of provisions to determine proportion of beneficial entitlement)—                  

(a)in subsection (2), for the definition of “arrangements” substitute—                  

““arrangements”—                  

(a)means arrangements of any kind (whether or not in writing), but                  

(b)does not include a condition or requirement imposed by, or agreed with, a Minister of the Crown, the Scottish Ministers, a                           Northern Ireland department or a statutory body,”, and                  

(b)after that subsection insert—                  

“(3)In subsection (2) “statutory body” means a body (other than a company as defined by section 1(1) of the Companies Act 2006) established by or under a statutory                           provision for the purpose of carrying out functions conferred on it by or under a statutory provision, except that the Treasury                           may, by order, specify that a body is or is not to be a statutory body for this purpose.”                  

(3)In section 188 (other definitions for Part 5), in subsection (1), in the definition of “company” for “section 156(2A)” substitute                        “ sections 156(2A) and 169(3) ”.                  

(4)The amendments made by this section have effect in relation to accounting periods ending on or after 1 January 2015.                  

### CHAPTER 4U.K.Other provisions

#### PensionsU.K.

##### 41Pension flexibility: drawdownU.K.

##### 42Pension flexibility: taking low-value pension rights as lump sumU.K.

##### 43Pension flexibility: further amendmentsU.K.

##### 44Transitional provision for new standard lifetime allowance for 2014-15 etcU.K.

##### 45Taxable specific income: effect on pension input amount for non-UK schemesU.K.

##### 46Pension schemesU.K.

#### Sporting eventsU.K.

##### 47Glasgow Grand PrixU.K.

##### 48Major sporting events: power to provide for tax exemptionsU.K.

#### Employee share schemesU.K.

##### 49Share incentive plans: increases in maximum annual awards etcU.K.

##### 50Share incentive plans: power to adjust maximum annual awards etcU.K.

##### 51Employee share schemesU.K.

##### 52Employment-related securities etcU.K.

#### Investment reliefsU.K.

##### 53Venture capital trustsU.K.

##### 54Removing time limit on seed enterprise investment scheme reliefU.K.

##### 55Removing time limit on CGT relief in respect of re-investment under SEISU.K.

##### 56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### Social investment reliefU.K.

##### 57Relief for investments in social enterprisesU.K.

#### Capital gainsU.K.

##### 58Relief on disposal of private residenceU.K.

##### 59Remittance basis and split year treatmentU.K.

##### 60Termination of life interest and death of life tenant: disabled personsU.K.

##### 61Capital gains roll-over relief: relevant classes of assetsU.K.

##### 62Capital gains roll-over relief: intangible fixed assetsU.K.

##### 63Avoidance involving lossesU.K.

#### Capital allowancesU.K.

##### 64Extension of capital allowancesU.K.

##### 65General Block Exemption RegulationU.K.

##### 66Business premises renovation allowancesU.K.

##### 67Mineral extraction allowances: activities not within charge to taxU.K.

##### 68Mineral extraction allowances: expenditure on planning permissionU.K.

#### Oil and gasU.K.

##### 69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 70Supplementary charge: onshore allowanceU.K.

##### 71Oil and gas: reinvestment after pre-trading disposalU.K.

##### 72Substantial shareholder exemption: oil and gasU.K.

##### 73Oil contractor activities: ring-fence trade etcU.K.

#### PartnershipsU.K.

##### 74PartnershipsU.K.

#### Transfer pricingU.K.

##### 75Transfer pricing: restriction on claims for compensation adjustmentsU.K.

## **PART 2**U.K.Excise duties and other taxes

### AlcoholU.K.

#### 76Rates of alcoholic liquor dutiesU.K.

### TobaccoU.K.

#### 77Rates of tobacco products dutyU.K.

### Air passenger dutyU.K.

#### 78Air passenger duty: rates of duty from 1 April 2014U.K.

#### 79Air passenger duty: rates of duty from 1 April 2015U.K.

#### 80Air passenger duty: adjustments to Part 3 of Schedule 5A to FA 1994U.K.

### Vehicle excise dutyU.K.

#### 81VED rates for light passenger vehicles, light goods vehicles, motorcycles etcU.K.

#### 82VED rates: rigid goods vehicle with trailersU.K.

#### 83VED rates: use for exceptional loads, rigid goods vehicles and tractive unitsU.K.

#### 84VED: extension of old vehicles exemption from 1 April 2014U.K.

#### 85VED: extension of old vehicles exemption from 1 April 2015U.K.

#### 86Abolition of reduced VED rates for meeting reduced pollution requirementsU.K.

#### 87Six month licence: tractive unitsU.K.

#### 88Vehicles subject to HGV road user levy: amount of 6 month licenceU.K.

#### 89Payment of vehicle excise duty by direct debitU.K.

#### 90Definition of “revenue weight”U.K.

#### 91Vehicle excise and registration: other provisionsU.K.

### HGV road user levyU.K.

#### 92HGV road user levy: rates tablesU.K.

#### 93HGV road user levy: disclosure of information by HMRCU.K.

### Aggregates levyU.K.

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

#### 95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### Climate change levyU.K.

#### 96Climate change levy: main rates for 2015-16U.K.

#### 97Climate change levy: carbon price support rates for 2014-15 and 2015-16U.K.

#### 98Climate change levy: carbon price support rates for 2016-17U.K.

#### 99Climate change levy: exemptions: mineralogical & metallurgical processes etcU.K.

### Landfill taxU.K.

#### 100Rates of landfill taxU.K.

### Excise and customs duties: generalU.K.

#### 101Goods carried as storesU.K.

#### 102Penalties under section 26 of FA 2003: extension to excise dutyU.K.

### Value added taxU.K.

#### 103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 105VAT: place of supply orders: disapplication of transitional provisionU.K.

#### 106VAT: supply of services through agentsU.K.

#### 107VAT: refunds to health service bodiesU.K.

#### 108VAT: prompt payment discountsU.K.

### Stamp duty land tax and annual tax on enveloped dwellingsU.K.

#### 109ATED: reduction in threshold from 1 April 2015U.K.

#### 110ATED: further reduction in threshold from 1 April 2016U.K.

#### 111SDLT: threshold for higher rate applying to certain transactionsU.K.

#### 112SDLT: exercise of collective rights by tenants of flatsU.K.

#### 113SDLT: charities reliefU.K.

### Stamp duty reserve tax and stamp dutyU.K.

#### 114Abolition of SDRT on certain dealings in collective investment schemesU.K.

#### 115Abolition of stamp duty and SDRT: securities on recognised growth marketsU.K.

#### 116Temporary statutory effect of House of Commons resolutionU.K.

### Inheritance taxU.K.

#### 117Inheritance taxU.K.

### Estate dutyU.K.

#### 118Gifts to the nation: estate dutyU.K.

### Bank levyU.K.

#### 119Bank levy: rates from 1 January 2014U.K.

#### 120Bank levy: miscellaneous changesU.K.

### Gaming dutyU.K.

#### 121Rates of gaming dutyU.K.

### Bingo dutyU.K.

#### 122Rate of bingo dutyU.K.

#### 123Exemption from bingo duty: small-scale amusements provided commerciallyU.K.

### Machine games dutyU.K.

#### 124Rates of machine games dutyU.K.

## **PART 3**U.K.General betting duty, pool betting duty and remote gaming duty

### CHAPTER 1U.K.General betting duty

#### The dutyU.K.

##### 125General betting dutyU.K.

#### General and spread betsU.K.

##### 126General betsU.K.

##### 127General betting duty charge on general betsU.K.

##### 128Spread betsU.K.

##### 129General betting duty charge on financial spread betsU.K.

##### 130General betting duty charge on non-financial spread betsU.K.

##### 131Ordinary profitsU.K.

##### 132Retained winnings profitsU.K.

##### 133Bet-brokersU.K.

#### Pool betting on horse and dog racesU.K.

##### 134Chapter 1 pool betsU.K.

##### 135General betting duty charge on Chapter 1 pool betsU.K.

##### 136Profits on pooled stake Chapter 1 pool betsU.K.

##### 137Profits on ordinary Chapter 1 pool betsU.K.

##### 138Profits on retained winnings on Chapter 1 pool betsU.K.

#### Stake money and winningsU.K.

##### 139Chapter 1: stake moneyU.K.

##### 140Chapter 1: winningsU.K.

#### ExchangesU.K.

##### 141General betting duty charge on betting exchangesU.K.

#### PaymentU.K.

##### 142Liability to payU.K.

### CHAPTER 2U.K.Pool betting duty

#### 143Chapter 2 pool betsU.K.

#### 144Pool betting duty charge on Chapter 2 pool betsU.K.

#### 145Profits on pooled stake Chapter 2 pool betsU.K.

#### 146Profits on ordinary Chapter 2 pool betsU.K.

#### 147Profits on retained winnings on Chapter 2 pool betsU.K.

#### 148Chapter 2: stake moneyU.K.

#### 149Chapter 2: winningsU.K.

#### 150Payments treated as betsU.K.

#### 151Payment and recoveryU.K.

#### 152Notification of reliance on community benefit exemptionU.K.

#### 153Bets made for community benefitU.K.

### CHAPTER 3U.K.Remote gaming duty

#### 154Remote gamingU.K.

#### 155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 156Profits on pooled prize gamingU.K.

#### 157Profits on ordinary gamingU.K.

#### 158Profits on retained prizesU.K.

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

#### 160. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 161ExemptionsU.K.

#### 162Liability to payU.K.

### CHAPTER 4U.K.General

#### AdministrationU.K.

##### 163AdministrationU.K.

##### 164RegistrationU.K.

##### 165Accounting periodU.K.

##### 166ReturnsU.K.

##### 167PaymentU.K.

##### 168Information and recordsU.K.

##### 169Stake funds and gaming prize fundsU.K.

#### Security and enforcementU.K.

##### 170Security for paymentU.K.

##### 171Appointment of UK representativeU.K.

##### 172Security and representatives: review and appealU.K.

##### 173Offence of failing to provide security or appoint representativeU.K.

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

##### 175Penalties under section 9 of FA 1994U.K.

##### 176InterestU.K.

##### 177Suspension and revocation of remote operating licencesU.K.

#### Offences and evidenceU.K.

##### 178Offences by bodies corporateU.K.

##### 179Protection of officersU.K.

##### 180Evidence by certificate, etcU.K.

##### 181Facilities capable of being used in United Kingdom: burden of proofU.K.

#### Review and appealU.K.

##### 182Review and appealU.K.

#### DefinitionsU.K.

##### 183BetU.K.

##### 184Pool bettingU.K.

##### 185Fixed oddsU.K.

##### 186UK personU.K.

##### 187On-course betting and excluded bettingU.K.

##### 188. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 189Other definitionsU.K.

##### 190. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### SupplementaryU.K.

##### 191Amounts not in sterlingU.K.

##### 192Limited liability partnershipsU.K.

##### 193Effect of imposition of dutiesU.K.

##### 194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

##### 195NoticesU.K.

##### 196Consequential amendments and repealsU.K.

##### 197Transitional and saving provisionsU.K.

##### 198Commencement and effectU.K.

## **PART 4**U.K.Follower notices and accelerated payments

### CHAPTER 1U.K.Introduction

#### OverviewU.K.

##### 199Overview of Part 4U.K.

#### Main definitionsU.K.

##### 200“Relevant tax”U.K.

##### 201“Tax advantage” and “tax arrangements”U.K.

##### 202“Tax enquiry” and “return”U.K.

##### 203“Tax appeal”U.K.

### CHAPTER 2U.K.Follower notices

#### Giving of follower noticesU.K.

##### 204Circumstances in which a follower notice may be givenU.K.

##### 205“Judicial ruling” and circumstances in which a ruling is “relevant”U.K.

##### 206Content of a follower noticeU.K.

#### RepresentationsU.K.

##### 207Representations about a follower noticeU.K.

#### PenaltiesU.K.

##### 208Penalty if corrective action not taken in response to follower noticeU.K.

##### 209Amount of a section 208 penaltyU.K.

##### 210Reduction of a section 208 penalty for co-operationU.K.

##### 211Assessment of a section 208 penaltyU.K.

##### 212Aggregate penaltiesU.K.

##### 213Alteration of assessment of a section 208 penaltyU.K.

##### 214Appeal against a section 208 penaltyU.K.

#### Partners and partnershipsU.K.

##### 215Follower notices: treatment of partners and partnershipsU.K.

#### Appeals out of timeU.K.

##### 216Late appeal against final judicial rulingU.K.

#### Transitional provisionU.K.

##### 217Transitional provisionU.K.

#### Defined termsU.K.

##### 218Defined terms used in Chapter 2U.K.

### CHAPTER 3U.K.Accelerated payment

#### Accelerated payment noticesU.K.

##### 219Circumstances in which an accelerated payment notice may be givenU.K.

##### 220Content of notice given while a tax enquiry is in progressU.K.

##### 221Content of notice given pending an appealU.K.

##### 222Representations about a noticeU.K.

#### Forms of accelerated paymentU.K.

##### 223Effect of notice given while tax enquiry is in progressU.K.

##### 224Restriction on powers to postpone tax payments pending initial appealU.K.

##### 225Protection of the revenue pending further appealsU.K.

#### PenaltiesU.K.

##### 226Penalty for failure to pay accelerated paymentU.K.

#### Withdrawal etc of accelerated payment noticeU.K.

##### 227Withdrawal, modification or suspension of accelerated payment noticeU.K.

#### Partners and partnershipsU.K.

##### 228Accelerated partner paymentsU.K.

#### Defined termsU.K.

##### 229Defined terms used in Chapter 3U.K.

### CHAPTER 4U.K.Miscellaneous and general provision

#### Stamp duty land tax and annual tax on enveloped dwellingsU.K.

##### 230Special case: stamp duty land taxU.K.

##### 231Special case: annual tax on enveloped dwellingsU.K.

#### Extension of Part by orderU.K.

##### 232Extension of this Part by orderU.K.

#### Consequential amendmentsU.K.

##### 233Consequential amendmentsU.K.

## **PART 5**U.K.Promoters of tax avoidance schemes

### IntroductionU.K.

#### 234. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 235. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 236. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### Conduct noticesU.K.

#### 237. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 238. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 239Section 238: supplementaryU.K.

#### 240. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 241. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### Monitoring notices: procedure and publicationU.K.

#### 242. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 243Monitoring notices: tribunal approvalU.K.

#### 244Monitoring notices: content and issuingU.K.

#### 245. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 246Notification of determination under section 245U.K.

#### 247Appeal against refusal to withdraw monitoring noticeU.K.

#### 248. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 249Publication by monitored promoterU.K.

### Allocation and distribution of promoter reference numberU.K.

#### 250. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 251. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 252. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 253. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### Obtaining information and documentsU.K.

#### 254Meaning of “monitored proposal” and “monitored arrangements”U.K.

#### 255Power to obtain information and documentsU.K.

#### 256Tribunal approval for certain uses of power under section 255U.K.

#### 257Ongoing duty to provide information following HMRC noticeU.K.

#### 258. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 259Monitored promoters: duty to provide information about clientsU.K.

#### 260. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 261Enquiry following provision of client informationU.K.

#### 262. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 263Duty to notify HMRC of addressU.K.

#### 264Failure to provide information: application to tribunalU.K.

#### 265Duty to provide information to monitored promoterU.K.

### Obtaining information and documents: appealsU.K.

#### 266Appeals against notices imposing information etc requirementsU.K.

### Obtaining information and documents: supplementaryU.K.

#### 267Form and manner of providing informationU.K.

#### 268Production of documents: complianceU.K.

#### 269Exception for certain documents or informationU.K.

#### 270Limitation on duty to produce documentsU.K.

#### 271Legal professional privilegeU.K.

#### 272Tax advisersU.K.

#### 273. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

### PenaltiesU.K.

#### 274PenaltiesU.K.

#### 275Failure to comply with Part 7 of the Finance Act 2004U.K.

#### 276. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 277Extended time limit for assessmentU.K.

### OffencesU.K.

#### 278Offence of concealing etc documentsU.K.

#### 279Offence of concealing etc documents following informal notificationU.K.

#### 280Penalties for offencesU.K.

### SupplementalU.K.

#### 281PartnershipsU.K.

#### 282. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 283. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

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

### Anti-avoidanceU.K.

#### 284Disclosure of tax avoidance schemes: information powersU.K.

### Code of Practice on Taxation for BanksU.K.

#### 285The Code of Practice on Taxation for Banks: HMRC to publish reportsU.K.

#### 286The Code of Practice on Taxation for Banks: “participating” groups or entitiesU.K.

#### 287. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  

#### 288The Code of Practice on Taxation for Banks: documents relating to the CodeU.K.

### Offshore fundsU.K.

#### 289Undertakings for collective investment in transferable securities and alternative investment fundsU.K.

### Employee-ownership trustsU.K.

#### 290Companies owned by employee-ownership trustsU.K.

### TrustsU.K.

#### 291Trusts with vulnerable beneficiary: meaning of “disabled person”U.K.

### International mattersU.K.

#### 292Amounts allowed by way of double taxation reliefU.K.

#### 293Controlled foreign companies: qualifying loan relationships (1)U.K.

#### 294Controlled foreign companies: qualifying loan relationships (2)U.K.

### Financial sector regulationU.K.

#### 295Tax consequences of financial sector regulationU.K.

### ScotlandU.K.

#### 296Scottish basic, higher and additional rates of income taxU.K.

#### 297Report on administration of the Scottish rate of income taxU.K.

### Co-operative societies etcU.K.

#### 298Co-operative societies etcU.K.

### Limitation periodsU.K.

#### 299Removal of limitation period restriction for EU casesU.K.

### Local loansU.K.

#### 300Increase in limit for local loansU.K.

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

### 301Power to update indexes of defined termsU.K.

(1)The Treasury may by order amend any index of defined expressions contained in an Act relating to taxation, so as to make amendments                        consequential on any enactment.                  

(2)In this section—                  
          -  “enactment” means any provision made by or under an Act (whether before or after the passing of this Act);                         
          -  “index of defined expressions” means a provision contained in an Act relating to taxation which lists where expressions used in the Act, or in a particular                           part of the Act, are defined or otherwise explained.                         

(3)The power to make an order under this section is exercisable by statutory instrument.                  

(4)An order under this section is subject to annulment in pursuance of a resolution of the House of Commons.                  

### 302InterpretationU.K.

(1)In this Act—                  
          -  “ALDA 1979” means the Alcoholic Liquor Duties Act 1979,                         
          -  “BGDA 1981” means the Betting and Gaming Duties Act 1981,                         
          -  “CAA 2001” means the Capital Allowances Act 2001,                         
          -  “CEMA 1979” means the Customs and Excise Management Act 1979,                         
          -  “CRCA 2005” means the Commissioners for Revenue and Customs Act 2005,                         
          -  “CTA 2009” means the Corporation Tax Act 2009,                         
          -  “CTA 2010” means the Corporation Tax Act 2010,                         
          -  “F(No.3)A 2010” means the Finance (No. 3) Act 2010,                         
          -  “IHTA 1984” means the Inheritance Tax Act 1984,                         
          -  “ITA 2007” means the Income Tax Act 2007,                         
          -  “ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003,                         
          -  “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005,                         
          -  “OTA 1975” means the Oil Taxation Act 1975,                         
          -  “TCGA 1992” means the Taxation of Chargeable Gains Act 1992,                         
          -  “TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010,                         
          -  “TMA 1970” means the Taxes Management Act 1970,                         
          -  “TPDA 1979” means the Tobacco Products Duty Act 1979,                         
          -  “VATA 1994” means the Value Added Tax Act 1994, and                         
          -  “VERA 1994” means the Vehicle Excise and Registration Act 1994.                         

(2)In this Act—                  
          -  “FA”, followed by a year, means the Finance Act of that year, and 
          -  “F(No.2)A”, followed by a year, means the Finance (No. 2) Act of that year. 

### 303Short titleU.K.

This Act may be cited as the Finance Act 2014.

# SCHEDULES

 Section 7

## SCHEDULE 1U.K.Corporation tax rates

### **PART 1**U.K.Abolition of small profits rate for non-ring fence profits

1U.K.CTA 2010 is amended as follows.

2U.K.In section 1 (overview of Act), in subsection (2)—

(a)for “Parts 3” substitute “ Parts 4 ”, and

(b)omit paragraph (a).

3U.K.For section 3 (corporation tax rates) substitute—

#### “3Corporation tax rates

4U.K.Omit Part 3 (companies with small profits).

5(1)Part 8 (oil activities) is amended as follows.U.K.

(2)In section 270 (overview of Part 8), after subsection (3) insert—

“(3A)Chapter 3A makes provision about the rates at which corporation tax is charged on ring fence profits.”                  

(3)After Chapter 3 insert—

#### “CHAPTER 3AU.K.Rates at which corporation tax is charged on ring fence profits

##### The ratesU.K.

###### 279ACorporation tax rates on ring fence profits

##### Marginal reliefU.K.

###### 279BCompany with only ring fence profits

###### 279CCompany with ring fence profits and other profits

###### 279DThe ring fence amount

##### The lower limit and the upper limitU.K.

###### 279EThe lower limit and the upper limit

##### Related 51% group companiesU.K.

###### 279F“Related 51% group company”

##### Augmented profitsU.K.

###### 279G“Augmented profits”

###### 279HInterpretation of section 279G(3) and (4)

### **PART 2**U.K.Amendments consequential on Part 1 of this Schedule

#### Finance Act 1998U.K.

6U.K.In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), in paragraph 8 (calculation of tax payable),                        in subsection (1), for “section 19, 20 or 21 of the Corporation Tax Act 2010 (marginal relief for companies with small profits)”                        substitute “ Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small ring fence profits etc) ”.

#### Finance Act 2000U.K.

7U.K.In Schedule 22 to FA 2000 (tonnage tax), in paragraph 57 (exclusion of relief or set-off against tax liability), in sub-paragraph                        (6), for paragraph (a) substitute—

“(a)any reduction under Chapter 3A of Part 8 of CTA 2010 (marginal relief for companies with small ring fence profits), or”.                  

#### Capital Allowances Act 2001U.K.

8U.K.In section 99 of CAA 2001 (long-life assets: the monetary limit)—

(a)in subsection (4)—

(i)for “If, in a chargeable period, a company has one or more associated companies” substitute “ In the case of a company (“C”), if, in a chargeable period, one or more companies are related 51% group companies of C ”, and

(ii)for “number of associated” substitute “ number of related 51% group ”, and

(b)omit subsection (5).

9U.K.In Part 2 of Schedule 1 to that Act (defined expressions), at the appropriate place insert—

#### Corporation Tax Act 2009U.K.

10U.K.In section 104N of CTA 2009 (payment of R&D expenditure credit) in subsection (3), in the definition of “*Amount A*”, in paragraph (b), after “main rate” insert “ (or, in the case of ring fence profits, the main ring fence profits rate) ”.

11U.K.In section 1114 of that Act (calculation of total R&D aid for the purposes of the cap), after “aid is calculated” insert “ (or, in the case of a ring fence trade (within the meaning of section 277 of CTA 2010) the main ring fence profits rate                           at that time) ”.

12U.K.In Schedule 4 to that Act (index of defined expressions), at the appropriate place, insert—

#### Corporation Tax Act 2010U.K.

13(1)Chapter 3 of Part 8A of CTA 2010 (profits arising from the exploitation of patents etc: relevant IP profits) is amended as                        follows.U.K.

(2)In section 357CL (companies eligible to elect for small claims treatment)—

(a)in subsection (5) for “the company has no associated company” substitute “ no other company is a related 51% group company of the company ”,

(b)in subsection (6)—

(i)for “the company has one or more associated companies” substitute “ one or more other companies are related 51% group companies of the company, ” and

(ii)for “those associated” substitute “ those related 51% group ”, and

(c)omit subsection (9).

(3)In section 357CM (small claims amount)—

(a)in subsection (5) for “the company has no associated company” substitute “ no other company is a related 51% group company of the company ”,

(b)in subsection (6)—

(i)for “the company has one or more associated companies” substitute “ one or more other companies are related 51% group companies of the company, ” and

(ii)for “those associated” substitute “ those related 51% group ”, and

(c)omit subsection (8).

14(1)Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.U.K.

(2)In section 534 (tax treatment of profits), omit subsection (3).

(3)In section 535 (tax treatment of gains), omit subsection (6).

(4)In section 543 (profit: financing-cost ratio), omit subsection (5).

(5)In section 551 (tax consequences of distribution to holder of excessive rights), omit subsection (6).

(6)In section 552 (“the section 552 amount”), in subsection (2), for “rate of corporation tax mentioned in section 534(3) (rate                        determined without reference to sections 18 to 23)” substitute “ main rate of corporation tax ”.

(7)In section 564 (breach of condition as to distribution of profits), omit subsection (4).

15(1)Part 13 of CTA 2010 (other special types of company etc) is amended as follows.U.K.

(2)In section 614 (open-ended investment companies: applicable corporation tax rate), omit “(and sections 18 and 19 (relief for                        companies with small profits) do not apply)”.

(3)In section 618 (authorised unit trusts: applicable corporation tax rate), omit “(and sections 18 and 19 (relief for companies                        with small profits) do not apply)”.

(4)In section 627 (companies in liquidation etc: meaning of “rate of corporation tax” in case of companies with small profits)—

(a)for subsections (1) and (2) substitute—

“(1)This section applies if corporation tax is chargeable on ring fence profits of a company for a financial year.                  

(2)References in this Chapter to the “main rate of corporation tax”, so far as relating to those profits, are to be taken—                  

(a)if corporation tax is to be charged on those profits at the main ring fence profits rate, as references to that rate;                  

(b)if corporation tax is to be charged on those profits at the small ring fence profits rate, as references to that rate;                  

(c)if corporation tax on those profits is to be reduced by reference to the marginal relief fraction within the meaning of Chapter                           3A of Part 8 (see sections 279B and 279C), as including references to the marginal relief fraction (and with references to                           a rate being “fixed” or “proposed” read accordingly as references to the marginal relief fraction concerned being fixed or                           proposed).”                  

(b)accordingly, in the heading for the section, for “**small profits**” substitute “ **ring fence profits** ”.

(5)In section 628 (company in liquidation: corporation tax rates), for “the rate of corporation tax” (in each place it occurs)                        substitute “ the main rate of corporation tax ”.

(6)In section 630 (company in administration: corporation tax rates), for “the rate of corporation tax” (in each place it occurs)                        substitute “ the main rate of corporation tax ”.

16U.K.In section 1119 of CTA 2010 (Corporation Tax Acts definitions), at the appropriate places insert—

““main ring fence profits rate” has the meaning given by section 279A(4),”, and                  

““ “related 51% group company” is to be read in accordance with section 279F,”.                  

17(1)Schedule 4 to CTA 2010 (index of defined expressions) is amended as follows.U.K.

(2)Insert the following entries at the appropriate places—

(3)Omit the entries for—
          -  “associated company (in Part 3)”; 
          -  “close investment holding company (in Part 3)”; 
          -  “the ring fence fraction (in Part 3)”; 
          -  “the small profits rate”; 
          -  “the standard fraction (in Part 3)”. 

(4)In the entry for “augmented profits (in Part 3)”—

(a)in the first column for “Part 3” substitute “ Chapter 3A of Part 8 ”, and

(b)in the second column, for “32” substitute “ 279G ”.

(5)In the entry for “the lower limit (in Part 3)”—

(a)in the first column for “Part 3” substitute “ Chapter 3A of Part 8 ”, and

(b)in the second column for “24” substitute “ 279E ”.

(6)In the entry for “the upper limit (in Part 3)”—

(a)in the first column for “Part 3” substitute “ Chapter 3A of Part 8 ”, and

(b)in the second column for “24” substitute “ 279E ”.

#### Finance Act 2012U.K.

18U.K.In section 102 of FA 2012 (policy holders' rate of tax on policyholders' share of I-E profit), omit subsection (5).

#### Finance Act 2013U.K.

19U.K.In section 6 of FA 2013 (main rate for financial year 2015)—

(a)in subsection (1) for “the rate” substitute “ the main rate ”,

(b)in that subsection, omit “on profits of companies other than ring fence profits”, and

(c)omit subsection (2).

20U.K.In Schedule 25 to that Act (charge on certain high value disposals by companies etc), omit paragraph 19.

### **PART 3**U.K.Commencement and transitional provision

21(1)The amendments made by paragraphs 8, 9 and 13 have effect in relation to accounting periods beginning on or after 1 April                        2015.U.K.

(2)Accordingly—

(a)despite the repeal of Part 3 of CTA 2010 by paragraph 4 of this Schedule, sections 25 to 30 of that Act (interpretation of                        references to associated companies) continue to apply for the purposes of section 99 of CAA 2001, and sections 357CL and 357CM                        of CTA 2010, in relation to accounting periods beginning before but ending on or after 1 April 2015, and

(b)in relation to the application of sections 25 to 30 of CTA 2010 for those purposes, paragraph 22(2) of this Schedule is to                        be ignored.

22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

 Section 10

## SCHEDULE 2U.K.Annual investment allowance: transitional provisions etc

### **PART 1**U.K.Transitional provisions

#### Chargeable periods which straddle start dateU.K.

1(1)This paragraph applies in relation to a chargeable period which begins before the start date and ends on or after that date                        (“the first straddling period”).U.K.

For “the start date”, see section 10(3).

(2)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—

(a)so much (if any) of the first straddling period as falls before 1 January 2013,

(b)so much of the first straddling period as falls on or after that date but before the start date, and

(c)so much of the first straddling period as falls on or after the start date,

were each treated as separate chargeable periods.

(3)But this is subject to paragraphs 2 and 3.

#### First straddling period beginning before 1 January 2013U.K.

2(1)This paragraph applies where the first straddling period begins before 1 January 2013.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 what would have been the maximum allowance for that period if neither the amendment made by section                        7(1) of FA 2013 nor the amendment made by section 10(1) had been made.

(3)So far as concerns expenditure incurred before the start 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 neither the amendment made by section                        10(1) nor the amendments made by Part 2 of this Schedule had been made.

#### First straddling period beginning on or after 1 January 2013U.K.

3(1)This paragraph applies where no part of the first straddling period falls before 1 January 2013.U.K.

(2)So far as concerns expenditure incurred before the start 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 10(1)                        had not been made.

#### Chargeable periods which straddle 1 January 2016U.K.

4(1)This paragraph applies in relation to a chargeable period (“the second straddling period”) which begins before 1 January 2016                        and ends on or after that date.U.K.

(2)The maximum allowance under section 51A of CAA 2001 for the second straddling period is the sum of each maximum allowance                        that would be found if—

(a)the period beginning with the first day of the chargeable period and ending with 31 December 2015, and

(b)the period beginning with 1 January 2016 and ending with the last day of the chargeable period,

were treated as separate chargeable periods.

(3)But, so far as concerns expenditure incurred on or after 1 January 2016, the maximum allowance under section 51A of CAA 2001                        for the second straddling period is the maximum allowance, calculated in accordance with sub-paragraph (2), for the period                        mentioned in paragraph (b) of that sub-paragraph.

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

5(1)Paragraphs 1 to 4 also apply for the purpose of determining the maximum allowance under section 51K of CAA 2001 (operation                        of annual investment allowance where restrictions apply) in a case where one or more chargeable periods in which the relevant                        AIA qualifying expenditure is incurred are chargeable periods within paragraph 1(1) or 4(1).U.K.

(2)There is to be taken into account for the purpose mentioned in sub-paragraph (1) only chargeable periods of one year or less                        (whether or not they are chargeable periods within paragraph 1(1) or 4(1)), and, if there is more than one such period, only                        that period which gives rise to the greatest maximum allowance.

(3)For the purposes of sub-paragraph (2) any chargeable period which—

(a)is longer than a year, and

(b)ends in the tax year 2013-14, 2014-15, 2015-16, 2016-17 or 2017-18,

is to be treated as being a chargeable period of one year ending at the same time as it actually ends.

(4)Nothing in this paragraph affects the operation of sections 51M and 51N of CAA 2001.

### **PART 2**U.K.Amendments of FA 2013

6(1)Section 7 of FA 2013 (temporary increase in annual investment allowance) is amended as follows.U.K.

(2)In subsection (1), for “of two years beginning with 1 January 2013” substitute “ beginning with 1 January 2013 and ending with the specified date ”.

(3)After subsection (1) insert—

“(1A)The specified date is —                  

(a)for the purposes of corporation tax, 31 March 2014, and                  

(b)for the purposes of income tax, 5 April 2014.”                  

(4)In subsection (2), omit “or 1 January 2015”.

7(1)Schedule 1 to FA 2013 (annual investment allowance) is amended as follows.U.K.

(2)In paragraph 1 (chargeable periods which straddle 1 January 2013)—

(a)in sub-paragraph (1), after “that date” insert “ but not later than the specified date ”, and

(b)after sub-paragraph (1) insert—

“(1A)The specified date” means—                  

(a)for the purposes of corporation tax, 31 March 2014, and                  

(b)for the purposes of income tax, 5 April 2014.”                  

(3)Omit paragraph 4 (chargeable periods which straddle 1 January 2015).

(4)In paragraph 5 (operation of annual investment allowance where restrictions apply)—

(a)in sub-paragraph (1)—

(i)for “to 4” substitute “ to 3 ”, and

(ii)omit “or 4(1)”, and

(b)in sub-paragraph (2), omit “or 4(1)”,

(c)in sub-paragraph (3)(b), for “, 2014-15, 2015-16 or 2016-17” substitute “ or 2014-15 ”.

 Section 15

## SCHEDULE 3U.K.Restrictions on remittance basis

1U.K.ITEPA 2003 is amended as follows.

2U.K.In section 23 (taxable earnings: calculation of “chargeable overseas earnings”) after subsection (1) insert—

“(1A)But none of an employee's general earnings from an employment for a tax year are to be “chargeable overseas earnings” if section                           24A applies in relation to the employment for the tax year.”                  

3U.K.After section 24 insert—

### “24ARestrictions on remittance basis

(1)This section applies in relation to an employment (“the relevant employment”) for a tax year (“the relevant tax year”) if—                  

(a)one or more of the paragraphs in subsection (5) applies,                  

(b)conditions 1 to 4 are met, and                  

(c)condition 5 is not met.                  

(2)The consequences of this section applying are set out in sections 23(1A), 41C(4A), 41H(5) and 554Z9(1A).                  

(3)But, for the purpose of determining if, and the extent to which, any provision of Part 11 (PAYE), or of PAYE regulations,                           applies in relation to any income, the application of any provision mentioned in subsection (2) in relation to the income                           is to be ignored.                  

(4)In this section—                  

(a)“the relevant employee” means the employee in respect of the relevant employment,                  

(b)“the relevant employer” means the employer in respect of the relevant employment, and                  

(c)“UK employment” means an employment the duties of which are not performed wholly outside the United Kingdom and “UK employer” is to be read                           accordingly,                  

and the rules in section 24(5) (“associated” persons) apply for the purposes of this section.                  

(5)The paragraphs referred to in subsection (1)(a) are—                  

(a)general earnings from the relevant employment which are for the relevant tax year would, apart from section 23(1A) and step                           3 in section 23(3), be “chargeable overseas earnings” under section 23(3);                  

(b)employment income in respect of the relevant employment which is treated as accruing in the relevant tax year under section                           41C(2) would, apart from sections 41C(4A), 41D and 41E, be “foreign” under section 41C(3);                  

(c)employment income in respect of the relevant employment which is treated as accruing in the relevant tax year under section                           41H(2) would, apart from sections 41H(5), 41I and 41L, be “chargeable foreign securities income” under section 41H(3);                  

(d)section 554Z9(2) would, apart from section 554Z9(1A) and (4) and (5), apply to employment income in respect of the relevant                           employment which corresponds to the value of a relevant step, or a part of the value of a relevant step, which is “for” the                           relevant tax year as determined under section 554Z4.                  

(6)Condition 1 is that the relevant employee holds a UK employment—                  

(a)at a time in the relevant tax year when the relevant employee also holds the relevant employment, or                  

(b)if the relevant tax year is a split year as respects the relevant employee, at a time in the UK part of the relevant tax year                           when the relevant employee also holds the relevant employment.                  

(7)Condition 2 is that the UK employer is the same as, or is associated with, the relevant employer.                  

(8)Condition 3 is that the UK employment and the relevant employment are related to each other.                  

(9)Without prejudice to the generality of subsection (8), the UK employment and the relevant employment are to be assumed to                           be related to each other if one or more of the following paragraphs applies—                  

(a)it is reasonable to suppose that—                  

(i)the relevant employee would not hold one employment without holding the other employment, or                  

(ii)the employments will cease at the same time or one employment will cease in consequence of the other employment ceasing;                  

(b)the terms of one employment operate to any extent by reference to the other employment;                  

(c)the performance of duties of one employment is (wholly or partly) dependent upon, or otherwise linked (directly or indirectly)                           to, the performance of duties of the other employment;                  

(d)the duties of the employments are wholly or mainly of the same type (ignoring the fact that they may be performed (wholly                           or partly) in different locations);                  

(e)the duties of the employments involve (wholly or partly) the provision of goods or services to the same customers or clients;                  

(f)the relevant employee is—                  

(i)a director (as defined in section 67) of the UK employer or the relevant employer who has a material interest (as defined                           in section 68) in the UK employer or the relevant employer,                  

(ii)a senior employee of the UK employer or the relevant employer, or                  

(iii)one of the employees of the UK employer or the relevant employer who receives the higher or highest levels of remuneration.                  

(10)In subsection (9)(f) references to the UK employer or the relevant employer include references to—                  

(a)any person with which the UK employer or the relevant employer (as the case may be) is associated, and                  

(b)if the UK employer or the relevant employer (as the case may be) is a company, the following companies taken together as if                           they were one company—                  

(i)the UK employer or the relevant employer (as the case may be), and                  

(ii)all the companies with which the UK employer or the relevant employer (as the case may be) is associated.                  

(11)The Treasury may by regulations amend this section so as to add to, reduce or modify the cases in which the UK employment                           and the relevant employment are to be assumed to be related to each other.                  

(12)A statutory instrument containing regulations under subsection (11) may not be made unless a draft has been laid before, and                           approved by a resolution of, the House of Commons.                  

(13)Condition 4 is that X% is less than Y%.                  

(14)“X%” is given by the following formula—                  

See section 24B for the definitions of “C” and “I”.                  

(15)“Y%” is 65% of the additional rate for the relevant tax year.                  

(16)The Treasury may by regulations amend this section so as to amend the definition of “Y%”.                  

(17)Condition 5 is that—                  

(a)were the duties of the relevant employment to be duties of the UK employment instead, all or substantially all of them could                           not lawfully be performed in the relevant territory (whether on the meeting of any condition or otherwise) by virtue of any                           regulatory requirements imposed by or under the law of that territory, and                  

(b)were the UK duties of the UK employment to be duties of the relevant employment instead, all or substantially all of them                           could not lawfully be performed in the part of the United Kingdom in which they are performed (whether on the meeting of any                           condition or otherwise) by virtue of any regulatory requirements imposed by or under the law of that part of the United Kingdom.                  

(18)In subsection (17)—                  
          -  “the relevant territory” means the territory in which the duties of the relevant employment are performed, and                         
          -  “UK duties” means duties performed in the United Kingdom.                         

### 24BDefinitions of “C” and “I” for the purposes of section 24A(14)

(1)This section applies for the purposes of section 24A(14).                  

(2)“C” is the total amount of credit which would be allowed under section 18(2) of TIOPA 2010 (double taxation relief by way                           of credit) against income tax in respect of all the employment income falling within section 24A(5)(a) to (d) were none of                           that income to be, as relevant—                  

(a)“chargeable overseas earnings”,                  

(b)“foreign”,                  

(c)“chargeable foreign securities income”, or                  

(d)income to which section 554Z9(2) applies.                  

(3)For this purpose, assume—                  

(a)that all relief is claimed within the applicable time limit given by section 19 of TIOPA 2010, and                  

(b)that all reasonable steps are taken to minimise any amounts of tax payable as mentioned in section 33 of that Act.                  

(4)“I” is the total amount of all the employment income falling within section 24A(5)(a) to (d).”                  

4(1)Section 41C (taxable specific income from employment-related securities etc: foreign securities income) is amended as follows.U.K.

(2)After subsection (4) insert—

“(4A)But subsection (4) does not apply to a tax year if section 24A applies in relation to the employment for the tax year.”                  

(3)After subsection (8) insert—

“(9)If subsection (4) does not apply to a tax year by virtue of subsection (4A), it is to be assumed for the purposes of section                           41E that it is just and reasonable for none of the securities income treated as accruing in the tax year to be “foreign”.”                  

5U.K.In section 554Z9 (employment income provided through third parties: remittance basis) after subsection (1) insert—

“(1A)But subsection (2) does not apply if section 24A applies in relation to A's employment with B for the relevant tax year.”                  

6U.K.In section 717 (orders and regulations) in subsection (4) after “under” insert “ section 24A(11) (assumptions about related employments), ”.

7(1)Section 23(1A) of ITEPA 2003 (as inserted by paragraph 2) has effect in relation to general earnings which are general earnings                        from an employment for the tax year 2014-15 or any subsequent tax year.U.K.

(2)Section 41C(4A) of ITEPA 2003 (as inserted by paragraph 4(2)) has effect for cases where the tax year in question is the tax                        year 2014-15 or any subsequent tax year.

(3)Section 41H(5) of ITEPA 2003 (as inserted by Part 1 of Schedule 9 to this Act) has effect for cases where the tax year in                        question is the tax year 2014-15 or any subsequent tax year.

(4)Section 554Z9(1A) of ITEPA 2003 (as inserted by paragraph 5) has effect for cases where the relevant tax year (see section                        554Z9(1)(a) of that Act) is the tax year 2014-15 or any subsequent tax year.

 Section 36

## SCHEDULE 4U.K.Tax relief for theatrical production

### **PART 1**U.K.Amendments of CTA 2009

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

### **PART 2**U.K.Consequential amendments

#### ICTAU.K.

2(1)Section 826 of the Income and Corporation Taxes Act 1988 (interest on tax overpaid) is amended as follows.U.K.

(2)In subsection (1), after paragraph (fb) insert—

“(fc)a payment of theatre tax credit falls to be made to a company; or”.                  

(3)In subsection (3C), for “or video game tax credit” substitute “ , video game tax credit or theatre tax credit ”.

(4)In subsection (8A)—

(a)in paragraph (a) for “or (f)” substitute “ (f), (fa), (fb) or (fc) ”, and

(b)in paragraph (b)(ii), after “video game tax credit” insert “ or theatre tax credit ”.

(5)In subsection (8BA), after “video game tax credit” (in both places) insert “ or theatre tax credit ”.

#### FA 1998U.K.

3U.K.Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

4U.K.In paragraph 10 (other claims and elections to be included in return), in sub-paragraph (4)—

(a)before “claims” insert “ certain ”;

(b)for “or 15B” substitute “ , 15B or 15C ”.

5(1)Paragraph 52 (recovery of excessive overpayments etc) is amended as follows.U.K.

(2)In sub-paragraph (2), after paragraph (bf) insert—

“(bg)theatre tax credit under Part 15C of that Act,”.                  

(3)In sub-paragraph (5)—

(a)after paragraph (ah) insert—

“(ai)an amount of theatre tax credit paid to a company for an accounting period,”;                  

(b)in the words after paragraph (b), after “(ah)” insert “ , (ai) ”.

6(1)Part 9D (certain claims for tax relief) is amended as follows.U.K.

(2)In paragraph 83S (introduction), after paragraph (c) insert—

“(d)an additional deduction under Part 15C of CTA 2009,                  

(e)a theatre tax credit under that Part of that Act.”                  

(3)The heading of that Part becomes “ Claims for tax relief under Part 15, 15A, 15B or 15C of the Corporation Tax Act 2009 ”.

#### CAA 2001U.K.

7U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

#### FA 2007U.K.

8U.K.In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (meaning of “corporation tax credit”), omit the “or”                        at the end of sub-paragraph (ivb) and after that sub-paragraph insert—

“(ivc)a theatre tax credit under section 1217K of that Act, or”.                  

#### CTA 2009U.K.

9U.K.In section 104BA of CTA 2009 (R&D expenditure credits: restrictions on claiming other tax reliefs), after subsection (3) insert—

“(4)For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under section 1217H                           or 1217K (theatrical productions: additional deduction or theatre tax credit), see section 1217JA(2).”                  

10U.K.In Part 8 of CTA 2009 (intangible fixed assets), in Chapter 10 (excluded assets), before section 809 insert—

##### “808CAssets representing expenditure incurred in course of separate theatrical trade

11U.K.In section 1040ZA of CTA 2009 (additional relief for expenditure on research and development), after subsection (3) insert—

“(4)For provision prohibiting relief being given under this Part and under section 1217H or 1217K (theatrical productions: additional                           deduction or theatre tax credit), see section 1217JA(2).”                  

12U.K.In section 1310 of CTA 2009 (orders and regulations), in subsection (4), after paragraph (ej) insert—

“(ek)section 1217GB(4) (EEA expenditure condition),                  

(el)section 1217J(4) (amount of additional deduction),                  

(em)section 1217O (activities involved in developing, producing, running or closing a production),”.                  

13U.K.In Schedule 4 to CTA 2009 (index of defined expressions) at the appropriate place insert—

#### FA 2009U.K.

14U.K.In Schedule 54A to FA 2009 (which is prospectively inserted by F(No. 3)A 2010 and contains provision about the recovery of                        certain amounts of interest paid by HMRC), in paragraph 2—

(a)in sub-paragraph (2), omit the “or” at the end of paragraph (f) and after paragraph (g) insert “, or 

(h)a payment of theatre tax credit under section 1217K of CTA 2009 for an accounting period.”;                  

(b)in sub-paragraph (4), for “(e)” substitute “ (h) ”.

Prospective

#### CTA 2010U.K.

15(1)Section 357CG of CTA 2010 (profits arising from the exploitation of patents etc: adjustments in calculating profits of trade)                           is amended as follows.U.K.

(2)In subsection (3), omit the “and” at the end of paragraph (c) and after paragraph (d) insert “, and 

(e)the amount of any additional deduction for the accounting period obtained by the company under Part 15C of CTA 2009 in respect                              of qualifying expenditure on a theatrical production.”                     

(3)In subsection (6)—

(a)in the definition of “qualifying expenditure”, omit the “and” at the end of paragraph (a) and after paragraph (b) insert “, and 

(c)in relation to a company that is the production company (as defined in section 1217FC of that Act) in relation to a theatrical                              production, has the same meaning as in Part 15C of that Act,”;                     

(b)omit the “and” at the end of the definition of “television production company” and after that definition insert—

““theatrical production” has the same meaning as in Part 15C of CTA 2009 (see section 1217FA of that Act), and”.                     

Prospective

### **PART 3**U.K.Commencement

16(1)Any power to make regulations conferred on the Treasury by virtue of this Schedule 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) may make different provision for different purposes.

17(1)The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 September 2014.U.K.

(2)Sub-paragraph (3) applies where a company has an accounting period beginning before 1 September 2014 and ending on or after                           that date (“the straddling period”).

(3)For the purposes of Part 15C of CTA 2009—

(a)so much of the straddling period as falls before 1 September 2014, 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 a trade for the                           straddling period are apportioned to the two separate accounting periods on such basis as is just and reasonable.

 Section 43

## SCHEDULE 5U.K.Pension flexibility: further amendments

### Temporary extension of period by which commencement lump sum may precede pensionU.K.

1U.K.In Schedule 29 to FA 2004 (authorised lump sums under registered pension schemes) after paragraph 1 (conditions for a lump                        sum to be a pension commencement lump sum) insert—

“1A(1)Paragraph 1(1)(c) is to be omitted when deciding whether a lump sum to which this paragraph applies is a pension commencement                           lump sum.                  

(2)This paragraph applies to a lump sum if—                  

(a)the sum is paid in respect of a money purchase arrangement,                  

(b)the sum is paid before the member becomes entitled to the sum,                  

(c)either—                  

(i)the sum is paid on or after 19 September 2013 but before 6 April 2015, or                  

(ii)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the pension in connection                           with which the sum is paid, and on or after 19 March 2014 the contract is cancelled, and                  

(d)the member becomes entitled to the sum before 6 October 2015.                  

(3)Where—                  

(a)a lump sum to which this paragraph applies is a pension commencement lump sum but would not be a pension commencement lump                           sum if sub-paragraph (1) were omitted, and                  

(b)the lump sum is paid to the member in connection with a pension under the scheme to which it is expected that the member will                           become entitled (“the expected pension”),                  

no lump sum paid to the member out of the expected-pension fund is a pension commencement lump sum; and here “the expected-pension fund” means the sums and assets that from time to time represent the sums and assets that, when the lump sum mentioned in paragraph                        (a) was paid, were held for the purpose of providing the expected pension.                  

(4)For the purposes of sub-paragraph (2), if the circumstances are as described in sub-paragraph (2)(c)(ii), the member is treated                           as not having become entitled to the arranged pension as a result of the cancelled contract having been entered into; and                           here “the arranged pension” means the pension that would have been provided by that contract had it not been cancelled.”                  

### Temporary relaxation to allow transfer of pension rights after lump sum paidU.K.

2(1)In Schedule 29 to FA 2004 after paragraph 1A insert—U.K.

“1B(1)When deciding whether a lump sum to which this paragraph applies is a pension commencement lump sum—                  

(a)paragraph 1(1)(aa) and (c) and (3) are to be omitted,                  

(b)paragraph 1(4) is to be treated as referring to the actual pension (see sub-paragraph (2)(h) of this paragraph), and                  

(c)paragraph 2(2) is to be treated as referring to the arrangement under which the member was expected to become entitled to                           the expected pension (see sub-paragraph (2)(b) of this paragraph).                  

(2)This paragraph applies to a lump sum if—                  

(a)the sum is paid in respect of a money purchase arrangement,                  

(b)the sum is paid to the member in connection with a pension under a registered pension scheme to which it is expected that                           the member will become entitled (“the expected pension”),                  

(c)the expected pension is income withdrawal, a lifetime annuity or a scheme pension,                  

(d)the sum is paid before the member becomes entitled to the expected pension,                  

(e)either—                  

(i)the sum is paid on or after 19 September 2013 but before 6 April 2015, or                  

(ii)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension,                           and on or after 19 March 2014 the contract is cancelled,                  

(f)the sum is not repaid at any time before 6 October 2015,                  

(g)before the member becomes entitled to the expected pension, there is a recognised transfer of the sums and assets that immediately                           before the transfer represent the sums and assets that when the sum was paid were held for the purpose of providing the expected                           pension,                  

(h)the member becomes entitled before 6 October 2015 to a pension under the scheme to which the recognised transfer is made (                           “ the actual pension ”),                  

(i)the actual pension is income withdrawal, a lifetime annuity or a scheme pension, or some combination of them, and                  

(j)all of the sums and assets that represent the sums and assets transferred by the recognised transfer are used to provide the                           actual pension.                  

(3)If a lump sum to which this paragraph applies is a pension commencement lump sum, any lump sum paid—                  

(a)to the member,                  

(b)by the scheme to which the recognised transfer mentioned in sub-paragraph (2)(g) is made or by any other registered pension                           scheme (including the scheme from which the transfer was made), and                  

(c)in connection with the member's becoming entitled to the actual pension,                  

is not a pension commencement lump sum.                  

(4)For the purposes of sub-paragraph (2), if the circumstances are as described in sub-paragraph (2)(e)(ii), the member is treated                           as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”                  

(2)In section 166(2) of FA 2004 (time at which a person becomes entitled to a lump sum)—

(a)before paragraph (a) insert—

“(za)in the case of a pension commencement lump sum to which paragraph 1B of Schedule 29 applies (certain sums paid before 6 April                           2015), immediately before the person becomes entitled to the actual pension (see paragraph 1B(2)(h) of that Schedule),”, and                  

(b)in paragraph (a) for “of a” substitute “ of any other ”.

### Temporary relaxation to allow lump sum to be repaid to pension scheme that paid itU.K.

3U.K.In Chapter 3 of Part 4 of FA 2004 (payments by registered pension schemes) after section 185I insert—

#### “Repayments of lump sumsU.K.

##### 185JEffect of repayment of certain pre-6 April 2015 lump sums

(1)For the purposes of this Part—                  

(a)a lump sum to which this section applies is treated as never having been paid, and                  

(b)the payment by which it is repaid is treated as not being a payment.                  

(2)This section applies to a lump sum if—                  

(a)the sum is paid by a registered pension scheme to a member of the scheme in respect of a money purchase arrangement,                  

(b)the sum is paid to the member in connection with a pension under the scheme to which it is expected that the member will become                           entitled (“the expected pension”),                  

(c)the expected pension is income withdrawal, a lifetime annuity or a scheme pension,                  

(d)the sum is paid before the member becomes entitled to the expected pension,                  

(e)either—                  

(i)the sum is paid on or after 19 September 2013 but before 6 April 2015, or                  

(ii)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension,                           and on or after 19 March 2014 the contract is cancelled,                  

(f)before the member becomes entitled to the expected pension, the member repays the sum to the pension scheme that paid it,                           and                  

(g)the repayment is made before 6 October 2015.                  

(3)For the purposes of subsection (2), if the circumstances are as described in subsection (2)(e)(ii), the member is treated                           as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”                  

### Calculation of “applicable amount” in certain casesU.K.

4U.K.In paragraph 3 of Schedule 29 to FA 2004 (pension commencement lump sums: applicable amount) after sub-paragraph (8) insert—

“(8A)Sub-paragraphs (1) to (8) have effect subject to the following—                  

(a)if—                  

(i)paragraph 1A or 1B applies to the lump sum,                  

(ii)the lump sum is paid more than 6 months before the day on which the member becomes entitled to it,                  

(iii)a contract for a lifetime annuity is entered into to provide the pension in connection with which the lump sum is paid, and                  

(iv)on or after 19 March 2014 the contract is cancelled,                  

the applicable amount is one third of the annuity purchase price that would have been given by sub-paragraphs (4) to (5) in                        the case of that annuity had the contract not been cancelled, and                  

(b)if—                  

(i)paragraph 1A or 1B applies to the lump sum,                  

(ii)the lump sum is paid more than 6 months before the day on which the member becomes entitled to it, and                  

(iii)paragraph (a) does not apply,                  

the applicable amount is one third of the sums, plus one third of the then market value of the assets, held at the time the                        lump sum is paid for the purpose of providing the pension at that time expected to be the pension in connection with which                        the lump sum is paid.                  

(8B)For the purposes of sub-paragraph (8A)(a)(ii), the member is treated as not having become entitled to a pension as a result                           of the cancelled contract having been entered into.”                  

### Expected pension commencement lump sums treated as trivial commutation lump sumsU.K.

5(1)In section 166(1) of FA 2004, in the lump sum rule, omit the “or” after paragraph (f), and after paragraph (g) insert “, or U.K.

(h)a transitional 2013/14 lump sum.”                  

(2)In Schedule 29 to FA 2004, after paragraph 11 insert—

#### “Transitional 2013/14 lump sum, and its related trivial commutation lump sumU.K.

11A(1)A lump sum is a transitional 2013/14 lump sum for the purposes of this Part if—                  

(a)the sum (“the earlier sum”) is paid to the member in connection with a pension under a registered pension scheme to which                           it is expected that the member will become entitled (“the expected pension”),                  

(b)the earlier sum is paid before the member becomes entitled to the expected pension,                  

(c)either—                  

(i)the earlier sum is paid on or after 19 September 2013 but before 27 March 2014, or                  

(ii)the earlier sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected                           pension, and on or after 19 March 2014 the contract is cancelled,                  

(d)all of the sums and assets for the time being representing the sums and assets that when the earlier sum was paid were held                           for the purpose of providing the expected pension are, before the member becomes entitled to the expected pension, used in                           paying a further lump sum to the member ( “ the further sum ”),                  

(e)the further sum is paid on or after 6 July 2014 but before 6 April 2015, and                  

(f)the further sum is a trivial commutation lump sum (see sub-paragraph (2)).                  

(2)Sub-paragraph (4) applies when deciding under paragraph 7 whether the further sum is a trivial commutation lump sum in a case                           where the earlier sum is paid before the nominated date (see paragraph 7(3) for the meaning of “the nominated date”).                  

(3)If the earlier sum is a transitional 2013/14 lump sum, and the earlier sum and the further sum are not the only lump sums                           paid under registered pension schemes to the member, sub-paragraph (4) applies when deciding under paragraph 7 whether any                           other lump sum paid under a registered pension scheme to the member is a trivial commutation lump sum.                  

(4)If this sub-paragraph applies, the payment of the earlier sum is to be treated for the purposes of paragraph 8(1)(b) as a                           benefit crystallisation event—                  

(a)which occurs when the earlier sum is paid, and                  

(b)on which the amount crystallised is the amount of the earlier sum.                  

(5)If the earlier sum is a transitional 2013/14 lump sum, and only the sums and assets mentioned in sub-paragraph (1)(d) are                           used in paying the further sum, section 636B of ITEPA 2003 applies in relation to the further sum with the omission of its                           subsection (3).                  

(6)If the earlier sum is a transitional 2013/14 lump sum, and the sums and assets mentioned in sub-paragraph (1)(d) are used                           together with other sums and assets in paying the further sum—                  

(a)section 636B of ITEPA 2003 applies in relation to the further sum as if instead of the further sum there were two separate                           trivial commutation lump sums as follows—                  

(i)one (“the first part of the further sum”) consisting of so much of the further sum as is attributable to the sums and assets                           mentioned in sub-paragraph (1)(d), and                  

(ii)another consisting of the remainder of the further sum,                  

(b)the first part of the further sum is to be treated for the purposes of section 636B of ITEPA 2003 as having been paid immediately                           before the remainder of the further sum,                  

(c)section 636B of ITEPA 2003 applies in relation to the first part of the further sum with the omission of its subsection (3),                           and                  

(d)for the purposes of applying section 636B(3) of ITEPA 2003 in relation to the remainder of the further sum, the rights to                           which the first part of the further sum relates are to be treated as rights that are not uncrystallised rights immediately                           before the remainder of the further sum is paid.                  

(7)For the purposes of sub-paragraph (1), if the circumstances are as described in sub-paragraph (1)(c)(ii), the member is treated                           as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”                  

(3)In section 636A of ITEPA 2003 (income tax exemption for certain lump sums)—

(a)in subsection (1) after paragraph (c) insert—

“(ca)a transitional 2013/14 lump sum,”, and                  

(b)in subsection (6) (definitions) omit the “and”, and after “ “short service refund lump sum”,” insert “and 

"transitional 2013/14 lump sum",”.                  

(4)In section 280(2) of FA 2004 (index of expressions) at the appropriate place insert—

### Small pot lump sumsU.K.

6(1)In the Registered Pension Schemes (Authorised Payments) Regulations 2009 (S.I. 2009/1171) after regulation 3 insert—U.K.

“3A(1)This regulation applies to a lump sum if—                  

(a)the sum (“the earlier sum”) is paid under a registered pension scheme to a member of the scheme,                  

(b)the earlier sum is paid to the member in connection with a pension under a registered pension scheme to which it is expected                           that the member will become entitled (“the expected pension”),                  

(c)the earlier sum is paid before the member becomes entitled to the expected pension,                  

(d)either—                  

(i)the earlier sum is paid on or after 19 September 2013 but before 27 March 2014, or                  

(ii)the earlier sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected                           pension, and on or after 19 March 2014 the contract is cancelled,                  

(e)all of the sums and assets for the time being representing the sums and assets that when the earlier sum was paid were held                           for the purpose of providing the expected pension are, before the member becomes entitled to the expected pension, used in                           paying a further lump sum to the member ( “ the further sum ”),                  

(f)the further sum is paid on or after 6 July 2014 but before 6 April 2015, and                  

(g)either—                  

(i)the payment of the further sum is a payment described in regulation 11, 11A or 12, or                  

(ii)the further sum is a trivial commutation lump sum within paragraph 7A of Schedule 29 and the earlier sum is the pension commencement                           lump sum in connection with which the further sum is paid.                  

(2)If this regulation applies to the earlier sum, and the payment of the further sum is a payment described in regulation 11,                           11A or 12—                  

(a)the payment of the earlier sum is a payment of a prescribed description for the purposes of section 164(1)(f), and                  

(b)section 636A of ITEPA 2003 (exemption from income tax for certain lump sums) applies in relation to the earlier sum as if                           the earlier sum were a pension commencement lump sum.                  

(3)When deciding for the purposes of this regulation whether the further sum is a trivial commutation lump sum within paragraph                           7A of Schedule 29, sub-paragraph (2)(c) of that paragraph is to be omitted.                  

(4)If this regulation applies to the earlier sum, and only the sums and assets mentioned in paragraph (1)(e) are used in paying                           the further sum, section 636B of ITEPA 2003 applies in relation to the further sum with the omission of its subsection (3).                  

(5)If this regulation applies to the earlier sum, and the sums and assets mentioned in paragraph (1)(e) are used together with                           other sums and assets in paying the further sum—                  

(a)section 636B of ITEPA 2003 applies in relation to the further sum as if instead of the further sum there were two separate                           trivial commutation lump sums as follows—                  

(i)one (“the first part of the further sum”) consisting of so much of the further sum as is attributable to the sums and assets                           mentioned in paragraph (1)(e), and                  

(ii)another consisting of the remainder of the further sum,                  

(b)the first part of the further sum is to be treated for the purposes of section 636B of ITEPA 2003 as having been paid immediately                           before the remainder of the further sum,                  

(c)section 636B of ITEPA 2003 applies in relation to the first part of the further sum with the omission of its subsection (3),                           and                  

(d)for the purposes of applying section 636B(3) of ITEPA 2003 in relation to the remainder of the further sum, the rights to                           which the first part of the further sum relates are to be treated as rights that are not uncrystallised rights immediately                           before the remainder of the further sum is paid.                  

(6)For the purposes of paragraph (1), if the circumstances are as described in paragraph (1)(d)(ii), the member is treated as                           not having become entitled to the expected pension as a result of the cancelled contract having been entered into.”                  

(2)The amendment made by sub-paragraph (1) is to be treated as having been made by the Commissioners for Her Majesty's Revenue                        and Customs under the powers to make regulations conferred by section 164(1)(f) and (2) of FA 2004.

### Preservation of protected pension age following certain transfers of pension rightsU.K.

7(1)In paragraph 22 of Schedule 36 to FA 2004 (protection of rights to take benefit before normal minimum pension age) after sub-paragraph                        (6) insert—U.K.

“(6A)A transfer is also a block transfer if—                  

(a)it involves the transfer in a single transaction of all the sums and assets held for the purposes of, or representing accrued                           rights under, the arrangements under the pension scheme from which the transfer is made which relate to the member,                  

(b)the transfer takes place—                  

(i)on or after 19 March 2014, and                  

(ii)before 6 April 2015, and                  

(c)the date mentioned in sub-paragraph (7)(a) is before 6 October 2015.”                  

(2)In paragraph 23(6) of Schedule 36 to FA 2004 (meaning of “block transfer”) after “22(6)” insert “ and (6A), but for this purpose paragraph 22(6A)(c) is to be read as if its reference to paragraph 22(7)(a) were a reference                           to sub-paragraph (7) of this paragraph ”.

### Operation of enhanced protection of pre-6 April 2006 rights to take lump sumsU.K.

8U.K.In paragraph 29 of Schedule 36 to FA 2004 (modifications of paragraph 3 of Schedule 29 to FA 2004 for cases where there is                        enhanced protection) after sub-paragraph (3) insert—

“(4)Paragraph 3 applies as if in sub-paragraph (8A)(a) for “is one third of” there were substituted “is—                  

where VULSR, VUR and LS have the same meaning as in sub-paragraph (1), and CAPP is”.                     

(5)Paragraph 3 applies as if in sub-paragraph (8A)(b) for “is one third of the sums, plus one third of” there were substituted                           “is—                  

where VULSR, VUR and LS have the same meaning as in sub-paragraph (1), and EP is the total of the sums, and”.”                     

### Protected lump sum entitlement following certain transfers of pension rightsU.K.

9U.K.In paragraph 31(8) of Schedule 36 to FA 2004 (“block transfer” has meaning given by paragraph 22(6) of Schedule 36 to FA 2004)—

(a)after “22(6)” insert “ and (6A) ”, and

(b)at the end insert “ , and reading paragraph 22(6A)(c) as if its reference to paragraph 22(7)(a) were a reference to sub-paragraph (3) of this                           paragraph. ”

10(1)In paragraph 34(2) of Schedule 36 to FA 2004 (modifications required by paragraph 31 in cases involving protected entitlements                        to lump sums) the sub-paragraphs treated as substituted in paragraph 2 of Schedule 29 to FA 2004 are amended as follows.U.K.

(2)In the substituted sub-paragraph (7A), in the definition of AC, for “(7AA) and (7B))” substitute “ (7AA) to (7B)) ”.

(3)After the substituted sub-paragraph (7AA) insert—

“(7AB)Where paragraph 1A applies to the lump sum, AC is the total of—                  

(a)the sums held, at the time the lump sum is paid, for the purpose of providing the pension at that time expected to be the                           pension in connection with which the lump sum is paid, and                  

(b)the market value at that time of the assets held at that time for that purpose.                  

(7AC)Where paragraph 1B applies to the lump sum, AC is the total of—                  

(a)the sums held, at the time the lump sum is paid, for the purpose of providing the expected pension (see paragraph 1B(2)(b)),                           and                  

(b)the market value at that time of the assets held at that time for that purpose.”                  

### Reporting obligationsU.K.

11(1)In the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) after regulation 18 insert—U.K.

#### “Modified operation of these Regulations in the case of certain pre-6 April 2015 lump sumsU.K.

##### 19Lump sums to which paragraph 1B of Schedule 29 applies

(1)Regulations 3 to 18 have effect subject to the following provisions of this regulation.                  

(2)Paragraphs (3) to (8) apply if—                  

(a)a lump sum is paid by a registered pension scheme (“the paying scheme”) to a member of the scheme,                  

(b)paragraph 1B of Schedule 29 applies to the lump sum, and                  

(c)the member's becoming entitled to the actual pension mentioned in paragraph 1B(2)(h) of Schedule 29 has the effect that—                  

(i)the member also becomes entitled to the lump sum, and                  

(ii)the member's becoming entitled to the lump sum is a benefit crystallisation event.                  

(3)For the purposes of—                  

(a)reportable event 6,                  

(b)regulation 3 so far as applying by virtue of that event, and                  

(c)obligations under regulation 14(1),                  

the benefit crystallisation event mentioned in paragraph (2)(c)(ii) is treated as occurring—                  

(i)in respect of the scheme to which the transfer mentioned in paragraph 1B(2)(g) of Schedule 29 was made (“the receiving scheme”) and not in respect of the paying scheme, and                  

(ii)when the member becomes entitled to the actual pension or, if later, on 5 August 2014.                  

(4)For the purposes of regulations 15(2)(a) and 17(5)(a)(i) and (7)(a)(i), that benefit crystallisation event is treated as occurring                           in respect of the receiving scheme and not in respect of the paying scheme.                  

(5)For the purposes of—                  

(a)reportable event 7 (but not its definition of “the entitlement amount”),                  

(b)reportable event 8, and                  

(c)regulation 3 so far as applying by virtue of either of those events,                  

the lump sum is treated as having been paid—                  

(i)by the receiving scheme and not by the paying scheme, and                  

(ii)when the member becomes entitled to the actual pension or, if later, on 5 August 2014.                  

(6)For the purposes of reportable event 7 “the entitlement amount” is the total of—                  

(a)the sums held, at the time the lump sum is actually paid, for the purpose of providing the expected pension mentioned in paragraph                           1B(2)(b) of Schedule 29, and                  

(b)the market value at that time of the assets held at that time for that purpose.                  

(7)The scheme administrator of the paying scheme is to provide the scheme administrator of the receiving scheme with the following                           information—                  

(a)the date the lump sum was paid,                  

(b)the amount of the lump sum,                  

(c)the total of—                  

(i)the sums held, at the time lump sum is paid, for the purpose of providing the expected pension mentioned in paragraph 1B(2)(b)                           of Schedule 29, and                  

(ii)the market value at that time of the assets held at that time for that purpose, and                  

(d)a statement that no further pension commencement lump sum may be paid in connection with that expected pension.                  

(8)The scheme administrator of the paying scheme is to comply with its obligations under paragraph (7) before—                  

(a)the end of 30 days beginning with the date of the transfer mentioned in paragraph 1B(2)(g) of Schedule 29, or                  

(b)if later, the end of 3 September 2014.                  

#### Lump sums to which paragraph 1B of Schedule 29 fails to applyU.K.

20(1)Regulations 3 to 18 have effect subject to the following provisions of this regulation.                  

(2)Paragraph (3) applies if—                  

(a)a lump sum is paid by a registered pension scheme (“the paying scheme”) to a member of the scheme,                  

(b)paragraph 1B of Schedule 29 does not apply to the lump sum, but the conditions in paragraph 1B(2)(a) to (g) are met in the                           case of the lump sum, and                  

(c)as at the end of 5 October 2015 it is the case that the lump sum is to be taken as having been an unauthorised member payment.                  

(3)For the purposes of reportable event 1, and regulation 3 so far as applying by virtue of that event, the lump sum is treated                           as having been paid—                  

(a)by the receiving scheme and not by the paying scheme, and                  

(b)on 6 October 2015.”                  

(2)The amendment made by sub-paragraph (1) is to be treated as having been made by the Commissioners for Her Majesty's Revenue                        and Customs under such of the powers cited in the instrument containing the Regulations as are applicable.

### Scheme sanction chargesU.K.

12(1)In section 239(3) of FA 2004 (cases where person other than scheme administrator is liable for a scheme sanction charge)—U.K.

(a)after “But” insert “— 

(a)”, and

(b)at the end insert “, and 

(b)in the case of a payment of a lump sum to a member where the conditions in paragraphs 1(1)(b) and (d) and 1B(2)(a) to (g)                           of Schedule 29 are met, the person liable to the scheme sanction charge so far as relating to any part of the lump sum within                           the permitted maximum is the scheme administrator of the registered pension scheme to which the transfer mentioned in paragraph                           1B(2)(g) of Schedule 29 is made.”                  

(2)In section 239 of FA 2004 (scheme sanction charges) after subsection (3) insert—

“(3A)For the purposes of subsection (3)(b) “the permitted maximum”, in the case of a lump sum paid to an individual, is the amount                           that in accordance with paragraph 2 of Schedule 29 would be the permitted maximum for that lump sum if the individual became                           entitled at the time the lump sum is paid to the pension at that time expected to be the pension in connection with which                           the lump sum is paid.”                  

(3)In section 268 of FA 2004 (discharge of liability to scheme sanction charges etc) after subsection (7) insert—

“(7A)Subsection (7) applies with the omission of its paragraph (a) if the scheme chargeable payment is a payment of a lump sum                           where the conditions in paragraph 1B(2)(a) to (g) of Schedule 29 are met.”                  

(4)In the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572) in article 18 (which provides for                        paragraph 1(1)(b) of Schedule 29 to FA 2004 to be omitted in certain cases) at the end insert “ , and section 239 has effect in the case of a lump sum paid to that individual as if its subsection (3)(b) did not include                           a reference to paragraph 1(1)(b) of Schedule 29 ”.

(5)The amendment made by sub-paragraph (4) is to be treated as made by the Treasury under the powers to make orders conferred                        by section 283(2) of FA 2004.

### Power to make further adjustmentsU.K.

13U.K.In section 166 of FA 2004 (payments by registered pension schemes: the lump sum rule) after subsection (4) insert—

“(5)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend Part 1 of Schedule 29, or Part 3 of Schedule                           36, in connection with cases involving a lump sum within subsection (6).                  

(6)A lump sum is within this subsection if—                  

(a)the sum is paid on or after 19 September 2013 and before 6 April 2015, or                  

(b)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the pension in connection                           with which the sum is paid, and on or after 19 March 2014 the contract is cancelled.                  

(7)The provision that may be made under subsection (5) includes provision altering the effect of amendments made by the Finance                           Act 2014.”                  

14U.K.In section 282(1) and (2) of FA 2004 (making of regulations and orders) for “Board of Inland Revenue” substitute “ Commissioners for Her Majesty's Revenue and Customs ”.

### CommencementU.K.

15U.K.The amendments made by paragraphs 1 to 5, 6(1), 7 to 10, 11(1) and 12(1) to (4) of this Schedule are to be treated as having                        come into force on 19 March 2014.

 Section 44

## SCHEDULE 6U.K.Transitional provision relating to new standard lifetime allowance for the tax year 2014-15 etc

### **PART 1**U.K.“Individual protection 2014”

#### The protectionU.K.

1(1)Sub-paragraph (2) applies on and after 6 April 2014 in the case of an individual—U.K.

(a)who, on 5 April 2014, has one or more relevant arrangements (see sub-paragraph (4)),

(b)whose relevant amount is greater than £1,250,000 (see sub-paragraph (5)), and

(c)in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not make provision for a lifetime allowance                        enhancement factor,

if notice of intention to rely on it is given to an officer of Revenue and Customs before 6 April 2017.

(2)Part 4 of FA 2004 has effect in relation to the individual as if the standard lifetime allowance were—

(a)if the individual's relevant amount is greater than £1,500,000, the greater of the standard lifetime allowance and £1,500,000,                        or

(b)otherwise, the greater of the standard lifetime allowance and the individual's relevant amount.

(3)But sub-paragraph (2) does not apply at any time when any of the following provisions applies in the case of the individual—

(a)paragraph 12 of Schedule 36 to FA 2004 (enhanced protection);

(b)paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012);

(c)paragraph 1 of Schedule 22 to FA 2013 (fixed protection 2014).

(4)“Relevant arrangement”, in relation to an individual, means an arrangement relating to the individual under—

(a)a registered pension scheme of which the individual is a member, or

(b)a relieved non-UK pension scheme of which the individual is a relieved member.

(5)An individual's “relevant amount” is the sum of amounts A, B, C and D (see paragraphs 2 to 5).

(6)Sub-paragraphs (7) and (8) apply if rights of an individual under a relevant arrangement become subject to a pension debit                        where the transfer day falls on or after 6 April 2014.

(7)For the purpose of applying sub-paragraph (2) in the case of the individual on and after the transfer day, the individual's                        relevant amount is reduced (or further reduced) by the following amount—

where—

X is the appropriate amount,

Y is 5% of X, and

Z is the number of tax years beginning after 5 April 2014 but ending on or before the transfer day.

(If the formula gives a negative amount, it is to be taken to be nil.)

(8)But if the individual's relevant amount would be reduced (or further reduced) to £1,250,000 or less, sub-paragraph (2) is                        not to apply at all in the case of the individual on and after the transfer day.

(9)In sub-paragraphs (6) to (8) “appropriate amount” and “transfer day”, in relation to a pension debit, have the same meaning as in section 29 of WRPA 1999 or Article 26 of WRP(NI)O 1999 (as                        the case may be).

#### Amount A (pre-6 April 2006 pensions in payment)U.K.

2(1)To determine amount A—U.K.

(a)apply sub-paragraph (2) if a benefit crystallisation event has occurred in relation to the individual during the period comprising                        the tax year 2006-07 and all subsequent tax years up to (and including) the tax year 2013-14;

(b)otherwise, apply sub-paragraph (6).

(2)If this sub-paragraph is to be applied, amount A is—

where—

ARP is (subject to sub-paragraph (3)) an amount equal to—

the annual rate at which any relevant existing pension was payable to the individual at the time immediately before the benefit                                    crystallisation event occurred, or                                 

if more than one relevant existing pension was payable to the individual at that time, the sum of the annual rates at which                                    each of the relevant existing pensions was so payable, and                                 

SLT is an amount equal to what the standard lifetime allowance was at the time the benefit crystallisation event occurred.

(3)Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the definition of “ARP” in sub-paragraph (2) (and, for                        this purpose, in paragraph 20(4) any reference to “the time” is to be read as a reference to the time immediately before the                        benefit crystallisation event occurred).

(4)If the time immediately before the benefit crystallisation event occurred falls before 6 April 2011, in sub-paragraph (3)                        references to paragraph 20(4) are to be read as references to that provision as it stood at the time immediately before the                        benefit crystallisation event occurred.

(5)If more than one benefit crystallisation event has occurred, in sub-paragraphs (2) to (4) references to the benefit crystallisation                        event are to be read as references to the first benefit crystallisation event.

(6)If this sub-paragraph is to be applied, amount A is—

where ARP is (subject to sub-paragraph (7)) an amount equal to—

the annual rate at which any relevant existing pension is payable to the individual at the end of 5 April 2014, or

if more than one relevant existing pension is payable to the individual at the end of 5 April 2014, the sum of the annual                                 rates at which each of the relevant existing pensions is so payable.                              

(7)Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the definition of “ARP” in sub-paragraph (6) (and, for                        this purpose, in paragraph 20(4) any reference to “the time” is to be read as a reference to 5 April 2014).

(8)In this paragraph “relevant existing pension” means (subject to sub-paragraph (9)) a pension, annuity or right—

(a)which was, at the end of 5 April 2006, a “relevant existing pension” as defined by paragraph 10(2) and (3) of Schedule 36 to FA 2004, and

(b)the payment of which the individual had, at the end of 5 April 2006, an actual (rather than a prospective) right to.

(9)If—

(a)before 6 April 2014, there was a recognised transfer of sums or assets representing a relevant existing pension, and

(b)those sums or assets were, after the transfer, applied towards the provision of a scheme pension (“the new scheme pension”),

the new scheme pension is also to be a “relevant existing pension” (including for the purposes of this sub-paragraph).

#### Amount B (pre-6 April 2014 benefit crystallisation events)U.K.

3(1)To determine amount B—U.K.

(a)identify each benefit crystallisation event that has occurred in relation to the individual during the period comprising the                        tax year 2006-07 and all subsequent tax years up to (and including) the tax year 2013-14,

(b)determine the amount which was crystallised by each of those benefit crystallisation events (applying paragraph 14 of Schedule                        34 to FA 2004 if relevant), and

(c)multiply each crystallised amount by the following fraction—

where SLT is an amount equal to what the standard lifetime allowance was at the time the benefit crystallisation event in                        question occurred.                     

(2)Amount B is the sum of the crystallised amounts determined under sub-paragraph (1)(b) as adjusted under sub-paragraph (1)(c).

#### Amount C (uncrystallised rights at end of 5 April 2014 under registered pension schemes)U.K.

4U.K.Amount C is the total value of the individual's uncrystallised rights at the end of 5 April 2014 under arrangements relating                        to the individual under registered pension schemes of which the individual is a member as determined in accordance with section                        212 of FA 2004.

#### Amount D (uncrystallised rights at end of 5 April 2014 under relieved non-UK pension schemes)U.K.

5(1)To determine amount D—U.K.

(a)identify each relieved non-UK pension scheme of which the individual is a relieved member at the end of 5 April 2014, and

(b)in relation to each such scheme—

(i)assume that a benefit crystallisation event occurs in relation to the individual at the end of 5 April 2014, and

(ii)in accordance with paragraph 14 of Schedule 34 to FA 2004, determine what the untested portion of the relevant relieved amount                        would be immediately before the assumed benefit crystallisation event.

(2)Amount D is the sum of the untested portions determined under sub-paragraph (1)(b)(ii).

#### InterpretationU.K.

6(1)Expressions used in this Part of this Schedule and Part 4 of FA 2004 have the same meaning in this Part as in that Part.U.K.

(2)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.

### **PART 2**U.K.Regulations

7(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend Part 1 of this Schedule.U.K.

(2)Regulations under this paragraph may (for example) add to the cases in which paragraph 1(2) is to apply.

(3)Regulations under this paragraph must not increase any person's liability to tax.

(4)Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made;                        but the time must be no earlier than 6 April 2014.

8(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 Part 1 of this Schedule is to be given.U.K.

(2)In sub-paragraph (1) the reference to Part 1 of this Schedule is to that Part as amended from time to time by regulations                        under paragraph 7.

9(1)Regulations under paragraph 7 or 8 may include supplementary or incidental provision.U.K.

(2)The powers to make regulations under paragraphs 7 and 8 are exercisable by statutory instrument.

(3)A statutory instrument containing regulations under paragraph 7 or 8 is subject to annulment in pursuance of a resolution                        of the House of Commons.

### **PART 3**U.K.Other provision

#### Amendment of section 219(5A) of FA 2004U.K.

10(1)In section 219 of FA 2004 (availability of individual's lifetime allowance) in subsection (5A) after “effect” insert “ where the previous benefit crystallisation event occurred before 6 April 2014 ”.U.K.

(2)The amendment made by this paragraph is treated as having come into force on 6 April 2014.

#### Amendment of section 98 of TMA 1970U.K.

11(1)Column 2 of the Table at the end of section 98 of TMA 1970 (special returns: penalties) is amended as follows.U.K.

(2)After the entry for section 228 of TIOPA 2010 insert—

(3)After the entry for regulations under section 61(5) of FA 2012 insert—

 Section 46

## SCHEDULE 7U.K.Pension schemes

### IntroductionU.K.

1U.K.Part 4 of FA 2004 (pension schemes etc) is amended as follows.

### Registration of pension schemesU.K.

2(1)Section 153 (applications for registration) is amended as follows.U.K.

(2)In subsection (4) for “On” substitute “ Following ”.

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

“(a)any information falling within subsection (5A) is inaccurate in a material respect,                  

(b)any document falling within subsection (5B) contains a material inaccuracy,                  

(c)any declaration accompanying the application is false,                  

(d)the scheme administrator has failed to comply with an information notice under section 153A given in connection with the application                           (including any declaration accompanying it),                  

(e)the scheme administrator has deliberately obstructed an officer of Revenue and Customs in the course of an inspection under                           section 153B carried out in connection with the application (including any declaration accompanying it) where the inspection                           has been approved by the tribunal,                  

(f)the pension scheme has not been established, or is not being maintained, wholly or mainly for the purpose of making payments                           falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums), or                  

(g)the person who is, or any of the persons who are, the scheme administrator is not a fit and proper person to be, as the case                           may be—                  

(i)the scheme administrator, or                  

(ii)one of the persons who are the scheme administrator.”                  

(4)After subsection (5) insert—

“(5A)The information falling within this subsection is any information—                  

(a)contained in the application, or                  

(b)otherwise provided to an officer of Revenue and Customs by the scheme administrator (whether under section 153A or otherwise)                           in connection with the application (including any declaration accompanying it).                  

(5B)The documents falling within this subsection are any documents produced to an officer of Revenue and Customs by the scheme                           administrator (whether under section 153A or otherwise) in connection with the application (including any declaration accompanying                           it).                  

(5C)The reference in subsection (5)(d) to the scheme administrator having failed to comply with an information notice under section                           153A includes a case where the scheme administrator has concealed, destroyed or otherwise disposed of, or has arranged for                           the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act                           2008 as applied by section 153A(3).”                  

3U.K.After section 153 insert—

#### “153APower to require information or documents in relation to applications for registration

(1)This section applies where an application for a pension scheme to be registered is made.                  

(2)An officer of Revenue and Customs may by notice (an “information notice”) require the scheme administrator or any other person—                  

(a)to provide the officer with any information, or                  

(b)to produce a document to the officer,                  

if the officer reasonably requires the information or document in connection with the application (including any declaration                        accompanying it).                  

(3)Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc)                           apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.                  

(4)Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue                           and Customs must give a copy of the notice to the scheme administrator.                  

(5)A person, other than the scheme administrator, who is given an information notice under this section may appeal against the                           notice or any requirement in the notice.                  

(6)Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes                           of an appeal under subsection (5) as it applies for the purposes of an appeal under Part 5 of that Schedule.                  

#### 153BPower to inspect documents in relation to applications for registration

(1)This section applies where an application for a pension scheme to be registered is made.                  

(2)An officer of Revenue and Customs may—                  

(a)enter any business premises of the scheme administrator or any other person, and                  

(b)inspect documents that are on the premises,                  

if the officer reasonably requires to inspect the documents in connection with the application (including any declaration                        accompanying it).                  

(3)In subsection (2)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).                  

(4)Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred                           by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.                  

(5)An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision                           of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 153A(3), an information notice                           under section 153A given at the time of the inspection to the occupier of the premises could not require the occupier to produce                           the document.                  

(6)An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.                  

(7)Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation                           to an application under subsection (6) as it applies in relation to an application under paragraph 13 of that Schedule in                           relation to an inspection under paragraph 10 of that Schedule.                  

#### 153CPenalties for failure to comply with information notices etc

(1)This section applies where a person other than the scheme administrator—                  

(a)fails to comply with an information notice under section 153A, or                  

(b)deliberately obstructs an officer of Revenue and Customs in the course of an inspection under section 153B that has been approved                           by the tribunal.                  

(2)The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals,                           destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph                           42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).                  

(3)Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information                           notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned                           in paragraph 39(1) of that Schedule.                  

#### 153DPenalties for inaccurate information in applications

(1)This section applies where—                  

(a)an application under section 153 contains information which is inaccurate,                  

(b)the inaccuracy is material, and                  

(c)condition A, B or C is met.                  

(2)Condition A is that the inaccuracy is careless or deliberate.                  

(3)An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.                  

(4)Condition B is that the scheme administrator knows of the inaccuracy at the time the application is made but does not inform                           an officer of Revenue and Customs at that time.                  

(5)Condition C is that the scheme administrator—                  

(a)discovers the inaccuracy some time later, and                  

(b)fails to take reasonable steps to inform an officer of Revenue and Customs.                  

(6)The scheme administrator is liable to a penalty not exceeding the maximum penalty for which the scheme administrator could                           have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents)                           had that paragraph applied in relation to the inaccuracy.                  

(7)Where the information contains more than one material inaccuracy, a penalty is payable for each inaccuracy.                  

(8)Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under                           this section as they apply in relation to a penalty under paragraph 40A of that Schedule.                  

#### 153EPenalties for inaccurate information or documents provided under information notice

(1)This section applies where—                  

(a)in complying with an information notice under section 153A, a person provides inaccurate information or produces a document                           that contains an inaccuracy, and                  

(b)the inaccuracy is material.                  

(2)Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply                           in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.                  

#### 153FPenalties for false declarations

(1)This section applies where—                  

(a)a declaration accompanying an application under section 153 is false, and                  

(b)at least one of conditions A to C in section 153D is met (reading references to an inaccuracy as references to a falsehood                           and references to the scheme administrator as references to the person who made the declaration).                  

(2)The person who made the declaration is liable to a penalty not exceeding the maximum penalty for which the person could have                           been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents)                           had that paragraph applied in relation to the falsehood.                  

(3)Where the declaration contains more than one falsehood, a penalty is payable in relation to each falsehood.                  

(4)Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under                           this section as they apply in relation to a penalty under paragraph 40A of that Schedule.”                  

4U.K.After section 156 insert—

#### “156ACases where application for registration not decided within 6 months

(1)This section applies where—                  

(a)an application for a pension scheme to be registered is made, but                  

(b)the scheme administrator is not notified under section 153(6) within the period of 6 months after the day on which the application                           is made.                  

(2)The scheme administrator may appeal to the tribunal as if, at the end of that period of 6 months, the scheme administrator                           had been notified under section 153(6) of a decision not to register the scheme; and section 156(5) to (8) applies accordingly.”                  

5(1)The amendments made by paragraphs 2 to 4 are treated as having come into force on 20 March 2014 and have effect in relation                        to applications made on or after that date.U.K.

(2)In relation to an application made before 1 September 2014, section 153(5) of FA 2004 (as amended by paragraph 2(3)) has effect                        with the omission of paragraph (g).

### De-registration of pension schemesU.K.

6(1)Section 158 (grounds for de-registration) is amended as follows.U.K.

(2)In subsection (1)—

(a)before paragraph (a) insert—

“(za)that the pension scheme has not been established, or is not being maintained, wholly or mainly for the purpose of making payments                           falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums),”,                  

(b)in paragraph (d) for “incorrect” substitute “ inaccurate ”,

(c)after paragraph (d) insert—

“(da)that the scheme administrator fails to produce any document required to be produced to an officer of Revenue and Customs by                           virtue of this Part or Part 1 of Schedule 36 to the Finance Act 2008,                  

(db)that any document produced to an officer of Revenue and Customs by the scheme administrator contains a material inaccuracy                           in relation to which at least one of conditions A to C in subsections (7) to (10) is met,”, and”                  

(d)for paragraph (e) substitute—

“(e)that any declaration accompanying the application to register the pension scheme, or otherwise made to an officer of Revenue                           and Customs in connection with the pension scheme, is false in a material particular,                  

(ea)that the scheme administrator has deliberately obstructed an officer of Revenue and Customs in the course of an inspection                           under Part 2 of Schedule 36 to the Finance Act 2008 that has been approved by the tribunal, or”.                  

(3)In subsection (1) (as amended by sub-paragraph (2) above)—

(a)after paragraph (za) insert—

“(zb)that the person who is, or any of the persons who are, the scheme administrator is not a fit and proper person to be, as the                           case may be—                  

(i)the scheme administrator, or                  

(ii)one of the persons who are the scheme administrator,”, and                  

(b)in paragraph (ea) after “under” insert “ section 159B or ”.

(4)After subsection (5) insert—

“(6)Subsections (7) to (10) apply for the purposes of subsection (1)(db).                  

(7)Condition A is that the inaccuracy is careless or deliberate.                  

(8)An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.                  

(9)Condition B is that the scheme administrator knows of the inaccuracy at the time the document is produced to an officer of                           Revenue and Customs but does not inform such an officer at that time.                  

(10)Condition C is that the scheme administrator—                  

(a)discovers the inaccuracy some time later, and                  

(b)fails to take reasonable steps to inform an officer of Revenue and Customs.”                  

7U.K.In Chapter 2, after section 159 insert—

#### “159APower to require information or documents for purpose of considering if scheme administrator is fit and proper

(1)An officer of Revenue and Customs may by notice (an “information notice”) require the scheme administrator of a registered                           pension scheme or any other person—                  

(a)to provide the officer with any information, or                  

(b)to produce a document to the officer,                  

if the officer reasonably requires the information or document for the purpose of considering whether the person who is, or                        any of the persons who are, the scheme administrator is a fit and proper person to be the scheme administrator or one of those                        persons (as the case may be).                  

(2)Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc)                           apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.                  

(3)Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue                           and Customs must give a copy of the notice to the scheme administrator.                  

(4)A person who is given an information notice under this section may appeal against the notice or any requirement in the notice.                  

(5)Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes                           of an appeal under subsection (4) as it applies for the purposes of an appeal under Part 5 of that Schedule.                  

#### 159BPower to inspect documents for purpose of considering if scheme administrator is fit and proper

(1)An officer of Revenue and Customs may—                  

(a)enter any business premises of the scheme administrator of a registered pension scheme or of any other person, and                  

(b)inspect documents that are on the premises,                  

if the officer reasonably requires to inspect the documents for the purpose of considering whether the person who is, or any                        of the persons who are, the scheme administrator is a fit and proper person to be the scheme administrator or one of those                        persons (as the case may be).                  

(2)In subsection (1)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).                  

(3)Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred                           by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.                  

(4)An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision                           of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 159A(2), an information notice                           under section 159A given at the time of the inspection to the occupier of the premises could not require the occupier to produce                           the document.                  

(5)An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.                  

(6)Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation                           to an application under subsection (5) as it applies in relation to an application under paragraph 13 of that Schedule in                           relation to an inspection under paragraph 10 of that Schedule.                  

#### 159CPenalties for failure to comply with information notices etc

(1)This section applies where a person—                  

(a)fails to comply with an information notice under section 159A, or                  

(b)deliberately obstructs an officer of Revenue and Customs in the course of an inspection under section 159B that has been approved                           by the tribunal.                  

(2)The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals,                           destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph                           42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 159A(2).                  

(3)Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information                           notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned                           in paragraph 39(1) of that Schedule.                  

#### 159DPenalties for inaccurate information or documents provided under information notice

(1)This section applies where—                  

(a)in complying with an information notice under section 159A, a person provides inaccurate information or produces a document                           that contains an inaccuracy, and                  

(b)the inaccuracy is material.                  

(2)Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply                           in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.”                  

8(1)The amendments made by paragraphs 6 and 7 have effect in relation to pension schemes whenever registered (including schemes                        registered by virtue of paragraph 1 of Schedule 36 to FA 2004 (deemed registration of existing schemes)).U.K.

(2)The amendments made by paragraph 6(2) and (4) are treated as having come into force on 20 March 2014.

(3)The amendments made by paragraphs 6(3) and 7 come into force on 1 September 2014 or, if later, the day after the day on which                        this Act is passed.

### Declarations required from person who is to be a scheme administratorU.K.

9(1)In section 270 (meaning of “scheme administrator”) in subsection (2)—U.K.

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

(b)after paragraph (b) insert “, and 

(c)has made to an officer of Revenue and Customs any other declarations which are reasonably required by Her Majesty's Revenue                           and Customs.”                  

(2)The amendments made by this paragraph have effect in relation to appointments on or after 1 September 2014.

### Payments by registered pension schemes: surrenderU.K.

10(1)Section 172A (payments by registered pension schemes: surrender) is amended as follows.U.K.

(2)In subsection (5) omit paragraph (d).

(3)After subsection (5) insert—

“(5A)Subsection (5)(b) applies only if the entitlement is held (or is to be held) by the dependant under an arrangement under the                           pension scheme relating to the member or dependant.”                  

11U.K.In section 207 (authorised surplus payments charge) after subsection (6) insert—

“(6A)Subsection (1) does not apply to an authorised surplus payment to the extent that the payment is funded (directly or indirectly)                           by a surrender of (or an agreement to surrender) benefits or rights which results in the registered pension scheme being treated                           as making an unauthorised payment under section 172A.                  

(6B)Terms used in subsection (6A) which are defined in section 172A have the same meaning as they have in that section.”                  

12U.K.The amendments made by paragraphs 10 and 11 have effect in relation to surrenders (or agreements to surrender) made on or                        after 20 March 2014.

### Orders for money etc to be restored to pension schemesU.K.

13(1)Section 188 (relief for members' contributions) is amended as follows.U.K.

(2)In subsection (2) after “(3)” insert “ or (3A) ”.

(3)After subsection (3) insert—

“(3A)This subsection applies to a contribution if the contribution results from the transfer of property or money, or the payment                           of a sum, towards the pension scheme pursuant to a relevant order in a case where—                  

(a)section 266A (members' liability in respect of unauthorised member payments) applies, and                  

(b)relief is claimed under that section in respect of the liability mentioned in subsection (1)(a) of that section.                  

(3B)In the case of a contribution which is greater than UMP (see section 266A(5)), subsection (3A) does not apply to the contribution so far as it is greater than UMP.                  

(3C)In subsection (3A) “relevant order” means an order under any of the following—                  

(a)section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders for money etc to be restored to pension schemes), or                  

(b)Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (corresponding provision for Northern Ireland).”                  

14(1)Section 266A (member's liability) is amended as follows.U.K.

(2)In subsection (1)(b) for the words from “an order” to “Regulator)” substitute “ a relevant order ”.

(3)In subsection (5), in the definition of “ASO”—

(a)before the first “order” insert “ relevant ”, and

(b)for the words from the second “order” to “2005” substitute “ relevant order ”.

(4)After subsection (6) insert—

“(6A)In this section “relevant order” means an order under any of the following—                  

(a)section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders for money etc to be restored to pension schemes), or                  

(b)Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (corresponding provision for Northern Ireland).”                  

15(1)Section 266B (scheme's liability) is amended as follows.U.K.

(2)In subsection (1)(b) for the words from “an order” to “Regulator)” substitute “ a relevant order ”.

(3)In subsection (3), in the definition of “ASO”—

(a)before the first “order” insert “ relevant ”, and

(b)for the words from the second “order” to “2005” substitute “ relevant order ”.

(4)After subsection (4) insert—

“(5)In this section “relevant order” means an order under any of the following—                  

(a)section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders for money etc to be restored to pension schemes), or                  

(b)Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (corresponding provision for Northern Ireland).”                  

16U.K.The amendments made by paragraphs 13 to 15 have effect in relation to orders made on or after 1 September 2014.

### Liabilities of trustees appointed by Pensions Regulator etcU.K.

17U.K.In section 255 (assessments under Part) in subsection (1) after paragraph (e) insert—

“(ea)liability under section 272C (former scheme administrator to retain liability in cases involving independent trustees etc),”.                  

18U.K.In section 272 (trustees etc liable as scheme administrator) in subsection (4) after “applying in relation to the pension                        scheme” insert “ or by reason of section 272C(7) applying in relation to a liability ”.

19U.K.After section 272 insert—

#### “272ALiabilities of independent trustee

(1)This section applies in relation to a person (“P”) who is an independent trustee of a registered pension scheme.                  

(2)For the purposes of this section and section 272B an “independent trustee” is a trustee of a pension scheme—                  

(a)who is appointed by, or otherwise pursuant to, an order made—                  

(i)by the Pensions Regulator under section 7 of the Pensions Act 1995 or Article 7 of the Pensions (Northern Ireland) Order 1995                           (appointment of trustees by the Pensions Regulator), or                  

(ii)by a court on an application made by the Pensions Regulator, and                  

(b)who is not a trustee of the pension scheme at any time before—                  

(i)the day on which the trustee's appointment as mentioned in paragraph (a) takes effect, or                  

(ii)if the trustee is appointed as mentioned in paragraph (a) on more than one occasion, the day on which the first appointment                           takes effect.                  

(3)In this section “the relevant day” means—                  

(a)the day on which P's appointment as trustee of the pension scheme as mentioned in subsection (2)(a) takes effect, or                  

(b)if P is appointed as trustee of the pension scheme as mentioned in subsection (2)(a) on more than one occasion, the day on                           which P's first appointment takes effect.                  

(4)If P is, or is one of the persons who are, the scheme administrator, P does not assume any liability falling within subsection                           (7) which P would otherwise assume (including by reason of section 272C(3) or (4)).                  

(5)Subsection (4) does not apply if P is, or is one of the persons who are, the scheme administrator at any time before the relevant                           day.                  

(6)In relation to any liability falling within subsection (7), in section 272(4) references to trustees or to persons who control                           the management of the pension scheme do not include P.                  

(7)The liabilities falling within this subsection are—                  

(a)liabilities for the following in respect of payments made (or treated as having been made) by the pension scheme on or before                           the relevant day—                  

(i)the short service refund lump sum charge;                  

(ii)the serious ill-health lump sum charge;                  

(iii)the special lump sum death benefits charge;                  

(iv)the authorised surplus payments charge;                  

(v)the scheme sanction charge in respect of scheme chargeable payments falling within section 241(1)(a) or (b);                  

(b)liabilities for the lifetime allowance charge in respect of benefit crystallisation events occurring on or before the relevant                           day;                  

(c)liabilities for the scheme sanction charge in respect of scheme chargeable payments treated under section 185A or 185F as                           having been made by the pension scheme in tax years earlier than the one in which the relevant day falls;                  

(d)any liability for the scheme sanction charge in respect of the relevant fraction of any scheme chargeable payment treated                           under section 185A as having been made by the pension scheme in the tax year in which the relevant day falls;                  

(e)where the pension scheme is treated under section 185F as having made a scheme chargeable payment in the tax year in which                           the relevant day falls and there is a relevant net gain, any liability for the scheme sanction charge in respect of the relevant                           amount;                  

(f)any liability to pay interest in respect of a liability mentioned in paragraphs (a) to (e) arising at any time.                  

(8)For the purposes of subsection (7)(d) “the relevant fraction” is—                  

where—                     

A is the number of days in the tax year up to (and including) the relevant day, and                        

B is the number of days in the tax year.                        

(9)For the purposes of subsection (7)(e)—                  

(a)there is a “relevant net gain” if—                  

(i)the total amount of any gains treated under section 185F as accruing in the tax year on or before the relevant day, exceeds                  

(ii)the total amount of any losses treated under section 185F as so accruing, and                  

(b)“the relevant amount” is—                  

(i)the scheme chargeable payment, or                  

(ii)if that payment is greater than the excess of gains over losses mentioned in paragraph (a), the amount of that excess.                  

(10)Subsection (11) applies if—                  

(a)apart from that subsection, losses in relation to which section 185G(10) applies would be included in the total amount mentioned                           in subsection (9)(a)(ii), and                  

(b)the losses exceed the gains—                  

(i)which are included in the total amount mentioned in subsection (9)(a)(i), and                  

(ii)from which the losses can be deducted in accordance with section 185G(10).                  

(11)The losses are not to be included in the total amount mentioned in subsection (9)(a)(ii) so far as they exceed the gains.                  

#### 272BLiabilities of scheme administrator appointed by independent trustee etc

(1)This section applies in relation to a person (“Q”) who is, or is one of the persons who are, the scheme administrator of a                           registered pension scheme where Q's appointment as such takes effect at a time when the pension scheme has one or more independent                           trustees.                  

(2)Q does not assume any liability falling within section 272A(7) which Q would otherwise assume.                  

(3)In relation to any liability falling within section 272A(7), in section 272(4) references to persons who control the management                           of the pension scheme do not include Q.                  

(4)Subsections (2) and (3) do not apply if Q is, or is one of the persons who are, the scheme administrator at any time before                           the relevant day.                  

(5)In this section, and in section 272A as it applies for the purposes of this section, “the relevant day” means the first day on which the pension scheme has an independent trustee (whether or not there are days between that day                           and the day on which Q's appointment takes effect on which the pension scheme has no independent trustees).                  

#### 272CFormer scheme administrator etc to retain liability

(1)This section applies in relation to a liability which, by reason of section 272A(4), is not assumed by P (in which case “the relevant day” is to be read in accordance with section 272A(3)).                  

(2)This section also applies in relation to a liability which, by reason of section 272B(2), is not assumed by Q (in which case                           “the relevant day” is to be read in accordance with section 272B(5)).                  

(3)The liability is to be retained or assumed by the person who is, or the persons who are, the scheme administrator immediately                           before the relevant day (unless dead or having ceased to exist).                  

(4)If there is no scheme administrator immediately before the relevant day, the liability is to be retained or assumed by the                           person who was, or the persons who were, the scheme administrator when there last was a scheme administrator before the relevant                           day (unless dead or having ceased to exist).                  

(5)Nothing in section 271 prevents a person from having (and continuing to have) the liability by reason of subsection (3) or                           (4).                  

(6)Subsection (7) applies if—                  

(a)no-one has the liability by reason of subsection (3) or (4),                  

(b)no-one who has the liability by reason of subsection (3) or (4) can be traced, or                  

(c)the person who has, or all the persons who have, the liability by reason of subsection (3) or (4) are in serious default (as                           determined in accordance with section 272(6)).                  

(7)The liability is to be assumed by the person or persons determined in accordance with section 272(4).                  

(8)Section 272(5) applies in relation to a person who assumes the liability by reason of subsection (7) as it applies in relation                           to a person who assumes a liability by reason of section 272.                  

(9)Nothing in this section prevents any person from being subject to the liability apart from this section (in addition to any                           person who is subject to the liability by reason of this section), and in particular the liability continues to be a liability                           of the scheme administrator for the purposes of section 271(2).                  

(10)If a person assumes the liability under section 271(2) at a time after P or Q's appointment as, or as one of the persons who                           are, the scheme administrator has ceased, the person who has, or the persons who have, the liability by reason of subsection                           (3) or (4) is, or are, released from the liability.                  

(11)A person who has, or persons who have, the liability by reason of subsection (3) or (4) may apply to an officer of Revenue                           and Customs to be released from the liability.                  

(12)Section 271(6) to (13) applies in relation to an application under subsection (11) as it applies in relation to an application                           under section 271(5).”                  

20U.K.In section 273 (members liable as scheme administrator) after subsection (1) insert—

“(1A)This section also applies in relation to a registered pension scheme if—                  

(a)a person has, or persons have, by reason of section 272C(7) assumed a liability to pay tax (or interest on tax) by virtue                           of section 239 (scheme sanction charge) in respect of the whole or a part of a scheme chargeable payment falling within section                           241(1)(b) or (c) made (or treated as having been made) by the pension scheme,                  

(b)that person, or each of those persons, has failed (in whole or in part) to satisfy the liability, and                  

(c)that person, or each of those persons, has either died or ceased to exist or is a person in whose case an officer of Revenue                           and Customs considers the person's failure to satisfy the liability to be of a serious nature.”                  

21(1)Section 274 (supplementary) is amended as follows.U.K.

(2)In subsection (1)—

(a)after “(trustees etc)” insert “ , section 272C(7) ”, and

(b)in paragraph (b) after “administrator)” insert “ , section 272C(3) or (4) ”.

(3)In subsection (3)(b) after “272” insert “ , 272C ”.

22U.K.Sections 272A to 272C (as inserted by paragraph 19) have effect for cases where the relevant day falls on or after 1 September                        2014.

### Other provisionU.K.

23U.K.In the following provisions (which relate to the giving of information etc) for “incorrect” (in all places) substitute “ inaccurate ”

(a)section 169(5)(a)(ii);

(b)section 257(4)(a) and (b);

(c)section 261(1)(a);

(d)section 264(2)(a).

 Section 51

## SCHEDULE 8U.K.Employee share schemes

### **PART 1**U.K.Share incentive plans

#### Amendments to Chapter 6 of Part 7 of ITEPA 2003U.K.

1U.K.Chapter 6 of Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities: share incentive plans)                        is amended as follows.

2U.K.In the title omit “Approved”.

3(1)Section 488 (introduction to share incentive plans) is amended as follows.U.K.

(2)In the heading omit “**Approved**”.

(3)In subsection (1)—

(a)omit paragraph (a), and

(b)in paragraph (b) for “those plans” substitute “ share incentive plans (“SIPs”) which are Schedule 2 SIPs ”.

(4)Omit subsection (2).

(5)In subsection (4)—

(a)omit the definitions of “approved” and “approval”, and

(b)after the definition of “PAYE deduction” insert—

““Schedule 2 SIP” is to be read in accordance with paragraph 1 and Part 10 of Schedule 2;”.                  

4(1)Section 489 (operation of tax advantages) is amended as follows.U.K.

(2)In the heading for “**approved**” substitute “ **Schedule 2** ”.

(3)In subsection (1) for “an approved” substitute “ a Schedule 2 ”.

5U.K.In section 498 (no charge on shares ceasing to be subject to plan in certain circumstances) in subsection (9)(b) for “an approved”                        substitute “ a Schedule 2 ”.

6(1)Section 500 (operation of tax charges) is amended as follows.U.K.

(2)In the heading for “**approved**” substitute “ **Schedule 2** ”.

(3)In subsection (1) for “an approved” substitute “ a Schedule 2 ”.

7U.K.In section 503 (charge on partnership share money) in subsection (2), in the entry for paragraph 56, for “withdrawal of plan                        approval” substitute “ plan ceasing to be a Schedule 2 SIP ”.

8(1)Section 506 (charge on partnership shares ceasing to be subject to plan) is amended as follows.U.K.

(2)In subsection (2) for “market value of the shares at the exit date” substitute “ relevant amount ”.

(3)After subsection (2) insert—

“(2A)Subject to subsection (2B), in subsection (2) “the relevant amount” means the market value of the shares at the exit date.                  

(2B)If the shares cease to be subject to the plan by virtue of a provision of the kind mentioned in paragraph 43(2B) of Schedule                           2 (provision requiring partnership shares to be offered for sale), in subsection (2) “the relevant amount” means the lesser of—                  

(a)the amount of partnership share money used to acquire the shares, and                  

(b)the market value of the shares at the time they are offered for sale.                  

(2C)Paragraph 92(2) of Schedule 2 (market value of shares subject to a restriction) applies for the purposes of subsection (2B)(b).”                  

(4)After subsection (3) insert—

“(3A)If the shares cease to be subject to the plan by virtue of a provision of the kind mentioned in paragraph 43(2B) of Schedule                           2, in subsection (3)(b) the reference to the market value of the shares at the exit date is to be read as a reference to the                           market value of the shares at the time they are offered for sale (as determined in accordance with paragraph 92(2) of Schedule                           2 if relevant).”                  

9U.K.In section 509 (modification of section 696) in subsection (1)(a) for “an approved” substitute “ a Schedule 2 ”.

10U.K.In section 510 (payments by trustees) in subsection (1) for “an approved” substitute “ a Schedule 2 ”.

11U.K.In section 511 (deductions to be made by trustees) in subsection (1) for “an approved” substitute “ a Schedule 2 ”.

12U.K.In section 515 (tax advantages and charges under other Acts) in subsection (2)(a) and (d) for “an approved” substitute “ a Schedule 2 ”.

13U.K.Schedule 2 is amended as follows.

14U.K.In the title omit “Approved”.

15U.K.In the cross-heading before paragraph 1 for “*Approval of*” substitute “ *Introduction to Schedule 2* ”.

16(1)Paragraph 1 (introduction) is amended as follows.U.K.

(2)For sub-paragraphs (1) and (2) substitute—

“(A1)For the purposes of the SIP code a share incentive plan (a “SIP”) is a Schedule 2 SIP if the requirements of Parts 2 to 9                           of this Schedule are met in relation to the SIP.”                  

(3)For sub-paragraph (4) substitute—

“(4)Sub-paragraph (A1) is subject to Part 10 of this Schedule which—                  

(a)requires notice of a plan to be given to Her Majesty's Revenue and Customs (“HMRC”) in order for the plan to be a Schedule                           2 SIP (see paragraph 81A(1)),                  

(b)provides for a plan in relation to which such notice is given to be a Schedule 2 SIP (see paragraph 81A(4)), and                  

(c)gives power to HMRC to enquire into a plan and to decide that the plan should not be a Schedule 2 SIP (see paragraphs 81F                           to 81I).”                  

17U.K.In the cross-heading before paragraph 6 omit “*for approval*”.

18(1)Paragraph 6 (general requirements for SIPs) is amended as follows.U.K.

(2)Make the existing text sub-paragraph (1).

(3)After the new sub-paragraph (1) insert—

“(2)The requirements of this Part are also to be taken to include the requirements of paragraphs 89 and 90 (plan termination notices                           etc).”                  

19(1)Paragraph 7 (the purpose of the plan) is amended as follows.U.K.

(2)In sub-paragraph (1)—

(a)after “provide” insert “ , in accordance with this Schedule, ”, and

(b)for “nature” substitute “ form ”.

(3)After sub-paragraph (1) insert—

“(1A)The plan must not provide benefits to employees otherwise than in accordance with this Schedule.                  

(1B)For example, the plan must not provide cash to employees as an alternative to shares.                  

(1C)Sub-paragraph (1A) does not prohibit an employee receiving a benefit from a company as a result of any shares in that company                           being held on the employee's behalf under the plan where the employee would have received the same benefit from the company                           had the shares been acquired by the employee otherwise than by virtue of the plan.”                  

(4)Omit sub-paragraph (2).

20U.K.In paragraph 18 (requirement not to participate in other SIPs) in sub-paragraph (1) for “approved” substitute “ Schedule 2 ”.

21U.K.In paragraph 18A (participation in more than one connected SIP) in sub-paragraph (1) for “approved” substitute “ Schedule 2 ”.

22U.K.In paragraph 37 (holding period: power of participant to direct trustees) in sub-paragraph (3)(b) for “an approved” substitute                        “ a Schedule 2 ”.

23U.K.In paragraph 43 (partnership shares: introduction) after sub-paragraph (2A) insert—

“(2B)Partnership shares may (notwithstanding sub-paragraph (2A) if relevant) be subject to provision requiring partnership shares                           acquired on behalf of an employee to be offered for sale but only if the requirement of sub-paragraph (2C) is met.                  

(2C)The consideration at which the shares are required to be offered for sale must be at least equal to—                  

(a)the amount of partnership share money applied in acquiring the shares on behalf of the employee, or                  

(b)if lower, the market value of the shares at the time they are offered for sale.”                  

24U.K.In the cross-heading before paragraph 56 for “*withdrawal of approval*” substitute “ *plan ceasing to be a Schedule 2 SIP* ”.

25(1)Paragraph 56 (repayment of partnership share money) is amended as follows.U.K.

(2)In sub-paragraph (1) for “approval of the plan is withdrawn (see paragraph 83)” substitute “ plan is not to be a Schedule 2 SIP by virtue of paragraph 81H or 81I ”.

(3)In sub-paragraph (2) for the words from “notice” to the end substitute “ the relevant day ”.

(4)After sub-paragraph (2) insert—

“(2A)If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81H, in sub-paragraph (2) “the relevant day” means—                  

(a)the last day of the period in which notice of an appeal under paragraph 81K(2)(a) may be given, or                  

(b)if notice of such an appeal is given, the day on which the appeal is determined or withdrawn.                  

(2B)If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81I, in sub-paragraph (2) “the relevant day” means—                  

(a)the last day of the period in which notice of an appeal under paragraph 81K(3) may be given, or                  

(b)if notice of such an appeal is given, the day on which the appeal is determined or withdrawn.”                  

26(1)Paragraph 65 (general requirements as to dividend shares) is amended as follows.U.K.

(2)Make the existing text sub-paragraph (1).

(3)After the new sub-paragraph (1) insert—

“(2)Dividend shares may (notwithstanding sub-paragraph (1)(b) if relevant) be subject to provision requiring dividend shares acquired                           on behalf of an employee to be offered for sale but only if the requirement of sub-paragraph (3) is met.                  

(3)The consideration at which the shares are required to be offered for sale must be at least equal to—                  

(a)the amount of the cash dividends applied in acquiring the shares on behalf of the employee, or                  

(b)if lower, the market value of the shares at the time they are offered for sale.”                  

27U.K.In paragraph 71A (duty to monitor participants) for “approved” substitute “ Schedule 2 ”.

28U.K.For Part 10 substitute—

##### **“PART 10**U.K.Notification of plans, annual returns and enquiries

###### Notice of SIP to be given to HMRCU.K.

81A(1)For a SIP to be a Schedule 2 SIP, notice of the SIP must be given to Her Majesty's Revenue and Customs (“HMRC”).                  

(2)The notice must—                  

(a)be given by the company,                  

(b)contain, or be accompanied by, such information as HMRC may require, and                  

(c)contain a declaration within sub-paragraph (3) made by such persons as HMRC may require.                  

(3)A declaration within this sub-paragraph is a declaration—                  

(a)that the requirements of Parts 2 to 9 of this Schedule are met in relation to the SIP, and                  

(b)if the declaration is made after the first date on which awards of shares are made under the SIP (“the first award date”),                           that those requirements—                  

(i)were met in relation to those awards of shares, and                  

(ii)have otherwise been met in relation to the SIP at all times on or after the first award date when shares appropriated to,                           or acquired on behalf of, individuals under the SIP have been held under the SIP.                  

(4)If notice is given under this paragraph in relation to a SIP, for the purposes of the SIP code the SIP is to be a Schedule                           2 SIP at all times on and after the relevant date (but not before that date).                  

(5)But if the notice is given after the initial notification deadline, the SIP is to be a Schedule 2 SIP only from the beginning                           of the relevant tax year.                  

(6)For the purposes of this Part—                  
          -  “the initial notification deadline” is 6 July in the tax year following that in which the first award date falls,                         
          -  “the relevant date” is—                          (a)
the date on which the declaration within sub-paragraph (3) is made, or                                 
(b)
if that declaration is made after the first award date, the first award date, and                                 
 
          -  “the relevant tax year” is—                          (a)
the tax year in which the notice under this paragraph is given, or                                 
(b)
if that notice is given on or before 6 July in that tax year, the preceding tax year.                                 
 

(7)Sub-paragraph (4) is subject to the following paragraphs of this Part.                  

###### Annual returnsU.K.

81B(1)This paragraph applies if notice is given in relation to a SIP under paragraph 81A.                  

(2)The company must give to HMRC a return for the tax year in which the relevant date falls and for each subsequent tax year                           (subject to sub-paragraph (9)).                  

(3)If paragraph 81A(5) applies in relation to the SIP, in sub-paragraph (2) the reference to the tax year in which the relevant                           date falls is to be read as a reference to the relevant tax year.                  

(4)A return for a tax year must—                  

(a)contain, or be accompanied by, such information as HMRC may require, and                  

(b)be given on or before 6 July in the following tax year.                  

(5)The information which may be required under sub-paragraph (4)(a) includes (in particular) information to enable HMRC to determine                           the liability to tax, including capital gains tax, of—                  

(a)any person who has participated in the SIP, or                  

(b)any other person whose liability to tax the operation of the SIP is relevant to.                  

(6)If during a tax year an alteration is made in a key feature of—                  

(a)the SIP, or                  

(b)the plan trust,                  

the return for the tax year must contain a declaration within sub-paragraph (7) made by such persons as HMRC may require.                  

(7)A declaration within this sub-paragraph is a declaration that the alteration has not caused the requirements of Parts 2 to                           9 of this Schedule not to be met in relation to the SIP.                  

(8)For the purposes of sub-paragraph (6) a “key feature” of a SIP or plan trust is a provision of the SIP or plan trust which                           is necessary in order for the requirements of Parts 2 to 9 of this Schedule to be met in relation to the SIP.                  

(9)A return is not required for any tax year following that in which the termination condition is met in relation to the SIP.                  

(10)For the purposes of this Part “the termination condition” is met in relation to a SIP when—                  

(a)a plan termination notice has been issued in relation to it under paragraph 89, and                  

(b)all the requirements under paragraphs 56(3), 68(4)(c) and 90 have been met by the trustees.                  

(11)If the company becomes aware that—                  

(a)anything which should have been included in, or should have accompanied, a return for a tax year was not included in, or did                           not accompany, the return,                  

(b)anything which should not have been included in, or should not have accompanied, a return for a tax year was included in,                           or accompanied, the return, or                  

(c)any other error or inaccuracy has occurred in relation to a return for a tax year,                  

the company must give an amended return correcting the position to HMRC without delay.                  

81C(1)This paragraph applies if the company fails to give a return for a tax year (containing, or accompanied by, all required information                           and declarations) on or before the date mentioned in paragraph 81B(4)(b) (“the date for delivery”).                  

(2)The company is liable for a penalty of £100.                  

(3)If the company's failure continues after the end of the period of 3 months beginning with the date for delivery, the company                           is liable for a further penalty of £300.                  

(4)If the company's failure continues after the end of the period of 6 months beginning with the date for delivery, the company                           is liable for a further penalty of £300.                  

(5)The company is liable for a further penalty under this sub-paragraph if—                  

(a)the company's failure continues after the end of the period of 9 months beginning with the date for delivery,                  

(b)HMRC decide that such a penalty should be payable, and                  

(c)HMRC give notice to the company specifying the period in respect of which the penalty is payable.                  

(The company may be liable for more than one penalty under this sub-paragraph.)                  

(6)The penalty under sub-paragraph (5) is £10 for each day that the failure continues during the period specified in the notice                           under sub-paragraph (5)(c).                  

(7)The period specified in the notice under sub-paragraph (5)(c)—                  

(a)may begin earlier than the date on which the notice is given, but                  

(b)may not begin until after the end of the period mentioned in sub-paragraph (5)(a) or, if relevant, the end of any period specified                           in any previous notice under sub-paragraph (5)(c) given in relation to the failure.                  

(8)Liability for a penalty under this paragraph does not arise if the company satisfies HMRC (or, on an appeal under paragraph                           81K, the tribunal) that there is a reasonable excuse for its failure.                  

(9)For the purposes of sub-paragraph (8)—                  

(a)an insufficiency of funds is not a reasonable excuse, unless attributable to events outside the company's control,                  

(b)where the company relies on any other person to do anything, that is not a reasonable excuse unless the company took reasonable                           care to avoid the failure, and                  

(c)where the company had a reasonable excuse for the failure but the excuse ceased, the company is to be treated as having continued                           to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.                  

###### Notices and returns to be given electronically etcU.K.

81D(1)A notice under paragraph 81A, and any information accompanying the notice, must be given electronically.                  

(2)A return under paragraph 81B, and any information accompanying the return, must be given electronically.                  

(3)But, if HMRC consider it appropriate to do so, HMRC may allow the company to give a notice or return or any accompanying information                           in another way; and, if HMRC do so, the notice, return or information must be given in that other way.                  

(4)The Commissioners for Her Majesty's Revenue and Customs—                  

(a)must prescribe how notices, returns and accompanying information are to be given electronically;                  

(b)may make different provision for different cases or circumstances.                  

81E(1)This paragraph applies if a return under paragraph 81B, or any information accompanying such a return—                  

(a)is given otherwise than in accordance with paragraph 81D, or                  

(b)contains a material inaccuracy—                  

(i)which is careless or deliberate, or                  

(ii)which is not corrected as required by paragraph 81B(11).                  

(2)The company is liable for a penalty of an amount decided by HMRC.                  

(3)The penalty must not exceed £5,000.                  

(4)For the purposes of sub-paragraph (1)(b)(i) an inaccuracy is careless if it is due to a failure by the company to take reasonable                           care.                  

###### EnquiriesU.K.

81F(1)This paragraph applies if notice is given in relation to a SIP under paragraph 81A.                  

(2)HMRC may enquire into the SIP if HMRC give notice to the company of HMRC's intention to do so no later than—                  

(a)6 July in the tax year following the tax year in which the initial notification deadline falls, or                  

(b)if the notice under paragraph 81A is given after the initial notification deadline, 6 July in the second tax year following                           the relevant tax year.                  

(3)HMRC may enquire into the SIP if HMRC give notice to the company of HMRC's intention to do so no later than 12 months after                           the date on which a declaration within paragraph 81B(7) is given to HMRC.                  

(4)Sub-paragraph (5) applies if (at any time) HMRC have reasonable grounds for believing that requirements of Parts 2 to 9 of                           this Schedule—                  

(a)are not met in relation to the SIP, or                  

(b)have not been met in relation to the SIP.                  

(5)HMRC may enquire into the SIP if HMRC give notice to the company of HMRC's intention to do so.                  

(6)Notice may be given, and an enquiry may be conducted, under sub-paragraph (2), (3) or (5) even though the termination condition                           has been met in relation to the SIP.                  

81G(1)An enquiry under paragraph 81F(2), (3) or (5) is completed when HMRC give the company a notice (a “closure notice”) stating—                  

(a)that HMRC have completed the enquiry, and                  

(b)that—                  

(i)paragraph 81H is to apply,                  

(ii)paragraph 81I is to apply, or                  

(iii)neither paragraph 81H nor paragraph 81I is to apply.                  

(2)If the company receives notice under paragraph 81F(2), (3) or (5), the company may make an application to the tribunal for                           a direction requiring a closure notice for the enquiry to be given within a specified period.                  

(3)The application is to be subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of                           that Act).                  

(4)The tribunal must give a direction unless satisfied that HMRC have reasonable grounds for not giving the closure notice within                           the specified period.                  

81H(1)This paragraph applies if HMRC decide—                  

(a)that requirements of Parts 2 to 9 of this Schedule—                  

(i)are not met in relation to the SIP, or                  

(ii)have not been met in relation to the SIP, and                  

(b)that the situation is, or was, so serious that this paragraph should apply.                  

(2)If this paragraph applies—                  

(a)the SIP is not to be a Schedule 2 SIP with effect from—                  

(i)such relevant time as is specified in the closure notice, or                  

(ii)if no relevant time is specified, the time of the giving of the closure notice, and                  

(b)the company is liable for a penalty of an amount decided by HMRC.                  

(3)Sub-paragraph (2)(a) does not affect the operation of the SIP code in relation to shares appropriated to, or acquired on behalf                           of, an individual under the SIP before the time mentioned in sub-paragraph (2)(a)(i) or (ii) (as the case may be).                  

(4)In particular, if the SIP was a Schedule 2 SIP when the shares were appropriated to, or acquired on behalf of, the individual,                           the SIP is to continue to be a Schedule 2 SIP in relation to those shares.                  

(5)The penalty under sub-paragraph (2)(b) must not exceed an amount equal to twice HMRC's reasonable estimate of—                  

(a)the total income tax for which participants in the SIP have not been liable, or will not be liable in the future, and                  

(b)the total contributions under Part 1 of SSCBA 1992 or SSCB(NI)A 1992 for which any persons have not been liable, or will not be liable in the future,                  

in consequence of the SIP having been a Schedule 2 SIP at any relevant time before the time mentioned in sub-paragraph (2)(a)(i)                        or (ii) (as the case may be).                  

(6)The liabilities covered by sub-paragraph (5) include liabilities for income tax or contributions which a person has not had,                           or will not have, in consequence of sub-paragraphs (3) and (4).                  

(7)In this paragraph “relevant time” means any time before the giving of the closure notice when requirements of Parts 2 to 9 of this Schedule were not met in                           relation to the SIP.                  

81I(1)This paragraph applies if HMRC decide—                  

(a)that requirements of Parts 2 to 9 of this Schedule—                  

(i)are not met in relation to the SIP, or                  

(ii)have not been met in relation to the SIP, but                  

(b)that the situation is not, or was not, so serious that paragraph 81H should apply.                  

(2)If this paragraph applies, the company—                  

(a)is liable for a penalty of an amount decided by HMRC, and                  

(b)must, no later than 90 days after the relevant day, secure that the requirements of Parts 2 to 9 of this Schedule are met                           in relation to the SIP.                  

(3)The penalty under sub-paragraph (2)(a) must not exceed £5,000.                  

(4)In sub-paragraph (2)(b) “the relevant day” means—                  

(a)the last day of the period in which notice of an appeal under paragraph 81K(2)(b) may be given, or                  

(b)if notice of such an appeal is given, the day on which the appeal is determined or withdrawn.                  

(5)Sub-paragraph (2)(b) does not apply if the termination condition was met in relation to the SIP before the giving of the closure                           notice or is met before the end of the 90 day period mentioned in sub-paragraph (2)(b).                  

(6)If the company fails to comply with sub-paragraph (2)(b), HMRC may give the company a notice stating that that is the case                           (a “default notice”).                  

(7)If the company is given a default notice—                  

(a)the SIP is not to be a Schedule 2 SIP with effect from—                  

(i)such relevant time as is specified in the default notice, or                  

(ii)if no relevant time is specified, the time of the giving of the default notice, and                  

(b)the company is liable for a further penalty of an amount decided by HMRC.                  

(8)Sub-paragraph (7)(a) does not affect the operation of the SIP code in relation to shares appropriated to, or acquired on behalf                           of, an individual under the SIP before the time mentioned in sub-paragraph (7)(a)(i) or (ii) (as the case may be).                  

(9)In particular, if the SIP was a Schedule 2 SIP when the shares were appropriated to, or acquired on behalf of, the individual,                           the SIP is to continue to be a Schedule 2 SIP in relation to those shares.                  

(10)The penalty under sub-paragraph (7)(b) must not exceed an amount equal to twice HMRC's reasonable estimate of—                  

(a)the total income tax for which participants in the SIP have not been liable, or will not be liable in the future, and                  

(b)the total contributions under Part 1 of SSCBA 1992 or SSCB(NI)A 1992 for which any persons have not been liable, or will not                           be liable in the future,                  

in consequence of the SIP having been a Schedule 2 SIP at any relevant time before the time mentioned in sub-paragraph (7)(a)(i)                        or (ii) (as the case may be).                  

(11)The liabilities covered by sub-paragraph (10) include liabilities for income tax or contributions which a person has not had,                           or will not have, in consequence of sub-paragraphs (8) and (9).                  

(12)In this paragraph “relevant time” means any time before the giving of the default notice when requirements of Parts 2 to 9 of this Schedule were not met in                           relation to the SIP.                  

###### Assessment of penaltiesU.K.

81J(1)This paragraph applies if the company is liable for a penalty under this Part.                  

(2)HMRC must assess the penalty and notify the company of the assessment.                  

(3)Subject to sub-paragraphs (4) and (5), the assessment must be made no later than 12 months after the date on which the company                           becomes liable for the penalty.                  

(4)In the case of a penalty under paragraph 81E(1)(b), the assessment must be made no later than—                  

(a)12 months after the date on which HMRC become aware of the inaccuracy, and                  

(b)6 years after the date on which the company becomes liable for the penalty.                  

(5)In the case of a penalty under paragraph 81H(2)(b) or 81I(2)(a) or (7)(b) where notice of appeal is given under paragraph                           81K(2) or (3), the assessment must be made no later than 12 months after the date on which the appeal is determined or withdrawn.                  

(6)A penalty payable under this Part must be paid—                  

(a)no later than 30 days after the date on which the notice under sub-paragraph (2) is given to the company, or                  

(b)if notice of appeal is given against the penalty under paragraph 81K(1) or (4), no later than 30 days after the date on which                           the appeal is determined or withdrawn.                  

(7)The penalty may be enforced as if it were corporation tax or, if the company is not within the charge to corporation tax,                           income tax charged in an assessment and due and payable.                  

(8)Sections 100 to 103 of TMA 1970 do not apply to a penalty under this Part.                  

###### AppealsU.K.

81K(1)The company may appeal against a decision of HMRC that the company is liable for a penalty under paragraph 81C or 81E.                  

(2)The company may appeal against—                  

(a)a decision of HMRC mentioned in paragraph 81H(1) or a decision of HMRC to specify, or not to specify, a relevant time in the                           closure notice;                  

(b)a decision of HMRC mentioned in paragraph 81I(1).                  

(3)The company may appeal against a decision of HMRC—                  

(a)to give the company a default notice under paragraph 81I;                  

(b)to specify, or not to specify, a relevant time in the default notice.                  

(4)The company may appeal against a decision of HMRC as to the amount of a penalty payable by the company under this Part.                  

(5)The company may appeal against a decision of an officer of Revenue and Customs to give a direction under section 998 of CTA                           2009 (withdrawal of corporation tax deductions in relation to a Schedule 2 SIP).                  

(6)Notice of appeal must be given to HMRC no later than 30 days after the date on which—                  

(a)in the case of an appeal under sub-paragraph (1) or (4), the notice under paragraph 81J(2) is given to the company;                  

(b)in the case of an appeal under sub-paragraph (2), the closure notice is given;                  

(c)in the case of an appeal under sub-paragraph (3), the default notice is given;                  

(d)in the case of an appeal under sub-paragraph (5), notice of the officer's decision is given to the company.                  

(7)On an appeal under sub-paragraph (1), (3)(a) or (5) which is notified to the tribunal, the tribunal may affirm or cancel the                           decision.                  

(8)On an appeal under sub-paragraph (2) or (3)(b) which is notified to the tribunal, the tribunal may—                  

(a)affirm or cancel the decision, or                  

(b)substitute for the decision another decision which HMRC had power to make.                  

(9)On an appeal under sub-paragraph (4) which is notified to the tribunal, the tribunal may—                  

(a)affirm the amount of the penalty decided, or                  

(b)substitute another amount for that amount.                  

(10)Subject to this paragraph and paragraph 81J, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation                           to an appeal under this paragraph as they have effect in relation to an appeal against an assessment to corporation tax or,                           if the company is not within the charge to corporation tax, income tax.”                  

29U.K.In paragraph 89 (termination of plan) in sub-paragraph (2) omit paragraph (a).

30U.K.In paragraph 90 (effect of plan termination notice) in sub-paragraph (2) for “awarded to” substitute “ appropriated to, or acquired on behalf of, ”.

31(1)Paragraph 93 (power to require information) is amended as follows.U.K.

(2)For sub-paragraph (1) substitute—

“(1)An officer of Revenue and Customs may by notice require a person to provide the officer with any information—                  

(a)which the officer reasonably requires for the performance of any functions of Her Majesty's Revenue and Customs or an officer                           of Revenue and Customs under the SIP code, and                  

(b)which the person to whom the notice is addressed has or can reasonably obtain.”                  

(3)In sub-paragraph (2)(a)—

(a)for sub-paragraph (i) substitute—

“(i)to check anything contained in a notice under paragraph 81A or a return under paragraph 81B or to check any information accompanying                           such a notice or return, or”, and”                  

(b)in sub-paragraph (ii) after “plan” insert “ or any other person whose liability to tax the operation of a plan is relevant to ”.

32U.K.In paragraph 100 (index of defined expressions)—

(a)omit the entries for “approval” and “approved”, and

(b)at the appropriate place insert—

#### Other amendments: TCGA 1992U.K.

33U.K.TCGA 1992 is amended as follows.

34U.K.In section 236A (relief for transfers to share incentive plans) for “an approved” substitute “ a Schedule 2 ”.

35(1)Section 238A (share schemes and share incentives) is amended as follows.U.K.

(2)In the heading omit “**Approved**”.

(3)In subsection (1) omit “approved”.

(4)In subsection (2)(a) for “approved” substitute “ Schedule 2 ”.

36U.K.Schedule 7C (relief for transfers to share plans) is amended as follows.

37U.K.In the title for “approved” substitute “ Schedule 2 ”.

38U.K.In paragraph 2 (conditions relating to disposal) in sub-paragraph (1) for “approved” substitute “ a Schedule 2 SIP ”.

39U.K.Schedule 7D (share schemes and share incentives) is amended as follows.

40U.K.In the title omit “Approved”.

41U.K.In the title of Part 1 for “Approved” substitute “ Schedule 2 ”.

42(1)Paragraph 1 (introduction to Part 1) is amended as follows.U.K.

(2)In sub-paragraph (1) for “an approved” substitute “ a Schedule 2 ”.

(3)In sub-paragraphs (2) and (3) omit “approved”.

43U.K.In paragraph 2 (gains accruing to trustees) in sub-paragraph (1)(a) omit “approved”.

#### Other amendments: ITEPA 2003 and Part 4 of FA 2004U.K.

44U.K.ITEPA 2003 is amended as follows.

45U.K.In section 227 (scope of Part 4) in subsection (4)(c) omit “approved”.

46U.K.In section 417 (scope of Part 7) in subsection (2), in the entry for Chapter 6, omit “approved”.

47(1)Section 431A (provision relating to restricted securities) is amended as follows.U.K.

(2)In the heading for “**approved**” substitute “ **tax advantaged** ”.

(3)In subsection (2)(a) for “an approved” substitute “ a Schedule 2 ”.

48U.K.In section 549 (application of Chapter 11 of Part 7) in subsection (2)(a) omit “approved”.

49(1)Section 554E (exclusions under Part 7A) is amended as follows.U.K.

(2)In subsections (1)(a) and (3)(a)(i) and (b)(i) for “an approved” substitute “ a Schedule 2 ”.

(3)In subsection (4)(a) and (b) for the first “approved” substitute “ Schedule 2 ”.

50U.K.In paragraph 11 of Schedule 4 (CSOP schemes: material interest) in sub-paragraph (5)(a) for “approved” substitute “ Schedule 2 ”.

51U.K.In paragraph 30 of Schedule 5 (enterprise management incentives: material interest) in sub-paragraph (7)(a) for “share incentive                        plan approved under Schedule 2 (SIPs)” substitute “ Schedule 2 SIP (see Schedule 2) ”.

52U.K.In section 195 of FA 2004 (pensions: transfer of certain shares to be treated as payment of contribution) in subsection (5),                        in the definition of “share incentive plan”, omit “approved”.

#### Other amendments: ITTOIA 2005U.K.

53U.K.Chapter 3 of Part 4 of ITTOIA 2005 (savings and investment income: dividends etc from UK resident companies) is amended as                        follows.

54U.K.In section 382 (contents of Chapter 3) in subsection (1)(c) for “an approved” substitute “ a Schedule 2 ”.

55U.K.In the cross-heading before section 392 for “*approved*” substitute “ *Schedule 2* ”.

56U.K.In section 392 (SIP shares: introduction) in subsection (1) for “an approved” substitute “ a Schedule 2 ”.

57(1)Section 394 (distribution when dividend shares cease to be subject to SIP) is amended as follows.U.K.

(2)In subsection (1) for “an approved” substitute “ a Schedule 2 ”.

(3)After subsection (3) insert—

“(3A)But if the shares cease to be subject to the plan by virtue of a provision of the kind mentioned in paragraph 65(2) of Schedule                           2 to ITEPA 2003 (provision requiring dividend shares to be offered for sale), the amount of the distribution treated as made                           is the amount equal to the relevant fraction of the market value of the shares at the time they are offered for sale if that                           amount is less than the amount given by subsection (3).                  

(3B)For the purposes of subsection (3A) “the relevant fraction” is—                  

where—                     

A is so much of the amount of the cash dividend applied to acquire the shares on the participant's behalf as represents a                              cash dividend paid in respect of plan shares in a UK resident company, and                        

B is the amount of the cash dividend applied to acquire the shares on the participant's behalf.                        

(3C)Paragraph 92(2) of Schedule 2 to ITEPA 2003 (market value of shares subject to a restriction) applies for the purposes of                           subsection (3A).”                  

(4)In subsection (7) for “approved” substitute “ Schedule 2 ”.

58U.K.In section 395 (reduction in tax due in cases within section 394) in subsections (1)(b) and (4) for “approved” substitute                        “ Schedule 2 ”.

59U.K.In section 396 (interpretation) in subsections (1) and (2) omit “approved”.

60U.K.Chapter 4 of Part 4 of ITTOIA 2005 (savings and investment income: dividends etc from non-UK resident companies) is amended                        as follows.

61U.K.In the cross-heading before section 405 for “*approved*” substitute “ *Schedule 2* ”.

62(1)Section 405 (SIP shares: introduction) is amended as follows.U.K.

(2)In subsection (1) for “an approved” substitute “ a Schedule 2 ”.

(3)In subsections (3) and (4) omit “approved”.

63(1)Section 407 (dividend payment when dividend shares cease to be subject to SIP) is amended as follows.U.K.

(2)In subsection (1) for “an approved” substitute “ a Schedule 2 ”.

(3)After subsection (3) insert—

“(3A)But if the shares cease to be subject to the plan by virtue of a provision of the kind mentioned in paragraph 65(2) of Schedule                           2 to ITEPA 2003 (provision requiring dividend shares to be offered for sale), the amount of the dividend treated as paid is                           the amount equal to the relevant fraction of the market value of the shares at the time they are offered for sale if that                           amount is less than the amount given by subsection (3).                  

(3B)For the purposes of subsection (3A) “the relevant fraction” is—                  

where—                     

A is so much of the amount of the cash dividend applied to acquire the shares on the participant's behalf as represents a                              cash dividend paid in respect of plan shares in a non-UK resident company, and                        

B is the amount of the cash dividend applied to acquire the shares on the participant's behalf.                        

(3C)Paragraph 92(2) of Schedule 2 to ITEPA 2003 (market value of shares subject to a restriction) applies for the purposes of                           subsection (3A).”                  

(4)In subsection (5) for “approved” substitute “ Schedule 2 ”.

64U.K.In section 408 (reduction in tax due in cases within section 407) in subsections (1)(b) and (3) for “approved” substitute                        “ Schedule 2 ”.

65U.K.Chapter 9 of Part 6 of ITTOIA 2005 (exempt income) is amended as follows.

66U.K.In the cross-heading before section 770 for “*Approved*” substitute “ *Schedule 2* ”.

67(1)Section 770 (amounts applied by SIP trustees) is amended as follows.U.K.

(2)In subsection (1)(a) for “an approved” substitute “ a Schedule 2 ”.

(3)In subsections (5) and (6) omit “approved”.

#### Other amendments: Part 9 of ITA 2007U.K.

68U.K.Part 9 of ITA 2007 (special rules about settlements and trusts) is amended as follows.

69U.K.In section 462 (overview of Part) in subsection (5) for “an approved” substitute “ a Schedule 2 ”.

70U.K.In section 479 (trustees' accumulated or discretionary income charged at special rates) in subsection (5) for “approved” substitute                        “ Schedule 2 ”.

71(1)Section 488 (application of section 479 to trustees of SIP) is amended as follows.U.K.

(2)In the heading for “**approved**” substitute “ **Schedule 2** ”.

(3)In subsection (1)—

(a)in paragraph (a) for “an approved” substitute “ a Schedule 2 ”, and

(b)in paragraph (b) omit “approved”.

72U.K.In section 489 (“the applicable period”) in subsection (8)(a) for “approved” substitute “ Schedule 2 ”.

73U.K.In section 490 (interpretation of Chapter 5) in subsection (1) omit “approved”.

#### Other amendments: Chapter 1 of Part 11 of CTA 2009U.K.

74U.K.Chapter 1 of Part 11 of CTA 2009 (relief for employee share acquisition schemes: share incentive plans) is amended as follows.

75(1)Section 983 (overview of Chapter) is amended as follows.U.K.

(2)In subsection (1) for “approved” substitute “ Schedule 2 ”.

(3)In subsection (7) for “approval for a plan is withdrawn” substitute “ a plan ceases to be a Schedule 2 share incentive plan ”.

76(1)Section 987 (deduction for cost of setting up plan) is amended as follows.U.K.

(2)In the heading for “**an approved**” substitute “ **a Schedule 2** ”.

(3)In subsection (1) for “approved by an officer of Revenue and Customs” substitute “ a Schedule 2 share incentive plan ”.

(4)Omit subsection (3).

(5)In subsection (4) for “approval is given” (in both places) substitute “ relevant date falls ”.

(6)After subsection (4) insert—

“(4A)In subsection (4) “the relevant date”, in relation to a share incentive plan, has the meaning given in paragraph 81A(6) of Schedule 2 to ITEPA 2003.”                  

77(1)Section 988 (deductions for running expenses) is amended as follows.U.K.

(2)In the heading for “**an approved**” substitute “ **a Schedule 2** ”.

(3)In subsections (1) and (3) for “an approved” substitute “ a Schedule 2 ”.

78U.K.In section 989 (deduction for contribution to plan trust) in subsection (1)(a) for “an approved” substitute “ a Schedule 2 ”.

79U.K.In section 994 (deduction for providing free or matching shares) in subsection (1) for “an approved” substitute “ a Schedule 2 ”.

80U.K.In section 995 (deduction for additional expense in providing partnership shares) in subsection (1)(a) for “an approved” substitute                        “ a Schedule 2 ”.

81U.K.In section 997 (no deduction for expenses in providing dividend shares) in subsection (1) for “an approved” substitute “ a Schedule 2 ”.

82U.K.For the cross-heading before section 998 substitute “ *Plan ceasing to be a Schedule 2 SIP* ”.

83(1)Section 998 (withdrawal of deductions) is amended as follows.U.K.

(2)In the heading for “**approval for share incentive plan withdrawn**” substitute “ **share incentive plan ceases to be a Schedule 2 share incentive plan** ”.

(3)In subsection (1)—

(a)in paragraph (a)—

(i)after “section” insert “ 987, ”, and

(ii)for “an approved” substitute “ a Schedule 2 ”, and

(b)for paragraph (b) substitute—

“(b)by virtue of paragraph 81H or 81I of Schedule 2 to ITEPA 2003 the plan is not to be a Schedule 2 share incentive plan.”                  

#### Other amendments: Individual Savings Account Regulations 1998 (S.I. 1998/1870)U.K.

84U.K.The Individual Savings Account Regulations 1998 are amended as follows.

85U.K.In regulation 2 (interpretation) in paragraph (1)(a)—

(a)omit the definition of “approved SIP”,

(b)in the definitions of “ceasing to be subject to the plan”, “participant” and “plan shares” for “an approved” substitute “ a Schedule 2 ”, and

(c)at the appropriate place insert—

““Schedule 2 SIP” shall be construed in accordance with the SIP code (see section 488(3) of ITEPA 2003);”.                  

86U.K.In regulation 7 (qualifying investments) in paragraph (2)(h)(iii) for “an approved” substitute “ a Schedule 2 ”.

87U.K.In regulation 34 (capital gains tax: adaptation of enactments) in paragraph (2)(a)—

(a)in the inserted subsections (12)(b)(iii) and (13)(d) for “an approved” substitute “ a Schedule 2 ”, and

(b)in the inserted subsection (13)(c) for “approved” substitute “ Schedule 2 ”.

#### Revocation of Employee Share Schemes (Electronic Communication of Returns and Information) Regulations 2007 (S.I. 2007/792)U.K.

88U.K.The Employee Share Schemes (Electronic Communication of Returns and Information) Regulations 2007 are revoked.

#### Commencement and transitional provisionU.K.

89U.K.This Part is treated as having come into force on 6 April 2014.

90U.K.Paragraphs 91 to 96 below apply in relation to a SIP established before 6 April 2014.

91(1)If the SIP was an approved SIP immediately before 6 April 2014, this paragraph applies to any provision which the SIP contains                        immediately before that date and which requires the approval or agreement of Her Majesty's Revenue and Customs or an officer                        of Revenue and Customs to be obtained in relation to any matter.U.K.

(2)On and after 6 April 2014, the provision is to have effect without the requirement for the approval or agreement, unless the                        requirement reflects a requirement for approval or agreement set out in Schedule 2 to ITEPA 2003 (as amended by this Part).

92(1)If the SIP was an approved SIP immediately before 6 April 2014, the amendments made by paragraph 19 above have effect in relation                        to the SIP only if, and when, there is an alteration in a key feature of the SIP or plan trust on or after that date.U.K.

(2)In sub-paragraph (1) “key feature” has the meaning given in paragraph 81B(8) of Schedule 2 to ITEPA 2003 (as inserted by paragraph 28 above).

93U.K.If the SIP was an approved SIP immediately before 6 April 2014, on and after that date the SIP and the plan trust have effect                        with any modifications needed to reflect the amendments made by paragraphs 20 to 22, 25, 27, 29 and 30 above.

94(1)Paragraph 81A of Schedule 2 to ITEPA 2003 (as inserted by paragraph 28 above) has effect in relation to the SIP—U.K.

(a)as if, at the end of sub-paragraph (1), the words “on or before 6 July 2015” were inserted,

(b)if the first date on which awards of shares are made under the SIP falls before 6 April 2014—

(i)as if, in sub-paragraph (3)(b), the reference to that date were a reference to 6 April 2014 and, accordingly, as if all references                        in paragraph 81A to the first award date were references to 6 April 2014,

(ii)as if sub-paragraph (3)(b)(i) were omitted, and

(iii)as if, in sub-paragraph (3)(b)(ii), “otherwise” were omitted,

(c)as if sub-paragraph (5) were omitted, and

(d)as if, in sub-paragraph (6), the definitions of “the initial notification deadline” and “the relevant tax year” were omitted.

(2)But the SIP cannot be a Schedule 2 SIP if, before 6 April 2014, an application for its approval was refused or an officer                        of Revenue and Customs decided to withdraw its approval.

(3)Sub-paragraph (2) is without prejudice to the outcome of any appeal under paragraph 82 or 85 of Schedule 2 to ITEPA 2003 against                        the refusal or decision to withdraw approval.

(4)The amendments made by this Part do not affect any right of appeal under paragraph 82 or 85 of Schedule 2 to ITEPA 2003 against                        a refusal or decision made before 6 April 2014 in relation to the SIP.

(5)Sub-paragraphs (6) and (7) apply if shares (“the relevant shares”) were appropriated to, or acquired on behalf of, an individual                        before 6 April 2014 under the SIP at a time when the SIP was an approved SIP.

(6)On and after 6 April 2014, the SIP code operates in relation to the relevant shares—

(a)as if the relevant shares were appropriated to, or acquired on behalf of, the individual under the SIP at a time when the                        SIP was a Schedule 2 SIP, and

(b)if no notice under paragraph 81A of Schedule 2 to ITEPA 2003 is given in relation to the SIP or if the SIP cannot be a Schedule                        2 SIP because of sub-paragraph (2) of this paragraph, as if the SIP were a Schedule 2 SIP despite no notice being given or                        despite sub-paragraph (2).

(7)If no notice under paragraph 81A of Schedule 2 to ITEPA 2003 is given in relation to the SIP, paragraph 81B of that Schedule                        (as inserted by paragraph 28 above) is to apply in relation to the SIP despite no notice being given; and, for this purpose,                        the relevant date is to be taken to be 6 April 2014.

(8)In relation to the SIP—

(a)paragraph 81F of Schedule 2 to ITEPA 2003 (as inserted by paragraph 28 above) has effect as if for sub-paragraph (2) there                        were substituted—

“(2)HMRC may enquire into the SIP if HMRC give notice to the company of HMRC's intention to do so no later than 6 July 2016.”, and                  

(b)the cases covered by paragraphs 81F(4)(b), 81H(1)(a)(ii) and 81I(1)(a)(ii) of Schedule 2 to ITEPA 2003 (as inserted by paragraph                        28 above) include cases in which requirements of Parts 2 to 9 of that Schedule were not met before 6 April 2014.

95U.K.If the SIP was an approved SIP before 6 April 2014, the amendments made by this Part do not affect the deductions which may                        be made in relation to the SIP under section 987 of CTA 2009 (deduction for costs of setting up SIP) if they would otherwise                        do so; and the amendment made by paragraph 83(3)(a)(i) above has no effect in relation to such deductions.

96U.K.The amendments made by paragraph 31 above do not affect a notice given in relation to the SIP under paragraph 93 of Schedule                        2 to ITEPA 2003 before 6 April 2014.

### **PART 2**U.K.SAYE option schemes

#### Amendments to Chapter 7 of Part 7 of ITEPA 2003U.K.

97U.K.Chapter 7 of Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities: SAYE option schemes) is                        amended as follows.

98U.K.In the title omit “Approved”.

99(1)Section 516 (introduction to SAYE option schemes) is amended as follows.U.K.

(2)In the heading omit “**Approved**”.

(3)In subsection (1)—

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

(b)in paragraph (b) for “those” substitute “ SAYE option schemes which are Schedule 3 SAYE option ”.

(4)Omit subsection (2).

(5)In subsection (3)(c) for “approved” substitute “ Schedule 3 ”.

(6)In subsection (4)—

(a)omit the definition of “approved”, and

(b)after the definition of “SAYE option scheme” insert—

““Schedule 3 SAYE option scheme” is to be read in accordance with paragraph 1 and Part 8 of Schedule 3;”.                  

100U.K.In section 517 (share options to which Chapter applies) in subsection (1)(a) for “an approved” substitute “ a Schedule 3 ”.

101(1)Section 519 (no charge in respect of exercise of option) is amended as follows.U.K.

(2)In subsection (1)(a) for “approved” substitute “ a Schedule 3 SAYE option scheme ”.

(3)In subsection (3A)—

(a)in paragraph (a) for “approved” substitute “ a Schedule 3 SAYE option scheme ”,

(b)in paragraph (b)(i) for “or (4)” substitute “ , (4) or (4A) ”,

(c)in paragraphs (c), (d) and (f) after sub-paragraph (ii) omit “or” and insert—

“(iia)the non-UK company reorganisation arrangement, or”, and                  

(d)in paragraph (e) after sub-paragraph (ii) omit “or” and insert—

“(iia)the making of any non-UK company reorganisation arrangement which would fall within subsection (3H), or”.                  

(4)In subsection (3H)—

(a)after “arrangement” insert “ or a non-UK company reorganisation arrangement ”, and

(b)in paragraph (b) for “an approved” substitute “ a Schedule 3 ”.

(5)In subsection (5)(b)—

(a)for “paragraph 42(3) provides” substitute “ paragraphs 40H(4) and 40I(9) provide ”,

(b)for “approved” substitute “ a Schedule 3 SAYE option scheme ”, and

(c)for “approval of the scheme has been previously withdrawn” substitute “ the scheme is not a Schedule 3 SAYE option scheme ”.

102U.K.Schedule 3 is amended as follows.

103U.K.In the title omit “Approved”.

104U.K.In the cross-heading before paragraph 1 for “*Approval of*” substitute “ *Introduction to Schedule 3* ”.

105(1)Paragraph 1 (introduction) is amended as follows.U.K.

(2)For sub-paragraphs (1) and (2) substitute—

“(A1)For the purposes of the SAYE code an SAYE option scheme is a Schedule 3 SAYE option scheme if the requirements of Parts 2                           to 7 of this Schedule are met in relation to the scheme.”                  

(3)For sub-paragraph (4) substitute—

“(4)Sub-paragraph (A1) is subject to Part 8 of this Schedule which—                  

(a)requires notice of a scheme to be given to Her Majesty's Revenue and Customs (“HMRC”) in order for the scheme to be a Schedule                           3 SAYE option scheme (see paragraph 40A(1)),                  

(b)provides for a scheme in relation to which such notice is given to be a Schedule 3 SAYE option scheme (see paragraph 40A(4)),                           and                  

(c)gives power to HMRC to enquire into a scheme and to decide that the scheme should not be a Schedule 3 SAYE option scheme (see                           paragraphs 40F to 40I).”                  

106U.K.In the title of Part 2 omit  “for approval”.

107U.K.In the cross-heading before paragraph 4 omit “*for approval*”.

108U.K.For paragraph 5 (general restriction on contents of scheme) substitute—

“5(1)The purpose of the scheme must be to provide, in accordance with this Schedule, benefits for employees and directors in the                           form of share options.                  

(2)The scheme must not provide benefits to employees or directors otherwise than in accordance with this Schedule.                  

(3)For example, the scheme must not provide cash as an alternative to share options or shares which might otherwise be acquired                           by the exercise of share options.”                  

109U.K.In paragraph 17 (requirements relating to shares that may be subject to share options) after sub-paragraph (1) insert—

“(1A)Sub-paragraph (1) and the other paragraphs of this Part are subject to paragraph 37(6B).”                  

110U.K.In paragraph 25 (requirements as to contributions to savings arrangements) in sub-paragraph (3)(a) for “approved” substitute                        “ Schedule 3 ”.

111(1)Paragraph 28 (requirements as to price for acquisition of shares) is amended as follows.U.K.

(2)After sub-paragraph (3) insert—

“(3A)If the scheme makes provision under sub-paragraph (3), the variation or variations made under that provision to take account                           of a variation in any share capital must (in particular) secure—                  

(a)that the total market value of the shares which may be acquired by the exercise of the share option is immediately after the                           variation or variations substantially the same as what it was immediately before the variation or variations, and                  

(b)that the total price at which those shares may be acquired is immediately after the variation or variations substantially                           the same as what it was immediately before the variation or variations.                  

(3B)Sub-paragraph (3) does not authorise any variation which would result in the requirements of the other paragraphs of this                           Schedule not being met in relation to the share option.”                  

(3)Omit sub-paragraph (4).

112U.K.In paragraph 32 (exercise of options: death) after “exercised” insert “ at any time ”.

113U.K.In paragraph 34 (exercise of options: scheme-related employment ends) in sub-paragraph (5)—

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

(b)in paragraph (b) after “organiser” insert “ where the transfer is not a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment)                           Regulations 2006 ”.

114(1)Paragraph 37 (exercise of options: company events) is amended as follows.U.K.

(2)In sub-paragraph (1) after “(4)” insert “ , (4A) ”.

(3)In sub-paragraph (4)(b) for “an approved” substitute “ a Schedule 3 ”.

(4)After sub-paragraph (4) insert—

“(4A)The relevant date for the purposes of this sub-paragraph is the date on which a non-UK company reorganisation 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 employments or directorships or their participation in a Schedule 3 SAYE option scheme,                  

becomes binding on the shareholders covered by it.”                  

(5)After sub-paragraph (6) insert—

“(6A)Sub-paragraphs (6B) to (6F) apply if the scheme makes provision under sub-paragraph (1) or (6).                  

(6B)The scheme may provide that if, in consequence of a relevant event, shares in the company to which a share option relates                           no longer meet the requirements of Part 4 of this Schedule, the share option may be exercised under the provision made under                           sub-paragraph (1) or (6) (as the case may be) no later than 20 days after the day on which the relevant event occurs, notwithstanding                           that the shares no longer meet the requirements of Part 4 of this Schedule.                  

(6C)In sub-paragraph (6B) “relevant event” means—                  

(a)a person obtaining control of the company as mentioned in sub-paragraph (2)(a);                  

(b)a person obtaining control of the company as a result of a compromise or arrangement sanctioned by the court as mentioned                           in sub-paragraph (4);                  

(c)a person obtaining control of the company as a result of a non-UK company reorganisation arrangement which has become binding                           on the shareholders covered by it as mentioned in sub-paragraph (4A);                  

(d)a person who is bound or entitled to acquire shares in the company as mentioned in sub-paragraph (6) obtaining control of                           the company.                  

(6D)Provision made under sub-paragraph (6B) may not authorise the exercise of a share option, as the case may be—                  

(a)at a time outside the 6 month period mentioned in sub-paragraph (1), or                  

(b)at a time not covered by sub-paragraph (6).                  

(6E)The scheme may provide that a share option relating to shares in a company which is exercised during the period of 20 days                           ending with—                  

(a)the relevant date for the purposes of sub-paragraph (2), (4) or (4A), or                  

(b)the date on which any person becomes bound or entitled to acquire shares in the company as mentioned in sub-paragraph (6),                  

is to be treated as if it had been exercised in accordance with the provision made under sub-paragraph (1) or (6) (as the                        case may be).                  

(6F)If the scheme makes provision under sub-paragraph (6E) it must also provide that if—                  

(a)a share option is exercised in reliance on that provision in anticipation of—                  

(i)an event mentioned in sub-paragraph (2), (4) or (4A) occurring, or                  

(ii)a person becoming bound or entitled to acquire shares in the company as mentioned in sub-paragraph (6), but                  

(b)as the case may be—                  

(i)the relevant date for the purposes of sub-paragraph (2), (4) or (4A) does not fall during the period of 20 days beginning                           with the date on which the share option is exercised, or                  

(ii)the person does not become bound or entitled to acquire shares in the company by the end of the period of 20 days beginning                           with the date on which the share option is exercised,                  

the exercise of the share option is to be treated as having had no effect.”                  

115(1)Paragraph 38 (exchanges of options on company reorganisation) is amended as follows.U.K.

(2)In sub-paragraph (2) after paragraph (b) omit “or” and insert—

“(ba)obtains control of the scheme company as a result of a non-UK company reorganisation arrangement which has become binding                           on the shareholders covered by it; or”.                  

(3)In sub-paragraph (3) after paragraph (b) omit “and” and insert—

“(ba)where control is obtained in the way set out in sub-paragraph (2)(ba), within the period of 6 months beginning with the date                           on which the non-UK company reorganisation arrangement becomes binding on the shareholders covered by it, and”.                  

116(1)Paragraph 39 (requirements about share options granted in exchange) is amended as follows.U.K.

(2)In sub-paragraph (4)—

(a)in paragraph (c) for “equal” substitute “ be substantially the same as ”, and

(b)in paragraph (d) for “equal to” substitute “ substantially the same as ”.

(3)After sub-paragraph (7) insert—

“(8)For the purposes of this paragraph the market value of any shares is to be determined using a methodology agreed by Her Majesty's                           Revenue and Customs.”                  

117U.K.For Part 8 substitute—

##### **“PART 8**U.K.Notification of schemes, annual returns and enquiries

###### 40ANotice of scheme to be given to HMRC

(1)For an SAYE option scheme to be a Schedule 3 SAYE option scheme, notice of the scheme must be given to Her Majesty's Revenue                           and Customs (“HMRC”).                  

(2)The notice must—                  

(a)be given by the scheme organiser,                  

(b)contain, or be accompanied by, such information as HMRC may require, and                  

(c)contain a declaration within sub-paragraph (3) made by such persons as HMRC may require.                  

(3)A declaration within this sub-paragraph is a declaration—                  

(a)that the requirements of Parts 2 to 7 of this Schedule are met in relation to the scheme, and                  

(b)if the declaration is made after the first date on which share options are granted under the scheme (“the first grant date”),                           that those requirements—                  

(i)were met in relation to those grants of share options, and                  

(ii)have otherwise been met in relation to the scheme at all times on or after the first grant date when share options granted                           under the scheme are outstanding.                  

(4)If notice is given under this paragraph in relation to an SAYE option scheme, for the purposes of the SAYE code the scheme                           is to be a Schedule 3 SAYE option scheme at all times on and after the relevant date (but not before that date).                  

(5)But if the notice is given after the initial notification deadline, the scheme is to be a Schedule 3 SAYE option scheme only                           from the beginning of the relevant tax year.                  

(6)For the purposes of this Part—                  
          -  “the initial notification deadline” is 6 July in the tax year following that in which the first grant date falls,                         
          -  “outstanding”, in relation to a share option, means that the option—                          (a)
has not been exercised, but                                 
(b)
is capable of being exercised in accordance with the scheme (whether on the meeting of any condition or otherwise),                                 
 
          -  “the relevant date” is—                          (a)
the date on which the declaration within sub-paragraph (3) is made, or                                 
(b)
if that declaration is made after the first grant date, the first grant date, and                                 
 
          -  “the relevant tax year” is—                          (a)
the tax year in which the notice under this paragraph is given, or                                 
(b)
if that notice is given on or before 6 July in that tax year, the preceding tax year.                                 
 

(7)Sub-paragraph (4) is subject to the following paragraphs of this Part.                  

###### 40BAnnual returns

(1)This paragraph applies if notice is given in relation to an SAYE option scheme under paragraph 40A.                  

(2)The scheme organiser must give to HMRC a return for the tax year in which the relevant date falls and for each subsequent                           tax year (subject to sub-paragraph (9)).                  

(3)If paragraph 40A(5) applies in relation to the scheme, in sub-paragraph (2) the reference to the tax year in which the relevant                           date falls is to be read as a reference to the relevant tax year.                  

(4)A return for a tax year must—                  

(a)contain, or be accompanied by, such information as HMRC may require, and                  

(b)be given on or before 6 July in the following tax year.                  

(5)The information which may be required under sub-paragraph (4)(a) includes (in particular) information to enable HMRC to determine                           the liability to tax, including capital gains tax, of—                  

(a)any person who has participated in the scheme, or                  

(b)any other person whose liability to tax the operation of the scheme is relevant to.                  

(6)If during a tax year—                  

(a)an alteration is made in a key feature of the scheme, or                  

(b)variations are made under a provision made under paragraph 28(3) to take account of a variation in any share capital,                  

the return for the tax year must contain a declaration within sub-paragraph (7) made by such persons as HMRC may require.                  

(7)A declaration within this sub-paragraph is a declaration, as the case may be—                  

(a)that the alteration has, or                  

(b)that the variations have,                  

not caused the requirements of Parts 2 to 7 of this Schedule not to be met in relation to the scheme.                  

(8)For the purposes of sub-paragraph (6)(a) a “key feature” of a scheme is a provision of the scheme which is necessary in order                           for the requirements of Parts 2 to 7 of this Schedule to be met in relation to the scheme.                  

(9)A return is not required for any tax year following that in which the termination condition is met in relation to the scheme.                  

(10)For the purposes of this Part “the termination condition” is met in relation to a scheme when—                  

(a)all share options granted under the scheme—                  

(i)have been exercised, or                  

(ii)are no longer capable of being exercised in accordance with the scheme (because, for example, they have lapsed or been cancelled),                           and                  

(b)no more share options will be granted under the scheme.                  

(11)If the scheme organiser becomes aware that—                  

(a)anything which should have been included in, or should have accompanied, a return for a tax year was not included in, or did                           not accompany, the return,                  

(b)anything which should not have been included in, or should not have accompanied, a return for a tax year was included in,                           or accompanied, the return, or                  

(c)any other error or inaccuracy has occurred in relation to a return for a tax year,                  

the scheme organiser must give an amended return correcting the position to HMRC without delay.                  

40C(1)This paragraph applies if the scheme organiser fails to give a return for a tax year (containing, or accompanied by, all required                           information and declarations) on or before the date mentioned in paragraph 40B(4)(b) (“the date for delivery”).                  

(2)The scheme organiser is liable for a penalty of £100.                  

(3)If the scheme organiser's failure continues after the end of the period of 3 months beginning with the date for delivery,                           the scheme organiser is liable for a further penalty of £300.                  

(4)If the scheme organiser's failure continues after the end of the period of 6 months beginning with the date for delivery,                           the scheme organiser is liable for a further penalty of £300.                  

(5)The scheme organiser is liable for a further penalty under this sub-paragraph if—                  

(a)the scheme organiser's failure continues after the end of the period of 9 months beginning with the date for delivery,                  

(b)HMRC decide that such a penalty should be payable, and                  

(c)HMRC give notice to the scheme organiser specifying the period in respect of which the penalty is payable.                  

(The scheme organiser may be liable for more than one penalty under this sub-paragraph.)                  

(6)The penalty under sub-paragraph (5) is £10 for each day that the failure continues during the period specified in the notice                           under sub-paragraph (5)(c).                  

(7)The period specified in the notice under sub-paragraph (5)(c)—                  

(a)may begin earlier than the date on which the notice is given, but                  

(b)may not begin until after the end of the period mentioned in sub-paragraph (5)(a) or, if relevant, the end of any period specified                           in any previous notice under sub-paragraph (5)(c) given in relation to the failure.                  

(8)Liability for a penalty under this paragraph does not arise if the scheme organiser satisfies HMRC (or, on an appeal under                           paragraph 40K, the tribunal) that there is a reasonable excuse for its failure.                  

(9)For the purposes of sub-paragraph (8)—                  

(a)an insufficiency of funds is not a reasonable excuse, unless attributable to events outside the scheme organiser's control,                  

(b)where the scheme organiser relies on any other person to do anything, that is not a reasonable excuse unless the scheme organiser                           took reasonable care to avoid the failure, and                  

(c)where the scheme organiser had a reasonable excuse for the failure but the excuse ceased, the scheme organiser is to be treated                           as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.                  

###### 40DNotices and returns to be given electronically etc

(1)A notice under paragraph 40A, and any information accompanying the notice, must be given electronically.                  

(2)A return under paragraph 40B, and any information accompanying the return, must be given electronically.                  

(3)But, if HMRC consider it appropriate to do so, HMRC may allow the scheme organiser to give a notice or return or any accompanying                           information in another way; and, if HMRC do so, the notice, return or information must be given in that other way.                  

(4)The Commissioners for Her Majesty's Revenue and Customs—                  

(a)must prescribe how notices, returns and accompanying information are to be given electronically;                  

(b)may make different provision for different cases or circumstances.                  

40E(1)This paragraph applies if a return under paragraph 40B, or any information accompanying such a return—                  

(a)is given otherwise than in accordance with paragraph 40D, or                  

(b)contains a material inaccuracy—                  

(i)which is careless or deliberate, or                  

(ii)which is not corrected as required by paragraph 40B(11).                  

(2)The scheme organiser is liable for a penalty of an amount decided by HMRC.                  

(3)The penalty must not exceed £5,000.                  

(4)For the purposes of sub-paragraph (1)(b)(i) an inaccuracy is careless if it is due to a failure by the scheme organiser to                           take reasonable care.                  

###### 40FEnquiries

(1)This paragraph applies if notice is given in relation to an SAYE option scheme under paragraph 40A.                  

(2)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so no later than—                  

(a)6 July in the tax year following the tax year in which the initial notification deadline falls, or                  

(b)if the notice under paragraph 40A is given after the initial notification deadline, 6 July in the second tax year following                           the relevant tax year.                  

(3)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so no later than 12                           months after the date on which a declaration within paragraph 40B(7) is given to HMRC.                  

(4)Sub-paragraph (5) applies if (at any time) HMRC have reasonable grounds for believing that requirements of Parts 2 to 7 of                           this Schedule—                  

(a)are not met in relation to the scheme, or                  

(b)have not been met in relation to the scheme.                  

(5)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so.                  

(6)Notice may be given, and an enquiry may be conducted, under sub-paragraph (2), (3) or (5) even though the termination condition                           is met in relation to the scheme.                  

40G(1)An enquiry under paragraph 40F(2), (3) or (5) is completed when HMRC give the scheme organiser a notice (a “closure notice”)                           stating—                  

(a)that HMRC have completed the enquiry, and                  

(b)that—                  

(i)paragraph 40H is to apply,                  

(ii)paragraph 40I is to apply, or                  

(iii)neither paragraph 40H nor paragraph 40I is to apply.                  

(2)If the scheme organiser receives notice under paragraph 40F(2), (3) or (5), the scheme organiser may make an application to                           the tribunal for a direction requiring a closure notice for the enquiry to be given within a specified period.                  

(3)The application is to be subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of                           that Act).                  

(4)The tribunal must give a direction unless satisfied that HMRC have reasonable grounds for not giving the closure notice within                           the specified period.                  

40H(1)This paragraph applies if HMRC decide—                  

(a)that requirements of Parts 2 to 7 of this Schedule—                  

(i)are not met in relation to the scheme, or                  

(ii)have not been met in relation to the scheme, and                  

(b)that the situation is, or was, so serious that this paragraph should apply.                  

(2)If this paragraph applies—                  

(a)the scheme is not to be a Schedule 3 SAYE option scheme with effect from—                  

(i)such relevant time as is specified in the closure notice, or                  

(ii)if no relevant time is specified, the time of the giving of the closure notice, and                  

(b)the scheme organiser is liable for a penalty of an amount decided by HMRC.                  

(3)Sub-paragraph (4) applies in relation to a share option granted under the scheme if the option—                  

(a)is granted at a time before that mentioned in sub-paragraph (2)(a)(i) or (ii) (as the case may be) when the scheme is a Schedule                           3 SAYE option scheme, but                  

(b)is exercised at or after the time mentioned in sub-paragraph (2)(a)(i) or (ii) (as the case may be).                  

(4)For the purposes of section 519 (exemption in respect of exercise of share option) in its application to the option, the scheme                           is to be taken still to be a Schedule 3 SAYE option scheme at the time of the exercise of the option.                  

(5)The penalty under sub-paragraph (2)(b) must not exceed an amount equal to twice HMRC's reasonable estimate of—                  

(a)the total income tax for which persons who have been granted share options under the scheme have not been liable, or will                           not be liable in the future, and                  

(b)the total contributions under Part 1 of SSCBA 1992 or SSCB(NI)A 1992 for which any persons have not been liable, or will not                           be liable in the future,                  

in consequence of the scheme having been a Schedule 3 SAYE option scheme at any relevant time before the time mentioned in                        sub-paragraph (2)(a)(i) or (ii) (as the case may be).                  

(6)The liabilities covered by sub-paragraph (5) include liabilities for income tax or contributions which a person has not had,                           or will not have, in consequence of sub-paragraph (4).                  

(7)In this paragraph “relevant time” means any time before the giving of the closure notice when requirements of Parts 2 to 7 of this Schedule were not met in                           relation to the scheme.                  

40I(1)This paragraph applies if HMRC decide—                  

(a)that requirements of Parts 2 to 7 of this Schedule—                  

(i)are not met in relation to the scheme, or                  

(ii)have not been met in relation to the scheme, but                  

(b)that the situation is not, or was not, so serious that paragraph 40H should apply.                  

(2)If this paragraph applies, the scheme organiser—                  

(a)is liable for a penalty of an amount decided by HMRC, and                  

(b)must, no later than 90 days after the relevant day, secure that the requirements of Parts 2 to 7 of this Schedule are met                           in relation to the scheme.                  

(3)The penalty under sub-paragraph (2)(a) must not exceed £5,000.                  

(4)In sub-paragraph (2)(b) “the relevant day” means—                  

(a)the last day of the period in which notice of an appeal under paragraph 40K(2)(b) may be given, or                  

(b)if notice of such an appeal is given, the day on which the appeal is determined or withdrawn.                  

(5)Sub-paragraph (2)(b) does not apply if the termination condition was met in relation to the scheme before the closure notice                           was given or is met before the end of the 90 day period mentioned in sub-paragraph (2)(b).                  

(6)If the scheme organiser fails to comply with sub-paragraph (2)(b), HMRC may give the scheme organiser a notice stating that                           that is the case (a “default notice”).                  

(7)If the scheme organiser is given a default notice—                  

(a)the scheme is not to be a Schedule 3 SAYE option scheme with effect from—                  

(i)such relevant time as is specified in the default notice, or                  

(ii)if no relevant time is specified, the time of the giving of the default notice, and                  

(b)the scheme organiser is liable for a further penalty of an amount decided by HMRC.                  

(8)Sub-paragraph (9) applies in relation to a share option granted under the scheme if the option—                  

(a)is granted at a time before that mentioned in sub-paragraph (7)(a)(i) or (ii) (as the case may be) when the scheme is a Schedule                           3 SAYE option scheme, but                  

(b)is exercised at or after the time mentioned in sub-paragraph (7)(a)(i) or (ii) (as the case may be).                  

(9)For the purposes of section 519 (exemption in respect of exercise of share option) in its application to the option, the scheme                           is to be taken still to be a Schedule 3 SAYE option scheme at the time of the exercise of the option.                  

(10)The penalty under sub-paragraph (7)(b) must not exceed an amount equal to twice HMRC's reasonable estimate of—                  

(a)the total income tax for which persons who have been granted share options under the scheme have not been liable, or will                           not be liable in the future, and                  

(b)the total contributions under Part 1 of SSCBA 1992 or SSCB(NI)A 1992 for which any persons have not been liable, or will not                           be liable in the future,                  

in consequence of the scheme having been a Schedule 3 SAYE option scheme at any relevant time before the time mentioned in                        sub-paragraph (7)(a)(i) or (ii) (as the case may be).                  

(11)The liabilities covered by sub-paragraph (10) include liabilities for income tax or contributions which a person has not had,                           or will not have, in consequence of sub-paragraph (9).                  

(12)In this paragraph “relevant time” means any time before the giving of the default notice when requirements of Parts 2 to 7 of this Schedule were not met in                           relation to the scheme.                  

###### 40JAssessment of penalties

(1)This paragraph applies if the scheme organiser is liable for a penalty under this Part.                  

(2)HMRC must assess the penalty and notify the scheme organiser of the assessment.                  

(3)Subject to sub-paragraphs (4) and (5), the assessment must be made no later than 12 months after the date on which the scheme                           organiser becomes liable for the penalty.                  

(4)In the case of a penalty under paragraph 40E(1)(b), the assessment must be made no later than—                  

(a)12 months after the date on which HMRC become aware of the inaccuracy, and                  

(b)6 years after the date on which the scheme organiser becomes liable for the penalty.                  

(5)In the case of a penalty under paragraph 40H(2)(b) or 40I(2)(a) or (7)(b) where notice of appeal is given under paragraph                           40K(2) or (3), the assessment must be made no later than 12 months after the date on which the appeal is determined or withdrawn.                  

(6)A penalty payable under this Part must be paid—                  

(a)no later than 30 days after the date on which the notice under sub-paragraph (2) is given to the scheme organiser, or                  

(b)if notice of appeal is given against the penalty under paragraph 40K(1) or (4), no later than 30 days after the date on which                           the appeal is determined or withdrawn.                  

(7)The penalty may be enforced as if it were corporation tax or, if the scheme organiser is not within the charge to corporation                           tax, income tax charged in an assessment and due and payable.                  

(8)Sections 100 to 103 of TMA 1970 do not apply to a penalty under this Part.                  

###### 40KAppeals

(1)The scheme organiser may appeal against a decision of HMRC that the scheme organiser is liable for a penalty under paragraph                           40C or 40E.                  

(2)The scheme organiser may appeal against—                  

(a)a decision of HMRC mentioned in paragraph 40H(1) or a decision of HMRC to specify, or not to specify, a relevant time in the                           closure notice;                  

(b)a decision of HMRC mentioned in paragraph 40I(1).                  

(3)The scheme organiser may appeal against a decision of HMRC—                  

(a)to give the scheme organiser a default notice under paragraph 40I;                  

(b)to specify, or not to specify, a relevant time in the default notice.                  

(4)The scheme organiser may appeal against a decision of HMRC as to the amount of a penalty payable by the scheme organiser under                           this Part.                  

(5)Notice of appeal must be given to HMRC no later than 30 days after the date on which—                  

(a)in the case of an appeal under sub-paragraph (1) or (4), the notice under paragraph 40J(2) is given to the scheme organiser;                  

(b)in the case of an appeal under sub-paragraph (2), the closure notice is given;                  

(c)in the case of an appeal under sub-paragraph (3), the default notice is given.                  

(6)On an appeal under sub-paragraph (1) or (3)(a) which is notified to the tribunal, the tribunal may affirm or cancel the decision.                  

(7)On an appeal under sub-paragraph (2) or (3)(b) which is notified to the tribunal, the tribunal may—                  

(a)affirm or cancel the decision, or                  

(b)substitute for the decision another decision which HMRC had power to make.                  

(8)On an appeal under sub-paragraph (4) which is notified to the tribunal, the tribunal may—                  

(a)affirm the amount of the penalty decided, or                  

(b)substitute another amount for that amount.                  

(9)Subject to this paragraph and paragraph 40J, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation                           to an appeal under this paragraph as they have effect in relation to an appeal against an assessment to corporation tax or,                           if the scheme organiser is not within the charge to corporation tax, income tax.”                  

118(1)Paragraph 45 (power to require information) is amended as follows.U.K.

(2)For sub-paragraph (1) substitute—

“(1)An officer of Revenue and Customs may by notice require a person to provide the officer with any information—                  

(a)which the officer reasonably requires for the performance of any functions of Her Majesty's Revenue and Customs or an officer                           of Revenue and Customs under the SAYE code, and                  

(b)which the person to whom the notice is addressed has or can reasonably obtain.”                  

(3)In sub-paragraph (2)(a)—

(a)for sub-paragraph (i) substitute—

“(i)to check anything contained in a notice under paragraph 40A or a return under paragraph 40B or to check any information accompanying                           such a notice or return, or”, and”                  

(b)in sub-paragraph (ii) after “scheme” insert “ or any other person whose liability to tax the operation of a scheme is relevant to ”.

119U.K.After paragraph 47 insert—

##### “Non-UK company reorganisation arrangementsU.K.

47A(1)For the purposes of the SAYE code a “non-UK company reorganisation arrangement” is an arrangement made in relation to a company                           under the law of a territory outside the United Kingdom—                  

(a)which gives effect to a reorganisation of the company's share capital by the consolidation of shares of different classes,                           or by the division of shares into shares of different classes, or by both of those methods, and                  

(b)which is approved by a resolution of members of the company.                  

(2)A resolution does not count for the purposes of sub-paragraph (1)(b) unless the members who vote in favour of approving the                           arrangement represent more than 50% of the total voting rights of all the members having the right to vote on the issue.”                  

120U.K.In paragraph 49 (index of defined expressions)—

(a)omit the entry for “approved”, and

(b)at the appropriate places insert—

#### Other amendments: TCGA 1992U.K.

121U.K.TCGA 1992 is amended as follows.

122(1)Section 105A (shares acquired on same day: election for alternative treatment) is amended as follows.U.K.

(2)For “approved-scheme” (in all places) substitute “ tax-advantaged-scheme ”.

(3)In subsection (1)(b)(ii) omit “approved”.

123U.K.In section 105B (provision supplementary to section 105A) in subsections (7) and (8) for “approved-scheme” substitute “ tax-advantaged-scheme ”.

124U.K.In section 238A (share schemes and share incentives) in subsection (2)(b) for “approved” substitute “ Schedule 3 ”.

125U.K.Part 2 of Schedule 7D (SAYE option schemes) is amended as follows.

126U.K.In the title for “Approved” substitute “ Schedule 3 ”.

127U.K.In paragraph 9 (introduction) in sub-paragraphs (1) and (2) omit “approved”.

128(1)Paragraph 10 (market value rule not to apply) is amended as follows.U.K.

(2)In sub-paragraph (1)—

(a)in paragraph (a)(i) for “an approved” substitute “ a Schedule 3 ”, and

(b)in paragraph (b) for “approved” substitute “ a Schedule 3 SAYE option scheme ”.

(3)For sub-paragraph (3) substitute—

“(3)Sub-paragraph (3A) applies for the purposes of sub-paragraph (1)(b) if—                  

(a)the SAYE option scheme is not to be a Schedule 3 SAYE option scheme by virtue of paragraph 40H or 40I of Schedule 3 to ITEPA                           2003, and                  

(b)the option was granted before, but exercised at or after, the time mentioned in paragraph 40H(2)(a)(i) or (ii) or 40I(7)(a)(i)                           or (ii) of that Schedule (as the case may be).                  

(3A)The scheme is to be taken still to be a Schedule 3 SAYE option scheme when the option is exercised.”                  

#### Other amendments: ITEPA 2003, Part 4 of FA 2004, ITTOIA 2005 and CTA 2009U.K.

129U.K.ITEPA 2003 is amended as follows.

130U.K.In section 227 (scope of Part 4) in subsection (4)(e) omit “approved”.

131U.K.In section 417 (scope of Part 7) in subsection (2), in the entry for Chapter 7, omit “approved”.

132U.K.In section 431A (provision relating to restricted securities) in subsection (2)(b) for “an approved” substitute “ a Schedule 3 ”.

133U.K.In section 473 (introduction to taxation of securities options) in subsection (4)(a) for “approved” substitute “ Schedule 3 ”.

134U.K.In section 476 (charge on occurrence of chargeable event) in subsection (6), in the entry for section 519, omit “approved”.

135U.K.In section 549 (application of Chapter 11 of Part 7) in subsection (2)(b) omit “approved”.

136(1)Section 554E (exclusions under Part 7A) is amended as follows.U.K.

(2)In subsection (1)(b) for “an approved” substitute “ a Schedule 3 ”.

(3)In subsection (3)(a)(ii) and (b)(ii) for the first “an approved” substitute “ a Schedule 3 ”.

(4)In subsection (4)(a) and (b) for the second “approved” substitute “ Schedule 3 ”.

137U.K.In section 697 (PAYE: enhancing the value of an asset) in subsection (4)—

(a)in paragraph (a) omit the words from “Schedule 3” to the second “or”,

(b)after paragraph (a) insert—

“(aa)any shares acquired by the employee under a scheme which is a Schedule 3 SAYE option scheme (see Schedule 3),”, and                  

(c)in paragraph (b) for “such a scheme” substitute “ a scheme mentioned in any of the preceding paragraphs ”.

138U.K.In section 701 (PAYE: meaning of “asset”) in subsection (2)(c)—

(a)in sub-paragraph (i) omit “Schedule 3 (approved SAYE option schemes) or”, and

(b)after sub-paragraph (i) insert—

“(iza)any shares acquired by the employee under a scheme which is a Schedule 3 SAYE option scheme (see Schedule 3),”.                  

139U.K.In section 195 of FA 2004 (pensions: transfer of certain shares to be treated as payment of contribution) in subsection (5),                        in the definition of “SAYE option scheme”, omit “approved”.

140(1)Section 94A of ITTOIA 2005 (costs of setting up SAYE option scheme or CSOP scheme) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a) omit “that is approved by an officer of Revenue and Customs”, and

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

(3)In subsection (2)—

(a)at the beginning of paragraph (a) insert “ Schedule 3 ”,

(b)at the beginning of paragraph (b) insert “ Schedule 4 ”, and

(c)omit the final sentence.

(4)In subsection (4) for “approval is given” (in both places) substitute “ relevant date falls ”.

(5)After subsection (4) insert—

“(4A)In subsection (4) “the relevant date”—                  

(a)in relation to a Schedule 3 SAYE option scheme, has the meaning given in paragraph 40A(6) of Schedule 3 to ITEPA 2003, and                  

(b)in relation to a Schedule 4 CSOP scheme, has the meaning given in paragraph 28A(6) of Schedule 4 to ITEPA 2003.”                  

141(1)Section 703 of ITTOIA 2005 (SAYE interest: meaning of “certified SAYE savings arrangement”) is amended as follows.U.K.

(2)In subsection (2)(b) for “an approved” substitute “ a Schedule 3 ”.

(3)In subsection (3) for the definition of “SAYE option scheme” substitute—

““Schedule 3 SAYE option scheme” has the meaning given in Schedule 3 to ITEPA 2003.”                  

142(1)Section 999 of CTA 2009 (deduction for costs of setting up SAYE option scheme etc) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a) omit “that is approved by an officer of Revenue and Customs”, and

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

(3)In subsection (2)—

(a)at the beginning of paragraph (a) insert “ Schedule 3 ”,

(b)at the beginning of paragraph (b) insert “ Schedule 4 ”, and

(c)omit the final sentence.

(4)In subsection (6) for “approval is given” (in all places) substitute “ relevant date falls ”.

(5)After subsection (6) insert—

“(6A)In subsection (6) “the relevant date”—                  

(a)in relation to a Schedule 3 SAYE option scheme, has the meaning given in paragraph 40A(6) of Schedule 3 to ITEPA 2003, and                  

(b)in relation to a Schedule 4 CSOP scheme, has the meaning given in paragraph 28A(6) of Schedule 4 to ITEPA 2003.”                  

#### Other amendments: Individual Savings Account Regulations 1998 (S.I. 1998/1870)U.K.

143U.K.The Individual Savings Account Regulations 1998 are amended as follows.

144U.K.In regulation 2 (interpretation) in paragraph (1)(a)—

(a)omit the definition of “approved SAYE option scheme”, and

(b)at the appropriate place insert—

““Schedule 3 SAYE option scheme” shall be construed in accordance with the SAYE code (see section 516(3) of ITEPA 2003);”.                  

145U.K.In regulation 7 (qualifying investments) in paragraphs (2)(h)(i) and (10)(a) for “an approved” substitute “ a Schedule 3 ”.

#### Commencement and transitional provisionU.K.

146U.K.This Part is treated as having come into force on 6 April 2014.

147U.K.Paragraphs 148 to 157 below apply in relation to an SAYE option scheme established before 6 April 2014.

148(1)If the scheme was an approved SAYE option scheme immediately before 6 April 2014, this paragraph applies to any provision                        which the scheme contains immediately before that date and which requires the approval or agreement of Her Majesty's Revenue                        and Customs or an officer of Revenue and Customs to be obtained in relation to any matter.U.K.

(2)On and after 6 April 2014, the provision is to have effect without the requirement for the approval or agreement, unless the                        requirement reflects a requirement for approval or agreement set out in Schedule 3 to ITEPA 2003 (as amended by this Part).

149(1)If the scheme was an approved SAYE option scheme immediately before 6 April 2014, the amendment made by paragraph 108 above                        has effect in relation to the scheme only if, and when, there is an alteration in a key feature of the scheme on or after                        that date.U.K.

(2)In sub-paragraph (1) “key feature” has the meaning given in paragraph 40B(8) of Schedule 3 to ITEPA 2003 (as inserted by paragraph 117 above).

150U.K.If the scheme was an approved SAYE option scheme immediately before 6 April 2014, on and after that date the scheme has effect                        with any modifications needed to reflect the amendment made by paragraph 110 above.

151(1)This paragraph applies if, immediately before 6 April 2014, the scheme was an approved SAYE option scheme which contains provision                        authorised by paragraph 28(3) of Schedule 3 to ITEPA 2003.U.K.

(2)On and after 6 April 2014, the scheme has effect with any modifications needed to reflect the amendments made by paragraph                        111 above.

152(1)The amendment made by paragraph 112 above has no effect in relation to share options granted before 6 April 2014 under the                        scheme.U.K.

(2)If the scheme was an approved SAYE option scheme immediately before 6 April 2014, on and after that date the scheme has effect                        with any modifications needed to reflect the amendment made by paragraph 112 above (subject to sub-paragraph (1) of this paragraph).

153(1)The amendments made by paragraph 113 above have no effect in a case where P ceases to hold the scheme-related employment before                        6 April 2014.U.K.

(2)If immediately before 6 April 2014 the scheme was an approved SAYE option scheme which contains provision authorised by paragraph                        34(5) of Schedule 3 to ITEPA 2003, on and after that date the scheme has effect with any modifications needed to reflect the                        amendments made by paragraph 113 above (subject to sub-paragraph (1) of this paragraph).

154(1)This paragraph applies if, immediately before 6 April 2014, the scheme was an approved SAYE option scheme which contains provision                        authorised by paragraph 37(1) of Schedule 3 to ITEPA 2003.U.K.

(2)On and after 6 April 2014, the scheme has effect with any modifications needed to reflect the amendment made by paragraph                        114(3) above.

155(1)Paragraph 40A of Schedule 3 to ITEPA 2003 (as inserted by paragraph 117 above) has effect in relation to the scheme—U.K.

(a)as if, at the end of sub-paragraph (1), the words “on or before 6 July 2015” were inserted,

(b)if the first date on which share options are granted under the scheme falls before 6 April 2014—

(i)as if, in sub-paragraph (3)(b), the reference to that date were a reference to 6 April 2014 and, accordingly, as if all references                        in paragraph 40A to the first grant date were references to 6 April 2014,

(ii)as if sub-paragraph (3)(b)(i) were omitted, and

(iii)as if, in sub-paragraph (3)(b)(ii), “otherwise” were omitted,

(c)as if sub-paragraph (5) were omitted, and

(d)as if, in sub-paragraph (6), the definitions of “the initial notification deadline” and “the relevant tax year” were omitted.

(2)But the scheme cannot be a Schedule 3 SAYE option scheme if, before 6 April 2014, an application for its approval was refused                        or an officer of Revenue and Customs decided to withdraw its approval.

(3)Sub-paragraph (2) is without prejudice to the outcome of any appeal under paragraph 41 or 44 of Schedule 3 to ITEPA 2003 against                        the refusal or decision to withdraw approval.

(4)The amendments made by this Part do not affect any right of appeal under paragraph 41 or 44 of Schedule 3 to ITEPA 2003 against                        a refusal or decision made before 6 April 2014 in relation to the scheme.

(5)Sub-paragraphs (6) and (7) apply if a share option was granted before 6 April 2014 under the scheme at a time when the scheme                        was an approved SAYE option scheme.

(6)On and after 6 April 2014, the SAYE code has effect in relation to the option as if it were granted under the scheme at a                        time when the scheme was a Schedule 3 SAYE option scheme (even if no notice is given under paragraph 40A of Schedule 3 to                        ITEPA 2003 in relation to the scheme or the scheme cannot be a Schedule 3 SAYE option scheme because of sub-paragraph (2)                        of this paragraph).

(7)If no notice is given under paragraph 40A of Schedule 3 to ITEPA 2003 in relation to the scheme, paragraph 40B of that Schedule                        (as inserted by paragraph 117 above) is to apply in relation to the scheme despite no notice being given; and, for this purpose,                        the relevant date is to be taken to be 6 April 2014.

(8)Sub-paragraph (9) applies in relation to a share option granted before 6 April 2014 under the scheme at a time when the scheme                        was an approved SAYE option scheme if—

(a)no notice is given under paragraph 40A of Schedule 3 to ITEPA 2003 in relation to the scheme or the scheme cannot be a Schedule                        3 SAYE option scheme because of sub-paragraph (2) of this paragraph, and

(b)the option is exercised on or after 6 April 2014.

(9)The scheme is to be taken to be a Schedule 3 SAYE option scheme at the time of the exercise of the option for the purposes                        of the following provisions in their application to the option—

(a)section 519 of ITEPA 2003 (exemption in respect of exercise of share option), and

(b)paragraph 10(1)(b) of Schedule 7D to TCGA 1992 (market value rule not to apply).

(10)In relation to the scheme—

(a)paragraph 40F of Schedule 3 to ITEPA 2003 (as inserted by paragraph 117 above) has effect as if for sub-paragraph (2) there                        were substituted—

“(2)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so no later than 6                           July 2016.”, and                  

(b)the cases covered by paragraphs 40F(4)(b), 40H(1)(a)(ii) and 40I(1)(a)(ii) of Schedule 3 to ITEPA 2003 (as inserted by paragraph                        117 above) include cases in which requirements of Parts 2 to 7 of that Schedule were not met before 6 April 2014.

156U.K.If the scheme was an approved SAYE option scheme before 6 April 2014, the amendments made by this Part do not affect the deductions                        which may be made in relation to the scheme under section 94A of ITTOIA 2005 or section 999 of CTA 2009 (deduction for costs                        of setting up scheme) if they would otherwise do so.

157U.K.The amendments made by paragraph 118 above do not affect a notice given in relation to the scheme under paragraph 45 of Schedule                        3 to ITEPA 2003 before 6 April 2014.

### **PART 3**U.K.CSOP schemes

#### Amendments to Chapter 8 of Part 7 of ITEPA 2003U.K.

158U.K.Chapter 8 of Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities: CSOP schemes) is amended                        as follows.

159U.K.In the title omit “Approved”.

160(1)Section 521 (introduction to CSOP schemes) is amended as follows.U.K.

(2)In the heading omit “**Approved**”.

(3)In subsection (1)—

(a)omit paragraph (a), and

(b)in paragraph (b) for “those” substitute “ CSOP schemes which are Schedule 4 CSOP ”.

(4)Omit subsection (2).

(5)In subsection (3)(c) for “approved” substitute “ Schedule 4 ”.

(6)In subsection (4)—

(a)omit the definition of “approved”, and

(b)after the definition of “CSOP scheme” insert—

““Schedule 4 CSOP scheme” is to be read in accordance with paragraph 1 and Part 7 of Schedule 4;”.                  

161U.K.In section 522 (share options to which Chapter applies) in subsection (1)(a) for “an approved” substitute “ a Schedule 4 ”.

162(1)Section 524 (no charge in respect of exercise of option) is amended as follows.U.K.

(2)In subsection (1)(a) for “approved” substitute “ a Schedule 4 CSOP scheme ”.

(3)In subsection (2E)—

(a)in paragraph (a) for “approved” substitute “ a Schedule 4 CSOP scheme ”,

(b)in paragraphs (c), (d) and (f) after sub-paragraph (ii) omit “or” and insert—

“(iia)the non-UK company reorganisation arrangement, or”, and                  

(c)in paragraph (e) after sub-paragraph (ii) omit “or” and insert—

“(iia)the making of any non-UK company reorganisation arrangement which would fall within subsection (2L), or”.                  

(4)In subsection (2L)—

(a)after “arrangement” insert “ or a non-UK company reorganisation arrangement ”, and

(b)in paragraph (b) for “an approved” substitute “ a Schedule 4 ”.

163U.K.Schedule 4 is amended as follows.

164U.K.In the title omit “Approved”.

165U.K.In the cross-heading before paragraph 1 for “*Approval of*” substitute “ *Introduction to Schedule 4* ”.

166(1)Paragraph 1 (introduction) is amended as follows.U.K.

(2)For sub-paragraphs (1) and (2) substitute—

“(A1)For the purposes of the CSOP code a CSOP scheme is a Schedule 4 CSOP scheme if the requirements of Parts 2 to 6 of this Schedule                           are met in relation to the scheme.”                  

(3)For sub-paragraph (4) substitute—

“(4)Sub-paragraph (A1) is subject to Part 7 of this Schedule which—                  

(a)requires notice of a scheme to be given to Her Majesty's Revenue and Customs (“HMRC”) in order for the scheme to be a Schedule                           4 CSOP scheme (see paragraph 28A(1)),                  

(b)provides for a scheme in relation to which such notice is given to be a Schedule 4 CSOP scheme (see paragraph 28A(4)), and                  

(c)gives power to HMRC to enquire into a scheme and to decide that the scheme should not be a Schedule 4 CSOP scheme (see paragraphs                           28F to 28I).”                  

167U.K.In the title for Part 2 omit  “for approval”.

168U.K.In the cross-heading before paragraph 4 omit “*for approval*”.

169U.K.For paragraph 5 (general restriction on contents of scheme) substitute—

“5(1)The purpose of the scheme must be to provide, in accordance with this Schedule, benefits for employees and directors in the                           form of share options.                  

(2)The scheme must not provide benefits to employees or directors otherwise than in accordance with this Schedule.                  

(3)For example, the scheme must not provide cash as an alternative to share options or shares which might otherwise be acquired                           by the exercise of share options.”                  

170U.K.In paragraph 6 (limit on value of shares subject to options) in sub-paragraph (1)(b) for “approved” substitute “ Schedule 4 ”.

171U.K.In paragraph 15 (requirements relating to shares that may be subject to share options) after sub-paragraph (1) insert—

“(1A)Sub-paragraph (1) and the other paragraphs of this Part are subject to paragraph 25A(7B).”                  

172U.K.In paragraph 21 (requirements relating to share options) in sub-paragraph (1) before the entry for paragraph 22 insert— “ paragraph 21A (general requirements as to terms of option), ”.

173U.K.After paragraph 21 insert—

##### “General requirements as to terms of optionU.K.

21A(1)The following terms of a share option which is granted under the scheme must be stated at the time the option is granted—                  

(a)the price at which shares may be acquired by the exercise of the option,                  

(b)the number and description of the shares which may be acquired by the exercise of the option,                  

(c)the restrictions to which those shares may be subject,                  

(d)the times at which the option may be exercised (in whole or in part), and                  

(e)the circumstances under which the option will lapse or be cancelled (in whole or in part), including any conditions to which                           the exercise of the option is subject (in whole or in part).                  

(2)Terms stated as required by sub-paragraph (1) may be varied after the grant of the option, but—                  

(a)in the case of the price, only as provided for in paragraph 22,                  

(b)in the case of the number or description of shares, only as provided for in paragraph 22 or by way of a mechanism which is                           stated at the time the option is granted, and                  

(c)in any other case, only by way of a mechanism which is stated at the time the option is granted.                  

(3)Any mechanism stated for the purposes of sub-paragraph (2)(b) or (c) must be applied in a way that is fair and reasonable.                  

(4)Terms stated as required by sub-paragraph (1), and any mechanism stated for the purposes of sub-paragraph (2)(b) or (c), must                           be notified to the participant as soon as practicable after the grant of the option.”                  

174(1)Paragraph 22 (requirements as to price for acquisition of shares etc) is amended as follows.U.K.

(2)In sub-paragraph (1)—

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

(b)in paragraph (b) for “that time” substitute “ the time when the option is granted ”.

(3)After sub-paragraph (3) insert—

“(3A)If the scheme makes provision under sub-paragraph (3), the variation or variations made under that provision to take account                           of a variation in any share capital must (in particular) secure—                  

(a)that the total market value of the shares which may be acquired by the exercise of the share option is immediately after the                           variation or variations substantially the same as what it was immediately before the variation or variations, and                  

(b)that the total price at which those shares may be acquired is immediately after the variation or variations substantially                           the same as what it was immediately before the variation or variations.                  

(3B)Sub-paragraph (3) does not authorise any variation which would result in the requirements of the other paragraphs of this                           Schedule not being met in relation to the share option.”                  

(4)Omit sub-paragraph (4).

(5)Omit sub-paragraph (5).

175(1)Paragraph 25 (exercise of options: death) is amended as follows.U.K.

(2)Make the existing text sub-paragraph (1).

(3)In the new sub-paragraph (1) omit “but not later than 12 months after that date”.

(4)After the new sub-paragraph (1) insert—

“(2)Provision made under sub-paragraph (1) must permit the exercise of the options at any time on or after the date of death but                           not later than 12 months after that date.”                  

176(1)Paragraph 25A (exercise of options: company events) is amended as follows.U.K.

(2)In sub-paragraph (1) for “or (6)” substitute “ , (6) or (6A) ”.

(3)In sub-paragraph (6)(b) for “an approved” substitute “ a Schedule 4 ”.

(4)After sub-paragraph (6) insert—

“(6A)The relevant date for the purposes of this sub-paragraph is the date on which a non-UK company reorganisation 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 employments or directorships or their participation in a Schedule 4 CSOP scheme,                  

becomes binding on the shareholders covered by it.”                  

(5)After sub-paragraph (7) insert—

“(7A)Sub-paragraphs (7B) to (7F) apply if the scheme makes provision under sub-paragraph (1) or (7).                  

(7B)The scheme may provide that if, in consequence of a relevant event, shares in the company to which a share option relates                           no longer meet the requirements of Part 4 of this Schedule, the share option may be exercised under the provision made under                           sub-paragraph (1) or (7) (as the case may be) no later than 20 days after the day on which the relevant event occurs, notwithstanding                           that the shares no longer meet the requirements of Part 4 of this Schedule.                  

(7C)In sub-paragraph (7B) “relevant event” means—                  

(a)a person obtaining control of the company as mentioned in sub-paragraph (2)(a);                  

(b)a person obtaining control of the company as a result of a compromise or arrangement sanctioned by the court as mentioned                           in sub-paragraph (6);                  

(c)a person obtaining control of the company as a result of a non-UK company reorganisation arrangement which has become binding                           on the shareholders covered by it as mentioned in sub-paragraph (6A);                  

(d)a person who is bound or entitled to acquire shares in the company as mentioned in sub-paragraph (7) obtaining control of                           the company.                  

(7D)Provision made under sub-paragraph (7B) may not authorise the exercise of a share option, as the case may be—                  

(a)at a time outside the 6 month period mentioned in sub-paragraph (1), or                  

(b)at a time not covered by sub-paragraph (7).                  

(7E)The scheme may provide that a share option relating to shares in a company which is exercised during the period of 20 days                           ending with—                  

(a)the relevant date for the purposes of sub-paragraph (2), (6) or (6A), or                  

(b)the date on which any person becomes bound or entitled to acquire shares in the company as mentioned in sub-paragraph (7),                  

is to be treated as if it had been exercised in accordance with the provision made under sub-paragraph (1) or (7) (as the                        case may be).                  

(7F)If the scheme makes provision under sub-paragraph (7E) it must also provide that if—                  

(a)a share option is exercised in reliance on that provision in anticipation of—                  

(i)an event mentioned in sub-paragraph (2), (6) or (6A) occurring, or                  

(ii)a person becoming bound or entitled to acquire shares in the company as mentioned in sub-paragraph (7), but                  

(b)as the case may be—                  

(i)the relevant date for the purposes of sub-paragraph (2), (6) or (6A) does not fall during the period of 20 days beginning                           with the date on which the share option is exercised, or                  

(ii)the person does not become bound or entitled to acquire shares in the company by the end of the period of 20 days beginning                           with the date on which the share option is exercised,                  

the exercise of the share option is to be treated as having had no effect.”                  

177(1)Paragraph 26 (exchanges of options on company reorganisation) is amended as follows.U.K.

(2)In sub-paragraph (2) after paragraph (b) insert—

“(ba)obtains control of the scheme company as a result of a non-UK company reorganisation arrangement which has become binding                           on the shareholders covered by it; or”.                  

(3)In sub-paragraph (3) after paragraph (b) omit “and” and insert—

“(ba)where control is obtained in the way set out in sub-paragraph (2)(ba), within the period of 6 months beginning with the date                           on which the non-UK company reorganisation arrangement becomes binding on the shareholders covered by it, and”.                  

178(1)Paragraph 27 (requirements about share options granted in exchange) is amended as follows.U.K.

(2)In sub-paragraph (4)—

(a)in paragraph (c) for “equal” substitute “ be substantially the same as ”, and

(b)in paragraph (d) for “equal to” substitute “ substantially the same as ”.

(3)After sub-paragraph (7) insert—

“(8)For the purposes of this paragraph the market value of any shares is to be determined using a methodology agreed by Her Majesty's                           Revenue and Customs.”                  

179U.K.For Part 7 substitute—

##### **“PART 7**U.K.Notification of schemes, annual returns and enquiries

###### Notice of scheme to be given to HMRCU.K.

28A(1)For a CSOP scheme to be a Schedule 4 CSOP scheme, notice of the scheme must be given to Her Majesty's Revenue and Customs                           (“HMRC”).                  

(2)The notice must—                  

(a)be given by the scheme organiser,                  

(b)contain, or be accompanied by, such information as HMRC may require, and                  

(c)contain a declaration within sub-paragraph (3) made by such persons as HMRC may require.                  

(3)A declaration within this sub-paragraph is a declaration—                  

(a)that the requirements of Parts 2 to 6 of this Schedule are met in relation to the scheme, and                  

(b)if the declaration is made after the first date on which share options are granted under the scheme (“the first grant date”),                           that those requirements—                  

(i)were met in relation to those grants of share options, and                  

(ii)have otherwise been met in relation to the scheme at all times on or after the first grant date when share options granted                           under the scheme are outstanding.                  

(4)If notice is given under this paragraph in relation to a CSOP scheme, for the purposes of the CSOP code the scheme is to be                           a Schedule 4 CSOP scheme at all times on and after the relevant date (but not before that date).                  

(5)But if the notice is given after the initial notification deadline, the scheme is to be a Schedule 4 CSOP scheme only from                           the beginning of the relevant tax year.                  

(6)For the purposes of this Part—                  
          -  “the initial notification deadline” is 6 July in the tax year following that in which the first grant date falls,                         
          -  “outstanding”, in relation to a share option, means that the option—                          (a)
has not been exercised, but                                 
(b)
is capable of being exercised in accordance with the scheme (whether on the meeting of any condition or otherwise),                                 
 
          -  “the relevant date” is—                          (a)
the date on which the declaration within sub-paragraph (3) is made, or                                 
(b)
if that declaration is made after the first grant date, the first grant date, and                                 
 
          -  “the relevant tax year” is—                          (a)
the tax year in which the notice under this paragraph is given, or                                 
(b)
if that notice is given on or before 6 July in that tax year, the preceding tax year.                                 
 

(7)Sub-paragraph (4) is subject to the following paragraphs of this Part.                  

###### Annual returnsU.K.

28B(1)This paragraph applies if notice is given in relation to a CSOP scheme under paragraph 28A.                  

(2)The scheme organiser must give to HMRC a return for the tax year in which the relevant date falls and for each subsequent                           tax year (subject to sub-paragraph (9)).                  

(3)If paragraph 28A(5) applies in relation to the scheme, in sub-paragraph (2) the reference to the tax year in which the relevant                           date falls is to be read as a reference to the relevant tax year.                  

(4)A return for a tax year must—                  

(a)contain, or be accompanied by, such information as HMRC may require, and                  

(b)be given on or before 6 July in the following tax year.                  

(5)The information which may be required under sub-paragraph (4)(a) includes (in particular) information to enable HMRC to determine                           the liability to tax, including capital gains tax, of—                  

(a)any person who has participated in the scheme, or                  

(b)any other person whose liability to tax the operation of the scheme is relevant to.                  

(6)If during a tax year—                  

(a)an alteration is made in a key feature of the scheme, or                  

(b)variations are made under a provision made under paragraph 22(3) to take account of a variation in any share capital,                  

the return for the tax year must contain a declaration within sub-paragraph (7) made by such persons as HMRC may require.                  

(7)A declaration within this sub-paragraph is a declaration, as the case may be—                  

(a)that the alteration has, or                  

(b)that the variations have,                  

not caused the requirements of Parts 2 to 6 of this Schedule not to be met in relation to the scheme.                  

(8)For the purposes of sub-paragraph (6)(a) a “key feature” of a scheme is a provision of the scheme which is necessary in order                           for the requirements of Parts 2 to 6 of this Schedule to be met in relation to the scheme.                  

(9)A return is not required for any tax year following that in which the termination condition is met in relation to the scheme.                  

(10)For the purposes of this Part “the termination condition” is met in relation to a scheme when—                  

(a)all share options granted under the scheme—                  

(i)have been exercised, or                  

(ii)are no longer capable of being exercised in accordance with the scheme (because, for example, they have lapsed or been cancelled),                           and                  

(b)no more share options will be granted under the scheme.                  

(11)If the scheme organiser becomes aware that—                  

(a)anything which should have been included in, or should have accompanied, a return for a tax year was not included in, or did                           not accompany, the return,                  

(b)anything which should not have been included in, or should not have accompanied, a return for a tax year was included in,                           or accompanied, the return, or                  

(c)any other error or inaccuracy has occurred in relation to a return for a tax year,                  

the scheme organiser must give an amended return correcting the position to HMRC without delay.                  

28C(1)This paragraph applies if the scheme organiser fails to give a return for a tax year (containing, or accompanied by, all required                           information and declarations) on or before the date mentioned in paragraph 28B(4)(b) (“the date for delivery”).                  

(2)The scheme organiser is liable for a penalty of £100.                  

(3)If the scheme organiser's failure continues after the end of the period of 3 months beginning with the date for delivery,                           the scheme organiser is liable for a further penalty of £300.                  

(4)If the scheme organiser's failure continues after the end of the period of 6 months beginning with the date for delivery,                           the scheme organiser is liable for a further penalty of £300.                  

(5)The scheme organiser is liable for a further penalty under this sub-paragraph if—                  

(a)the scheme organiser's failure continues after the end of the period of 9 months beginning with the date for delivery,                  

(b)HMRC decide that such a penalty should be payable, and                  

(c)HMRC give notice to the scheme organiser specifying the period in respect of which the penalty is payable.                  

(The scheme organiser may be liable for more than one penalty under this sub-paragraph.)                  

(6)The penalty under sub-paragraph (5) is £10 for each day that the failure continues during the period specified in the notice                           under sub-paragraph (5)(c).                  

(7)The period specified in the notice under sub-paragraph (5)(c)—                  

(a)may begin earlier than the date on which the notice is given, but                  

(b)may not begin until after the end of the period mentioned in sub-paragraph (5)(a) or, if relevant, the end of any period specified                           in any previous notice under sub-paragraph (5)(c) given in relation to the failure.                  

(8)Liability for a penalty under this paragraph does not arise if the scheme organiser satisfies HMRC (or, on an appeal under                           paragraph 28K, the tribunal) that there is a reasonable excuse for its failure.                  

(9)For the purposes of sub-paragraph (8)—                  

(a)an insufficiency of funds is not a reasonable excuse, unless attributable to events outside the scheme organiser's control,                  

(b)where the scheme organiser relies on any other person to do anything, that is not a reasonable excuse unless the scheme organiser                           took reasonable care to avoid the failure, and                  

(c)where the scheme organiser had a reasonable excuse for the failure but the excuse ceased, the scheme organiser is to be treated                           as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.                  

###### Notices and returns to be given electronically etcU.K.

28D(1)A notice under paragraph 28A, and any information accompanying the notice, must be given electronically.                  

(2)A return under paragraph 28B, and any information accompanying the return, must be given electronically.                  

(3)But, if HMRC consider it appropriate to do so, HMRC may allow the scheme organiser to give a notice or return or any accompanying                           information in another way; and, if HMRC do so, the notice, return or information must be given in that other way.                  

(4)The Commissioners for Her Majesty's Revenue and Customs—                  

(a)must prescribe how notices, returns and accompanying information are to be given electronically;                  

(b)may make different provision for different cases or circumstances.                  

28E(1)This paragraph applies if a return under paragraph 28B, or any information accompanying such a return—                  

(a)is given otherwise than in accordance with paragraph 28D, or                  

(b)contains a material inaccuracy—                  

(i)which is careless or deliberate, or                  

(ii)which is not corrected as required by paragraph 28B(11).                  

(2)The scheme organiser is liable for a penalty of an amount decided by HMRC.                  

(3)The penalty must not exceed £5,000.                  

(4)For the purposes of sub-paragraph (1)(b)(i) an inaccuracy is careless if it is due to a failure by the scheme organiser to                           take reasonable care.                  

###### EnquiriesU.K.

28F(1)This paragraph applies if notice is given in relation to a CSOP scheme under paragraph 28A.                  

(2)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so no later than—                  

(a)6 July in the tax year following that in which the initial notification deadline falls, or                  

(b)if the notice under paragraph 28A is given after the initial notification deadline, 6 July in the second tax year following                           the relevant tax year.                  

(3)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so no later than 12                           months after the date on which a declaration within paragraph 28B(7) is given to HMRC.                  

(4)Sub-paragraph (5) applies if (at any time) HMRC have reasonable grounds for believing that requirements of Parts 2 to 6 of                           this Schedule—                  

(a)are not met in relation to the scheme, or                  

(b)have not been met in relation to the scheme.                  

(5)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so.                  

(6)Notice may be given, and an enquiry may be conducted, under sub-paragraph (2), (3) or (5) even though the termination condition                           is met in relation to the scheme.                  

28G(1)An enquiry under paragraph 28F(2), (3) or (5) is completed when HMRC give the scheme organiser a notice (a “closure notice”)                           stating—                  

(a)that HMRC have completed the enquiry, and                  

(b)that—                  

(i)paragraph 28H is to apply,                  

(ii)paragraph 28I is to apply, or                  

(iii)neither paragraph 28H nor paragraph 28I is to apply.                  

(2)If the scheme organiser receives notice under paragraph 28F(2), (3) or (5), the scheme organiser may make an application to                           the tribunal for a direction requiring a closure notice for the enquiry to be given within a specified period.                  

(3)The application is to be subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of                           that Act).                  

(4)The tribunal must give a direction unless satisfied that HMRC have reasonable grounds for not giving the closure notice within                           the specified period.                  

28H(1)This paragraph applies if HMRC decide—                  

(a)that requirements of Parts 2 to 6 of this Schedule—                  

(i)are not met in relation to the scheme, or                  

(ii)have not been met in relation to the scheme, and                  

(b)that the situation is, or was, so serious that this paragraph should apply.                  

(2)If this paragraph applies—                  

(a)the scheme is not to be a Schedule 4 CSOP scheme with effect from—                  

(i)such relevant time as is specified in the closure notice, or                  

(ii)if no relevant time is specified, the time of the giving of the closure notice, and                  

(b)the scheme organiser is liable for a penalty of an amount decided by HMRC.                  

(3)The penalty under sub-paragraph (2)(b) must not exceed an amount equal to twice HMRC's reasonable estimate of—                  

(a)the total income tax for which persons who have been granted share options under the scheme have not been liable, or will                           not be liable in the future, and                  

(b)the total contributions under Part 1 of SSCBA 1992 or SSCB(NI)A 1992 for which any persons have not been liable, or will not                           be liable in the future,                  

in consequence of the scheme having been a Schedule 4 CSOP scheme at any relevant time before the time mentioned in sub-paragraph                        (2)(a)(i) or (ii) (as the case may be).                  

(4)In this paragraph “relevant time” means any time before the giving of the closure notice when requirements of Parts 2 to 6 of this Schedule were not met in                           relation to the scheme.                  

28I(1)This paragraph applies if HMRC decide—                  

(a)that requirements of Parts 2 to 6 of this Schedule—                  

(i)are not met in relation to the scheme, or                  

(ii)have not been met in relation to the scheme, but                  

(b)that the situation is not, or was not, so serious that paragraph 28H should apply.                  

(2)If this paragraph applies, the scheme organiser—                  

(a)is liable for a penalty of an amount decided by HMRC, and                  

(b)must, no later than 90 days after the relevant day, secure that the requirements of Parts 2 to 6 of this Schedule are met                           in relation to the scheme.                  

(3)The penalty under sub-paragraph (2)(a) must not exceed £5,000.                  

(4)In sub-paragraph (2)(b) “the relevant day” means—                  

(a)the last day of the period in which notice of an appeal under paragraph 28K(2)(b) may be given, or                  

(b)if notice of such an appeal is given, the day on which the appeal is determined or withdrawn.                  

(5)Sub-paragraph (2)(b) does not apply if the termination condition was met in relation to the scheme before the closure notice                           was given or is met before the end of the 90 day period mentioned in sub-paragraph (2)(b).                  

(6)If the scheme organiser fails to comply with sub-paragraph (2)(b), HMRC may give the scheme organiser a notice stating that                           that is the case (a “default notice”).                  

(7)If the scheme organiser is given a default notice—                  

(a)the scheme is not to be a Schedule 4 CSOP scheme with effect from—                  

(i)such relevant time as is specified in the default notice, or                  

(ii)if no relevant time is specified, the time of the giving of the default notice, and                  

(b)the scheme organiser is liable for a further penalty of an amount decided by HMRC.                  

(8)The penalty under sub-paragraph (7)(b) must not exceed an amount equal to twice HMRC's reasonable estimate of—                  

(a)the total income tax for which persons who have been granted share options under the scheme have not been liable, or will                           not be liable in the future, and                  

(b)the total contributions under Part 1 of SSCBA 1992 or SSCB(NI)A 1992 for which any persons have not been liable, or will not                           be liable in the future,                  

in consequence of the scheme having been a Schedule 4 CSOP scheme at any relevant time before the time mentioned in sub-paragraph                        (7)(a)(i) or (ii) (as the case may be).                  

(9)In this paragraph “relevant time” means any time before the giving of the default notice when requirements of Parts 2 to 6 of this Schedule were not met in                           relation to the scheme.                  

###### Assessment of penaltiesU.K.

28J(1)This paragraph applies if the scheme organiser is liable for a penalty under this Part.                  

(2)HMRC must assess the penalty and notify the scheme organiser of the assessment.                  

(3)Subject to sub-paragraphs (4) and (5), the assessment must be made no later than 12 months after the date on which the scheme                           organiser becomes liable for the penalty.                  

(4)In the case of a penalty under paragraph 28E(1)(b), the assessment must be made no later than—                  

(a)12 months after the date on which HMRC become aware of the inaccuracy, and                  

(b)6 years after the date on which the scheme organiser becomes liable for the penalty.                  

(5)In the case of a penalty under paragraph 28H(2)(b) or 28I(2)(a) or (7)(b) where notice of appeal is given under paragraph                           28K(2) or (3), the assessment must be made no later than 12 months after the date on which the appeal is determined or withdrawn.                  

(6)A penalty payable under this Part must be paid—                  

(a)no later than 30 days after the date on which the notice under sub-paragraph (2) is given to the scheme organiser, or                  

(b)if notice of appeal is given against the penalty under paragraph 28K(1) or (4), no later than 30 days after the date on which                           the appeal is determined or withdrawn.                  

(7)The penalty may be enforced as if it were corporation tax or, if the scheme organiser is not within the charge to corporation                           tax, income tax charged in an assessment and due and payable.                  

(8)Sections 100 to 103 of TMA 1970 do not apply to a penalty under this Part.                  

###### AppealsU.K.

28K(1)The scheme organiser may appeal against a decision of HMRC that the scheme organiser is liable for a penalty under paragraph                           28C or 28E.                  

(2)The scheme organiser may appeal against—                  

(a)a decision of HMRC mentioned in paragraph 28H(1) or a decision of HMRC to specify, or not to specify, a relevant time in the                           closure notice;                  

(b)a decision of HMRC mentioned in paragraph 28I(1).                  

(3)The scheme organiser may appeal against a decision of HMRC—                  

(a)to give the scheme organiser a default notice under paragraph 28I;                  

(b)to specify, or not to specify, a relevant time in the default notice.                  

(4)The scheme organiser may appeal against a decision of HMRC as to the amount of a penalty payable by the scheme organiser under                           this Part.                  

(5)Notice of appeal must be given to HMRC no later than 30 days after the date on which—                  

(a)in the case of an appeal under sub-paragraph (1) or (4), the notice under paragraph 28J(2) is given to the scheme organiser;                  

(b)in the case of an appeal under sub-paragraph (2), the closure notice is given;                  

(c)in the case of an appeal under sub-paragraph (3), the default notice is given.                  

(6)On an appeal under sub-paragraph (1) or (3)(a) which is notified to the tribunal, the tribunal may affirm or cancel the decision.                  

(7)On an appeal under sub-paragraph (2) or (3)(b) which is notified to the tribunal, the tribunal may—                  

(a)affirm or cancel the decision, or                  

(b)substitute for the decision another decision which HMRC had power to make.                  

(8)On an appeal under sub-paragraph (4) which is notified to the tribunal, the tribunal may—                  

(a)affirm the amount of the penalty decided, or                  

(b)substitute another amount for that amount.                  

(9)Subject to this paragraph and paragraph 28J, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation                           to an appeal under this paragraph as they have effect in relation to an appeal against an assessment to corporation tax or,                           if the scheme organiser is not within the charge to corporation tax, income tax.”                  

180(1)Paragraph 33 (power to require information) is amended as follows.U.K.

(2)For sub-paragraph (1) substitute—

“(1)An officer of Revenue and Customs may by notice require a person to provide the officer with any information—                  

(a)which the officer reasonably requires for the performance of any functions of Her Majesty's Revenue and Customs or an officer                           of Revenue and Customs under the CSOP code, and                  

(b)which the person to whom the notice is addressed has or can reasonably obtain.”                  

(3)In sub-paragraph (2)(a)—

(a)for sub-paragraph (i) substitute—

“(i)to check anything contained in a notice under paragraph 28A or a return under paragraph 28B or to check any information accompanying                           such a notice or return, or”, and”                  

(b)in sub-paragraph (ii) after “scheme” insert “ or any other person whose liability to tax the operation of a scheme is relevant to ”.

181U.K.After paragraph 35 insert—

##### “Non-UK company reorganisation arrangementsU.K.

35ZA(1)For the purposes of the CSOP code a “non-UK company reorganisation arrangement” is an arrangement made in relation to a company                           under the law of a territory outside the United Kingdom—                  

(a)which gives effect to a reorganisation of the company's share capital by the consolidation of shares of different classes,                           or by the division of shares into shares of different classes, or by both of those methods, and                  

(b)which is approved by a resolution of members of the company.                  

(2)A resolution does not count for the purposes of sub-paragraph (1)(b) unless the members who vote in favour of approving the                           arrangement represent more than 50% of the total voting rights of all the members having the right to vote on the issue.”                  

182U.K.In paragraph 37 (index of defined expressions)—

(a)omit the entry for “approved”, and

(b)at the appropriate places insert—

#### Other amendments: TCGA 1992U.K.

183U.K.TCGA 1992 is amended as follows.

184U.K.In section 238A (share schemes and share incentives) in subsection (2)(c) for “approved” substitute “ Schedule 4 ”.

185U.K.Part 3 of Schedule 7D (CSOP schemes) is amended as follows.

186U.K.In the title for “Approved” substitute “ Schedule 4 ”.

187(1)Paragraph 11 (introduction) is amended as follows.U.K.

(2)In sub-paragraphs (1) and (2) omit “approved”.

(3)In sub-paragraph (3)(a)(i) for “an approved” substitute “ a Schedule 4 ”.

188U.K.In paragraph 12 (relief where income tax charged in respect of grant of option) in sub-paragraph (4)(b) for “approved” substitute                        “ a Schedule 4 CSOP scheme ”.

189U.K.In paragraph 13 (market value rule not to apply) in sub-paragraphs (1)(a) and (3) for “approved” substitute “ a Schedule 4 CSOP scheme ”.

#### Other amendments: ITEPA 2003U.K.

190U.K.ITEPA 2003 is amended as follows.

191U.K.In section 227 (scope of Part 4) in subsection (4)(g) omit “approved”.

192U.K.In section 417 (scope of Part 7) in subsection (2), in the entry for Chapter 8, omit “approved”.

193U.K.In section 431A (which makes provision relating to restricted securities etc) in subsection (2)(c) for “an approved” substitute                        “ a Schedule 4 ”.

194U.K.In section 473 (introduction to taxation of securities options) in subsection (4)(b) for “approved” substitute “ Schedule 4 ”.

195U.K.In section 475 (no charge in respect of acquisition of option) in subsection (2) omit “approved”.

196U.K.In section 476 (charge on occurrence of chargeable event) in subsection (6), in the entry for section 524, omit “approved”.

197U.K.In section 480 (deductible amounts) in subsection (4) omit “approved”.

198U.K.In section 539 (CSOP and other options relevant for purposes of section 536) in subsection (4) for “approved under Schedule                        4 (CSOP schemes)” substitute “ which is a Schedule 4 CSOP scheme (see Schedule 4) ”.

199U.K.In section 549 (application of Chapter 11 of Part 7) in subsection (2)(c) omit “approved”.

200(1)Section 554E (exclusions under Part 7A) is amended as follows.U.K.

(2)In subsection (1)(c) for “an approved” substitute “ a Schedule 4 ”.

(3)In subsection (3)(a)(ii) and (b)(ii) for the second “an approved” substitute “ a Schedule 4 ”.

(4)In subsection (4)(a) and (b) for the third “approved” substitute “ Schedule 4 ”.

201U.K.In section 697 (PAYE: enhancing the value of an asset) in subsection (4) before paragraph (b) insert—

“(ab)any shares acquired by the employee under a scheme which is a Schedule 4 CSOP scheme (see Schedule 4),”.                  

202U.K.In section 701 (PAYE: meaning of “asset”) in subsection (2)(c)(ia) for “approved under Schedule 4 (approved CSOP schemes)”                        substitute “ which is a Schedule 4 CSOP scheme (see Schedule 4) ”.

203U.K.In paragraph 5 of Schedule 5 (enterprise management incentives: maximum entitlement of employee) in sub-paragraph (5) for                        “approved under Schedule 4 (CSOP schemes)” substitute “ which is a Schedule 4 CSOP scheme (see Schedule 4) ”.

#### Commencement and transitional provisionU.K.

204U.K.This Part is treated as having come into force on 6 April 2014.

205U.K.Paragraphs 206 to 215 below apply in relation to a CSOP scheme established before 6 April 2014.

206(1)If the scheme was an approved CSOP scheme immediately before 6 April 2014, this paragraph applies to any provision which the                        scheme contains immediately before that date and which requires the approval or agreement of Her Majesty's Revenue and Customs                        or an officer of Revenue and Customs to be obtained in relation to any matter.U.K.

(2)On and after 6 April 2014, the provision is to have effect without the requirement for the approval or agreement, unless the                        requirement reflects a requirement for approval or agreement set out in Schedule 4 to ITEPA 2003 (as amended by this Part).

207(1)If the scheme was an approved CSOP scheme immediately before 6 April 2014, the amendment made by paragraph 169 above has effect                        in relation to the scheme only if, and when, there is an alteration in a key feature of the scheme on or after that date.U.K.

(2)In sub-paragraph (1) “key feature” has the meaning given in paragraph 28B(8) of Schedule 4 to ITEPA 2003 (as inserted by paragraph 179 above).

208U.K.If the scheme was an approved CSOP scheme immediately before 6 April 2014, on and after that date the scheme has effect with                        any modifications needed to reflect the amendment made by paragraph 170 above.

209(1)The amendments made by paragraphs 172, 173 and 174(2) and (5) above have no effect in relation to share options granted under                        the scheme before 6 April 2014.U.K.

(2)If the scheme was an approved CSOP scheme immediately before 6 April 2014, on and after that date the scheme has effect with                        any modifications needed to reflect the amendments made by paragraphs 172, 173 and 174(2) and (5) above (subject to sub-paragraph                        (1) of this paragraph).

210(1)This paragraph applies if, immediately before 6 April 2014 the scheme was an approved CSOP scheme which contains provision                        authorised by paragraph 22(3) of Schedule 4 to ITEPA 2003.U.K.

(2)On and after 6 April 2014, the scheme has effect with any modifications needed to reflect the amendments made by paragraph                        174(3) and (4) above.

211(1)The amendments made by paragraph 175 above have no effect in relation to share options granted before 6 April 2014 under the                        scheme.U.K.

(2)If immediately before 6 April 2014 the scheme was an approved CSOP scheme which contains provision authorised by paragraph                        25 of Schedule 4 to ITEPA 2003, on and after that date the scheme has effect with any modifications needed to reflect the                        amendments made by paragraph 175 above (subject to sub-paragraph (1) of this paragraph).

212(1)This paragraph applies if immediately before 6 April 2014 the scheme was an approved CSOP scheme which contains provision                        authorised by paragraph 25A(1) of Schedule 4 to ITEPA 2003.U.K.

(2)On and after 6 April 2014, the scheme has effect with any modifications needed to reflect the amendment made by paragraph                        176(3) above.

213(1)Paragraph 28A of Schedule 4 to ITEPA 2003 (as inserted by paragraph 179 above) has effect in relation to the scheme—U.K.

(a)as if, at the end of sub-paragraph (1), the words “on or before 6 July 2015” were inserted,

(b)if the first date on which share options are granted under the scheme falls before 6 April 2014—

(i)as if, in sub-paragraph (3)(b), the reference to that date were a reference to 6 April 2014 and, accordingly, as if all references                        in paragraph 28A to the first grant date were references to 6 April 2014,

(ii)as if sub-paragraph (3)(b)(i) were omitted, and

(iii)as if, in sub-paragraph (3)(b)(ii), “otherwise” were omitted,

(c)as if sub-paragraph (5) were omitted, and

(d)as if, in sub-paragraph (6), the definitions of “the initial notification deadline” and “the relevant tax year” were omitted.

(2)But the scheme cannot be a Schedule 4 CSOP scheme if, before 6 April 2014, an application for its approval was refused or                        an officer of Revenue and Customs decided to withdraw its approval.

(3)Sub-paragraph (2) is without prejudice to the outcome of any appeal under paragraph 29 or 32 of Schedule 4 to ITEPA 2003 against                        the refusal or decision to withdraw approval.

(4)The amendments made by this Part do not affect any right of appeal under paragraph 29 or 32 of Schedule 4 to ITEPA 2003 against                        a refusal or decision made before 6 April 2014 in relation to the scheme.

(5)Sub-paragraph (6) applies if a share option was granted before 6 April 2014 under the scheme at a time when the scheme was                        an approved CSOP scheme.

(6)On and after 6 April 2014, the CSOP code has effect in relation to the option as if it were granted under the scheme at a                        time when the scheme was a Schedule 4 CSOP scheme (but not if no notice under paragraph 28A of Schedule 4 to ITEPA 2003 is                        given in relation to the scheme or if the scheme cannot be a Schedule 4 CSOP scheme because of sub-paragraph (2) of this paragraph).

(7)In relation to the scheme—

(a)paragraph 28F of Schedule 4 to ITEPA 2003 (as inserted by paragraph 179 above) has effect as if for sub-paragraph (2) there                        were substituted—

“(2)HMRC may enquire into the scheme if HMRC give notice to the scheme organiser of HMRC's intention to do so no later than 6                           July 2016.”, and                  

(b)the cases covered by paragraphs 28F(4)(b), 28H(1)(a)(ii) and 28I(1)(a)(ii) of Schedule 4 to ITEPA 2003 (as inserted by paragraph                        179 above) include cases in which requirements of Parts 2 to 6 of that Schedule were not met before 6 April 2014.

214U.K.If the scheme was an approved CSOP scheme before 6 April 2014, the amendments made by this Part and paragraphs 140 and 142                        above do not affect the deductions which may be made in relation to the scheme under section 94A of ITTOIA 2005 or section                        999 of CTA 2009 (deduction for costs of setting up scheme) if they would otherwise do so.

215U.K.The amendments made by paragraph 180 above do not affect a notice given in relation to the scheme under paragraph 33 of Schedule                        4 to ITEPA 2003 before 6 April 2014.

### **PART 4**U.K.Enterprise management incentives

#### Amendments to Schedule 5 to ITEPA 2003U.K.

216U.K.Schedule 5 to ITEPA 2003 (enterprise management incentives) is amended as follows.

217(1)Paragraph 44 (notice of option to be given to HMRC) is amended as follows.U.K.

(2)In sub-paragraph (2) omit paragraph (b) and the “and” before it.

(3)In sub-paragraph (4) for “each of sub-paragraphs (5) and (6)” substitute “ sub-paragraph (5) ”.

(4)In sub-paragraph (5)—

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

(b)after paragraph (b) insert “, and 

(c)that the individual to whom the option has been granted has made and signed a written declaration within sub-paragraph (6)                           and that the declaration is held by the employer company”.                  

(5)After sub-paragraph (5) insert—

“(5A)The employer company must—                  

(a)retain the declaration mentioned in sub-paragraph (5)(c) and, if requested to do so by an officer of Revenue and Customs,                           produce it to such an officer before the end of the period of 7 days after the day on which the request is made, and                  

(b)give a copy of that declaration to the individual before the end of the period of 7 days after the day on which the declaration                           is signed by the individual.”                  

(6)After sub-paragraph (7) insert—

“(8)The notice, and any information supporting it, must be given electronically.                  

(9)But, if an officer of Revenue and Customs considers it appropriate to do so, the officer may allow the employer company to                           give the notice or any supporting information in another way; and, if the officer does so, the notice or information must                           be given in that other way.                  

(10)The Commissioners for Her Majesty's Revenue and Customs—                  

(a)must prescribe how notices and supporting information are to be given electronically;                  

(b)may make different provision for different cases or circumstances.”                  

218U.K.For paragraph 52 (annual returns) substitute—

“52(1)This paragraph applies in relation to a company whose shares are (or have been) subject to qualifying options.                  

(2)The company must give to Her Majesty's Revenue and Customs (“HMRC”) a return for each tax year falling (wholly or partly)                           in the company's qualifying option period.                  

(3)The company's “qualifying option period” is the period—                  

(a)beginning when the first qualifying option to which the company's shares are subject is granted, and                  

(b)ending when the termination condition is met.                  

(4)“The termination condition” is met when the company's shares—                  

(a)are no longer subject to qualifying options, and                  

(b)will no longer become subject to qualifying options.                  

(5)The return for a tax year must—                  

(a)contain, or be accompanied by, such information as HMRC may require, and                  

(b)be given on or before 6 July in the following tax year.                  

(6)The information which may be required under sub-paragraph (5)(a) includes (in particular) information to enable HMRC to determine                           the liability to tax, including capital gains tax, of any person who has been granted a qualifying option to which the company's                           shares are subject.                  

(7)If the company becomes aware that—                  

(a)anything which should have been included in, or should have accompanied, a return for a tax year was not included in, or did                           not accompany, the return,                  

(b)anything which should not have been included in, or should not have accompanied, a return for a tax year was included in,                           or accompanied, the return, or                  

(c)any other error or inaccuracy has occurred in relation to a return for a tax year,                  

the company must give an amended return correcting the position to HMRC without delay.                  

52A(1)A return under paragraph 52, and any information accompanying the return, must be given electronically.                  

(2)But, if HMRC consider it appropriate to do so, HMRC may allow a company to give a return or any accompanying information in                           another way; and, if HMRC do so, the return or information must be given in that other way.                  

(3)The Commissioners for Her Majesty's Revenue and Customs—                  

(a)must prescribe how returns and accompanying information are to be given electronically;                  

(b)may make different provision for different cases or circumstances.”                  

219(1)Paragraph 53 (compliance with time limits) is amended as follows.U.K.

(2)In sub-paragraph (1)—

(a)after “a person” insert “ (“P”) ”, and

(b)in paragraphs (a) and (b) for “the person” substitute “ P ”.

(3)After sub-paragraph (2) insert—

“(3)For the purposes of sub-paragraph (1)—                  

(a)an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control, and                  

(b)where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid                           the failure.”                  

220U.K.After paragraph 57 insert—

##### “PenaltiesU.K.

57AA company is liable for a penalty of £500 if the company fails—

(a)to produce a declaration to an officer of Revenue and Customs as required by paragraph 44(5A)(a) before the end of the period                           mentioned in that provision, or                  

(b)to provide a copy of a declaration to an individual as required by paragraph 44(5A)(b) before the end of the period mentioned                           in that provision,                  

and Her Majesty's Revenue and Customs (“HMRC”) decide that such a penalty should be payable.                  

57B(1)This paragraph applies if a company fails to give a return for a tax year (containing, or accompanied by, all required information)                           on or before the date mentioned in paragraph 52(5)(b) (“the date for delivery”).                  

(2)The company is liable for a penalty of £100.                  

(3)If the company's failure continues after the end of the period of 3 months beginning with the date for delivery, the company                           is liable for a further penalty of £300.                  

(4)If the company's failure continues after the end of the period of 6 months beginning with the date for delivery, the company                           is liable for a further penalty of £300.                  

(5)The company is liable for a further penalty under this sub-paragraph if—                  

(a)the company's failure continues after the end of the period of 9 months beginning with the date for delivery,                  

(b)HMRC decide that such a penalty should be payable, and                  

(c)HMRC give notice to the company specifying the period in respect of which the penalty is payable.                  

(The company may be liable for more than one penalty under this sub-paragraph.)                  

(6)The penalty under sub-paragraph (5) is £10 for each day that the failure continues during the period specified in the notice                           under sub-paragraph (5)(c).                  

(7)The period specified in the notice under sub-paragraph (5)(c)—                  

(a)may begin earlier than the date on which the notice is given, but                  

(b)may not begin until after the end of the period mentioned in sub-paragraph (5)(a) or, if relevant, the end of any period specified                           in any previous notice under sub-paragraph (5)(c) given in relation to the failure.                  

57C(1)This paragraph applies if a return under paragraph 52, or any information accompanying such a return—                  

(a)is given otherwise than in accordance with paragraph 52A, or                  

(b)contains a material inaccuracy—                  

(i)which is careless or deliberate, or                  

(ii)which is not corrected as required by paragraph 52(7).                  

(2)The company is liable for a penalty of an amount decided by HMRC.                  

(3)The penalty must not exceed £5,000.                  

(4)For the purposes of sub-paragraph (1)(b)(i) an inaccuracy is careless if it is due to a failure by the company to take reasonable                           care.                  

57D(1)This paragraph applies if a company is liable for a penalty under this Part.                  

(2)HMRC must assess the penalty and notify the company of the assessment.                  

(3)Subject to sub-paragraph (4), the assessment must be made no later than 12 months after the date on which the company becomes                           liable for the penalty.                  

(4)In the case of a penalty under paragraph 57C(1)(b), the assessment must be made no later than—                  

(a)12 months after the date on which HMRC become aware of the inaccuracy, and                  

(b)6 years after the date on which the company becomes liable for the penalty.                  

(5)A penalty payable under this Part must be paid—                  

(a)no later than 30 days after the date on which the notice under sub-paragraph (2) is given to the company, or                  

(b)if notice of appeal is given against the penalty under paragraph 57E(1) or (2), no later than 30 days after the date on which                           the appeal is determined or withdrawn.                  

(6)The penalty may be enforced as if it were corporation tax or, if the company is not within the charge to corporation tax,                           income tax charged in an assessment and due and payable.                  

(7)Sections 100 to 103 of TMA 1970 do not apply to a penalty under this Part.                  

57E(1)A company may appeal against a decision of HMRC that the company is liable for a penalty under this Part.                  

(2)A company may appeal against a decision of HMRC as to the amount of a penalty payable by the company under this Part.                  

(3)Notice of appeal must be given to HMRC no later than 30 days after the date on which the notice under paragraph 57D(2) is                           given to the company.                  

(4)On an appeal under sub-paragraph (1) which is notified to the tribunal, the tribunal may affirm or cancel the decision.                  

(5)On an appeal under sub-paragraph (2) which is notified to the tribunal, the tribunal may—                  

(a)affirm the amount of the penalty decided, or                  

(b)substitute another amount for that amount.                  

(6)Subject to this paragraph and paragraph 57D, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation                           to an appeal under this paragraph as they have effect in relation to an appeal against an assessment to corporation tax or,                           if the company is not within the charge to corporation tax, income tax.”                  

#### Other amendment: section 98 of TMA 1970U.K.

221U.K.In the second column of the Table in section 98 of TMA 1970 (special returns etc) omit the entry for paragraph 52 of Schedule                        5 to ITEPA 2003.

#### Commencement and transitional provisionU.K.

222U.K.This Part is treated as having come into force on 6 April 2014.

223U.K.The amendments made by paragraph 217 above have no effect in relation to options granted before 6 April 2014.

224(1)The amendment made by paragraph 218 above has effect so as to require returns for the tax year 2014-15 and subsequent tax                        years.U.K.

(2)It has effect in relation to companies whose qualifying option periods begin before 6 April 2014 (as well as those whose qualifying                        option periods begin on or after that date).

(3)It does not affect the duty of a company to deliver a return for a tax year earlier than the tax year 2014-15 in accordance                        with paragraph 52 of Schedule 5 to ITEPA 2003 as that paragraph stood before its substitution; and the effect of the amendment                        made by paragraph 221 above is limited accordingly.

(4)In paragraphs 57B(1) and 57C(1) of Schedule 5 to ITEPA 2003 (as inserted by paragraph 220 above) the reference to a return                        is to a return under paragraph 52 of that Schedule as substituted.

225U.K.The amendment made by paragraph 219(3) above does not affect a reasonable excuse which began before 6 April 2014.

### **PART 5**U.K.Other employee share schemes

#### Amendments to Chapter 1 of Part 7 of ITEPA 2003U.K.

226U.K.Chapter 1 of Part 7 of ITEPA 2003 (employment income: income and exemptions relating to securities: general) is amended as                        follows.

227(1)Section 421J (duty to provide information) is amended as follows.U.K.

(2)Omit subsections (3), (7), (8), (11) and (12).

(3)In subsection (10) for “by, or by a notice under,” substitute “ by a notice under ”.

228U.K.After section 421J insert—

##### “421JAAnnual returns

(1)This section applies in relation to a person who is (or has been) a responsible person (see section 421L) in relation to reportable                           events (see section 421K).                  

(2)The person must give to Her Majesty's Revenue and Customs (“HMRC”) a return for each tax year falling (wholly or partly) in                           the person's reportable event period.                  

(3)The person's “reportable event period” is the period—                  

(a)beginning when the first reportable event occurs in relation to which the person is a responsible person, and                  

(b)ending when the person will no longer be a responsible person in relation to reportable events.                  

(4)The return for a tax year must—                  

(a)contain, or be accompanied by, such information as HMRC may require, and                  

(b)be given on or before 6 July in the following tax year.                  

(5)The information which may be required under subsection (4)(a) includes (in particular) information to enable HMRC to determine                           the liability to tax, including capital gains tax, of any employee.                  

(6)If the person becomes aware that—                  

(a)anything which should have been included in, or should have accompanied, a return for a tax year was not included in, or did                           not accompany, the return,                  

(b)anything which should not have been included in, or should not have accompanied, a return for a tax year was included in,                           or accompanied, the return, or                  

(c)any other error or inaccuracy has occurred in relation to a return for a tax year,                  

the person must give an amended return correcting the position to HMRC without delay.                  

(7)A person's return for a tax year under this section need not contain, or be accompanied by, duplicate information and a person                           is not required to give a return for a tax year under this section if it would only contain, or be accompanied by, duplicate                           information.                  

(8)“Duplicate information” means information which is contained in or accompanies—                  

(a)a return which another person gives for the tax year under this section, or                  

(b)a return which any person gives for the tax year under any of the following provisions—                  

(i)paragraph 81B of Schedule 2 (annual return for Schedule 2 SIP);                  

(ii)paragraph 40B of Schedule 3 (annual return for Schedule 3 SAYE option scheme);                  

(iii)paragraph 28B of Schedule 4 (annual return for Schedule 4 CSOP scheme);                  

(iv)paragraph 52 of Schedule 5 (annual return for company whose shares are subject to qualifying options under the EMI code).                  

##### 421JBReturns to be given electronically

(1)A return under section 421JA, and any information accompanying the return, must be given electronically.                  

(2)But, if HMRC consider it appropriate to do so, HMRC may allow a person to give a return or any accompanying information in                           another way; and, if HMRC do so, the return or information must be given in that other way.                  

(3)The Commissioners for Her Majesty's Revenue and Customs—                  

(a)must prescribe how returns and accompanying information are to be given electronically;                  

(b)may make different provision for different cases or circumstances.                  

##### 421JCPenalties for late returns

(1)This section applies if a person fails to give a return under section 421JA for a tax year (containing, or accompanied by,                           all required information) on or before the date mentioned in section 421JA(4)(b) (“the date for delivery”).                  

(2)The person is liable for a penalty of £100.                  

(3)If the person's failure continues after the end of the period of 3 months beginning with the date for delivery, the person                           is liable for a further penalty of £300.                  

(4)If the person's failure continues after the end of the period of 6 months beginning with the date for delivery, the person                           is liable for a further penalty of £300.                  

(5)The person is liable for a further penalty under this subsection if—                  

(a)the person's failure continues after the end of the period of 9 months beginning with the date for delivery,                  

(b)HMRC decide that such a penalty should be payable, and                  

(c)HMRC give notice to the person specifying the period in respect of which the penalty is payable.                  

(The person may be liable for more than one penalty under this subsection.)                  

(6)The penalty under subsection (5) is £10 for each day that the failure continues during the period specified in the notice                           under subsection (5)(c).                  

(7)The period specified in the notice under subsection (5)(c)—                  

(a)may begin earlier than the date on which the notice is given, but                  

(b)may not begin until after the end of the period mentioned in subsection (5)(a) or, if relevant, the end of any period specified                           in any previous notice under subsection (5)(c) given in relation to the failure.                  

(8)Liability for a penalty under this section does not arise if the person satisfies HMRC (or, on an appeal under section 421JF,                           the tribunal) that there is a reasonable excuse for the person's failure.                  

(9)For the purposes of subsection (8)—                  

(a)an insufficiency of funds is not a reasonable excuse, unless attributable to events outside the person's control,                  

(b)where the person relies on any other person to do anything, that is not a reasonable excuse unless the (first mentioned) person                           took reasonable care to avoid the failure, and                  

(c)where the person had a reasonable excuse for the failure but the excuse ceased, the person is to be treated as having continued                           to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.                  

##### 421JDPenalty if information not given correctly

(1)This section applies if a return under section 421JA, or any information accompanying such a return—                  

(a)is given otherwise than in accordance with section 421JB, or                  

(b)contains a material inaccuracy—                  

(i)which is careless or deliberate, or                  

(ii)which is not corrected as required by section 421JA(6).                  

(2)The person in question is liable for a penalty of an amount decided by HMRC.                  

(3)The penalty must not exceed £5,000.                  

(4)For the purposes of subsection (1)(b)(i) an inaccuracy is careless if it is due to a failure by the person in question to                           take reasonable care.                  

##### 421JEAssessment of penalties

(1)This section applies if a person is liable for a penalty under section 421JC or 421JD.                  

(2)HMRC must assess the penalty and notify the person of the assessment.                  

(3)Subject to subsection (4), the assessment must be made no later than 12 months after the date on which the person becomes                           liable for the penalty.                  

(4)In the case of a penalty under section 421JD(1)(b), the assessment must be made no later than—                  

(a)12 months after the date on which HMRC become aware of the inaccuracy, and                  

(b)6 years after the date on which the person becomes liable for the penalty.                  

(5)A penalty payable under this Part must be paid—                  

(a)no later than 30 days after the date on which the notice under subsection (2) is given to the person, or                  

(b)if notice of appeal is given against the penalty under section 421JF(1) or (2), no later than 30 days after the date on which                           the appeal is determined or withdrawn.                  

(6)The penalty may be enforced as if it were income tax or, if the person is a company within the charge to corporation tax,                           corporation tax charged in an assessment and due and payable.                  

(7)Sections 100 to 103 of TMA 1970 do not apply to a penalty under section 421JC or 421JD.                  

##### 421JFAppeals

(1)A person may appeal against a decision of HMRC that the person is liable for a penalty under section 421JC or 421JD.                  

(2)A person may appeal against a decision of HMRC as to the amount of a penalty payable by the person under section 421JC or                           421JD.                  

(3)Notice of appeal must be given to HMRC no later than 30 days after the date on which the notice under section 421JE(2) is                           given to the person.                  

(4)On an appeal under subsection (1) which is notified to the tribunal, the tribunal may affirm or cancel the decision.                  

(5)On an appeal under subsection (2) which is notified to the tribunal, the tribunal may—                  

(a)affirm the amount of the penalty decided, or                  

(b)substitute another amount for that amount.                  

(6)Subject to this section and section 421JE, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation                           to an appeal under this section as they have effect in relation to an appeal against an assessment to income tax or, if the                           person is a company within the charge to corporation tax, corporation tax.”                  

229U.K.In section 421K (reportable events) in subsection (1) for “section 421J (duty to provide information)” substitute “ sections 421J and 421JA (duties to provide information and annual returns) ”.

230U.K.In section 421L (responsible persons) in subsection (1) for “section 421J (duty to provide information)” substitute “ sections 421J and 421JA (duties to provide information and annual returns) ”.

#### Other amendment: section 98 of TMA 1970U.K.

231U.K.In the second column of the Table in section 98 of TMA 1970 (special returns etc) omit the entry for section 421J(3) of ITEPA                        2003.

#### Commencement and transitional provisionU.K.

232U.K.This Part is treated as having come into force on 6 April 2014.

233U.K.The amendments made by paragraphs 227 and 231 above have no effect in relation to reportable events occurring before 6 April                        2014.

234(1)Section 421JA of ITEPA 2003 (as inserted by paragraph 228 above) has effect so as to require returns for the tax year 2014-15                        and subsequent tax years.U.K.

(2)That section has effect in relation to persons whose reportable event periods begin before 6 April 2014 (as well as those                        whose reportable event periods begin on or after that date).

 Section 52

## SCHEDULE 9U.K.Employment-related securities etc

### **PART 1**U.K.Internationally mobile employees

#### ITEPA 2003U.K.

1U.K.ITEPA 2003 is amended as follows.

2U.K.Part 2 (employment income: charge to tax) is amended as follows.

3U.K.In section 6 (nature of charge to tax on employment income), in subsection (3A), for “Chapter 5A” substitute “ Chapter 5B ”.

4U.K.In section 10 (meaning of “taxable earnings” and “taxable specific income”), in subsection (4), for the words from “Chapter 5A” to the end substitute “ Chapter 5B (taxable specific income from employment-related securities etc: internationally mobile employees) ”.

5U.K.For Chapter 5A (taxable specific income: effect of remittance basis) substitute—

##### “CHAPTER 5BU.K.Taxable specific income from employment-related securities etc: internationally mobile employees

###### 41FTaxable specific income: internationally mobile employees etc

###### 41GSection 41F: the relevant period

###### 41HSection 41F: chargeable and unchargeable foreign securities income

###### 41ILimit on “chargeable foreign securities income” where duties of associated employment performed in UK

###### 41JLocation of employment duties

###### 41KSecurities income from overseas Crown employment

###### 41LChargeable and unchargeable foreign securities income: just and reasonable apportionment

6U.K.Part 7 (employment income: income and exemptions relating to securities) is amended as follows.

7U.K.In section 418 (other related provisions), before subsection (1) insert—

“(A1)This Part needs to be read with Chapter 5B of Part 2 (taxable specific income from employment-related securities etc: internationally                           mobile employees).”                  

8U.K.Omit section 421E (employment-related securities: exclusions, residence etc).

9U.K.In section 425 (no charge in respect of acquisition in certain cases), after subsection (5) insert—

“(6)No election may be made under subsection (3) unless, at the time of the acquisition, the earnings from the employment are                           (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.”                  

10(1)Section 428 (restricted securities: amount of charge) is amended as follows.U.K.

(2)In subsection (7), after paragraph (ba) insert—

“(bb)any amount that was charged to non-UK income tax in respect of the acquisition of the employment-related securities, but only                           so far as that amount exceeds any amount within paragraph (b) or (ba),”.                  

(3)After subsection (7) insert—

“(7A)In subsection (7)(b) and (ba) the references to an amount of exempt income, in a case in which the amount that constituted,                           or was treated as, earnings in respect of the acquisition was not an amount of general earnings to which any of the charging                           provisions of Chapters 4 and 5 of Part 2 applied, includes any amount that would have been an amount of exempt income if any                           of those charging provisions had applied.                  

(7B)In subsection (7)(bb) “non-UK income tax” means a tax chargeable on income under the law of a territory outside the United Kingdom that corresponds to United Kingdom                           income tax.                  

(7C)A tax is not outside the scope of subsection (7B) by reason only that it—                  

(a)is chargeable under the law of a province, state or other part of a country, or                  

(b)is levied by or on behalf of a municipality or other local body.”                  

11U.K.In section 430 (election for outstanding restrictions to be ignored), after subsection (3) insert—

“(4)No election may be made under this section unless, at the time of the chargeable event, the earnings from the employment are                           (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.”                  

12U.K.In section 431 (election for full or partial disapplication of Chapter 2 of Part 7 of ITEPA 2003), after subsection (5) insert—

“(6)No election may be made under this section unless, at the time of the acquisition, the earnings from the employment are (or                           would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.”                  

13U.K.In section 446T (securities acquired for less than market value: amount of notional loan), after subsection (3) insert—

“(3A)In subsection (3)(b) and (ba) the references to an amount of exempt income, in a case in which the amount that constitutes,                           or is treated as, earnings in respect of the acquisition is not an amount of general earnings to which any of the charging                           provisions of Chapters 4 and 5 of Part 2 applies, includes any amount that would be an amount of exempt income if any of those                           charging provisions were to apply.”                  

14U.K.Omit section 474 (cases where Chapter 5 of Part 7 of ITEPA 2003 (employment-related securities options) does not apply).

15U.K.In section 480 (securities options: deductible amounts), after subsection (5) insert—

“(5A)In subsection (5)(a) the reference to an amount of exempt income, in a case in which the amount that constituted earnings                           in respect of the acquisition was not an amount of general earnings to which any of the charging provisions of Chapters 4                           and 5 of Part 2 applied, includes any amount that would have been an amount of exempt income if any of those charging provisions                           had applied.”                  

16(1)Section 540 (no charge on acquisition of shares as taxable benefit) is amended as follows.U.K.

(2)In subsection (1), omit “In its application in relation to a UK resident employee,”.

(3)Omit subsection (2).

17U.K.Part 7A (employment income provided through third parties) is amended as follows.

18U.K.In section 554L (exclusions: earmarking for employee share schemes (3)), in subsection (10)(c)(i), for “section 474” substitute                        “ Chapter 5B of Part 2 ”.

19(1)Section 554M (exclusions: earmarking for employee share schemes (4)) is amended as follows.U.K.

(2)In subsection (9)(b)(i), for “section 474” substitute “ Chapter 5B of Part 2 ”.

(3)In subsection (10)(b)(i), for “section 474” substitute “ Chapter 5B of Part 2 ”.

20(1)Section 554N (exclusions: other cases involving employment-related securities etc) is amended as follows.U.K.

(2)In subsection (1)(b), omit “, or would apply apart from section 421E(1),”.

(3)In subsection (2)(b), omit “, or would apply apart from section 474(1),”.

(4)In subsection (6)—

(a)omit “421E(1),”, and

(b)omit “, 474(1)”.

(5)In subsection (10)—

(a)in paragraph (b), omit “, but ignoring section 474(1)”, and

(b)in paragraph (c), omit “or would be a chargeable event apart from section 474(1)”.

(6)In subsection (13)(c)(i), for “section 474” substitute “ Chapter 5B of Part 2 ”.

21U.K.In Chapter 4 of Part 11 (PAYE: special types of income), in section 700A (employment-related securities etc: remittance basis),                        in subsection (3), for “41A” substitute “ 41F ”.

#### Consequential amendments to other ActsU.K.

22U.K.TCGA 1992 is amended as follows.

23U.K.In section 119A (increase in expenditure by reference to tax charged in relation to employment-related securities), in subsection                        (5A), for “unremitted foreign securities income” substitute “ unchargeable, and unremitted chargeable, foreign securities income ”.

24(1)Section 119B (section 119A: unremitted foreign securities income) is amended as follows.U.K.

(2)In the heading, for “unremitted foreign securities income” substitute “ unchargeable, and unremitted chargeable, foreign securities income ”.

(3)In subsection (1), for the words from “unremitted” to the end substitute “— 

(a)unchargeable foreign securities income, or                  

(b)unremitted chargeable foreign securities income.”                  

(4)After subsection (1) insert—

“(1A)In this section “unchargeable foreign securities income” means unchargeable foreign securities income for the purposes of section 41F of ITEPA 2003 (taxable specific income: internationally                           mobile employees etc) (see sections 41H to 41L of that Act).”                  

(5)In subsection (2)—

(a)after “unremitted” insert “ chargeable ”, and

(b)for paragraph (a) substitute—

“(a)is chargeable foreign securities income for the purposes of section 41F of ITEPA 2003, and”.                  

(6)In subsection (3), after “unremitted” insert “ chargeable ”.

25U.K.In section 144ZB (exception to rule in section 144ZA), in subsection (2)(a), omit “or would, apart from section 474 of that                        Act, apply”.

26U.K.In section 149A (employment-related securities options), in subsection (1)(b), omit “or would, apart from section 474 of that                        Act, apply”.

27U.K.In section 149AA (restricted and convertible employment-related securities and employee shareholder shares), in subsection                        (7)—

(a)after “include” insert “— 

(a)”, and

(b)at the end insert “, or 

(b)in a case in which the amount that constituted, or was treated as, earnings was not an amount of general earnings to which                           any of the charging provisions of Chapters 4 and 5 of Part 2 of ITEPA 2003 applied, any amount that would have been an amount                           of such exempt income if any of those charging provisions had applied.”                  

28U.K.In section 288 (interpretation), in subsection (1A), omit “or would, apart from section 474 of that Act, apply”.

29U.K.In section 809K of ITA 2007 (remittance of income and gains: introduction), in subsection (1), for paragraph (c) substitute—

“(c)Chapter 5B of Part 2 of that Act (taxable specific income from employment-related securities etc: internationally mobile employees),”.                  

30U.K.CTA 2009 is amended as follows.

31U.K.In section 1017 (condition relating to employee's income tax position for CT relief following acquisition of shares pursuant                        to option), omit subsections (2) to (4).

32U.K.In section 1025 (additional CT relief available if shares are restricted shares), omit subsections (3) to (5).

33U.K.In section 1032 (meaning of “chargeable event” for the purposes of additional CT relief in cases involving convertible securities), omit subsections (3) to (5).

### **PART 2**U.K.Restricted securities and securities acquired for less than market value: replacement and additional securities and rollover                        relief etc

34U.K.ITEPA 2003 is amended as follows.

35(1)In Chapter 1 of Part 7 (income and exemptions relating to securities: general), section 421D (replacement and additional securities                        and changes in interests) is amended as follows.U.K.

(2)In subsection (3), insert at the end “ and for the purposes of Chapter 3C as a payment made for their acquisition at or before the time of the acquisition ”.

(3)In subsection (4), insert at the end “ or a payment was made for their acquisition at or before the time of the acquisition ”.

36U.K.In Chapter 2 of Part 7 (restricted securities), before section 431 (election for full or partial disapplication of Chapter                        2) but after the heading before that section (supplementary) insert—

#### “430AApplication of this Chapter where securities exchanged for further securities

37(1)In Chapter 3C of Part 7 (securities acquired for less than market value), section 446U (discharge of notional loan) is amended                        as follows.U.K.

(2)In subsection (1), omit the “or” at the end of paragraph (a) and for paragraph (b) substitute—

“(b)if there is an outstanding or contingent liability to pay for the employment-related securities, that liability is released,                           extinguished, transferred or adjusted so as no longer to bind any associated person (except in circumstances in which subsection                           (4)(aa) applies), or”.                  

(3)After that subsection insert—

“(1A)Subsection (1)(a) does not apply if, at the time of the acquisition, there was an actual or contingent liability to make one                           or more further payments equal to the amount initially outstanding for the employment-related securities.”                  

(4)In subsection (4), omit the “or” at the end of paragraph (a) and after that paragraph insert—

“(aa)the employment-related securities, together with the liability to make such further payment or payments, are disposed of otherwise                           than to an associated person and for consideration of an amount that reflects the transfer of the liability, or”.                  

38U.K.In section 554N (exclusions from Chapter 2 of Part 7A: other cases involving employment related securities etc), in subsection                        (6), after “429,” insert “ 430A(5)(b), ”.

### **PART 3**U.K.Corporation tax relief for employee share acquisitions

39U.K.Part 12 of CTA 2009 (other relief for employee share acquisitions) is amended as follows.

40U.K.In Chapter 1 (introduction), in section 1002 (“employment”), after subsection (4) insert—

“(5)See also sections 1007A(2), 1015B(2), 1025B(2) and 1030B(2) (deemed employment for the purposes of Chapters 2, 3, 4 and 5                           of certain employees of overseas companies who work for companies in the UK).”                  

41U.K.In section 1005 (other definitions)—

(a)at the end of the definition of “the employee” insert “ (see also sections 1025A(7) and 1030A(8)) ”, and

(b)in the definition of “the qualifying business”, for “or 1015(1)(b)” substitute “ , 1015(1)(b), 1025A(1)(d)(i) or 1030A(1)(d)(ii) ”.

42U.K.In Chapter 2 (corporation tax relief if shares are acquired by employee or other person), after section 1007 insert—

#### “1007AApplication of Chapter in relation to employees of overseas companies who work for companies in the UK

43U.K.In Chapter 3 (corporation tax relief if employee or other person obtains option to acquire shares), after section 1015 insert—

#### “1015AApplication of Chapter: employees of overseas companies who take up employment with a UK company

#### 1015BApplication of Chapter in relation to employees of overseas companies who work for companies in the UK

44(1)Section 1016 (conditions relating to shares acquired) is amended as follows.U.K.

(2)In subsection (1), omit the “or” at the end of paragraph (b) of Condition 2 and after paragraph (c) of that Condition insert                        “, or 

(d)shares within subsection (1A)”.                  

(3)After subsection (1) insert—

“(1A)Shares are within this subsection if—                  

(a)after the option is obtained, the company in which the shares are to be acquired (“the relevant company”) comes to be controlled by another company (“the takeover”),                  

(b)immediately before the takeover, the shares were within any of paragraphs (a) to (c) of Condition 2,                  

(c)as a result of the takeover, the shares cease to be within any of those paragraphs,                  

(d)the shares are acquired pursuant to the option within the period of 90 days beginning with the day of the takeover, and                  

(e)the avoidance of tax is not the main purpose (or one of the main purposes) of the takeover.”                  

45U.K.In Chapter 4 (additional corporation tax relief in cases involving restricted shares), after section 1025 insert—

#### “1025AApplication of Chapter: employees of overseas companies who take up employment with, or work for, a UK company

#### 1025BApplication of Chapter where original relief a consequence of section 1007A, 1015A or 1015B

46U.K.In Chapter 5 (additional corporation tax relief in cases involving convertible securities), after section 1030 insert—

#### “1030AApplication of Chapter: employees of overseas companies who take up employment with, or work for, a UK company

#### 1030BApplication of Chapter where original relief a consequence of section 1007A, 1015A or 1015B

### **PART 4**U.K.Commencement etc

47U.K.Part 1 and paragraphs 40 to 43, 45 and 46 of Part 3 of this Schedule come into force on 6 April 2015.

48U.K.The amendments made by Part 1 have effect on and after that date in relation to employment-related securities and employment-related                        securities options irrespective of the date of the acquisition.

49U.K.The Treasury may by regulations—

(a)make transitional provision or savings in connection with the coming into force of any of the provisions mentioned in paragraph                        47;

(b)make consequential, incidental or supplementary provision in connection with any of those provisions.

50(1)Regulations made under paragraph 49 may—U.K.

(a)modify any provision made by or under an Act (including paragraph 48 of this Schedule), as the Treasury think appropriate;

(b)make different provision for different cases or different circumstances.

(2)In sub-paragraph (1)(a) “modify” includes amend, repeal or revoke.

 Section 53

## SCHEDULE 10U.K.Venture capital trusts

### Time limits for making assessmentsU.K.

1(1)In section 270 of ITA 2007 (assessment on withdrawal or reduction of relief), in subsection (1), after “obtained” insert “ , and may be made at any time not more than 6 years after the end of that tax year ”.U.K.

(2)The amendment made by this paragraph has effect in relation to assessments made on or after 6 April 2014 (including those                        made for tax years ending before that date).

### Linked salesU.K.

2(1)After section 264 of ITA 2007 insert—U.K.

#### “264ARestricting relief where there is a linked sale

(1)This section applies where—                  

(a)an individual subscribes for shares (“the relevant shares”) in a VCT (“the VCT”), and                  

(b)there is at least one linked sale of other shares by the individual.                  

(2)For the purposes of this Part, the amount the individual subscribes for the shares is to be treated as reduced (but not below                           nil) by the total consideration given for the linked sales of other shares.                  

This is subject to subsection (3).                  

(3)If a sale is linked in relation to more than one subscription for shares—                  

(a)the consideration for it is to be applied to reduce subscriptions under subsection (2) in the order in which the subscriptions                           are made, and                  

(b)accordingly, to the extent that any consideration has been used to reduce an earlier subscription, it is not available to                           reduce a later one.                  

(4)A sale of shares (“the sold shares”) is “linked” if conditions A and B are met.                  

(5)Condition A is that the sold shares are in—                  

(a)the VCT, or                  

(b)a company which is (or later becomes) a successor or predecessor of the VCT.                  

(6)Condition B is that—                  

(a)the individual subscribes for the relevant shares in circumstances where—                  

(i)the purchase of the sold shares from the individual was conditional upon the individual subscribing for shares in the VCT,                           or                  

(ii)the individual's subscription for shares in the VCT was conditional upon that purchase, or                  

(b)the subscription for the relevant shares and the sale of the sold shares are within 6 months of each other (irrespective of                           which came first).                  

(7)A company (“company X”) is a “successor or predecessor of the VCT” if—                  

(a)there is a merger of two or more companies for the purposes of Chapter 5 (see section 323) and—                  

(i)the VCT is one of the merged companies and company X is “the successor company” (as defined by that section), or                  

(ii)the VCT is “the successor company” and company X is one of the merged companies, or                  

(b)section 327 (effect of restructuring of VCT) applies and—                  

(i)the VCT is “the old company” and company X is “the new company” for the purposes of that section, or                  

(ii)company X is “the old company” and the VCT is “the new company” for those purposes.                  

(8)This section does not apply if, or to the extent that, the subscription for the relevant shares is a result of the individual                           electing to reinvest dividends payable to the individual on shares in the VCT, in acquiring further shares in the VCT.”                  

(2)The amendment made by this paragraph has effect in relation to claims for relief by reference to shares issued on or after                        6 April 2014.

### Approval of VCT: return of capitalU.K.

3(1)Section 281 of ITA 2007 (withdrawal of VCT approval of a company) is amended as follows.U.K.

(2)In subsection (1), omit the “or” at the end of paragraph (d) and after paragraph (e) insert—

“(f)that, while it has been a VCT, the company has issued shares and, before the end of the restricted period, the company, other                           than for the purpose of redeeming or repurchasing any of those shares, has—                  

(i)made a payment to all or any of its shareholders of an amount representing (directly or indirectly) a repayment of its share                           capital, whether that payment was made out of a reserve arising from a reduction of share capital or otherwise,                  

(ii)where the shares were issued at a premium, made a payment to all or any of its shareholders of an amount representing (directly                           or indirectly) that premium or any part of it, whether that payment was made out of a share premium reserve or otherwise,                           or                  

(iii)used an amount which represents (directly or indirectly) the company's share capital or an amount by which that share capital                           has been diminished, or, where the shares were issued at a premium, that premium (or any part of it), to pay up new shares                           to be allotted to all or any of its shareholders.”                  

(3)After that subsection insert—

“(1A)In subsection (1)(f)—                  
          -  “payment”—                          (a)
does not include any distribution of assets made in connection with the winding up of the company, but                                 
(b)
does include every other description of distribution of the company's assets to its members,                                 
  and for this purpose “distribution” includes (but is not limited to) a distribution within the meaning of section 989,                         
          -  “reduction of share capital” has the same meaning as in section 1027A(2) of CTA 2010, and                         
          -  “the restricted period” means the period of 3 years beginning at the end of the accounting period of the company in which the shares were issued.”                         

(4)The amendments made by this paragraph have effect in relation to shares issued on or after 6 April 2014.

(5)In section 281(1)(f)(i) or (iii) of ITA 2007 references to a company's share capital do not include so much (if any) of its                        share capital as consists of shares issued before 6 April 2014.

4U.K.In section 322 of ITA 2007 (power to facilitate mergers of VCTs: provision that may be made by regulations), after subsection                        (5) insert—

“(5A)Provision for section 281(1)(f) (withdrawal of VCT approval where company has made a repayment of share capital etc) not to                           apply, or to apply subject to modifications, to the successor company or any of the merging companies, in relation to payments                           made, or amounts used to pay up new shares, in connection with or after the merger.”                  

### NomineesU.K.

5(1)After section 330 of ITA 2007 insert—U.K.

#### “NomineesU.K.

##### 330ANominees

Shares subscribed for, issued to, held by or disposed of for an individual by a nominee are treated for the purposes of this                        Part as subscribed for, issued to, held by or disposed of by the individual.”                  

(2)In section 284 of that Act (power to make regulations as to procedure), in subsection (1)(d), after “persons” include “(including                        nominees)”.

 Section 57

## SCHEDULE 11U.K.Tax relief for social investments

### **PART 1**U.K.New Part 5B of ITA 2007

1U.K.In ITA 2007, after Part 5A (seed enterprise investment scheme) insert—

#### **“PART 5B**U.K.Tax relief for social investments

##### CHAPTER 1U.K.Introduction

###### 257JMeaning of “SI relief” and “social enterprise”

(1)This Part provides for income tax relief for social investments (“SI relief”), that is, entitlement to tax reductions in respect                           of amounts invested in social enterprises by individuals.                  

(2)In this Part “social enterprise” means—                  

(a)a community interest company,                  

(b)a community benefit society (see section 257JB) that is not a charity,                  

(c)a charity,                  

(d)an accredited social impact contractor (see section 257JD), or                  

(e)any other body prescribed, or of a description prescribed, by an order made by the Treasury.                  

(3)An order under subsection (2)(e) may make provision as to the bodies which are social enterprises for the purposes of this                           Part at times before the order comes into force or FA 2014 is passed but, where a body is a social enterprise for the purposes                           of this Part as a result of an order under subsection (2)(e) that has come into force, no subsequent order under subsection                           (2)(e) may undo that result in respect of times before the subsequent order comes into force.                  

###### 257JAForm and amount of relief

(1)If an individual—                  

(a)is eligible for SI relief in respect of any amount, and                  

(b)makes a claim in respect of all or some of the amount,                  

the individual is entitled to a tax reduction for the tax year in which the amount was invested.                  

This is subject to the provisions of this Part.                  

(2)The amount of the reduction to which an individual is entitled under this Part for any particular tax year is the amount equal                           to tax, at the SI rate for that year, on—                  

(a)the amount or, as the case may be, the sum of the amounts invested in that year in respect of which the individual is eligible                           for and claims SI relief, or                  

(b)if less, £1 million.                  

(3)The tax reduction is given effect at Step 6 in section 23.                  

(4)If an individual—                  

(a)is eligible for and claims SI relief in respect of an amount, and                  

(b)makes a claim for part of that amount to be treated for the purposes of subsections (1) and (2) as if it had been invested                           not in the tax year in which it was actually invested but in the preceding tax year,                  

those subsections apply, and the individual's liability to tax for both tax years is determined, in accordance with the claim.                  

(5)In this Part “the SI rate” means 30%.                  

###### 257JBMeaning of “community benefit society”

(1)In this Part “community benefit society” means a body that—                  

(a)is registered as a community benefit society under the 2014 Act,                  

(b)is a pre-commencement society (within the meaning of the 2014 Act) that meets the condition in section 2(2)(a)(ii) of the                           2014 Act, or                  

(c)is a society registered, or treated as registered, under section 1 of the Industrial and Provident Societies Act (Northern                           Ireland) 1969 in the case of which the condition in section 1(2)(b) of that Act is fulfilled,                  

and in respect of which the condition in subsection (2) is met.                  

(2)The condition is that—                  

(a)the body is of a kind prescribed by regulation 5 of, and                  

(b)the body's rules include a rule in the terms set out in Schedule 1 to,                  

the Community Benefit Societies (Restriction on Use of Assets) Regulations 2006 (S.I. 2006/264) or the Community Benefit Societies                        (Restriction on Use of Assets) Regulations (Northern Ireland) 2006 (S.R. 2006/258).                  

(3)The Treasury may by order amend this section for the purpose of—                  

(a)replacing—                  

(i)the condition in subsection (2), or                  

(ii)the condition, or all or any of the conditions, for the time being replacing the condition in subsection (2),                  

with one or more other conditions;                  

(b)varying—                  

(i)the condition in subsection (2), or                  

(ii)the condition, or any of the conditions, for the time being replacing the condition in subsection (2);                  

(c)dispensing with—                  

(i)the condition in subsection (2), or                  

(ii)the condition, or all or any of the conditions, for the time being replacing the condition in subsection (2).                  

(4)In this section—                  
          -  “the 2014 Act” means the Co-operative and Community Benefit Societies Act 2014;                         
          -  “the 2010 Act” means the Co-operative and Community Benefit Societies and Credit Unions Act 2010.                         

(5)While neither the 2014 Act, nor section 1 of the 2010 Act, is in force, subsection (1) of this section has effect as if for                           paragraphs (a) and (b) of that subsection there were substituted—                  

“(a)is a society registered, or treated as registered, under section 1 of the Industrial and Provident Societies Act 1965 in the                           case of which the condition in section 1(2)(b) of that Act is fulfilled, or”.                  

(6)If section 1 of the 2010 Act (registration of societies) comes into force before the 2014 Act comes into force then, with                           effect from the coming into force of that section and until the coming into force of the 2014 Act, subsection (1) of this                           section has effect as if for paragraphs (a) and (b) of that subsection there were substituted—                  

“(a)is registered as a community benefit society under section 1 of the Industrial and Provident Societies Act 1965 (“the 1965 Act”),                  

(b)is a pre-2010 Act society (as defined by section 4A(1) of the 1965 Act) that meets the condition in section 1(3) of the 1965                           Act, or”.                  

(7)In the event that section 2 of the 2010 Act (renaming of the 1965 Act) is brought into force before its repeal by the 2014                           Act takes effect then, with effect from the coming into force of that section, subsections (5) and (6) of this section have                           effect as if, in the provisions which they substitute, the references to the Industrial and Provident Societies Act 1965 were                           references to the Co-operative and Community Benefit Societies and Credit Unions Act 1965.                  

###### 257JCCharities that are trusts

In this Part (except section 257JD), a reference to a company includes a reference to a charity that is a trust.                  

###### 257JDAccreditation as a social impact contractor

(1)In this Part “accredited social impact contractor” means a company limited by shares that is accredited under this section as a social impact contractor.                  

(2)Applications for accreditation as a social impact contractor must be made to a Minister of the Crown in the form and manner                           specified by a Minister of the Crown.                  

(3)A Minister of the Crown is to accredit a company if, but only if, that Minister is satisfied that—                  

(a)the company has entered into a social impact contract (see section 257JE),                  

(b)the company is, and at all times since its incorporation has been, established—                  

(i)for the purpose of entering into and carrying out a social impact contract, or for that purpose and purposes incidental to                           it, but                  

(ii)for no other purpose, and                  

(c)the activities of the company in carrying out that contract will not consist wholly, or as to a substantial part, in excluded                           activities (see section 257MQ).                  

(4)If a Minister of the Crown is satisfied that the condition in subsection (3)(b) or (c) has ceased to be met in relation to                           a company that is an accredited social impact contractor, that Minister is to withdraw the company's accreditation with effect                           from the time the condition ceased to be met or a later time.                  

###### 257JEMeaning of “social impact contract”

(1)In this Part “social impact contract” means a contract that meets such criteria as may be specified in regulations made by the Treasury.                  

(2)The criteria which may be specified under subsection (1) include, in particular, criteria as to a party to the contract other                           than the company seeking accreditation.                  

(3)Criteria may be specified in regulations under subsection (1) by reference to material published by, or on behalf of, a Minister                           of the Crown after the making of the regulations (as well as by reference to material published before the making of the regulations).                  

(4)Regulations under subsection (1) may make different provision for different cases or circumstances or in relation to different                           areas.                  

###### 257JFAccreditations: supplementary provisions

(1)An accreditation must be made so as to be conditional on compliance with—                  

(a)any requirements imposed by or under regulations, and                  

(b)any other requirements considered appropriate by the Minister of the Crown who is accrediting the company concerned.                  

(2)The requirements that may be imposed by virtue of subsection (1) include requirements relating to the provision of information.                  

(3)Regulations may—                  

(a)make further provision about applications for accreditation,                  

(b)make provision for the variation of an accreditation (including its provisions as to its duration),                  

(c)make provision which, in a case where a company is or has been an accredited social impact contractor, imposes or authorises                           the imposition of requirements on the company, or on any other party to the social impact contract concerned, to provide information,                  

(d)make provision about the consequences of a failure to comply with any requirement of an accreditation imposed by virtue of                           subsection (1) or with any requirement imposed by virtue of paragraph (c), including in particular—                  

(i)provision for the withdrawal of the accreditation concerned with effect from the time of the failure or a later time, and                  

(ii)provision for the imposition of penalties,                  

(e)make provision for publication of information about an accreditation or accredited social impact contractor, and                  

(f)make provision for reviews of, or for appeals to the tribunal against, any of the following—                  

(i)a refusal to grant or vary an accreditation,                  

(ii)the imposition of a requirement under subsection (1)(b),                  

(iii)the withdrawal of an accreditation (whether under section 257JD(4) or by virtue of provision made under paragraph (d)(i)),                           and                  

(iv)the imposition or amount of a penalty imposed by virtue of provision made under paragraph (d)(ii).                  

(4)Regulations under subsection (1) or (3) may—                  

(a)make provision for the making of decisions by a Minister of the Crown as to any matter required to be decided for the purposes                           of the regulations,                  

(b)be framed by reference to material published by, or on behalf of, a Minister of the Crown after the making of the regulations                           (as well as by reference to material published before the making of the regulations),                  

(c)make different provision for different cases or circumstances or in relation to different areas, and                  

(d)contain incidental, supplemental, consequential and transitional provision and savings.                  

(5)In this section—                  
          -  “accreditation” means accreditation under section 257JD, and                         
          -  “regulations” means regulations made by the Treasury.                         

###### 257JGPeriod of accreditation as a social impact contractor

(1)An accreditation under section 257JD has effect for a period—                  

(a)beginning with the day specified in the accreditation, and                  

(b)of a length specified in, or determined in accordance with, the accreditation.                  

(2)The day specified under subsection (1)(a) in an accreditation may not be earlier than 6 April 2014 but subject to that—                  

(a)may be, or be earlier than, the day it is decided to grant the accreditation (and in particular may be, or be earlier than,                           the day the application for the accreditation is made), and                  

(b)may be earlier than the day section 257JD comes into force.                  

(3)This section has effect subject to sections 257JD(4) and 257JF(3)(d)(i) (withdrawal of accreditations).                  

###### 257JHFunctions of Ministers of the Crown under sections 257JD to 257JG

(1)A Minister of the Crown may delegate any function given to a Minister of the Crown by or under sections 257JD to 257JG other                           than a power of the Treasury to make regulations.                  

(2)In those sections and this section “Minister of Crown” has the meaning given by section 8(1) of the Ministers of the Crown Act 1975.                  

##### CHAPTER 2U.K.Eligibility for relief: basic rule and key definitions

###### EligibilityU.K.

###### 257KEligibility for SI relief

(1)An individual (“the investor”) who invests in a social enterprise is eligible for SI relief in respect of the amount invested                           if—                  

(a)the investment is made—                  

(i)by the investor on the investor's own behalf,                  

(ii)on or after 6 April 2014, and                  

(iii)before 6 April 2019 (but see subsection (5)), and                  

(b)the conditions set out in Chapters 3 and 4 are met.                  

(2)Subsection (1)(b) is subject to the provisions in sections 257LB and 257MJ to 257MN which provide for conditions set out in                           those sections not to apply where the social enterprise is an accredited social impact contractor.                  

(3)The investor is not eligible for SI relief in respect of the amount invested if—                  

(a)the investor has obtained in respect of that amount, or any part of it, relief under—                  

(i)Part 5 (enterprise investment scheme),                  

(ii)Part 5A (seed enterprise investment scheme), or                  

(iii)Part 7 (community investment tax relief), or                  

(b)that amount, or any part of it, has under Schedule 5B to TCGA 1992 (enterprise investment scheme: re-investment) been set                           against a chargeable gain.                  

(4)Investments made by, subscribed for, issued to, held by or disposed of for an individual by a nominee are treated for the                           purposes of this Part as made by, subscribed for, issued to, held by or disposed of by the individual.                  

(5)The Treasury may by order substitute a later date for the date for time being specified in subsection (1)(a)(iii).                  

###### Key definitionsU.K.

###### 257KAKey to reading the rest of the Part

In the following provisions of this Part (except section 257N), a reference to—                  
          -  “the amount invested”,                         
          -  “the investment”,                         
          -  “the investor”, or                         
          -  “the social enterprise”,                         

is to be read in accordance with section 257K(1).                  

###### 257KBWhen investment is made, and “investment date”

(1)For the purposes of this Part “the investment date” means the date on which the investment is made.                  

(2)So far as the investment is in shares, for the purposes of this Part it is made when the shares are issued to the investor                           by the social enterprise.                  

(3)If the investment, so far as it is in qualifying debt investments (see section 257L), involves making the only advance covered                           by the debenture or debentures concerned, for the purposes of this Part it is made—                  

(a)when the social enterprise issues the debenture or debentures to the investor, or                  

(b)in a case where there is to be no such issuing, when the debenture or debentures, so far as relating to the advance, take                           effect between the social enterprise and the investor.                  

(4)If the investment, so far as it is in qualifying debt investments, involves making the first of multiple advances covered                           by the debenture or debentures concerned, for the purposes of this Part it is made—                  

(a)when the social enterprise issues the debenture or debentures to the investor, or                  

(b)in a case where there is to be no such issuing, when the debenture or debentures, so far as relating to all of those advances,                           take effect between the social enterprise and the investor.                  

(5)If the investment, so far as it is in qualifying debt investments, involves making the second of multiple advances covered                           by the debenture or debentures concerned, or a subsequent one of those advances, for the purposes of this Part it is made—                  

(a)when the amount of that advance is fully advanced in cash, or                  

(b)if later—                  

(i)when the social enterprise issues the debenture or debentures to the investor, or                  

(ii)in a case where there is to be no such issuing, when the debenture or debentures, so far as relating to all of those advances,                           takes effect between the social enterprise and the investor.                  

(6)For the purposes of subsections (3) to (5) “debenture” includes any instrument creating or acknowledging indebtedness.                  

###### 257KC“Shorter applicable period” and “longer applicable period”

(1)In this Part “the shorter applicable period” and “the longer applicable period” have the meaning given by this section.                  

(2)The shorter applicable period begins with the investment date.                  

(3)The longer applicable period begins with—                  

(a)the day on which the social enterprise is—                  

(i)incorporated (if it is a body corporate), or                  

(ii)established (in any other case), or                  

(b)if later, the day whose first anniversary is the investment date.                  

(4)Each of the periods ends with the third anniversary of the investment date.                  

##### CHAPTER 3U.K.Eligibility: conditions relating to the investor and the investment

###### 257LInvestment to be in new shares or new qualifying debt investments

(1)At all times during the shorter applicable period, the investment must be in—                  

(a)shares that meet conditions A and B and are issued to the investor by the social enterprise in return for the amount invested,                           or                  

(b)qualifying debt investments of which the investor is the holder in return for advancing the amount invested to the social                           enterprise.                  

(2)Condition A is that the shares must carry none of the following—                  

(a)a right to a return which, or any part of which, is a fixed amount;                  

(b)a right to a return which, or any part of which, is at a fixed rate;                  

(c)a right to a return which, or any part of which, is otherwise fixed by reference to the amount invested;                  

(d)a right to a return which, or any part of which, is fixed by reference to some other factor that is not contingent on successful                           financial performance by the social enterprise;                  

(e)a right to a return at a rate greater than a reasonable commercial rate.                  

(3)Condition B is that, for the purpose of determining the amounts due in respect of the shares to their holder in the event                           of the winding-up of the social enterprise—                  

(a)those amounts rank after all debts of the social enterprise except any due to holders of qualifying debt investments in the                           social enterprise in respect of their qualifying debt investments, and                  

(b)the shares do not rank above any other shares in the social enterprise.                  

(4)In this Part “qualifying debt investments”, in relation to the social enterprise, means any debentures of the social enterprise in respect of which the following conditions                           are met—                  

(a)neither the principal of the debt concerned, nor any return on that, is charged on any assets,                  

(b)the rate of any such return is not greater than a reasonable commercial rate of return, and                  

(c)in the event of the winding-up of the social enterprise and so far as the law allows, any sums due in respect of the debt                           (whether principal or return)—                  

(i)are subordinated to all other debts of the social enterprise except sums due in the case of other unsecured debentures of                           the social enterprise which rank equally,                  

(ii)rank equally, if there are shares in the social enterprise and they all rank equally among themselves, with amounts due to                           share-holders in respect of their shares, and                  

(iii)rank equally, if there are shares in the social enterprise and they do not all rank equally, with amounts due in respect of                           their shares to the holders of shares that do not rank above any other shares.                  

(5)The condition in subsection (3)(a) or (4)(c)(i) is met even if the sums concerned do not rank after debts which are postponed—                  

(a)by rules under section 411 of the Insolvency Act 1986, or                  

(b)by or under any other enactment.                  

(6)For the purposes of subsection (4) “debenture” includes any instrument creating or acknowledging indebtedness.                  

###### 257LACondition that the amount invested must have been paid over

(1)So far as the investment is in shares—                  

(a)the shares must be subscribed for wholly in cash, and                  

(b)must be fully paid up at the time they are issued.                  

(2)If the investment, so far as it is in qualifying debt investments, involves making—                  

(a)the only advance covered by the debenture or debentures concerned, or                  

(b)one of multiple advances covered by the debenture or debentures concerned,                  

the full amount of that advance must have been advanced wholly in cash by the time the investment is made.                  

(3)For the purposes of this section—                  

(a)shares are not fully paid up, or                  

(b)the full nominal amount of qualifying debt investments has not been advanced,                  

if there is any undertaking to pay cash to any person at a future time in respect of the acquisition of the shares or investments.                  

(4)For the purposes of subsection (2) “debenture” includes any instrument creating or acknowledging indebtedness.                  

###### 257LBThe no pre-arranged exits requirements

(1)There must not at any time in the shorter applicable period be any arrangements in existence for the investment to be redeemed,                           repaid, repurchased, exchanged or otherwise disposed of in that period.                  

(2)The issuing arrangements for the investment must not include—                  

(a)arrangements for or with a view to the cessation of any trade which is being or is to be or may be carried on by the social                           enterprise or a person connected with the social enterprise, or                  

(b)arrangements for the disposal of, or of a substantial amount (in terms of value) of, the assets of the social enterprise or                           of a person connected with the social enterprise.                  

(3)The arrangements referred to in subsection (2)(a) and (b) do not include any arrangements applicable only on the winding-up                           of a company except in a case where—                  

(a)the issuing arrangements include arrangements for the company to be wound up, or                  

(b)the arrangements are applicable on the winding-up of the company otherwise than for genuine commercial reasons.                  

(4)In this section “the issuing arrangements” means—                  

(a)the arrangements under which the investor makes the investment, and                  

(b)any arrangements made before, and in relation to or in connection with, the making of the investment by the investor.                  

(5)Subsections (2) to (4) do not apply if the social enterprise is an accredited social impact contractor.                  

###### 257LCThe no risk avoidance requirement

(1)There must not at any time in the shorter applicable period be any arrangements in existence the main purpose or one of the                           main purposes of which is (by means of any insurance, indemnity, guarantee, hedging of risk or otherwise) to provide partial                           or complete protection for the investor against what would otherwise be the risks attached to making the investment.                  

(2)The arrangements referred to in subsection (1) do not include any arrangements which are confined to the provision—                  

(a)for the social enterprise itself, or                  

(b)if the social enterprise is a parent company that meets the trading requirement in section 257MJ(2)(c) or is a parent company                           that is an accredited social impact contractor—                  

(i)for the social enterprise itself,                  

(ii)for the social enterprise itself and one or more of its subsidiaries, or                  

(iii)for one or more of the subsidiaries of the social enterprise,                  

of any such protection against the risks arising in the course of carrying on its business as might reasonably be expected                        to be provided in normal commercial circumstances.                  

###### 257LDThe no linked loans requirement

(1)No linked loan is to be made by any person, at any time in the longer applicable period, to the investor or an associate of                           the investor.                  

(2)In this section “linked loan” means any loan which—                  

(a)would not have been made, or                  

(b)would not have been made on the same terms,                  

if the investor had not made the investment, or had not been proposing to do so.                  

(3)References in this section to the making by any person of a loan to the investor or an associate of the investor include—                  

(a)references to the giving by that person of any credit to the investor or any associate of the investor, and                  

(b)references to the assignment to that person of a debt due from the investor or any associate of the investor.                  

###### 257LEThe no tax avoidance requirement

The investment must not be made as part of any arrangements the main purpose or one of the main purposes of which is the avoidance                        of tax.                  

###### 257LFRestrictions on being an employee, partner or paid director

(1)This section applies—                  

(a)to the investor, and                  

(b)to any individual who is an associate of the investor.                  

(2)An individual to whom this section applies must not at any time in the longer applicable period be—                  

(a)an employee of—                  

(i)the social enterprise,                  

(ii)any subsidiary of the social enterprise,                  

(iii)a partner of the social enterprise, or                  

(iv)a partner of any subsidiary of the social enterprise,                  

(b)a partner of—                  

(i)the social enterprise, or                  

(ii)any subsidiary of the social enterprise,                  

(c)a trustee of—                  

(i)the social enterprise, or                  

(ii)any subsidiary of the social enterprise, or                  

(d)a remunerated director of—                  

(i)the social enterprise, or                  

(ii)a linked company.                  

(3)In this section—                  
          -  “linked company” means—                          (a)
a subsidiary of the social enterprise,                                 
(b)
a company which is a partner of the social enterprise, or                                 
(c)
a company which is a partner of a subsidiary of the social enterprise;                                 
 
          -  “related person” means—                          (a)
the social enterprise,                                 
(b)
a person connected with the social enterprise,                                 
(c)
a linked company of which the individual is a director, or                                 
(d)
a person connected with such a company;                                 
 
          -  “subsidiary”, in relation to the social enterprise, means a company which at any time in the longer applicable period is a 51% subsidiary                              of the social enterprise (and such a company is therefore a subsidiary of the social enterprise for the purposes of this section                              even at times when it is not a 51% subsidiary of the social enterprise).                         

(4)For the purposes of subsection (2)(d), an individual who is a director of the social enterprise or a linked company is “remunerated”                           if the individual (or a partnership of which the individual is a member)—                  

(a)receives at any time in the longer applicable period a payment from a related person, or                  

(b)is entitled to receive a payment from a related person in respect of any time in the longer applicable period.                  

(5)For the purposes of subsection (4) the following are ignored—                  

(a)any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by the individual                           in the performance of the individual's duties as a director,                  

(b)any interest which represents no more than a reasonable commercial return on money lent to a related person,                  

(c)any dividend or other distribution which does not exceed a normal return on the investment,                  

(d)any payment for the supply of goods which does not exceed their market value,                  

(e)any payment of rent for any property occupied by a related person which does not exceed a reasonable and commercial rent for                           the property,                  

(f)any necessary and reasonable remuneration which—                  

(i)is paid for services, rendered to a related person in the course of a trade or profession, that are not secretarial services                           and are not managerial services and are not services of a kind provided by the person to whom they are rendered, and                  

(ii)is taken into account in calculating for tax purposes the profits of that trade or profession, and                  

(g)if condition A is met and (where applicable) condition B is also met, any other reasonable remuneration (including any benefit                           or facility) received by the individual, or to which the individual is entitled, for services rendered by the individual—                  

(i)to the company (whether the social enterprise or a linked company) of which the individual is a director, and                  

(ii)in the individual's capacity as a director of that company.                  

(6)Condition A is that the investor made the investment, or previously made another investment meeting the requirement in section                           257L(1), at a time (“the qualifying time”) when—                  

(a)the requirements of this section and sections 257LG and 257LH (even if the three sections were not then in force) would have                           been met even if each other reference in the three sections to any time in the longer applicable period were a reference to                           any time before the qualifying time, and                  

(b)the investor had never been involved in carrying on (whether on the investor's own account or as a partner, director or employee)                           the whole or any part of the trade, business or profession carried on by the social enterprise or a subsidiary of the social                           enterprise.                  

(7)Condition B is that—                  

(a)the investment did not meet condition A (but a previous investment did), and                  

(b)the investment was made before the third anniversary of the date when the investor last made an investment in the social enterprise                           which met condition A.                  

(8)References in this section to an individual in the individual's capacity as a director of a company include, if the individual                           is both a director and an employee of the company, references to the individual in the individual's capacity as an employee                           of the company but, apart from that, an individual who is both a director and an employee of a company is treated for the                           purposes of this section as a director, and not an employee, of the company.                  

(9)In subsections (2), (4) and (5) “director” does not include a trustee of a charity that is a trust.                  

###### 257LGThe requirement not to be interested in capital etc of social enterprise

(1)This section applies—                  

(a)to the investor, and                  

(b)to any individual who is an associate of the investor.                  

(2)In this section “related company” means—                  

(a)the social enterprise, or                  

(b)a company which at any time in the longer applicable period is a 51% subsidiary of the social enterprise (and such a company                           is therefore a related company for the purposes of this section even at times when it is not a 51% subsidiary of the social                           enterprise).                  

(3)There must not be any time in the longer applicable period when an individual to whom this section applies has control of                           a related company.                  

(4)There must not be any time in the longer applicable period when an individual to whom this section applies directly or indirectly                           possesses or is entitled to acquire—                  

(a)more than 30% of the ordinary share capital of a related company,                  

(b)more than 30% of the loan capital of a related company, or                  

(c)more than 30% of the voting power in a related company.                  

(5)For the purposes of subsections (3) and (4) ignore any shares in a related company held by the individual, or by an associate                           of the individual, at a time when that company—                  

(a)has not issued any shares other than subscriber shares, and                  

(b)has not begun to carry on, or make preparations for carrying on, any trade or business.                  

(6)For the purposes of this section, the loan capital of a company—                  

(a)is treated as including any debt incurred by the company—                  

(i)for any money borrowed or capital assets acquired by the company,                  

(ii)for any right to receive income created in favour of the company, or                  

(iii)for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the                           amount of the debt (including any premium on it), and                  

(b)is treated as not including any debt incurred by the company by overdrawing an account with a person carrying on a business                           of banking if the debt arose in the ordinary course of that business.                  

(7)For the purposes of this section—                  

(a)an individual is treated as entitled to acquire anything which the individual is entitled to acquire at a future date or will                           at a future date be entitled to acquire, and                  

(b)there is attributed to any individual any rights or powers of any other person who is an associate of the individual.                  

###### 257LHRequirement for no collusion with a non-qualifying investor

There must not at any time in the longer applicable period be any arrangements—                  

(a)as part of which—                  

(i)the investor makes the investment, or                  

(ii)the investor, or an individual who is an associate of the investor, makes any other investment in the social enterprise,                  

(b)which provide for a person to make an investment in a company other than the social enterprise, where that person is not the                           individual (“A”) who invests as mentioned in paragraph (a), and                  

(c)to which there is a party (whether or not A) who is an individual in relation to whom not all of the requirements in sections                           257LF and 257LG would be met if—                  

(i)references in those sections to the investor were read as references to that individual, and                  

(ii)references in those sections to the social enterprise were read as references to the company mentioned in paragraph (b).                  

##### CHAPTER 4U.K.Eligibility: conditions relating to the social enterprise

###### Conditions relating to the social enterpriseU.K.

###### 257MThe continuing to be a social enterprise requirement

The social enterprise must be a social enterprise throughout the shorter applicable period.                  

###### 257MAThe amount raised from investments potentially eligible for relief

(1)The amount invested must not be more than the amount given by—                  

where—                     

T is the total of any scheme investments made in the aid period,                        

M is the total of any de minimis aid, other than scheme investments, that is granted during the aid period—                        

to the social enterprise, or                                 

to a qualifying subsidiary of the social enterprise at a time when it is such a subsidiary,                                 

RCG is the highest rate at which capital gains tax is charged in the aid period, and                        

RSI is the highest SI rate in the aid period.                        

(2)In subsection (1) “the aid period” is the 3 years—                  

(a)ending with the day on which the investment is made, but                  

(b)in the case of that day, including only the part of the day before the investment is made.                  

(3)In this section “de minimis aid” means de minimis aid which fulfils the conditions laid down—                  

(a)in Commission Regulation (EU) No. 1407/2013 (de minimis aid) as amended from time to time, or                  

(b)in any EU instrument from time to time replacing the whole or any part of that Regulation.                  

(4)For the purposes of subsection (1), the amount of any de minimis aid is the amount of the grant or, if the aid is not in the                           form of a grant, the gross grant equivalent amount within the meaning of that Regulation as amended from time to time.                  

(5)For the purposes of this section—                  

(a)a scheme investment is an investment in respect of which the social enterprise (at any time) provides a compliance statement,                           and                  

(b)section 257KB applies for the purpose of determining when a scheme investment is made, but as if references in that section                           to this Part, the investment and the investor were (respectively) to this section, the scheme investment and the person making                           the scheme investment.                  

(6)For the purposes of subsection (1), if—                  

(a)the investment or any scheme investment is made, or                  

(b)any aid is granted,                  

in sterling or any other currency that is not the euro, its amount is to be converted into euros at an appropriate spot rate                        of exchange for the date on which the investment is made or the aid is paid.                  

###### 257MBPower to amend limits on amounts raised

(1)The Treasury may by order amend this Part for the purpose of—                  

(a)altering any limit for the time being imposed by this Part on amounts that a social enterprise may raise through investments                           eligible for SI relief;                  

(b)complying with any undertakings given to the European Commission, or any conditions imposed by the Commission, in connection                           with an application for State aid approval.                  

(2)In subsection (1) “State aid approval” means approval that the provision made by this Part, so far as it constitutes the granting of aid to which any of the provisions                           of Article 107 or 108 of the Treaty on the Functioning of the European Union applies, is or would be compatible with the internal                           market, within the meaning of Article 107 of that Treaty.                  

(3)An order under this section may make incidental, supplemental, consequential, transitional or saving provision.                  

(4)An order under this section may not be made unless a draft of the instrument containing it has been laid before, and approved                           by a resolution of, the House of Commons.                  

###### 257MCThe gross assets requirement

(1)If the social enterprise is a single company, the value of its assets—                  

(a)must not exceed £15 million immediately before the investment is made, and                  

(b)must not exceed £16 million immediately after the investment is made.                  

(2)If the social enterprise is a parent company, the value of the group assets—                  

(a)must not exceed £15 million immediately before the investment is made, and                  

(b)must not exceed £16 million immediately after the investment is made.                  

(3)For the purposes of subsection (2), the value of the group assets is the sum of the values of the gross assets of each of                           the members of the group, ignoring any assets that consist in rights against, or shares in or securities of, another member                           of the group.                  

###### 257MDThe unquoted status requirement

(1)At the beginning of the shorter applicable period—                  

(a)the social enterprise must not be a quoted company,                  

(b)there must be no arrangements in existence for the social enterprise to become a quoted company, and                  

(c)there must be no arrangements in existence for the social enterprise to become a subsidiary of a company (“the new company”)                           by virtue of an exchange of shares, or shares and securities, if arrangements have been made with a view to the new company                           becoming a quoted company.                  

(2)For the purpose of this section, a company is a “quoted company” if any shares, stocks, debentures or other securities of                           the company are—                  

(a)listed on a recognised stock exchange,                  

(b)listed on a designated exchange in a country outside the United Kingdom, or                  

(c)dealt in outside the United Kingdom by such means as may be designated.                  

(3)In subsection (2)(b) and (c) “designated” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that provision.                  

(4)An order made for the purposes of subsection (2)(b) may designate an exchange by name, or by reference to any class or description                           of exchanges, including a class or description framed by reference to any authority or approval given in a country outside                           the United Kingdom.                  

(5)The arrangements referred to in subsection (1)(b), and the second arrangements referred to in subsection (1)(c), do not include                           arrangements in consequence of which any shares, stocks, debentures or other securities of the social enterprise or the new                           company (as the case may be) are at any subsequent time—                  

(a)listed on a stock exchange that is a recognised stock exchange by virtue of an order under section 1005(1)(b), or                  

(b)listed on an exchange, or dealt in by any means, designated by an order made for the purposes of subsection (2)(b) or (c),                  

if the order was made after the beginning of the shorter applicable period.                  

###### 257METhe control and independence requirements

(1)The social enterprise must not at any time in the shorter applicable period control (whether on its own or together with any                           person connected with it) any company which is not a qualifying subsidiary of the social enterprise.                  

(2)The social enterprise must not at any time in the shorter applicable period—                  

(a)be a 51% subsidiary of a company, or                  

(b)be under the control of a company, or under the control of a company and a person connected with that company, without being                           a 51% subsidiary of the company.                  

(3)No arrangements must be in existence at any time in the shorter applicable period by virtue of which the social enterprise                           could fail to meet either or both of subsections (1) and (2) (whether during that period or otherwise).                  

###### 257MFThe qualifying subsidiaries requirement

Any subsidiary that the social enterprise has at any time in the shorter applicable period must be a qualifying subsidiary                        of the social enterprise.                  

###### 257MGThe property-managing subsidiaries requirement

(1)Any property-managing subsidiary that the social enterprise has at any time in the shorter applicable period must be a 90%                           social subsidiary of the social enterprise.                  

(2)In subsection (1) “property-managing subsidiary” means a subsidiary of the social enterprise whose business consists wholly or mainly in the holding or managing of land                           or any property deriving its value (directly or indirectly) from land.                  

###### 257MHThe number of employees requirement

(1)If the social enterprise is a single company, the full-time equivalent employee number for it must be less than 500 when the                           investment is made.                  

(2)If the social enterprise is a parent company, the sum of—                  

(a)the full-time equivalent employee number for it, and                  

(b)the full-time equivalent employee number for each of its qualifying subsidiaries,                  

must be less than 500 when the investment is made.                  

(3)The full-time equivalent employee number for a company is calculated by taking the number of full-time employees of the company                           and adding, for each employee of the company who is not a full-time employee, such fraction as is just and reasonable.                  

(4)In this section “employee”—                  

(a)includes a director, but                  

(b)does not include—                  

(i)an employee on maternity or paternity leave, or                  

(ii)a student on vocational training.                  

###### 257MIThe no partnership requirement

(1)The requirements in this section apply during the shorter applicable period.                  

(2)The social enterprise must not be a member of any partnership.                  

(3)Each 90% social subsidiary of the social enterprise must not be a member of a partnership.                  

###### 257MJThe trading requirement

(1)The social enterprise must meet the trading requirement throughout the shorter applicable period, but this does not apply                           if the social enterprise is an accredited social impact contractor.                  

(2)The trading requirement is that—                  

(a)the social enterprise is a charity,                  

(b)the social enterprise is a single company that is not a charity, and its business—                  

(i)does not, if things done for incidental purposes are ignored, consist to any extent in the carrying-on of non-trade activities,                           and                  

(ii)does not consist wholly, or as to a substantial part, in the carrying-on of excluded activities, or                  

(c)the social enterprise is a parent company that is not a charity, and the business of the group does not consist wholly, or                           as to a substantial part, in the carrying-on of non-qualifying activities.                  

(3)If the social enterprise intends that one or more companies should become its qualifying subsidiaries with a view to their                           carrying on one or more qualifying trades—                  

(a)the social enterprise is treated as a parent company for the purposes of subsection (2)(b) and (c), and                  

(b)the reference in subsection (2)(c) to the group includes the social enterprise and any existing or future company that will                           be its qualifying subsidiary after the intention in question is carried out,                  

but this subsection does not apply at any time after the abandonment of that intention.                  

(4)For the purposes of subsection (2)(c) “the business of the group” means what would be the business of the group if the activities of the group companies taken together were regarded as one                           business.                  

(5)For the purposes of determining the business of a group, activities of a group company are ignored so far as they are activities                           carried on by a mainly trading subsidiary otherwise than for its main purpose.                  

(6)For the purposes of determining the business of a group, activities of a group company are ignored so far as they consist                           in—                  

(a)the holding of shares in or securities of a qualifying subsidiary of the parent company,                  

(b)the making of loans to another group company, or                  

(c)the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by                           a group company.                  

(7)In this section—                  
          -  “incidental purposes” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities                              of the body in question,                         
          -  “mainly trading subsidiary” means a qualifying subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or                              more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,                         
          -  “non-qualifying activities” means—                          (a)
excluded activities, and                                 
(b)
activities, other than activities carried on by a charity, that are carried on otherwise than in the course of a trade, and                                 
 
          -  “non-trade activities” means activities which are neither of the following—                          (a)
activities carried on in the course of a trade, and                                 
(b)
activities carried on in the course of preparing to carry on a trade.                                 
 

###### 257MKCeasing to meet trading requirement: administration or receivership

(1)The social enterprise is not regarded as ceasing to meet the trading requirement merely because of anything done in consequence                           of the social enterprise or any of its subsidiaries being in administration or receivership, but this is subject to subsections                           (2) and (3).                  

(2)Subsection (1) applies only if—                  

(a)the entry into administration or receivership, and                  

(b)everything done as a result of the company concerned being in administration or receivership,                  

is for genuine commercial reasons, and is not part of any arrangements the main purpose or one of the main purposes of which                        is the avoidance of tax.                  

(3)The social enterprise ceases to meet the trading requirement if before the end of the shorter applicable period—                  

(a)a resolution is passed, or an order is made, for the winding-up of the social enterprise or any of its subsidiaries (or, in                           the case of a winding-up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 (S.I.                           1989/2405 (N.I. 19)), any other act is done for the like purpose), or                  

(b)the company or any of its subsidiaries is dissolved without winding-up,                  

but this is subject to subsection (4).                  

(4)Subsection (3) does not apply if the winding-up or dissolution is for genuine commercial reasons, and is not part of any arrangements                           the main purpose or one of the main purposes of which is the avoidance of tax.                  

###### 257MLThe issue must be to raise money for chosen trade or preparing for it

(1)The social enterprise must be a party to the making of the investment (so far as not in bonus shares) in order to raise money                           for the carrying-on, by the social enterprise or a 90% social subsidiary of the social enterprise, of—                  

(a)a qualifying trade which on the investment date is carried on by the social enterprise or a 90% social subsidiary of the social                           enterprise, or                  

(b)the activity of preparing to carry on (or preparing to carry on and then carrying on) a qualifying trade—                  

(i)which on the investment date is intended to be carried on by the social enterprise or a 90% social subsidiary of the social                           enterprise, and                  

(ii)which is begun to be carried by the social enterprise or such a subsidiary within 2 years after that date.                  

(2)In this Chapter—                  

(a)the purpose within subsection (1) for which money is raised is referred to as “the funded purpose”,                  

(b)the qualifying trade mentioned in subsection (1)(a) or (b) is referred to as “the chosen trade”, and                  

(c)if the funded purpose is the carrying-on of the activity mentioned in subsection (1)(b), “relevant preparation work” means preparations that form the whole or part of the activity.                  

(3)In determining for the purposes of subsection (1)(b) when a qualifying trade is begun to be carried on by a 90% social subsidiary                           of the social enterprise, any carrying-on of the trade by it before it became such a subsidiary is ignored.                  

(4)The reference in subsection (1)(b)(i) to a 90% social subsidiary of the social enterprise includes a reference to any existing                           or future body which will be such a subsidiary at any future time.                  

(5)This section does not apply if the social enterprise is an accredited social impact contractor.                  

###### 257MMRequirement to use money raised and to trade for minimum period

(1)All of the money raised by the social enterprise from the making of the investment must, no later than the end of 28 months                           beginning with the investment date, be employed wholly for the funded purpose.                  

(2)The chosen trade must have been carried on for a period of at least 4 months ending at or after the time the investment is                           made and, throughout that period, the trade—                  

(a)must have been carried on by the social enterprise or a 90% social subsidiary of the social enterprise, and                  

(b)must not have been carried on by any other person.                  

(3)Employing money on the acquisition of shares or stock in a body does not of itself amount to employing the money for the funded                           purpose.                  

(4)Subsection (1) does not fail to be met merely because an amount of money which is not significant is employed for other purposes.                  

(5)If—                  

(a)merely because of the social enterprise or any other company being wound up, or dissolved without winding-up, the qualifying                           trade is carried on as mentioned in subsection (2) for a period shorter than 4 months, and                  

(b)the winding-up or dissolution—                  

(i)is for genuine commercial reasons, and                  

(ii)is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax,                  

subsection (2) has effect as if it referred to that shorter period.                  

(6)If—                  

(a)merely because of anything done as a result of the social enterprise or any other company being in administration or receivership,                           the chosen trade is carried on as mentioned in subsection (2) for a period shorter than 4 months, and                  

(b)the entry into administration or receivership, and everything done as a result of the company concerned being in administration                           or receivership—                  

(i)is for genuine commercial reasons, and                  

(ii)is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax,                  

subsection (2) has effect as if it referred to that shorter period.                  

(7)If the social enterprise is an accredited social impact contractor, the preceding provisions of this section apply with the                           following modifications—                  

(a)in subsection (1), for “28 months” substitute “ 24 months ”,                  

(b)in that subsection, for “the funded purpose” substitute “ the carrying out of the social impact contract concerned ”, and                  

(c)omit subsections (2), (3), (5) and (6).                  

###### 257MNThe social enterprise must carry on the chosen trade

(1)There must not be a time in the shorter applicable period when—                  

(a)the chosen trade, or                  

(b)relevant preparation work,                  

is carried on by a person who is neither the social enterprise nor a 90% social subsidiary of the social enterprise.                  

(2)If relevant preparation work is carried out in the shorter applicable period by the social enterprise or a 90% social subsidiary                           of the social enterprise then, for the purposes of determining whether the requirement in subsection (1) is met, ignore any                           carrying-on of the chosen trade that takes place in that period before the trade begins to be carried on by a person who is                           the social enterprise or a 90% social subsidiary of the social enterprise.                  

(3)The requirement in subsection (1) is not regarded as failing to be met if, merely because of any act or event within subsection                           (4), the chosen trade—                  

(a)ceases to be carried on in the shorter applicable period by the social enterprise or any 90% social subsidiary of the social                           enterprise, and                  

(b)it is subsequently carried on in that period by a person who is not any time in the longer applicable period connected with                           the social enterprise.                  

(4)The acts and events within this subsection are—                  

(a)anything done as a consequence of the social enterprise or any other company being in administration or receivership, and                  

(b)the social enterprise or any other company being wound up, or dissolved without being wound up.                  

(5)Subsection (4) applies only if—                  

(a)the entry into administration or receivership, and everything done as a consequence of the company concerned being in administration                           or receivership, or                  

(b)the winding-up or dissolution,                  

is for genuine commercial reasons, and is not part of any arrangements the main purpose or one of the main purposes of which                        is the avoidance of tax.                  

(6)This section does not apply if the social enterprise is an accredited social impact contractor.                  

###### Interpretation of conditions relating to the social enterpriseU.K.

###### 257MPMeaning of “qualifying trade”

(1)For the purposes of this Chapter, a trade is a qualifying trade if—                  

(a)it is conducted on a commercial basis and with a view to the realisation of profits, and                  

(b)it does not at any time in the shorter applicable period consist wholly or as to a substantial part in the carrying-on of                           excluded activities.                  

(2)References in this section and sections 257MQ to 257MT (excluded activities) to a trade are to be read without regard to the                           definition of “trade” in section 989.                  

###### 257MQMeaning of “excluded activity”

(1)The following are excluded activities for the purposes of sections 257JD, 257MJ and 257MP—                  

(a)dealing in land, in commodities or futures or in shares, securities or other financial instruments,                  

(b)banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities (but see subsection                           (2)),                  

(c)property development (see section 257MR),                  

(d)activities in the fishery and aquaculture sector that is covered by Council Regulation (EC) No. 104/2000 of 17 December 1999 on the common organisation of the markets in fishery and aquaculture products,                  

(e)the primary production of products listed in Annex I to the Treaty on the Functioning of the European Union (agricultural                           etc products), with the exception of products covered by Council Regulation (EC) No. 104/2000 (fishery and aquaculture products),                  

(f)the subsidised generation or export of electricity (see section 257MS),                  

(g)road freight transport for hire or reward, and                  

(h)providing services or facilities for a business carried on by another person (other than a company of which the provider of                           the services or facilities is a qualifying subsidiary) if—                  

(i)the business consists wholly or as to a substantial part of activities falling within any of paragraphs (a) to (g), and                  

(ii)a controlling interest (see section 257MT) in the business is held by a person who also has a controlling interest in the                           business carried on by the provider of the services or facilities.                  

(2)The activity of lending money to a social enterprise is not an excluded activity for the purposes of sections 257MJ and 257MP.                  

###### 257MRExcluded activities: property development

(1)For the purposes of section 257MQ(1)(c) “property development” means the development of land—                  

(a)by a company which has, or at any time has had, an interest in the land, and                  

(b)with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed.                  

(2)For the purposes of subsection (1) “interest in land” means (subject to subsection (3))—                  

(a)any estate, interest or right in or over land, including any right affecting the use or disposition of land, or                  

(b)any right to obtain such an estate, interest or right from another which is conditional on the other's ability to grant it.                  

(3)References in this section to an interest in land do not include—                  

(a)the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an                           agreement for a mortgage or a charge of any kind over land, or                  

(b)in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.                  

###### 257MSExcluded activity: subsidised generation or export of electricity

(1)This section supplements section 257MQ(1)(f).                  

(2)Electricity is exported if it is exported onto a distribution system or transmission system (within the meaning of section                           4 of the Electricity Act 1989).                  

(3)The generation of electricity is subsidised if a person receives a FIT subsidy in respect of the electricity generated.                  

(4)The export of electricity is subsidised if a person receives a FIT subsidy in respect of the electricity exported.                  

(5)In this section—                  
          -  “FIT subsidy” means—                          (a)
a financial incentive under a scheme established by virtue of section 41 of the Energy Act 2008 (powers to amend licence conditions                                       etc: feed-in tariffs) to encourage small-scale low-carbon generation of electricity, or                                 
(b)
a financial incentive under a similar scheme established in Northern Ireland, or in a territory outside the United Kingdom,                                       to encourage small-scale low-carbon generation of electricity;                                 
 
          -  “small-scale low-carbon generation of electricity” has the meaning given by section 41(4) of the Energy Act 2008.                         

###### 257MTExcluded activity: providing services or facilities for another business

(1)This section explains what is meant by a controlling interest in a business for the purposes of section 257MQ(1)(h).                  

(2)In the case of a business carried on by a company, a person (“A”) has a controlling interest in the business if—                  

(a)A controls the company,                  

(b)the company is a close company and A, or an associate of A, is a director of the company and either—                  

(i)is the beneficial owner of more than 30% of the ordinary share capital of the company, or                  

(ii)is able, directly or through the medium of other companies or by any other indirect means, to control more than 30% of that                           share capital, or                  

(c)at least half of the business could, in accordance with section 942 of CTA 2010, be regarded as belonging to A for the purposes                           of section 941 of CTA 2010 (company reconstructions without a change of ownership).                  

(3)In any other case, a person has a controlling interest in a business if the person is entitled to at least half of the assets                           used for, or of the income arising from, the business.                  

(4)For the purposes of this section—                  

(a)any rights or powers of a person who is an associate of another are to be attributed to that other person, and                  

(b)“business” includes any trade, profession or vocation.                  

###### 257MUMeaning of “qualifying subsidiary”

(1)For the purposes of this Part, a company (“the subsidiary”) is a qualifying subsidiary of another company (“the parent”) if—                  

(a)the subsidiary is a 51% subsidiary of the parent,                  

(b)no person other than the parent, or another of its subsidiaries, has control of the subsidiary, and                  

(c)no arrangements are in existence as a result of which either of the conditions in paragraphs (a) and (b) would cease to be                           met.                  

(2)The conditions in subsection (1)(a) to (c) do not cease to be met merely because the subsidiary or any other company is wound                           up, or dissolved without winding up, if the winding-up or dissolution—                  

(a)is for genuine commercial reasons, and                  

(b)is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.                  

(3)The conditions in subsection (1)(a) to (c) do not cease to be met merely because of anything done as a consequence of the                           subsidiary or another company being in administration, or receivership, if—                  

(a)the entry into administration or receivership, and                  

(b)everything done as a consequence of the company concerned being in administration or receivership,                  

is for genuine commercial reasons, and is not part of any arrangements the main purpose or one of the main purposes of which                        is the avoidance of tax.                  

(4)The conditions in subsection (1)(a) to (c) do not cease to be met merely because arrangements are in existence for the disposal                           by the parent or (as the case may be) by another subsidiary of all its interest in the subsidiary if the disposal—                  

(a)is to be for genuine commercial reasons, and                  

(b)is not to be part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.                  

###### 257MVMeaning of “90% social subsidiary” of a social enterprise

(1)For the purposes of this Chapter, a company (“the subsidiary”) is a 90% social subsidiary of another company (“the parent”)                           if—                  

(a)the subsidiary is a social enterprise,                  

(b)the parent possesses at least 90% of the issued share capital of, and at least 90% of the voting power in, the subsidiary,                  

(c)the parent would—                  

(i)in the event of a winding-up of the subsidiary, or                  

(ii)in any other circumstances,                  

be beneficially entitled to receive at least 90% of the assets of the subsidiary which would then be available for distribution                        to equity holders of the subsidiary,                  

(d)the parent is beneficially entitled to receive at least 90% of any profits of the subsidiary which are available for distribution                           to equity holders of the subsidiary,                  

(e)no person other than the parent has control of the subsidiary, and                  

(f)no arrangements are in existence as a result of which any of the conditions in paragraphs (a) to (e) would cease to be met.                  

(2)For the purposes of this Chapter, a company (“company A”) which is a subsidiary of another company (“company B”) is a 90%                           social subsidiary of a third company (“company C”) if—                  

(a)company A is a 90% social subsidiary of company B, and company B is a 100% social subsidiary of company C, or                  

(b)company A is a 100% social subsidiary of company B, and company B is a 90% social subsidiary of company C.                  

(3)For the purposes of subsection (2) no account is to be taken of any control company C may have of company A.                  

(4)For the purposes of subsection (2), a company (“company X”) is a 100% social subsidiary of another company (“company Y”) at                           any time when the conditions in subsection (1)(a) to (f) would be met if—                  

(a)company X were the subsidiary,                  

(b)company Y were the parent, and                  

(c)in subsection (1) for “at least 90%” there were substituted “ 100% ”.                  

(5)The conditions in subsection (1)(a) to (f) do not cease to be met merely because of anything done as a consequence of the                           subsidiary or any other company being wound up, or dissolved without being wound up, if the winding-up or dissolution—                  

(a)is for genuine commercial reasons, and                  

(b)is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.                  

(6)The conditions in subsection (1)(a) to (f) do not cease to be met merely because of anything done as a consequence of the                           subsidiary or any other company being in administration, or receivership, if—                  

(a)the entry into administration or receivership, and                  

(b)everything done as a consequence of the company concerned being in administration or receivership,                  

is for genuine commercial reasons, and is not part of any arrangements the main purpose or one of the main purposes of which                        is the avoidance of tax.                  

(7)The conditions in subsection (1)(a) to (f) do not cease to be met merely because any arrangements are in existence for the                           disposal by the parent of all its interest in the subsidiary if the disposal—                  

(a)is to be for genuine commercial reasons, and                  

(b)is not to be part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.                  

(8)For the purposes of subsection (1)—                  

(a)the persons who are equity holders of the subsidiary, and                  

(b)the percentage of the assets of the subsidiary to which an equity holder would be entitled,                  

are to be determined in accordance with Chapter 6 of Part 5 of CTA 2010.                  

(9)In making that determination—                  

(a)references in section 166 of that Act to company A are to be read as references to an equity holder, and                  

(b)references in that section to winding up are to be read as including references to any other circumstances in which assets                           of the subsidiary are available for distribution to its equity holders.                  

##### CHAPTER 5U.K.Attribution of relief

###### 257NAttribution of SI relief to investments

(1)References in this Part, in relation to any individual, to the SI relief attributable to any investment are to be read as                           references to any reduction made in the individual's liability to income tax that is attributed to that investment in accordance                           with this section.                  

This is subject to the provisions of this Part providing for the withdrawal or reduction of SI relief.                  

(2)If an individual's liability to income tax is reduced under this Part in any tax year, then—                  

(a)if the reduction is obtained because of a single distinct investment, the amount of the reduction is attributed to that investment,                           and                  

(b)if the reduction is obtained because of two or more distinct investments, the amount of the reduction—                  

(i)is apportioned between the distinct investments in the same proportions as the amounts claimed by the individual in respect                           of each of those investments, and                  

(ii)is attributed to those investments accordingly.                  

(3)In this section “distinct investment” means an investment, made on a single day, in—                  

(a)a single share or single qualifying debt investment, or                  

(b)two or more shares, or two or more qualifying debt investments, where the shares or qualifying debt investments are in the                           same social enterprise and of the same class.                  

(4)If under this section an amount of any reduction in income tax is attributed to a distinct investment—                  

(a)in the case of a distinct investment of the kind mentioned in subsection (3)(a), that amount is attributed to the share, or                           qualifying debt investment, concerned, and                  

(b)in the case of a distinct investment of the kind mentioned in subsection (3)(b), a proportionate part of that amount is attributed                           to each of the shares, or qualifying debt investments, concerned.                  

(5)If corresponding bonus shares are issued to an individual in respect of any shares (“the original shares”) to which SI relief                           is attributed—                  

(a)a proportionate part of the total amount attributed to the original shares immediately before the bonus shares are issued                           is attributed to each of the shares in the holding comprising the original shares and the bonus shares, and                  

(b)after the issue of the bonus shares, this Part applies as if those shares had been issued to the individual on the same day                           as the original shares.                  

(6)In subsection (5) “corresponding bonus shares” means bonus shares which are in the same company, of the same class, and carry the same rights, as the original shares.                  

(7)If section 257JA(1) and (2) apply in the case of any investment as if part of the amount invested had been invested in a previous                           tax year, this section has effect as if that part and the remainder had been invested by separate investments (and that part                           had been invested by an investment made on a day in the previous tax year).                  

(8)For the purposes of this section, shares or other investments in a company are not treated as being of the same class unless                           they would be so treated if dealt in on a recognised stock exchange.                  

##### CHAPTER 6U.K.Claims for relief

###### 257PTime for making claims for SI relief

(1)A claim for SI relief in respect of the amount invested may be made—                  

(a)not earlier than the time the requirement in section 257MM(2) (chosen trade must have been carried on for 4 months) is first                           met, and                  

(b)not later than the fifth anniversary of the normal self-assessment filing date for the tax year in which the investment is                           made.                  

(2)If the social enterprise is an accredited social impact contractor, subsection (1) applies with the omission of its paragraph                           (a).                  

(3)If section 257JA(1) and (2) apply as if part of the amount invested had been invested in a previous tax year, subsection (1)                           has effect as if that part and the remainder had been invested by separate investments (and that part had been invested by                           an investment made on a day in the previous tax year).                  

###### 257PAEntitlement to claim

(1)The investor is entitled to make a claim for SI relief in respect of the amount invested if the investor has received from                           the social enterprise a compliance certificate in respect of that amount.                  

(2)For the purposes of PAYE regulations, no regard is to be had to SI relief unless a claim for it has been duly made.                  

(3)No application may be under section 55(3) or (4) of TMA 1970 (application for postponement of payment of tax pending appeal)                           on the ground that the investor is entitled to SI relief unless a claim for the relief has been duly made by the investor.                  

###### 257PBCompliance statements

(1)For the purposes of this Part, a “compliance statement” in respect of the investment is a statement by the social enterprise                           to the effect that, except so far as they fall to be met by or in relation to the individual, the requirements for SI relief—                  

(a)are for the time being met in relation to the investment (or in relation to investments that include the investment), and                  

(b)have been so met at all times since the investment was made.                  

(2)A compliance statement must be in such form as the Commissioners for Her Majesty's Revenue and Customs may direct and must                           contain—                  

(a)such additional information as the Commissioners may reasonably require, including in particular information relating to the                           persons who have requested the issue of compliance certificates,                  

(b)a declaration that the statement is correct to the best of the social enterprise's knowledge and belief, and                  

(c)such other declarations as the Commissioners may reasonably require.                  

(3)The social enterprise may not provide an officer of Revenue and Customs with a compliance statement in respect of the investment—                  

(a)before the requirement in section 257MM(2) (trade must have been carried for 4 months) is met, or                  

(b)later than 2 years after the end of the tax year in which the investment is made or, if that requirement is first met after                           the end of that tax year, later than 2 years after the requirement is first met.                  

(4)If the social enterprise is an accredited social impact contractor, subsection (3) applies with the omission of its paragraph                           (a).                  

###### 257PCCompliance certificates

(1)For the purposes of this Chapter, a “compliance certificate” is a certificate which—                  

(a)is issued by the social enterprise in respect of the investment,                  

(b)states that, except so far as they fall to be met by or in relation to the individual, the requirements for SI relief are                           for the time being met in relation to the investment, and                  

(c)is in such form as the Commissioners for Her Majesty's Revenue and Customs may direct.                  

(2)Before issuing a compliance certificate, the social enterprise must provide an officer of Revenue and Customs with a compliance                           statement in respect of the investment.                  

(3)The social enterprise must not issue a compliance certificate without the authority of an officer of Revenue and Customs.                  

(4)If the social enterprise, or a person connected with the social enterprise, has under section 257SF given a notice to an officer                           of Revenue and Customs that relates (whether or not exclusively) to the investment, a compliance certificate must not be issued                           unless the authority mentioned in subsection (3) of this section is given or renewed after receipt of the notice.                  

(5)If—                  

(a)an officer of Revenue and Customs has been requested to give or renew an authority to issue a compliance certificate, and                  

(b)an officer of Revenue and Customs has decided whether or not to do so,                  

an officer of Revenue and Customs must give notice of the decision to the social enterprise.                  

(6)For the purposes of the provisions of TMA 1970 relating to appeals, the refusal of an officer of Revenue and Customs to authorise                           the issue of a compliance certificate is taken to be a decision disallowing a claim by the social enterprise.                  

(7)In the case of requirements that cannot be met until a future time, references in this section to requirements being met for                           the time being are to nothing having occurred to prevent their being met.                  

###### 257PDPenalties for fraudulent certificate or statement etc

The social enterprise is liable to a penalty not exceeding £3,000 if—                  

(a)it issues a compliance certificate, or provides a compliance statement, which is made fraudulently or negligently, or                  

(b)it issues a compliance certificate in contravention of section 257PC(3) or (4).                  

###### 257PEPower to amend Chapter

(1)The Treasury may by order amend this Chapter.                  

(2)An order under this section may include consequential, incidental or transitional provision or savings, including consequential                           amendments, repeals or revocations of provision made by or under an enactment (including this Act) whenever passed or made.                  

(3)An order under this section may make different provision for different cases or purposes.                  

(4)An order under this section may, in particular, make provision for persons to be liable to penalties whose amount, or maximum                           amount, does not exceed £3,000.                  

##### CHAPTER 7U.K.Withdrawal or reduction of SI relief

###### Value received by the investorU.K.

###### 257QEffect of the investor receiving value from the social enterprise

(1)If the investor receives any value from the social enterprise at any time in the longer applicable period, any SI relief given                           in respect of the investment must—                  

(a)if it is greater than the amount given by the formula set out in subsection (2), be reduced by that amount, and                  

(b)in any other case, be withdrawn.                  

(2)The formula is—                  

where—                     

V is the amount of the value received, and                        

R is the SI rate for the tax year for which the SI relief was given.                        

(3)Subsections (1) and (2) are subject to—                  

(a)section 257QA (value received: insignificant receipts),                  

(b)section 257QB (value received where there is more than one issue of investments),                  

(c)section 257QC (value received where part of investment treated as made in previous tax year),                  

(d)section 257QD (cases where maximum SI relief not obtained),                  

(e)section 257QG (receipts of value by and from connected persons etc), and                  

(f)section 257QH (receipt of replacement value).                  

(4)Sections 257QB to 257QD are to be applied in the order in which they appear in this Part.                  

(5)Value received is to be ignored, for the purposes of this section, so far as SI relief attributable to the investment has                           already been withdrawn or reduced on its account.                  

(6)For the purposes of this section and sections 257QA to 257QI, an individual—                  

(a)who acquires any part of the investment, and                  

(b)who does so on such a transfer as is mentioned in section 257T (spouses or civil partners),                  

is treated as the investor.                  

###### 257QAValue received: insignificant receipts

(1)In this section “insignificant receipt” means a receipt whose amount—                  

(a)is not more than £1,000, or                  

(b)is more than £1,000 but is insignificant in relation to the amount invested.                  

(2)Section 257Q(1) does not apply to an insignificant receipt, subject as follows.                  

(3)Section 257Q(1) applies to all receipts within the longer applicable period if, at any time on the investment date or in the                           preceding 12 months, arrangements are in existence providing for the investor to receive, or to be entitled to receive, value                           from the social enterprise at any time in the longer applicable period.                  

(4)Once section 257Q(1) has applied to a receipt, it applies also to all other receipts within the longer applicable period except                           any earlier insignificant receipts.                  

(5)The amount of the first receipt to which section 257Q(1) applies is treated as increased by the total amount of any earlier                           insignificant receipts.                  

(6)In subsection (3)—                  

(a)the reference to the investor includes any person who at any time in the longer applicable period is an associate of the investor                           (whether or not an associate at the material time), and                  

(b)the reference to the social enterprise includes any person who at any time in the longer applicable period is connected with                           the social enterprise (whether or not connected at the material time).                  

###### 257QBValue received where there is more than one issue of investments

(1)Subsection (3) applies if—                  

(a)a time in the longer applicable period when the investor receives value from the social enterprise is within the period that                           for the purposes of this Part is the longer applicable period in relation to another investment in the social enterprise,                           and                  

(b)that other investment is one for which the investor has SI relief.                  

(2)That other investment is an “overlapping investment” for the purposes of subsection (3).                  

(3)Section 257Q(2) has effect in relation to the investment as if the amount V were reduced by multiplying it by—                  

where—                     

I is the amount on which the investor has SI relief in the case of the investment, and                        

T is the total of that amount and the corresponding amount for each overlapping investment.                        

###### 257QCValue received where part of investment treated as made in previous tax year

(1)Subsection (2) applies if—                  

(a)section 257Q(1) applies to a receipt, and                  

(b)section 257JA(1) and (2) apply as if part of the amount invested had been invested in a previous tax year.                  

(2)The calculation under section 257Q(2) in relation to that receipt is to be made as follows—                  
          -  *Step 1* Apportion the amount referred to as “V” between the tax year in which the investment was made and the preceding tax year by multiplying that amount by—                            
where—                           

A is the part of the amount invested on which the investor obtains SI relief for the tax year in question, and                              

B is the sum of—                              
(a)
that part, and                                       
(b)
the part of the amount invested on which the investor obtains SI relief for the other tax year.                                       
 
          -  *Step 2* In relation to each of the amounts (“V1” and “V2”) so apportioned to the two tax years, calculate the amounts (“X1” and “X2”) that would be given by the formula if separate investments had been made in those tax years. In calculating amounts X1                              and X2, apply section 257QD if appropriate but do not apply section 257QB.                         
          -  *Step 3* Add amounts X1 and X2 together. The result is the required amount.                         

###### 257QDCases where maximum SI relief not obtained

(1)If the investor's liability to income tax is reduced for any tax year in respect of the investment and—                  

(a)the amount of the reduction (“A”), is less than                  

(b)the amount (“B”) which is equal to income tax at the SI rate for that tax year on the amount on which the investor has SI                           relief in the case of the investment,                  

section 257Q(2) has effect in relation to any value received as if the amount referred to as “V” were reduced by multiplying it by—                  

(2)If the amount of SI relief attributable to the investment has been reduced before the SI relief was obtained, the amount referred                           to in subsection (1) as “A” is to be treated for the purposes of that subsection as the amount that it would have been without                           that reduction.                  

(3)Subsection (2) does not apply to a reduction of SI relief as a result of section 257N(5) (attribution of SI relief where there                           is a corresponding issue of bonus shares).                  

###### 257QEWhen value is received

(1)This section applies for the purposes of sections 257Q and 257QB.                  

(2)The investor receives value from the social enterprise at any time when the social enterprise—                  

(a)repays, redeems or repurchases any investments in the social enterprise which belong to the investor, or makes any payment                           to the investor for giving up the investor's right to investments in the social enterprise on their cancellation or extinguishment,                  

(b)repays, in pursuance of any arrangements for or in connection with the making of the investment, any debt owed to the investor                           other than a debt which was incurred by the social enterprise—                  

(i)on or after the investment date, and                  

(ii)otherwise than in consideration of the extinguishment of a debt incurred before that date,                  

(c)makes to the investor any payment for giving up on its extinguishment the investor's right to any debt, other than—                  

(i)a debt in respect of a repayment of the kind mentioned in section 257LF(5)(a) or (f), or                  

(ii)an ordinary trade debt,                  

(d)releases or waives any liability of the investor to the social enterprise or discharges or undertakes to discharge any liability                           of the investor to a third person,                  

(e)makes a loan or advance to the investor which has not been repaid in full before the investment is made,                  

(f)provides a benefit or facility for the investor by providing, at a price less than the arm's-length price or free of charge,                           goods or services for whose provision the social enterprise ordinarily makes a charge,                  

(g)otherwise provides any benefit or facility for the investor,                  

(h)transfers an asset to the investor for no consideration or for consideration less than its market value or acquires an asset                           from the investor for consideration greater than its market value, or                  

(i)makes to the investor any other payment except—                  

(i)a payment of a kind mentioned in section 257LF(5), or                  

(ii)a payment in discharge of an ordinary trade debt.                  

(3)For the purposes of subsection (2)(d), the social enterprise is treated as having released or waived a liability if the liability                           is not discharged within 12 months of the time when it ought to have been discharged.                  

(4)For the purposes of subsection (2)(e), each of the following is treated as a loan made by the social enterprise to the investor—                  

(a)the amount of any debt, other than an ordinary trade debt, incurred by the investor to the social enterprise, and                  

(b)the amount of any debt due from the investor to a third party which has been assigned to the social enterprise.                  

(5)The investor also receives value from the social enterprise if—                  

(a)in respect of ordinary shares, or qualifying debt investments, held by the investor any payment or asset is received in a                           winding-up or dissolution of the social enterprise, and                  

(b)the winding-up or dissolution is for genuine commercial reasons, and is not part of any arrangements the main purpose or one                           of the main purposes of which is the avoidance of tax.                  

(6)The investor also receives value from the social enterprise if—                  

(a)a person—                  

(i)purchases any investments in the social enterprise which belong to the investor, or                  

(ii)makes any payment to the investor for giving up any right in relation to any investments in the social enterprise, and                  

(b)that person is an individual in relation to whom not all of the requirements in sections 257LF and 257LG would be met if references                           in those sections to the investor were read as references to that person.                  

(7)If, because of the investor's disposal of investments in the social enterprise, any SI relief attributable to those investments                           is withdrawn or reduced under section 257R, the investor is not to be treated as receiving value from the social enterprise                           in respect of the disposal.                  

(8)If the investor is a director of the social enterprise, the investor is not to be treated as receiving value from the social                           enterprise merely because of the payment to the investor of reasonable remuneration (including any benefit or facility) for                           any services rendered to the social enterprise as a director or employee.                  

(9)In this section “ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business if any credit given—                  

(a)is for not more than 6 months, and                  

(b)is not for longer than that normally given to customers of the person carrying on the trade or business.                  

###### 257QFThe amount of value received

In a case falling within a provision listed in column 1 of the following table, the amount of value received for the purposes                        of sections 257Q and 257QB is given by the corresponding entry in column 2 of the table.                  

###### 257QGReceipts of value by and from connected persons etc

In sections 257Q, 257QA, 257QB, 257QE and 257QF—                  

(a)any reference to a payment or transfer to the investor includes a reference to a payment or transfer made to the investor                           indirectly or to the investor's order or for the investor's benefit,                  

(b)any reference to the investor includes a reference to an associate of the investor, and                  

(c)any reference to the social enterprise includes a reference to a person who at any time in the longer applicable period is                           connected with the social enterprise (whether or not that person is so connected at the material time).                  

###### 257QHReceipt of replacement value

(1)If—                  

(a)any SI relief attributable to the investment would, in the absence of this section, be reduced or withdrawn under section                           257Q because of a receipt of value within section 257QE(2) or (6) (“the original value”),                  

(b)the original supplier receives value (“the replacement value”) from the original recipient and the receipt is a qualifying                           receipt, and                  

(c)the amount of the replacement value is at least the amount of the original value,                  

section 257Q does not, because of the receipt of the original value, have effect to withdraw or reduce the SI relief.                  

This is subject to section 257QI(1) and (2).                  

(2)For the purposes of this section—                  
          -  “the original recipient” means the person who receives the original value, and                         
          -  “the original supplier” means the person from whom that value was received.                         

(3)If the amount of the original value is, by virtue of section 257QB, treated as reduced for the purposes of section 257Q(2)                           as it applies in relation to the investment, the reference in subsection (1)(c) to the amount of the original value is to                           be read as a reference to the amount of that value ignoring the reduction.                  

(4)A receipt of the replacement value is a qualifying receipt for the purposes of subsection (1) if it arises—                  

(a)because of the original recipient doing one or more of the following—                  

(i)making a payment to the original supplier, other than a payment within paragraph (c) or a payment to which subsection (5)                           applies,                  

(ii)acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value                           of the asset, and                  

(iii)disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is                           less than the market value of the asset,                  

(b)if the receipt of the original value was within section 257QE(2)(d), because of an event the effect of which is to reverse                           the event which constituted the receipt of the original value, or                  

(c)if the receipt of the original value was within section 257QE(6), because of the original recipient repurchasing the investments                           in question, or (as the case may be) re-acquiring the right in question, for a consideration the amount or value of which                           is at least the amount of the original value.                  

(5)This subsection applies to—                  

(a)any payment for any goods, services or facilities, provided (whether in the course of trade or otherwise) by—                  

(i)the original supplier, or                  

(ii)any other person who at any time in the longer applicable period is an associate of, or is connected with, the original supplier                           (whether or not the person is such an associate, or is so connected, at the material time),                  

which is reasonable in relation to the market value of those goods, services or facilities,                  

(b)any payment of any interest which represents no more than a reasonable commercial return on any money lent to—                  

(i)the original recipient, or                  

(ii)any other person who at any time in the longer applicable period is an associate of the original recipient (whether or not                           the person is such an associate at the material time),                  

(c)any payment for the acquisition of an asset which does not exceed its market value,                  

(d)any payment, as rent for any property occupied by—                  

(i)the original recipient, or                  

(ii)any person who at any time in the longer applicable period is an associate of the original recipient (whether or not the person                           is such an associate at the material time),                  

of an amount not exceeding a reasonable and commercial rent for the property,                  

(e)any payment in discharge of an ordinary trade debt, and                  

(f)any payment for shares in or securities of any company in circumstances that do not fall within subsection (4)(a)(ii).                  

(6)For the purposes of this section, the amount of the replacement value is—                  

(a)in a case within paragraph (a) of subsection (4), the sum of—                  

(i)the amount of any payment within sub-paragraph (i) of that paragraph, and                  

(ii)the difference between the market value of any asset to which sub-paragraph (ii) or (iii) of that paragraph applies and the                           amount or value of the consideration (if any) received for it,                  

(b)in a case within subsection (4)(b), the same as the amount of the original value, and                  

(c)in a case within subsection (4)(c), the amount or value of the consideration received by the original supplier.                  

Section 257QF applies for the purpose of determining the amount of the original value.                  

(7)In this section—                  

(a)any reference to a payment to a person (however expressed) includes a reference to a payment made to the person indirectly                           or to the person's order or for the person's benefit, and                  

(b)“ordinary trade debt” has the meaning given by section 257QE(9).                  

###### 257QISection 257QH: supplementary

(1)The receipt of the replacement value by the original supplier is ignored for the purposes of section 257QH(1) to the extent                           to which it has previously been set under section 257QH against a receipt of value to prevent any reduction or withdrawal                           of SI relief under section 257Q.                  

(2)The receipt of the replacement value by the original supplier (“the event”) is ignored for the purposes of section 257QH if—                  

(a)the event occurs before the longer applicable period,                  

(b)where the event occurs after the time the original recipient receives the original value, it does not occur as soon after                           that time as is reasonably practicable in the circumstances, or                  

(c)where an appeal has been brought by the investor against an assessment to withdraw or reduce any SI relief attributable to                           the investment because of the receipt of the original value, the event occurs more than 60 days after the day on which the                           amount of the relief which falls to be withdrawn has been finally determined.                  

But nothing in section 257QH or this section requires the replacement value to be received after the original value.                  

(3)This subsection applies if—                  

(a)the receipt of the replacement value by the original supplier is a qualifying receipt for the purposes of section 257QH(1),                           and                  

(b)in consequence of the receipt, any receipts of value are ignored for the purposes of section 257Q as that section applies                           in relation to the investment or any other investments made by the investor, and                  

(c)the event which gives rise to the receipt is (or includes) the making of an investment by—                  

(i)the investor, or                  

(ii)any person who at any time in the longer applicable period is an associate of the investor (whether or not the person is such                           an associate at the material time).                  

(4)If subsection (3) applies, the person who makes the investment concerned is not to be eligible for SI relief in relation to                           the investment concerned or any other investments in the same issue.                  

(5)In this section “the original recipient”, “the original supplier” and “replacement value” have the same meaning as in section 257QH.                  

###### Repayments etc of investments to other personsU.K.

###### 257QJRepayments etc of share capital to other persons

(1)This section applies if any SI relief is attributable to the whole or any part of the investment and, at any time in the longer                           applicable period, the social enterprise or any subsidiary—                  

(a)repays, redeems or repurchases any of its share capital which belongs to any member other than—                  

(i)the investor, or                  

(ii)a person who falls within subsection (5), or                  

(b)makes any payment to any such member for giving up the member's right to any of the share capital of the social enterprise                           or subsidiary on its cancellation or extinguishment.                  

(2)The SI relief must—                  

(a)if it is greater than the amount given by the formula set out in subsection (3), be reduced by that amount, and                  

(b)in any other case, be withdrawn.                  

(3)The formula is—                  

where—                     

A is the amount received by the member, and                        

R is the SI rate for the tax year for which the SI relief was given.                        

(4)This section is subject to sections 257QK to 257QP; and sections 257QL to 257QO are to be applied in the order in which they                           appear in this Part.                  

(5)A person falls within this subsection if the repayment causes any SI relief attributable to that person's shares in the social                           enterprise to be withdrawn or reduced by virtue of—                  

(a)section 257QE(2)(a) (receipt of value by virtue of repayment of investments etc), or                  

(b)section 257R (disposal of whole or part of the investment).                  

(6)A repayment is treated as having the effect mentioned in subsection (5)(a) if it would have that effect were it not an insignificant                           receipt; and here “insignificant receipt” is to be read in accordance with section 257QA(1).                  

(7)A repayment is to be ignored, for the purposes of this section, to the extent to which SI relief attributable to any shares                           has already been withdrawn or reduced on its account.                  

(8)In this section and sections 257QK to 257QP—                  

(a)“repayment” means a repayment, redemption, repurchase or payment mentioned in subsection (1)(a) or (b), and                  

(b)references to a subsidiary of the social enterprise are references to a company which at any time in the longer applicable                           period is a 51% subsidiary of the social enterprise (whether or not it is such a subsidiary at the time of the repayment).                  

###### 257QKInsignificant payments ignored for the purposes of section 257QJ

(1)A repayment is ignored for the purposes of section 257QJ if both—                  

(a)the market value of the shares to which it relates (“the target shares”) immediately before the event occurs, and                  

(b)the amount received by the member in question,                  

are insignificant in relation to the market value of the remaining issued share capital of the social enterprise, or (as the                        case may be) the subsidiary, immediately after the event occurs.                  

This is subject to subsection (3).                  

(2)For the purposes of subsection (1) it is to be assumed that the target shares are cancelled at the time the repayment is made.                  

(3)Subsection (1) does not apply if repayment arrangements are in existence at any time in the period—                  

(a)beginning 12 months before the investment date, and                  

(b)ending at the end of the investment date.                  

(4)For this purpose “repayment arrangements” means arrangements which provide—                  

(a)for a repayment by the social enterprise or any subsidiary of the social enterprise (whether or not it is such a subsidiary                           at the time the arrangements are made), or                  

(b)for anyone to be entitled to such a repayment,                  

at any time in the longer applicable period.                  

###### 257QLAmount of repayments etc if there is more than one issue of shares

(1)This section applies if, in relation to the same repayment, section 257QJ(2) applies to SI relief attributable to two or more                           issues of shares.                  

(2)Section 257QJ(3) has effect in relation to the shares included in each of those issues as if the amount referred to as A were                           reduced by multiplying it by the fraction—                  

where—                     

I is the amount on which SI relief was obtained by individuals in respect of shares which are included in the issue and to                              which SI relief is or, but for section 257QJ(2)(b), would be attributable, and                        

T is the total of that amount and the corresponding amount or amounts in respect of the other issue or issues.                        

###### 257QMSingle issue affecting more than one individual

(1)This section applies if, in relation to the same repayment, section 257QJ(2) applies to SI relief attributable to shares held                           by two or more individuals.                  

(2)Section 257QJ(3) has effect in relation to each individual as if the amount referred to as A were reduced by multiplying it                           by the fraction—                  

where—                     

I is the amount on which the individual obtains SI relief in respect of the shares to which SI relief is or, but for section                              257QJ(2)(b), would be attributable, and                        

T is the total of that amount and the corresponding amount or amounts on which the other individual or individuals obtain                              SI relief in respect of such shares.                        

###### 257QNSingle issue treated as made partly in previous tax year

(1)This section applies if—                  

(a)section 257QJ(2) applies to SI relief attributable to shares held by an individual, and                  

(b)part of the issue of shares has been treated as issued to the individual in a previous tax year for the purposes of section                           257JA(1) and (2).                  

(2)This subsection explains how the calculation under section 257QJ(3) is to be made.                  
          -  *Step 1* Apportion the amount referred to as A between the tax year in which the shares were issued and the previous tax year by multiplying                              that amount by the fraction—                            
where—                           

I is the amount on which the individual obtains SI relief in respect of the shares treated as issued in the tax year in question,                                    and                              

T is the total of that amount and the corresponding amount in respect of the shares treated as issued in the other tax year.                              
 
          -  *Step 2* In relation to each of the amounts (“A1” and “A2”) so apportioned to the two tax years, calculate the amounts (“X1” and “X2”) that would be given by the formula if there were separate issues of shares in those tax years. In calculating amounts X1                              and X2, apply section 257QO if appropriate but do not apply section 257QL or 257QM.                         
          -  *Step 3* Add amounts X1 and X2 together. The result is the required amount.                         

###### 257QOMaximum relief not obtained for share issue

(1)This section applies if section 257QJ(2) applies to SI relief attributable to shares held by the investor and—                  

(a)the amount of the reduction (“D”) in the investor's liability to income tax for any tax year in respect of the shares, is                           less than                  

(b)the amount given by—                  

where—                     

I is the amount on which the investor claims SI relief in respect of the investment, and                        

R is the SI rate for the tax year for which the SI relief was given.                        

(2)Section 257QJ(3) has effect as if the amount referred to as A were reduced by multiplying it by the fraction—                  

(3)If the amount of SI relief attributable to any of the shares has been reduced before the SI relief was obtained, the amount                           referred to in subsections (1) and (2) as D is to be treated for the purposes of those subsections as the amount it would                           have been without that reduction.                  

(4)Subsection (3) does not apply to a reduction of SI relief by virtue of section 257N(5) (attribution of SI relief where there                           is a corresponding issue of bonus shares).                  

###### 257QPRepayment of authorised minimum within 12 months

(1)This section applies if—                  

(a)a company issues share capital (“the original shares”) of nominal value equal to the authorised minimum (within the meaning                           of the Companies Act 2006) for the purposes of complying with section 761 of that Act (public company: requirement as to minimum                           share capital), and                  

(b)the registrar of companies issues the company with a certificate under that section.                  

(2)Section 257QJ(2) does not apply in relation to any redemption of the original shares within 12 months of the date on which                           they were issued.                  

###### MiscellaneousU.K.

###### 257QQAcquisition of a trade or trading assets

(1)Any SI relief attributable to the investment is withdrawn if—                  

(a)at any time in the longer applicable period, the social enterprise or any qualifying subsidiary—                  

(i)begins to carry on as its trade, or as part of its trade, a trade which was previously carried on at any time in that period                           otherwise than by the social enterprise or any qualifying subsidiary, or                  

(ii)acquires the whole, or the greater part, of the assets used for the purposes of a trade previously so carried on, and                  

(b)the investor is a person, or one of a group of persons, to whom subsection (2) or (3) applies.                  

(2)This subsection applies to any person or group of persons—                  

(a)to whom an interest amounting in total to more than a half share in the trade (as previously carried on) belonged at any time                           in the longer applicable period, and                  

(b)who is or are a person or group of persons to whom such an interest in the trade carried on by the social enterprise belongs                           or has, at any such time, belonged.                  

(3)This subsection applies to any person or group of persons who—                  

(a)control or, at any time in the longer applicable period, have controlled the social enterprise, and                  

(b)is or are a person or group of persons who, at any such time, controlled another company which previously carried on the trade.                  

(4)For the purposes of subsection (2)—                  

(a)for the purpose of determining the person to whom a trade belongs and, if a trade belongs to two or more persons, their respective                           shares in that trade—                  

(i)apply section 941(6) of CTA 2010, and                  

(ii)an interest in a trade belonging to a company may be treated in accordance with any of the options set out in section 942                           of that Act, and                  

(b)any interest, rights or powers of a person who is an associate of another person are treated as those of that other person.                  

(5)If the investor—                  

(a)is a director of, or of a company which is a partner of, the social enterprise or any qualifying subsidiary, and                  

(b)is in receipt of, or entitled to receive, remuneration as such a director falling within section 257LF(5)(g) (reasonable remuneration                           for services),                  

then, in determining whether any SI relief attributable to the investment is to be withdrawn, the reference in subsection                        (3)(b), and (so far as relating to that provision) the reference in subsection (1)(a)(i), to any time in the longer applicable                        period are to be read as references to any time before the end of the longer applicable period.                  

(6)Section 257LF(8) (director also an employee) applies for the purposes of subsection (5) as it applies for the purposes of                           section 257LF, and in subsection (5) “remuneration” includes any benefit or facility.                  

(7)In this section “trade” includes any business or profession, and references to a trade previously carried on include references to part of such                           a trade.                  

###### 257QRAcquisition of share capital

(1)Any SI relief attributable to the investment is withdrawn if—                  

(a)the social enterprise comes to acquire all of the issued share capital of another company at any time in the longer applicable                           period, and                  

(b)the investor is a person, or one of a group of persons, to whom subsection (2) applies.                  

(2)This subsection applies to any person or group of persons who—                  

(a)control or have, at any time in the longer applicable period, controlled the social enterprise, and                  

(b)is or are a person or group of persons who, at any such time, controlled the other company.                  

(3)If the investor—                  

(a)is a director of, or of a company which is a partner of, the social enterprise or any qualifying subsidiary, and                  

(b)is in receipt of, or entitled to receive, remuneration as such a director falling within section 257LF(5)(g) (reasonable remuneration                           for services),                  

then, in determining whether any SI relief attributable to the investment is to be withdrawn, the reference in subsection                        (2)(b) to any time in the longer applicable period is to be read as a reference to any time before the end of the longer applicable                        period.                  

(4)Section 257LF(8) (director also an employee) applies for the purposes of subsection (3) as it applies for the purposes of                           section 257LF, and in subsection (3) “remuneration” includes any benefit or facility.                  

###### 257QSRelief subsequently found not to have been due

(1)Any SI relief obtained by the investor which is subsequently found not to have been due must be withdrawn.                  

(2)SI relief obtained by the investor in respect of the investment may not be withdrawn on the ground that the requirements of                           Chapter 4 are not met unless the requirements of subsection (3) are met.                  

(3)The requirements of this subsection are met if either—                  

(a)the social enterprise has given notice under section 257SF in relation to the investment (information to be provided by the                           social enterprise etc), or                  

(b)an officer of Revenue and Customs has given notice to the social enterprise stating the officer's opinion that, because of                           the ground in question, the whole or any part of the SI relief attributable to the investment (whether alone or with other                           SI relief) was not due.                  

###### DisposalsU.K.

###### 257RDisposal of whole or part of the investment

(1)This section applies if—                  

(a)the investor disposes of the whole or part of the investment,                  

(b)the disposal takes place before the shorter applicable period ends,                  

(c)SI relief is attributable to the shares, or qualifying debt investments, disposed of,                  

(d)the disposal is not to an individual who—                  

(i)is the spouse, or civil partner, of the investor, and                  

(ii)is living together with the investor at the time of the disposal, and                  

(e)the disposal does not occur as a result of the investor's death.                  

(2)If the disposal is not made by way of a bargain at arm's length, the SI relief attributable to those shares, or qualifying                           debt investments, must be withdrawn.                  

(3)If the disposal is made by way of a bargain at arm's length, the SI relief attributable to those shares or qualifying debt                           investments must—                  

(a)if it is greater than the amount given by the formula set out in subsection (4), be reduced by that amount, and                  

(b)in any other case, be withdrawn.                  

(4)The formula is—                  

where—                     

C is the amount or value of the consideration received by the investor for the shares or qualifying debt investments, and                        

R is the SI rate for the tax year for which the SI relief was given.                        

###### 257RACases where maximum relief not obtained

(1)Subsection (2) applies if the investor's liability to income tax for any tax year is reduced under this Part in respect of                           the investment and—                  

(a)the amount of the reduction (“D”), is less than                  

(b)the amount given by—                  

where—                     

A is the amount on which the investor claims SI relief in respect of the investment, and                        

R is the SI rate for that tax year.                        

(2)Section 257R(3) and (4) have effect as if the amount or value referred to as C were reduced by multiplying it by the fraction—                  

(3)If section 257JA(1) and (2) apply in the case of the investment as if part of it had been made in a previous tax year, subsections                           (1) and (2) of this section have effect as if that part and the remainder had been invested by separate investments (and that                           part had been invested by an investment made on a day in the previous tax year).                  

(4)If the amount of SI relief attributable to the investment or any part of it has been reduced before SI relief was obtained,                           the amount referred to in subsections (1) and (2) as D is to be treated for the purposes of those subsections as the amount                           that it would have been without that reduction.                  

(5)Subsection (4) does not apply to a reduction of SI relief by virtue of section 257N(5) (attribution of SI relief if there                           is a corresponding issue of bonus shares).                  

###### 257RBCall options

(1)This section applies if the investor grants an option which, if exercised, would bind the investor to sell the whole or part                           of investment.                  

(2)The grant of the option is treated for the purposes of section 257R as a disposal—                  

(a)of the investment, or                  

(b)(as the case may be) of the part of the investment to which the option relates.                  

(3)Nothing in this section prejudices section 257LB (no pre-arranged exits).                  

###### 257RCPut options

(1)This section applies if, at any time in the longer applicable period, a person grants the investor an option which, if exercised,                           would bind the grantor to purchase the whole or part of the investment.                  

(2)Any SI relief—                  

(a)attributable to the investment, or                  

(b)(as the case may be) attributable to the part of the investment to which the option relates,                  

must be withdrawn.                  

(3)For the purposes of subsection (2)(b), the part of the investment to which an option relates is the part which, if—                  

(a)the option were exercised immediately after the grant, and                  

(b)any investments made in the social enterprise by the investor after the grant were disposed of immediately after being made,                  

would be treated for the purposes of section 257R as disposed of in pursuance of the option.                  

##### CHAPTER 8U.K.Withdrawal or reduction of SI relief: procedure

###### Assessments and appealsU.K.

###### 257SAssessments for the withdrawal or reduction of SI relief

If any SI relief which has been obtained falls to be withdrawn or reduced under Chapter 7, it must be withdrawn or reduced                        by the making of an assessment to income tax for the tax year for which the relief was obtained.                  

###### 257SAAppeals against section 257QS(3)(b) notices

For the purposes of the provisions of TMA 1970 relating to appeals, the giving of notice by an officer of Revenue and Customs                        under section 257QS(3)(b) is taken to be a decision disallowing a claim by the social enterprise.                  

###### 257SBTime limits for assessments

(1)An officer of Revenue and Customs may—                  

(a)make an assessment for withdrawing or reducing the SI relief attributable to whole or any part of the investment, or                  

(b)give a notice under section 257QS(3)(b),                  

at any time not more than 6 years after the end of the relevant tax year.                  

(2)In subsection (1) “the relevant tax year” means—                  

(a)the tax year containing the end of the 28 months beginning with the investment date, or                  

(b)if later, the tax year in which occurs the event which causes the SI relief to be withdrawn or reduced.                  

(3)Subsection (1) is without prejudice to section 36(1A) of TMA 1970 (loss of tax brought about deliberately etc).                  

###### 257SCCases where assessment not to be made

(1)No assessment for withdrawing or reducing SI relief in respect of the investment may be made because of an event occurring                           after the investor's death.                  

(2)Subsection (3) applies if the investor has, by a disposal or disposals to which section 257R(3) applies, disposed of all investments                           which—                  

(a)have been made by the investor in the social enterprise, and                  

(b)are investments—                  

(i)to which SI relief is attributable, or                  

(ii)have not been held by the investor until the end of the third anniversary of the date on which they were made.                  

(3)No assessment for withdrawing or reducing SI relief in respect of those investments may be made because of any subsequent                           event unless the event occurs at a time when the requirements of sections 257LF, 257LG and 257LH are not met in relation to                           the investor by reference to any of those investments.                  

###### InterestU.K.

###### 257SDDate from which interest is chargeable

(1)In its application to an assessment made by virtue of section 257S in the case of relief withdrawn or reduced by virtue of                           a provision listed in subsection (2), section 86 of TMA 1970 (interest on overdue income tax) has effect as if the relevant                           date were 31 January next following the tax year for which the assessment is made.                  

(2)The provisions are—                  
          -  section 257LD,                         
          -  any of sections 257LF to 257LH,                         
          -  any of sections 257M to 257MJ,                         
          -  section 257MN,                         
          -  section 257Q,                         
          -  section 257QJ,                         
          -  section 257QQ,                         
          -  section 257QR                         
          -  section 257R, and                         
          -  section 257RC.                         

###### InformationU.K.

###### 257SEInformation to be provided by the investor

(1)This section applies if the investor has obtained SI relief in respect of the investment, and an event occurs as a result                           of which—                  

(a)the SI relief falls to be withdrawn or reduced by virtue of any of sections 257LD, 257LF, 257LG and 257LH,                  

(b)the SI relief falls to be withdrawn or reduced under section 257Q (receipt of value), or would fall to be so withdrawn or                           reduced but for section 257QH (receipt of replacement value), or                  

(c)the SI relief falls to be withdrawn or reduced under any of sections 257R, 257RB and 257RC (disposals and options).                  

(2)The investor must within 60 days of coming to know of the event give a notice to an officer of Revenue and Customs containing                           particulars of the event.                  

(3)If the investor—                  

(a)is required under this section to give notice of a receipt of value which is within section 257Q, or would be within that                           section but for section 257QH, and                  

(b)has knowledge of any replacement value received (or expected to be received) because of a qualifying receipt,                  

the notice must include particulars of that receipt (or expected receipt).                  

(4)In subsection (3) “qualifying receipt” and “replacement value” are to be read in accordance with section 257QH.                  

###### 257SFInformation to be provided by the social enterprise etc

(1)This section applies if the social enterprise has provided an officer of Revenue and Customs with a compliance statement in                           respect of the investment and an event occurs as a result of which—                  

(a)any of the requirements in sections 257M, 257MC to 257MK, 257MM(1) and 257MN is not met in respect of the investment, or                  

(b)any of sections 257Q, 257QJ, 257QQ and 257QR has effect to cause any SI relief attributable to the investment to be withdrawn                           or reduced, or—                  

(i)would have such an effect if SI relief had been obtained in respect of the investment, or                  

(ii)in the case of section 257Q, would have such an effect but for section 257QH (receipt of replacement value).                  

(2)If this section applies—                  

(a)the social enterprise, and                  

(b)any person connected with the social enterprise who has knowledge of the matters mentioned in subsection (1),                  

must give a notice to an officer of Revenue and Customs containing particulars of the event.                  

(3)Any notice required to be given by the social enterprise under subsection (2)(a) must be given—                  

(a)within 60 days of the event, or                  

(b)if the event is a receipt of value within section 257QE(2) from a person connected with the social enterprise (see section                           257QG), within 60 days of the social enterprise coming to know of the event.                  

(4)Any notice required to be given by a person under subsection (2)(b) must be given within 60 days of the person coming to know                           of the event.                  

(5)If a person—                  

(a)is required under this section to give notice of a receipt of value which is within section 257Q, or would be within that                           section but for section 257QH, and                  

(b)has knowledge of any replacement value received (or expected to be received) because of a qualifying receipt,                  

the notice must include particulars of that receipt of replacement value (or expected receipt).                  

(6)In subsection (5) “qualifying receipt” and “replacement value” are to be read in accordance with section 257QH.                  

(7)If the event mentioned in subsection (1) is one whose occurrence results in the requirement in section 257M not being met                           in respect of the investment, the references in subsections (2) and (3) to the social enterprise are to—                  

(a)the body concerned even though it has ceased to be a social enterprise, or                  

(b)the body into which the social enterprise has been converted.                  

###### 257SGPower to require information in section 257SE or 257SF cases

(1)This section applies if an officer of Revenue and Customs has reason to believe that a person—                  

(a)has not given a notice which the person is required to give under section 257SE or 257SF in respect of any event,                  

(b)has given or received value within the meaning of section 257QE(2) or (6) which, but for the fact that the amount given or                           received was an insignificant receipt, would have triggered a requirement to give such a notice, or                  

(c)has made or received any repayment within the meaning given by section 257QJ(8) which, but for the fact that it falls to be                           ignored for the purposes of section 257QJ by virtue of section 257QK(1), would have triggered a requirement to give a notice                           under section 257SF.                  

(2)The officer may by notice require the person concerned to supply the officer, within such time as the officer may specify                           in the notice, with such information relating to the event as the officer may reasonably require for the purposes of this                           Part.                  

(3)The period specified in a notice under subsection (2) must be at least 60 days.                  

(4)In subsection (1)(b) the reference to an insignificant receipt is to be read in accordance with section 257QA(1).                  

###### 257SHPower to require information in other cases

(1)Subsection (2) applies if SI relief is claimed in respect of the investment, and an officer of Revenue and Customs has reason                           to believe that it may not be due because of any such arrangements as are mentioned in section 257LB(1), 257LC, 257LE, 257LH,                           257ME(3), 257MK(2) or (4), 257MM(5) or (6), 257MN(5), 257MU or 257MV(1), (5), (6) or (7).                  

(2)The officer may by notice require any person concerned to supply the officer within such time as may be specified in the notice                           with—                  

(a)a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain,                           any such arrangements exist or have existed, and                  

(b)such other information as the officer may reasonably require for the purposes of the provision in question and as that person                           has or can reasonably obtain.                  

(3)The period specified in a notice under subsection (2) must be at least 60 days.                  

(4)For the purposes of subsection (2), in the case of a provision listed in column 1 of the following table, the person concerned                           is given by the corresponding entry in column 2 of the table.                  

References in the table to the investor include references to any person to whom the investor appears to have made such a                        transfer as is mentioned in section 257T (spouses or civil partners) of the whole or part of the investment.                  

(5)If SI relief has been obtained in respect of the investment—                  

(a)any person who receives from the social enterprise any payment or asset which may constitute value received (by the person                           or another) for the purposes of section 257Q, and                  

(b)any person on whose behalf such a payment or asset is received,                  

must, if so required by an officer of Revenue and Customs, state whether the payment or asset so received is received on behalf                        of any other person and, if so, the name and address of that other person.                  

(6)If SI relief has been claimed in respect of the investment—                  

(a)any person who holds or has held investments in the social enterprise, and                  

(b)any person on whose behalf any such investments are or were held,                  

must, if so required by an officer of Revenue and Customs, state whether the investments so held are or were held on behalf                        of any other person and, if so, the name and address of that other person.                  

###### 257SIConfidentiality

(1)Section 18(1) of the Commissioners for Revenue and Customs Act 2005 does not prevent an officer of Revenue and Customs from                           disclosing to the social enterprise that SI relief has been obtained or claimed in respect of a particular number or proportion                           of any investments in it.                  

(2)Section 18(1) of the Commissioners for Revenue and Customs Act 2005 does not prevent—                  

(a)disclosure to the Regulator of Community Interest Companies for the purposes of the Regulator's functions,                  

(b)disclosure to a Minister of the Crown for the purposes of functions of a Minister of the Crown under sections 257JD to 257JG,                           or                  

(c)disclosure to a person for the purposes of functions delegated to the person under section 257JH(1).                  

(3)Information disclosed in reliance on subsection (2) may not be further disclosed except—                  

(a)with the consent of the Commissioners for Her Majesty's Revenue and Customs, or                  

(b)if the disclosure is required by an enactment.                  

(4)Information originally disclosed in reliance on subsection (2)(a) may be disclosed in reliance on subsection (3)(a) only for                           the purposes of the Regulator's functions.                  

(5)Information originally disclosed in reliance on subsection (2)(b) or (c) may be disclosed in reliance on subsection (3)(a)                           only for the purposes of—                  

(a)functions of a Minister of the Crown under sections 257JD to 257JG, or                  

(b)functions delegated to a person under section 257JH(1).                  

(6)If, in contravention of subsections (3) to (5), any revenue and customs information relating to a person is disclosed and                           the identity of the person—                  

(a)is specified in the disclosure, or                  

(b)can be deduced from it,                  

section 19 of the Commissioners for Revenue and Customs Act 2005 (offence of wrongful disclosure) applies as it applies in                        relation to a disclosure of such information in contravention of section 20(9) of that Act.                  

(7)In subsection (6) “revenue and customs information relating to a person” has the meaning given by section 19(2) of that Act.                  

(8)Subject to subsections (3) and (5), no obligation as to confidentiality or other restriction on disclosure, whether imposed                           by an enactment or otherwise, prevents disclosure of relevant information—                  

(a)to a Minister of the Crown for the purposes of functions of a Minister of the Crown under sections 257JD to 257JG,                  

(b)to a person for the purposes of functions delegated to the person under section 257JH(1), or                  

(c)to an officer of Revenue and Customs for the purpose of assisting Her Majesty's Revenue and Customs to discharge their functions                           under the Income Tax Acts so far as relating to matters arising under this Part.                  

(9)In subsection (8) “relevant information” means information obtained—                  

(a)by a Minister of the Crown, or                  

(b)by a person to whom functions have been delegated under section 257JH(1),                  

in the course of discharging functions under sections 257JD to 257JG.                  

(10)In this section “Minister of the Crown” has the meaning given by section 8(1) of the Ministers of the Crown Act 1975.                  

##### CHAPTER 9U.K.Miscellaneous and supplementary provisions

###### 257TTransfers between spouses or civil partners

(1)This section applies if—                  

(a)the investor transfers the whole or part of the investment to another individual (“B”) during their lives,                  

(b)the investor was married to, or was the civil partner of, B at the time of the transfer, and                  

(c)section 257R does not apply to the transfer.                  

(2)This Part (including subsection (1)) has effect, in relation to any subsequent disposal or other event, as if—                  

(a)B were the investor as respects the transferred stake,                  

(b)B's liability to income tax had been reduced in respect of the transferred stake for the same tax year as that for which the                           investor's was so reduced,                  

(c)the amount by which B's liability to income tax had been reduced in respect of the transferred stake were the same as that                           by which the investor's liability had been so reduced, and                  

(d)the same amount of SI relief had continued to be attributable to the transferred stake despite the transfer.                  

(3)If the amount of SI relief attributable to the transferred stake had been reduced before the relief was obtained by the investor—                  

(a)this Part has effect, in relation to any subsequent disposal or other event, as if the amount of SI relief attributable to                           the transferred stake had been correspondingly reduced before the relief was obtained by B, and                  

(b)section 257QD(2), 257QO(3) and 257RA(4) apply in relation to B as they would have applied in relation to the investor.                  

(4)If, because of any such disposal or other event, an assessment for reducing or withdrawing SI relief is to be made, the assessment                           is to be made on B.                  

###### 257TAIdentification of investments on a disposal

(1)The rules in subsections (2) and (3) are for determining which investments of any class are treated as disposed of for the                           purposes of—                  

(a)section 257R (disposal of the investment), or                  

(b)section 257T (spouses or civil partners),                  

if the investor disposes of some but not all of the investments of that class which the investor holds in the social enterprise.                  

(2)Investments made on an earlier day are treated as disposed of before investments made on a later day.                  

(3)Investments made on the same day are treated as disposed of in the following order—                  

(a)first, any to which neither SI relief nor hold-over relief is attributable,                  

(b)next, any to which hold-over relief, but not SI relief, is attributable,                  

(c)next, any to which SI relief, but not hold-over relief, is attributable, and                  

(d)finally, any to which both SI relief and hold-over relief are attributable.                  

(4)Any investments within paragraph (c) or (d) of subsection (3) which are treated by section 257N(7) as issued on an earlier                           day are treated as disposed of before any other investments falling within that paragraph of subsection (3).                  

(5)The following—                  

(a)any investments to which SI relief is attributable and which were transferred to an individual as mentioned in section 257T,                           and                  

(b)any investments to which hold-over relief, but not SI relief, is attributable and which were acquired by an individual on                           a disposal to which section 58 of TCGA 1992 applies,                  

are treated for the purposes of subsections (2) and (3) as acquired by the individual on the day on which they were made.                  

(6)In a case to which section 127 of TCGA 1992 applies (including the case where that section applies by virtue of an enactment                           relating to chargeable gains), shares included in the new holding are treated for the purposes of subsections (2) and (3)                           as acquired when the original shares were acquired.                  

(7)In this section—                  
          -  “hold-over relief” means relief under Schedule 8B to TCGA 1992;                         
          -  “new holding” and “original shares” have the same meaning as in section 127 of TCGA 1992 (or, as the case may be, that section as applied by the enactment concerned).                         

###### 257TBMeaning of a company being “in administration” or “in receivership”

(1)References in this Part to a company being “in administration” or “in receivership” are to be read as follows.                  

(2)A company is “in administration” if—                  

(a)it is in administration within the meaning of Schedule B1 to the Insolvency Act 1986 or Schedule B1 to the Insolvency (Northern                           Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or                  

(b)there is in force in relation to it under the law of a country or territory outside the United Kingdom any appointment corresponding                           to an appointment of an administrator under either of those Schedules.                  

(3)A company is “in receivership” if there is in force in relation to it—                  

(a)an order for the appointment of an administrative receiver, a receiver and manager or a receiver under Chapter 1 or 2 of Part                           3 of the Insolvency Act 1986 or Part 4 of the Insolvency (Northern Ireland) Order 1989, or                  

(b)any corresponding order under the law of a country or territory outside the United Kingdom.                  

###### 257TCMeaning of “associate”

(1)In this Part “associate”, in relation to a person, means—                  

(a)any relative or partner of the person,                  

(b)the trustee or trustees of any settlement in relation to which the person, or any relative of the person (living or dead),                           is or was a settlor, and                  

(c)if the person has an interest in any shares or obligations of a company which are subject to any trust or are part of the                           estate of a deceased person—                  

(i)the trustee or trustees of the settlement concerned or, as the case may be, the personal representatives of the deceased,                           and                  

(ii)if the person is a company, any other company which has an interest in those shares or obligations.                  

(2)In this section “relative” means spouse, civil partner, ancestor or lineal descendant.                  

###### 257TDMeaning of “control”

(1)In this Part “control” is to be read in accordance with sections 450 and 451 of CTA 2010 but as if “company” in those sections included a charity                           that is a trust.                  

(2)For the purposes of this Part, a charity that is a trust has “control” of another person if, as a result of the operation                           of subsection (1), the trustees (in their capacity as trustees of the trust) have, or any of them has, control of the person.                  

(3)A person has “control” of a charity that is a trust if—                  

(a)the person is a trustee of the charity and some or all of the powers of the trustees of the charity could be exercised by—                  

(i)the person acting alone, or                  

(ii)by the person acting together with any other persons who are trustees of the charity and who are connected with the person,                  

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

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

(4)Subsection (3) is in addition to, and does not limit, subsection (1); and both of those subsections are subject to subsection                           (5).                  

(5)For the purposes of this Part, a regulator is to be treated as not having control of any company regulated by the regulator.                  

(6)Section 995 of this Act (control) does not apply for the purposes of this Part.                  

###### 257TEMinor definitions etc

(1)In this Part—                  
          -  “arrangements” (except as used, in sections 257LB and 257QK, in the expressions “issuing arrangements” and “repayment arrangements”)                              includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction                              or two or more transactions,                         
          -  “bonus shares” means shares which are issued otherwise than for payment (whether in cash or otherwise),                         
          -  “compliance statement” has the meaning given by section 257PB,                         
          -  “director”—                          (a)
is read in accordance with section 452 of CTA 2010 but as if “company” in that section included a charity that is a trust,                                       and                                 
(b)
in relation to a charity that is a trust (but subject to section 257LF(9)), includes (in particular) each trustee of the trust,                                 
 
          -  “disposal”, in relation to any shares or other investments, includes disposal of an interest or right in or over them,                         
          -  “group” means a parent company and its qualifying subsidiaries,                         
          -  “group company”, in relation to a group, means the parent company or any of its qualifying subsidiaries,                         
          -  “ordinary shares” means shares forming part of a company's ordinary share capital,                         
          -  “parent company” means a company that has one or more qualifying subsidiaries,                         
          -  “qualifying subsidiary” has the meaning given by section 257MU, and                         
          -  “single company” means a company that does not have any qualifying subsidiaries.                         

(2)For the purposes of this Part, the market value at any time of any asset is the price which it might reasonably be expected                           to fetch on a sale at that time in the open market free from any interest or right which exists by way of security in or over                           it.”                  

### **PART 2**U.K.Consequential amendments

2(1)Section 98 of TMA 1970 (penalties) is amended as follows.U.K.

(2)In column 1 of the Table, after the entry for sections 257GG and 257GH(1) and (2) of ITA 2007, insert—

(3)In column 2 of the Table, after the entry for sections 257GE and 257GF of ITA 2007, insert—

3U.K.ITA 2007 is amended as follows.

4U.K.In section 2 (overview of Act) after subsection (5A) insert—

“(5B)Part 5B is about relief for social investments.”                  

5U.K.In section 24A(7)(d) (share loss relief on the disposal of certain investments not subject to the limit on deductions imposed                        by section 24A) after sub-paragraph (ii) insert “, or 

(iii)where SI relief is attributable to the shares in question as determined in accordance with Part 5B (income tax relief for                           social investments).”                  

6U.K.In section 26(1)(a) (provisions giving rise to deductions at Step 6 of the calculation in section 23) after the entry for                        Chapter 1 of Part 5A of ITA 2007 insert— “ Chapter 1 of Part 5B (relief for social investments), ”.

7U.K.In section 27(5) (order in which certain tax reductions are to be made) after the entry for Chapter 1 of Part 5A of ITA 2007                        insert— “ Chapter 1 of Part 5B (relief for social investments), ”.

8U.K.In section 29(4B) (limit on certain tax reductions) after the entry for Chapter 1 of Part 5 of ITA 2007 insert— “ Chapter 1 of Part 5B (relief for social investments), ”.

9U.K.In section 32 (liabilities to income tax not dealt with in the calculation under Chapter 3 of Part 2) after the entry for                        section 257G of ITA 2007 insert— “ under section 257S (withdrawal or reduction of relief for social investments), ”.

10U.K.In section 392 (loan to buy interest in close company) after subsection (3) insert—

“(3A)Subsection (2) does not apply if at any time the individual by whom the shares are acquired or the money is lent, or that                           individual's spouse or civil partner, makes—                  

(a)a claim under Part 5B of this Act for relief in respect of the amount invested in acquiring the shares or (as the case may                           be) in return for the debentures in respect of the money lent, or                  

(b)a claim in respect of the amount under Schedule 8B to TCGA 1992 (hold-over relief for gains re-invested in social enterprises).                  

(3B)For the purposes of subsection (3A)(a) “debenture” includes any instrument creating or acknowledging indebtedness.”                  

11U.K.In section 416 (gift aid: meaning of “qualifying donation”) after subsection (6) insert—

“(6A)Condition EA is that the payment is not by way of, and does not amount in substance to, waiver by the individual of entitlement                           to sums (whether of principal or return) due to the individual from the charity in respect of an amount—                  

(a)advanced to the charity, and                  

(b)in respect of which a person, whether or not the individual, has obtained relief under Part 5B (relief for social investments).”                  

12U.K.In section 1014(5)(b) (orders and regulations not subject to negative procedure) after sub-paragraph (iii) insert—

“(iiia)section 257MB (amendment of Part 5B: amounts that may be raised from social investments; and State aid),”.                  

13U.K.In section 1022 (meaning of “debenture”) after subsection (1) insert—

“(1A)For the meaning of “debenture” in sections 257KB(3) to (5), 257L(4), 257LA(2) and 392(3A)(a), see also sections 257KB(6),                           257L(6), 257LA(4) and 392(3B).”                  

 Section 57

## SCHEDULE 12U.K.Investments in social enterprises: capital gains

1U.K.TCGA 1992 is amended as follows.

2U.K.After section 255 insert—

### “Investments in social enterprisesU.K.

#### 255AHold-over relief for gains re-invested in social enterprises

Schedule 8B to this Act (which provides relief in respect of gains re-invested in social enterprises) has effect.                  

#### 255BGains and losses on investments in social enterprises

(1)For the purpose of determining the gain or loss on any disposal of an asset by an individual where—                  

(a)an amount of SI relief is attributable to the asset, and                  

(b)apart from this subsection there would be a loss,                  

treat the consideration given by the individual for the acquisition of the asset as reduced by the amount of the SI relief.                  

(2)If—                  

(a)an individual disposes of an asset,                  

(b)an amount of SI relief is attributable to the asset,                  

(c)the disposal takes place after the end of the 3 years beginning with the day when the individual acquired the asset, and                  

(d)apart from this subsection, there would be a gain on the disposal,                  

the gain is not a chargeable gain, subject to section 255C.                  

(3)Despite section 16(2), subsection (2) above does not apply to a disposal on which a loss accrues.                  

(4)Any question as to—                  

(a)which of any assets acquired by an individual at different times a disposal relates to, being assets to which SI relief is                           attributable, or                  

(b)whether a disposal relates to assets to which SI relief is attributable or to other assets,                  

is to be determined for the purposes of capital gains tax as provided by section 257TA of ITA 2007.                  

(5)Chapter 1 of this Part has effect subject to subsection (4).                  

(6)Sections 104, 105 and 106A do not apply to assets to which SI relief is attributable.                  

(7)There are to be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment                           of tax, as may be required in consequence of SI relief being given or withdrawn.                  

(8)In this section and sections 255C to 255E “SI relief” means relief under Part 5B of ITA 2007 (income tax relief for investments in social enterprises).                  

(9)That Part applies for the purposes of this section and sections 255C to 255E to determine whether SI relief is attributable                           to any asset and, if so, the amount of SI relief so attributable.                  

#### 255CApplication of section 255B(2) where maximum SI relief not obtained

(1)Subsection (2) applies if—                  

(a)an individual's liability to income tax has been reduced (or treated by virtue of section 257T of ITA 2007 (spouses or civil                           partners) as reduced) for any tax year under section 257JA of ITA 2007 (SI relief) in respect of the acquisition of an asset,                  

(b)the amount of the reduction (“D”) is less than the amount given by—                  

where—                     

I is the amount on which the individual has SI relief in the case of the asset, and                        

R is the SI rate for the tax year for which the SI relief was obtained, and                        

(c)D is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007.                  

(2)If the individual disposes of the asset and there is a gain on the disposal, section 255B(2) has effect in relation to the                           gain as if it were reduced by multiplying it by—                  

(3)In this section “SI rate” has the meaning given by section 257JA(5) of ITA 2007.                  

#### 255DApplication of section 255B(2) where SI relief has been reduced

(1)Subsection (2) applies if before a disposal of an asset—                  

(a)value is received in circumstances where SI relief attributable to the asset is reduced by an amount under section 257Q(1)(a)                           of ITA 2007, or                  

(b)there is a repayment, redemption, repurchase or payment in circumstances where SI relief attributable to the asset is reduced                           by an amount under section 257QJ(2)(a) of ITA 2007, or                  

(c)paragraphs (a) and (b) both apply.                  

(2)If section 255B(2) applies on the disposal but section 255C does not, section 255B(2) applies only to so much of the gain                           as remains after deducting so much of it as is found by multiplying it by the fraction—                  

where—                     

A is equal to the amount by which the SI relief given in respect of the asset is reduced as mentioned in subsection (1) above,                              and                        

B is equal to the amount of the SI relief given in respect of the asset.                        

(3)If sections 255B(2) and 255C apply on the disposal, section 255B(2) applies only to so much of the gain as is found by—                  

(a)taking the part of the gain found under section 255C, and                  

(b)deducting from that part so much of it as is found by multiplying it by the fraction mentioned in subsection (2).                  

(4)If the SI relief given in respect of the asset is reduced as mentioned in subsection (1) by more than one amount, the amount                           referred to as A in subsection (2) is to be taken to be equal to the aggregate of those amounts.                  

(5)The amount referred to in subsection (2) as B is to be found without regard to any reduction mentioned in subsection (1).                  

#### 255EReorganisations involving shares to which SI relief is attributable

(1)Subsection (2) applies if an individual holds shares which form part of the ordinary share capital of a company and include                           shares of more than one of the following kinds—                  

(a)shares to which SI relief is attributable and to which subsection (3) applies,                  

(b)shares to which SI relief is attributable and to which subsection (3) does not apply, and                  

(c)shares to which SI relief is not attributable and to which subsection (3) does not apply.                  

(2)If there is a reorganisation within the meaning of section 126 affecting the shares listed in subsection (1), section 127                           applies separately to those shares so that shares of each kind are treated as a separate holding of original shares and identified                           with a separate new holding.                  

(3)This subsection applies to any shares if—                  

(a)expenditure on the shares has been set under Schedule 8B to this Act against the whole or part of any gain, and                  

(b)in relation to the shares there has been no chargeable event for the purposes of that Schedule.                  

(4)If—                  

(a)an individual holds shares (“the existing holding”) which form part of the ordinary share capital of a company,                  

(b)there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the                           existing holding, and                  

(c)immediately following the reorganisation, SI relief is attributable to the existing holding or the allotted shares,                  

sections 127 to 130 do not apply in relation to the existing holding.                  

(5)Subject to subsection (6), sections 135 and 136 do not apply in respect of shares to which SI relief is attributable.                  

(6)Subsection (5) does not have effect to disapply section 135 or 136 in a case where the original shares are shares to which                           SI relief is attributable if—                  

(a)the new holding consists of new ordinary shares which meet conditions A and B of section 257L of ITA 2007,                  

(b)the new shares are issued after the end of three years beginning with the day on which the original shares were acquired,                  

(c)before issuing the new shares, the company had issued shares which met conditions A and B of section 257L of ITA 2007, and                  

(d)the company issued a compliance certificate in relation to those earlier shares for the purposes of section 257PA(1) of ITA                           2007 and in accordance with sections 257PB and 257PC of ITA 2007.                  

(7)In subsection (6) “new holding” is to be construed in accordance with sections 126, 127, 135 and 136.                  

(8)In this section—                  
          -  “ordinary share capital” has the meaning given in section 989 of ITA 2007;                         
          -  “ordinary shares”, in relation to a company, means shares forming part of its ordinary share capital.”                         

3U.K.Before Schedule 9 insert—

 Section 255A

### “SCHEDULE 8BU.K.Hold-over relief for gains re-invested in social enterprises

#### When does the Schedule apply?U.K.

1(1)This Schedule applies if—                  

(a)a chargeable gain accrues to an individual (“the investor”),                  

(b)the investor acquires one or more assets (“the social holding”),                  

(c)the investor is eligible for SI relief under Part 5B of ITA 2007 in respect of the consideration given for the social holding,                           and                  

(d)conditions A, B, C, D and E are met.                  

(2)Condition A is that the gain is one that accrues—                  

(a)on the disposal by the investor of an asset,                  

(b)in accordance with section 169N (but see sub-paragraph (7)), or                  

(c)as a result of the operation of paragraph 5 in connection with a chargeable event within paragraph 6(1)(c) or (d).                  

(3)Condition B is that the gain is one that accrues—                  

(a)on or after 6 April 2014, and                  

(b)before 6 April 2019 (but see sub-paragraph (8)).                  

(4)Condition C is that the investor is resident in the United Kingdom—                  

(a)when the gain accrues, and                  

(b)when the social holding is acquired.                  

(5)Condition D is that the social holding is acquired by the investor on the investor's own behalf.                  

(6)Condition E is that the social holding is acquired—                  

(a)in the 3 years beginning with the day when the gain accrues, or                  

(b)in the year that ends at the beginning of that day.                  

(7)The reference in sub-paragraph (2)(b) to a gain accruing in accordance with section 169N does not include such a gain so far                           as it is chargeable to capital gains tax at the rate in section 169N(3) (rate where entrepreneurs' relief is available).                  

(8)The Treasury may by order substitute a later date for the date for the time being specified in sub-paragraph (3)(b).                  

2(1)This Schedule also applies if—                  

(a)a chargeable gain accrues to an individual (“the investor”),                  

(b)the gain accrues as a result of the operation of paragraph 5 in connection with a chargeable event within paragraph 6(1)(a),                           (b) or (c),                  

(c)the chargeable event is either—                  

(i)a disposal to a social enterprise of shares in or debentures of the social enterprise, or                  

(ii)the cancellation, extinguishment, redemption or repayment by a social enterprise of shares in or debentures of the social                           enterprise,                  

(d)as part of the chargeable event or in connection with it, and in place of the shares or debentures, the investor acquires                           one or more assets (“the social holding”) from the social enterprise,                  

(e)other than the investor's ceasing to hold the shares or debentures, no detriment is suffered in return for the acquisition                           of the social holding,                  

(f)the asset acquired, or each of the assets acquired, is a share in or debenture of the social enterprise,                  

(g)but for section 257LA of ITA 2007 (consideration for acquisition must be wholly in cash and fully paid) the investor would                           be eligible for SI relief under Part 5B of ITA 2007 in respect of the consideration given for the social holding, and                  

(h)conditions F, G, H and J are met.                  

(2)Condition F is that the gain is one that accrues—                  

(a)on or after 6 April 2014, and                  

(b)before 6 April 2019 (but see sub-paragraph (6)).                  

(3)Condition G is that the investor is resident in the United Kingdom—                  

(a)when the gain accrues, and                  

(b)when the social holding is acquired.                  

(4)Condition H is that the social holding is acquired by the investor on the investor's own behalf.                  

(5)Condition J is that the social holding is acquired—                  

(a)in the 3 years beginning with the day when the gain accrues, or                  

(b)in the year that ends at the beginning of that day.                  

(6)The Treasury may by order substitute a later date for the date for the time being specified in sub-paragraph (2)(b).                  

(7)In this paragraph “debenture” includes any instrument creating or acknowledging indebtedness.                  

(8)A reference in this paragraph to a social enterprise is a reference to a body that is a social enterprise for the purposes                           of Part 5B of ITA 2007 (see section 257J of that Act).                  

#### Interpretation of ScheduleU.K.

3(1)In the following provisions of this Schedule—                  
          -  “the amount invested” means, in a case where this Schedule applies because of paragraph 1, the consideration mentioned in paragraph 1(1)(c),                         
          -  “the investor” means the individual mentioned in paragraph 1(1)(a) or, as the case may be, paragraph 2(1)(a),                         
          -  “the original gain” means the chargeable gain mentioned in paragraph 1(1)(a) or, as the case may be, paragraph 2(1)(a), and                         
          -  “the social holding” means the asset or assets mentioned in paragraph 1(1)(b) or, as the case may be, paragraph 2(1)(d).                         

(2)In this Schedule, a “disposal within marriage or civil partnership” is a disposal to which section 58 (certain disposals between                           spouses or civil partners) applies.                  

#### Claim to hold gain over while invested in a social enterpriseU.K.

4(1)The investor may make a claim for the original gain to be reduced—                  

(a)in a case within paragraph 1, by the amount invested, or by a part of that amount specified in the claim, or                  

(b)in a case within paragraph 2, to the extent specified in the claim,                  

but, in either case, subject as follows.                  

(2)The reduction may not be more than the original gain or, if the original gain has already been reduced under one or more of                           the listed provisions, the reduction may not be more than the reduced gain.                  

(3)In a case within paragraph 1, the claim may not relate to any part of the amount invested that under any of the listed provisions                           has already been set against a chargeable gain.                  

(4)The “listed provisions” are—                  

(a)sub-paragraph (1),                  

(b)Schedule 5B, and                  

(c)paragraph 1(5) of Schedule 5BB.                  

(5)The total of all reductions claimed by the investor under sub-paragraph (1) in any tax year must not be more than £1,000,000.                  

(6)If there is relief by way of a reduction under sub-paragraph (1) then, for the purposes of this Schedule, that relief—                  

(a)is attributable to the asset or assets that form the social holding, but                  

(b)ceases to be attributable to any particular asset, or to any particular part of a particular asset, when—                  

(i)a chargeable event occurs in relation to that asset or part, or                  

(ii)the person holding the asset or part dies.                  

#### Held-over gain treated as accruing on disposal etc of the qualifying investmentU.K.

5(1)This paragraph applies if there has been a reduction under paragraph 4(1).                  

(2)A chargeable gain equal to the amount of the reduction is treated as accruing when a chargeable event occurs in relation to                           the social holding without any chargeable event having previously occurred in relation to any of the holding.                  

(3)When a chargeable event occurs in relation to part only of the social holding without any chargeable event having previously                           occurred in relation to any of that part, a chargeable gain calculated in accordance with sub-paragraph (4) is treated as                           accruing.                  

(4)The calculation is—                  
          -  *Step 1* Subtract from the amount of the reduction any chargeable gains previously treated as accruing as a result of the operation                              of sub-paragraph (3).                         
          -  *Step 2* Attribute a proportionate part of the amount calculated at Step 1 to each part of the social holding held, immediately before                              the occurrence of the chargeable event in question, by the investor or a person who has acquired any part of the holding from                              the investor on a disposal within marriage or civil partnership.                         
          -  *Step 3* The amount attributed at Step 2 to the part of the social holding in relation to which that chargeable event occurs is the                              chargeable gain treated as accruing as a result of the operation of subparagraph (3) on the occurrence of that event.                         

#### Chargeable eventsU.K.

6(1)A chargeable event occurs in relation to an asset that forms the whole or any part of the social holding if (after the acquisition                           of the holding)—                  

(a)the investor disposes of the asset otherwise than by way of a disposal within marriage or civil partnership,                  

(b)the asset is disposed of, otherwise than by way of a disposal to the investor, by a person who acquired the asset on a disposal                           made within marriage or civil partnership,                  

(c)the asset is cancelled, extinguished, redeemed or repaid, or                  

(d)any of the conditions in Chapters 3 and 4 of Part 5B of ITA 2007 for the investor's eligibility for SI relief under that Part                           in respect of the amount invested fails to be met.                  

In this sub-paragraph “asset” includes part of an asset.                  

(2)In the event of the death of—                  

(a)the investor, or                  

(b)a person who, on a disposal within marriage or civil partnership, has acquired the whole or any part of the social holding,                  

nothing which occurs at or after the time of death is a chargeable event in relation to any part of the holding held by the                        deceased person immediately before the time of death.                  

(3)If a person makes a disposal of assets of a particular class while retaining other assets of that class—                  

(a)assets of that class acquired by the person on an earlier day are treated for the purposes of this Schedule as disposed of                           before assets of that class acquired by the person on a later day, and                  

(b)assets of that class acquired by the person on the same day are treated for the purposes of this Schedule as disposed of in                           the following order—                  

(i)first, any to which neither relief under this Schedule, nor SI relief under Part 5B of ITA 2007, is attributable,                  

(ii)next, any to which relief under this Schedule, but not SI relief under that Part, is attributable,                  

(iii)next, any to which SI relief under that Part, but not relief under this Schedule, is attributable, and                  

(iv)finally, any to which both SI relief under that Part, and relief under this Schedule, are attributable.                  

(4)For the purposes of sub-paragraph (3), assets—                  

(a)to which relief under this Schedule is attributable, and                  

(b)which have not been held continuously by the investor since the social holding was acquired,                  

are treated as having been acquired when the social holding was acquired if SI relief under Part 5B of ITA 2007 is not also                        attributable to them.                  

(5)For the purposes of sub-paragraph (3), assets—                  

(a)to which SI relief under Part 5B of ITA 2007 is attributable, and                  

(b)which were transferred to an individual as mentioned in section 257T of ITA 2007 (transfers between spouses or civil partners),                  

are treated as having been acquired when the social holding was acquired.                  

(6)Chapter 1 of Part 4 of this Act has effect subject to sub-paragraphs (3) to (5).                  

(7)Sections 104, 105 and 106A do not apply to assets to which relief under this Schedule is attributable if SI relief under Part                           5B of ITA 2007 is not also attributable to them.                  

(8)Where, at the time of a chargeable event, an asset that formed the whole or any part of the social holding is treated for                           the purposes of this Act as represented by assets which consist of or include assets other than that asset—                  

(a)so much of the original gain as is attributable to the asset is treated, in determining for the purposes of this paragraph                           the amount of the original gain to be treated as attributable to each of those assets, as apportioned in such manner as may                           be just and reasonable between those assets, and                  

(b)as between different assets treated as representing the same asset, sub-paragraphs (3) to (5) apply with the necessary modifications                           in relation to those assets as they would apply in relation to the asset.                  

(9)In order to determine, for the purposes of sub-paragraph (8), the amount of the original gain attributable to any asset, a                           proportionate part of the amount of the original gain is to be attributed to each asset that forms the whole or any part of                           so much of the social holding as is held, immediately before the occurrence of the chargeable event in question, by the investor                           or a person who has acquired any part of the social holding from the investor on a disposal within marriage or civil partnership.                  

(10)In subsections (8) and (9) references to the original gain are to so much of the original gain as remains after deduction                           from it of the amount of any chargeable gain treated as accruing as a result of the previous operation of paragraph 5.                  

#### Person to whom held-over gain is treated as accruingU.K.

7(1)This paragraph applies where a chargeable gain is treated as accruing as a result of the operation of paragraph 5.                  

(2)If the chargeable event is a disposal, that chargeable gain is treated as accruing to the person who makes the disposal.                  

(3)If the chargeable event occurs—                  

(a)when an asset, or part of an asset, is cancelled, extinguished, redeemed or repaid, or                  

(b)when a condition, for eligibility for relief in respect of the consideration given for the acquisition of an asset, fails                           to be met,                  

that chargeable gain is treated as accruing to the person who holds the asset, or part, when the chargeable event occurs.                  

#### Claims: procedureU.K.

8(1)Sections 257P(1), 257PA(1) and 257PB to 257PD of ITA 2007—                  

(a)apply in relation to a claim under this Schedule in respect of the social holding as they apply in relation to a claim under                           Part 5B to ITA 2007 in respect of an investment, and                  

(b)as they so apply, have effect as if any reference to the requirements for relief under that Part were a reference to the conditions                           for the application of this Schedule.                  

(2)In section 257PE(2) of ITA 2007 (power to make consequential amendments etc when amending provision about claims for SI relief)                           “enactment” includes (in particular) sub-paragraph (1).”                  

 Section 65

## SCHEDULE 13U.K.General Block Exemption Regulation

1U.K.CAA 2001 is amended as follows.

2(1)Section 45DB (exclusions from allowances under section 45DA) is amended as follows.U.K.

(2)In subsection (3)(a), for “a firm in difficulty for the purposes of the Community Guidelines on State Aid for Rescuing and                        Restructuring Firms in Difficulty (2004/C 244/02)” substitute “ an undertaking in difficulty for the purposes of the General Block Exemption Regulation ”.

(3)In subsection (4)(a), for “Council Regulation (EC) No 104/2000” substitute “ Regulation (EU) No 1379/2013 of the European Parliament and of the Council ”.

(4)In subsection (11), in the definition of “General Block Exemption Regulation”, for “(EC) No 800/2008” substitute “ (EU) No 651/2014 ”.

(5)In subsection (12), for paragraph (c) substitute—

“(c)Regulation (EU) No 1379/2013 of the European Parliament and of the Council,”.                  

3U.K.In section 45K (expenditure on plant and machinery for use in designated assisted areas), after subsection (8) insert—

“(8A)Condition C is met by virtue of subsection (8)(c) only if the amount of the expenditure exceeds the amount by which the relevant                           plant or machinery is depreciated in the period of 3 years ending immediately before the beginning of the chargeable period                           in which the expenditure is incurred.                  

(8B)“Relevant plant or machinery” means the plant or machinery being used at the end of the period of 3 years mentioned in subsection (8A) for the purposes                           of the product, process or service mentioned in subsection (8)(c).”                  

4(1)Section 45M (exemptions from allowances under section 45K) is amended as follows.U.K.

(2)In subsection (1), for “(6) or (7)” substitute “ (7) or (7A) ”.

(3)In subsection (3)(a), for “a firm in difficulty for the purposes of the Community Guidelines on State Aid for Rescuing and                        Restructuring Firms in Difficulty (2004/C 244/02)” substitute “ an undertaking in difficulty for the purposes of the General Block Exemption Regulation ”.

(4)In subsection (4)—

(a)in paragraph (a), for “Council Regulation (EC) No 104/2000” substitute “ Regulation (EU) No 1379/2013 of the European Parliament and of the Council ”, and

(b)after paragraph (b) insert—

“(ba)in the transport sector or related infrastructure,                  

(bb)relating to energy generation, distribution or infrastructure,                  

(bc)relating to the development of broadband networks,”.                  

(5)After that subsection insert—

“(4A)Expressions used in subsection (4)(b), (ba), (bb) or (bc) and in the General Block Exemption Regulation have the same meaning                           as in that Regulation.”                  

(6)Omit subsection (6).

(7)After subsection (7) insert—

“(7A)Expenditure is within this subsection if—                  

(a)the area by reference to which the condition in section 45K(1)(a) is met is not an area which falls within Article 107(3)(a)                           of the Treaty on the Functioning of the European Union,                  

(b)the condition in section 45K(8)(a) is not met in relation to the expenditure, and                  

(c)at the time the expenditure is incurred the company is not an SME for the purposes of the General Block Exemption Regulation.”                  

(8)In subsection (12)—

(a)in the first definition, for the words from “ “coal” to “have” substitute “has”, and

(b)in the definition of “General Block Exemption Regulation”, for “(EC) No 800/2008” substitute “ (EU) No 651/2014 ”.

(9)In subsection (15), for paragraph (c) substitute—

“(c)Regulation (EU) No 1379/2013 of the European Parliament and of the Council,”.                  

5(1)Section 45N (effect of plant or machinery subsequently being primarily for use outside designated assisted areas) is amended                        as follows.U.K.

(2)In subsection (1)—

(a)for “designated assisted area within the meaning of section 45K” substitute “ relevant area ”, and

(b)for “such a designated assisted” substitute “ a relevant ”.

(3)After subsection (3) insert—

“(3A)Relevant area” means—                  

(a)in relation to expenditure which would be within subsection (7A) of section 45M if paragraph (a) of that subsection were omitted,                           a designated assisted area within the meaning of section 45K which falls within Article 107(3)(a) of the Treaty on the Functioning                           of the European Union, and                  

(b)in relation to any other expenditure, a designated assisted area within the meaning of section 45K.”                  

6U.K.In section 212T(6) (cap on first-year allowances: zero-emission goods vehicles), in the definition of “undertaking”, for “(EC) No 800/2008” substitute “ (EU) No 651/2014 ”.

7U.K.In section 212U(5) (cap on first-year allowances: expenditure on plant and machinery for use in designated assisted areas),                        in the definition of “single investment project”, for “(EC) No 800/2008” substitute “ (EU) No 651/2014 ”.”

8U.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 69

## SCHEDULE 14U.K.Extended ring fence expenditure supplement for onshore activities

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

 Section 70

## SCHEDULE 15U.K.Supplementary charge: onshore allowance

### **PART 1**U.K.Amendments of Part 8 of CTA 2010

1U.K.Part 8 of CTA 2010 (oil activities) is amended as follows.

#### Onshore allowanceU.K.

2U.K.Section 357 (other definitions) is renumbered as section 356AA.

3U.K.After Chapter 7 insert—

##### “CHAPTER 8U.K.Supplementary charge: onshore allowance

###### IntroductionU.K.

###### 356BOverview

This Chapter sets out how relief for certain capital expenditure incurred for the purposes of onshore oil-related activities                        is given by way of reduction of a company's adjusted ring fence profits, and includes provision about—                  

(a)the need for allowance held for a site to be activated by relevant income from the same site in order for the allowance to                           be available for reducing adjusted ring fence profits,                  

(b)elections by a company to transfer allowance between different sites in which it is a licensee (see section 356F), and                  

(c)mandatory transfers of allowance where shares in the equity in a licensed area are disposed of (see sections 356H to 356HB                           and the related provisions in sections 356G to 356GD).                  

###### 356BA“Onshore oil-related activities”

(1)In this Chapter “onshore oil-related activities” means activities of a company which are carried on onshore and—                  

(a)fall within any of subsections (1) to (4) of section 356BB, or                  

(b)consist of the acquisition, enjoyment or exploitation of oil rights.                  

(2)Activities of a company are carried on “onshore” if they are authorised—                  

(a)under a landward licence under Part 1 of the Petroleum Act 1998 or the Petroleum (Production) Act 1934, or                  

(b)under a licence under the Petroleum (Production) Act (Northern Ireland) 1964.                  

(3)In subsection (2)(a) “landward licence” means a licence in respect of an area which falls within the definition of “landward area” in the regulations pursuant to                           which the licence was applied for.                  

###### 356BBThe activities

(1)Activities of a company in searching for oil or causing such searching to be carried out for the company.                  

(2)Activities of a company in extracting oil, or causing oil to be extracted for it, under rights which—                  

(a)authorise the extraction, and                  

(b)are held by it or by a company associated with it.                  

(3)Activities of a company in transporting, or causing to be transported for it, oil extracted under rights which—                  

(a)authorise the extraction, and                  

(b)are held as mentioned in subsection (2)(b),                  

but only if the transportation meets the condition in subsection (5).                  

(4)Activities of the company in effecting, or causing to be effected for it, the initial treatment or initial storage of oil                           won from any site under rights which—                  

(a)authorise its extraction, and                  

(b)are held as mentioned in subsection (2)(b).                  

(5)The condition mentioned in subsection (3) is that the transportation is to a place at which the seller in a sale at arm's                           length could reasonably be expected to deliver it (or, if there is more than one such place, the one nearest to the place                           of extraction).                  

(6)In this section “initial storage”—                  

(a)means, in relation to oil won from a site, the storage of a quantity of oil won from the site not exceeding 10 times the relevant                           share of the maximum daily production rate of oil for the site as planned or achieved (whichever is greater), but                  

(b)does not include the matters excluded by paragraphs (a) to (c) of the definition of “initial storage” in section 12(1) of                           OTA 1975;                  

and in this subsection “the relevant share” means a share proportionate to the company's share of oil won from the site concerned.                  

(7)In this section “initial treatment” has the meaning given by section 12(1) of OTA 1975; but for this purpose that definition is to be read as if the references                           in it to an oil field were to a site.                  

###### 356BC“Site”

In this Chapter “site” (except in the expression “drilling and extraction site”) means—                  

(a)a drilling and extraction site that is not used in connection with any oil field, or                  

(b)an oil field (whether or not one or more drilling and extraction sites are used in connection with it).                  

###### Onshore allowanceU.K.

###### 356CGeneration of onshore allowance

(1)Subsection (2) applies where a company incurs any relievable capital expenditure in relation to a qualifying site.                  

(2)The company is to hold an amount of allowance equal to 75% of the amount of the expenditure.                  

(3)“Qualifying site” means a site whose development (in whole or in part) is authorised for the first time on or after 5 December 2013.                  

(4)Capital expenditure incurred by a company is “relievable” only if, and so far as—                  

(a)it is incurred for the purposes of onshore oil-related activities (see section 356BA), and                  

(b)neither of the disqualifying conditions is met at the beginning of the day on which the expenditure is incurred (see section                           356CA).                  

(5)Allowance held under this Chapter is called “onshore allowance”.                  

(6)Onshore allowance is said in this Chapter to be “generated” at the time when the capital expenditure is incurred (see section                           356JA).                  

(7)Onshore allowance is referred to in this Chapter as being generated—                  

(a)“by” the company concerned,                  

(b)“at” the site concerned.                  

(8)Where capital expenditure is incurred only partly for the purposes of onshore oil-related activities, or the onshore oil-related                           activities for the purposes of which capital expenditure is incurred are carried on only partly in relation to a particular                           site, the expenditure is to be attributed to the site concerned on a just and reasonable basis.                  

(9)In this section, references to authorisation of development of a site—                  

(a)in the case of a site which is an oil field, are to be read in accordance with section 351;                  

(b)in the case of a drilling and extraction site, are to be read in accordance with section 356J.                  

###### 356CADisqualifying conditions for section 356C(4)(b)

(1)The first disqualifying condition is that production from the site is expected to exceed 7,000,000 tonnes.                  

(2)The second disqualifying condition is that production from the site has exceeded 7,000,000 tonnes.                  

(3)For the purposes of this section 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere                           is to be counted as equivalent to one tonne.                  

###### 356CBExpenditure not related to an established site

(1)A company may make an election under this section in relation to capital expenditure incurred by it for the purposes of onshore                           oil-related activities if the appropriate condition is met.                  

(2)The appropriate condition is that at the time of the election no site can be identified as a site in relation to which the                           expenditure has been incurred.                  

(3)An election may not be made before the beginning of the third accounting period of the company after that in which the expenditure                           is incurred.                  

(4)An election must specify—                  

(a)the expenditure in question,                  

(b)a site (“the specified site”) every part of which is, or is part of, an area in which the company is a licensee, and                  

(c)an accounting period of the company (“the specified accounting period”).                  

(5)The specified accounting period must not be earlier than the accounting period in which the election is made.                  

(6)Where a company makes an election under this section in relation to an amount of expenditure, that amount is treated for the                           purposes of this Chapter as incurred by the company—                  

(a)in relation to the specified site, and                  

(b)at the beginning of the specified accounting period.                  

###### Reduction of adjusted ring fence profitsU.K.

###### 356DReduction of adjusted ring fence profits

(1)A company's adjusted ring fence profits for an accounting period are to be reduced by the cumulative total amount of activated                           allowance for the accounting period (but are not to be reduced below zero).                  

(2)In relation to a company and an accounting period, the “cumulative total amount of activated allowance” is—                  

where—                     

A is the total of any amounts of activated allowance the company has, for any sites, for the accounting period (see section                              356E(2)) or for reference periods within the accounting period (see section 356GB(1)), and                        

C is any amount carried forward to the period under section 356DA.                        

###### 356DACarrying forward of activated allowance

(1)This section applies where, in the case of a company and an accounting period—                  

(a)the cumulative total amount of activated allowance (see section 356D(2)), is greater than                  

(b)the adjusted ring fence profits.                  

(2)The difference is carried forward to the next accounting period.                  

###### 356DBCompanies with both field allowances and onshore allowance

(1)This section applies where a company's adjusted ring fence profits for an accounting period are reducible both—                  

(a)under section 333(1) (by the amount of the company's pool of field allowances for the period), and                  

(b)under section 356D(1) (by the cumulative total amount of activated allowance for the period).                  

(2)The company may choose the order in which the different allowances are to be used.                  

(3)If the company chooses to apply section 333(1) first, then—                  

(a)Chapter 7 and this Chapter are to be ignored in calculating the “adjusted ring fence profits” in accordance with section 356AA,                           and                  

(b)if section 356D(1) is also applied: this Chapter, but not Chapter 7, is to be ignored in calculating the adjusted ring fence                           profits in accordance with section 356JB.                  

(4)If the company chooses to apply section 356D(1) first, then—                  

(a)this Chapter and Chapter 7 are to be ignored in calculating the adjusted ring fence profits in accordance with section 356JB,                           and                  

(b)if section 333(1) is also applied: Chapter 7, but not this Chapter, is to be ignored in calculating the “adjusted ring fence                           profits” in accordance with section 356AA.                  

###### Activated and unactivated allowance: basic calculation rulesU.K.

###### 356EActivation of allowance: no change of equity share

(1)This section applies where—                  

(a)a company is a licensee in a licensed area for the whole or part (“the licensed part”) of an accounting period,                  

(b)the company's share of the equity in the site is the same throughout the accounting period or, as the case requires, throughout                           the licensed part of the accounting period,                  

(c)the licensed area is or contains a site,                  

(d)the company holds, for the accounting period and the site, a closing balance of unactivated allowance (see section 356EA)                           that is greater than zero, and                  

(e)the company has relevant income from the site for the accounting period.                  

(2)The amount of activated allowance the company has for that accounting period and that site is the smaller of—                  

(a)the closing balance of unactivated allowance held for the accounting period and the site;                  

(b)the company's relevant income for that accounting period from that site.                  

(3)In this Chapter “relevant income”, in relation to a site and an accounting period of a company, means production income of the company from any oil extraction                           activities carried on at the site that is taken into account in calculating the company's adjusted ring fence profits for                           the accounting period.                  

###### 356EAThe closing balance of unactivated allowance for an accounting period

The closing balance of unactivated allowance held by a company for an accounting period and a site is—                  

where—                     

P is the amount of onshore allowance generated by the company in the accounting period at the site (including any amount treated                              under section 356F(7) or 356HB(1) as generated by the company in that accounting period at that site);                        

Q is any amount carried forward from an immediately preceding accounting period under section 356EB(2) or from an immediately                              preceding reference period under section 356GC;                        

R is any amount deducted in accordance with section 356GD(1) (reduction of allowance if equity disposed of).                        

###### 356EBCarrying forward of unactivated allowance

(1)This section applies where X is greater than Y in the case of an accounting period of a company and a site, where—                  
          -  X is the closing balance of unactivated allowance for the accounting period and the site;                         
          -  Y is the company's relevant income for the accounting period from that site.                         

(2)An amount equal to the difference between X and Y is treated as onshore allowance held by the company for that site for the                           next accounting period (and is treated as held with effect from the beginning of that period).                  

###### Transfer of allowances between sitesU.K.

###### 356FTransfer of allowances between sites

(1)This section applies if a company has, with respect to a site, an amount (“N”) of onshore allowance available to carry forward                           to an accounting period—                  

(a)under section 356EB(2), or                  

(b)by virtue of section 356GC(3).                  

(2)The company may elect to transfer the whole or part of that amount to another site (“site B”), if the appropriate conditions                           are met.                  

(3)The appropriate conditions are that—                  

(a)every part of site B is, or is part of, an area in which the company is a licensee, and                  

(b)the election is made no earlier than the beginning of the third accounting period of the company after that in which the allowance                           was generated.                  

(4)For the purposes of subsection (3)(b), a company may regard an amount of onshore allowance held by it for a site as generated                           in a particular accounting period if the amount does not exceed—                  

where—                     

A is the amount of onshore allowance generated in that accounting period for that site;                        

T is the total amount of onshore allowance generated in that period for that site that has already been transferred under                              this section.                        

(5)An election must specify—                  

(a)the amount of onshore allowance to be transferred;                  

(b)the site at which it was generated;                  

(c)the site to which it is transferred;                  

(d)the accounting period in which it was generated.                  

(6)Where a company makes an election under subsection (2), then—                  

(a)if the company elects to transfer the whole of N, no amount is available to be carried forward under section 356EB(2) or (as                           the case may be) by virtue of section 356GC(3);                  

(b)if the company elects to transfer only part of N, the amount available to be carried forward as mentioned in subsection (1)                           is reduced by the amount transferred.                  

(7)Where an amount of onshore allowance is transferred to a site as a result of an election, this Chapter has effect as if the                           allowance is generated at that site at the beginning of the accounting period in which the election is made.                  

###### Changes in equity share: activation of allowanceU.K.

###### 356GIntroduction to sections 356GA to 356GD

(1)Sections 356GA to 356GD apply to a company in respect of an accounting period and a licensed area that is or contains a site,                           if the following conditions are met—                  

(a)the company is a licensee in the licensed area for the whole, or for part, of the accounting period;                  

(b)the company has different shares (greater than zero) of the equity in the licensed area at different times during the accounting                           period.                  

(2)In a case where a company has three or more different shares of the equity in a licensed area during a particular day, sections                           356GA to 356GD (in particular, provisions relating to the beginning or end of a day) have effect subject to the necessary                           modifications.                  

###### 356GAReference periods

(1)For the purposes of sections 356GB to 356GD, the accounting period, or (if the company is not a licensee for the whole of                           the accounting period) the part or parts of the accounting period for which the company is a licensee, are to be divided into                           reference periods (each of which “belongs to” the site concerned).                  

(2)A reference period is a period of consecutive days that meets the following conditions—                  

(a)at the beginning of each day in the period, the company is a licensee in the licensed area;                  

(b)at the beginning of each day in the period, the company's share of the equity in the licensed area is the same;                  

(c)each day in the period falls within the accounting period.                  

###### 356GBActivation of allowance: reference periods

(1)The amount (if any) of activated allowance that a company has with respect to a site for a reference period is the smaller                           of the following—                  

(a)the company's relevant income from the site in the reference period;                  

(b)the total amount of unactivated allowance that is attributable to the reference period and the site (see section 356GD).                  

(2)The company's relevant income from the site in the reference period is—                  

where—                     

I is the company's relevant income from the site in the whole of the accounting period;                        

R is the number of days in the reference period;                        

L is the number of days in the accounting period for which the company is a licensee in the licensed area concerned.                        

###### 356GCCarry-forward of unactivated allowance from a reference period

(1)If, in the case of a reference period (“RP1”) of a company, the amount mentioned in subsection (1)(b) of section 356GB exceeds                           the amount mentioned in subsection (1)(a) of that section, an amount equal to the difference between those amounts is treated                           as onshore allowance held by the company for the site concerned for the next period.                  

(2)If RP1 is immediately followed by another reference period of the company (belonging to the same site), “the next period” means that reference period.                  

(3)If subsection (2) does not apply, “the next period” means the next accounting period of the company.                  

###### 356GDUnactivated amounts attributable to a reference period

(1)For the purposes of section 356GB(1)(b), the total amount of unactivated allowance attributable to a reference period and                           a site is—                  

where—                     

P is the amount of allowance generated by the company in the reference period at the site (including any amount treated under                              section 356F(7) or 356HB(1) as generated by the company in that accounting period at that site);                        

Q is the amount given by subsection (2) or (3);                        

R is any amount to be deducted under section 356HA(1) in respect of a disposal of the whole or part of the company's share                              of the equity in a licensed area that is or contains the site.                        

(2)Where the reference period is not immediately preceded by another reference period but is preceded by an accounting period                           of the company, Q is equal to the amount (if any) that is to be carried forward from that preceding accounting period under                           section 356EB(2).                  

(3)Where the reference period is immediately preceded by another reference period, Q is equal to the amount carried forward by                           virtue of section 356GC(2).                  

###### Transfers of allowance on disposal of equity shareU.K.

###### 356HIntroduction to sections 356HA and 356HB

(1)Sections 356HA and 356HB apply where a company (“the transferor”)—                  

(a)disposes of the whole or part of its share of the equity in a licensed area that is or contains a site;                  

(b)immediately before the disposal holds (unactivated) onshore allowance for the site concerned.                  

(2)Each company to which a share of the equity is disposed of is referred to in section 356HB as “a transferee”.                  

###### 356HAReduction of allowance if equity disposed of

(1)The following amount is to be deducted, in accordance with section 356GD(1), in calculating the total amount of unactivated                           allowance attributable to a reference period and a site—                  

where—                     

F is the pre-transfer total of unactivated allowance for the reference period that ends with the day on which the disposal                              is made;                        

E1 is the transferor's share of the equity in the licensed area immediately before the disposal;                        

E2 is the transferor's share of the equity in the licensed area immediately after the disposal.                        

(2)The “pre-transfer total of unactivated allowance” for a reference period is—                  

where P and Q are the same as in section 356GD.                     

###### 356HBAcquisition of allowance if equity acquired

(1)A transferee is treated as generating at the site concerned, at the beginning of the reference period or accounting period                           of the transferee that begins with, or because of, the disposal, onshore allowance of the amount given by subsection (2).                  

(2)The amount is—                  

where—                     

R is the amount determined for the purposes of the deduction under section 356HA(1);                        

E3 is the share of equity in the licensed area that the transferee has acquired from the transferor;                        

E1 and E2 are the same as in section 356HA.                        

###### MiscellaneousU.K.

###### 356IAdjustments

(1)This section applies if there is any alteration in a company's adjusted ring fence profits for an accounting period after                           this Chapter has effect in relation to the profits.                  

(2)Any necessary adjustments to the operation of this Chapter (whether in relation to the profits or otherwise) are to be made                           (including any necessary adjustments to the effect of section 356D on the profits or to the calculation of the amount to be                           carried forward under section 356DA).                  

###### 356IAOrders

(1)The Treasury may by order substitute a different percentage for the percentage that is at any time specified in section 356C(2)                           (calculation of allowance as a percentage of capital expenditure).                  

(2)The Treasury may by order amend the number that is at any time specified in section 356CA(1) or (2) (cap on production, or                           estimated production, at a site for the purposes of onshore allowance).                  

(3)An order under subsection (1) or (2) may include transitional provision.                  

###### InterpretationU.K.

###### 356J“Authorisation of development”: drilling and extraction sites

(1)References in this Chapter to authorisation of development of a site are to be interpreted as follows in relation to a drilling                           and extraction site that is situated in, or used in connection with, a licensed area.                  

(2)The references are to be read as references to a national authority—                  

(a)granting a licensee consent for development of the licensed area,                  

(b)serving on a licensee a programme of development for the licensed area, or                  

(c)approving a programme of development for the licensed area.                  

(3)References in subsection (2) to a “licensee” are to a licensee in the licensed area mentioned in subsection (1).                  

(4)In this section—                  
          -  “consent for development”, in relation to a licensed area, does not include consent which is limited to the purpose of testing the characteristics                              of an oil-bearing area;                         
          -  “development”, in relation to a licensed area, means winning oil from the licensed area otherwise than in the course of searching for                              oil or drilling wells;                         
          -  “national authority” means—                          (a)
the Secretary of State, or                                 
(b)
a Northern Ireland Department.                                 
 

###### 356JAWhen capital expenditure is incurred

Section 5 of CAA 2001 (when capital expenditure is incurred) applies for the purposes of this Chapter as for the purposes                        of that Act.                  

###### 356JBOther definitions

In this Chapter (except where otherwise specified)—                  
          -  “adjusted ring fence profits”, in relation to a company and an accounting period, means the adjusted ring fence profits that would (if this Chapter were                              ignored) be taken into account in calculating the supplementary charge on the company under section 330(1) for the accounting                              period (but see also section 356DB);                         
          -  “cumulative total amount of activated allowance” has the meaning given by section 356D(2);                         
          -  “licence” has the same meaning as in Part 1 of OTA 1975 (see section 12(1) of that Act);                         
          -  “licensed area” has the same meaning as in Part 1 of OTA 1975;                         
          -  “licensee” has the same meaning as in Part 1 of OTA 1975;                         
          -  “onshore allowance” has the meaning given by section 356C(5);                         
          -  “relevant income”, in relation to an onshore site and an accounting period, has the meaning given by section 356E(3);                         
          -  “site” has the meaning given by section 356BC.”                         

#### Restriction of field allowance to offshore fieldsU.K.

4(1)Section 352 (meaning of “qualifying oil field”) is amended as follows.U.K.

(2)Renumber section 352 as subsection (1) of section 352.

(3)In section 352(1) (as renumbered), after “an oil field” insert “ , other than an onshore field, ”.

(4)After subsection (1) insert—

“(2)An oil field is an “onshore field” for the purposes of subsection (1) if—                  

(a)the authorisation day is on or after 5 December 2013, and                  

(b)on the authorisation day every part of the oil field is, or is part of, an onshore licensed area;                  

but see the transitional provisions in paragraph 7 of Schedule 15 to FA 2014.                  

(3)A licensed area is an “onshore licensed area” if it falls within the definition of “landward area” in the regulations pursuant                           to which the application for the licence was made.”                  

### **PART 2**U.K.Minor and consequential amendments

5(1)CTA 2010 is amended as follows.U.K.

(2)In section 270 (overview of Part)—

(a)after subsection (7) insert—

“(7A)Chapter 8 makes provision about the reduction of supplementary charge by an allowance for capital expenditure incurred for                           the purposes of onshore oil-related activities.”;                  

(b)in subsection (8)(c), for “357” substitute “ 356AA ”.

(3)In section 333 (reduction of adjusted ring fence profits)—

(a)in subsection (1), after “reduced” insert “ (but not below zero) ”;

(b)omit subsection (2).

(4)In section 356AA (as renumbered by paragraph 2)(definitions for Chapter 7), in the definition of “adjusted ring fence profits”,                        at the end insert “ ; but see also section 356DB (companies with allowances under Chapter 8 as well as this Chapter) ”.

(5)In Schedule 4 (index of defined expressions)—

(a)at the appropriate places insert—

(b)in the entries for “adjusted ring fence profits”, “authorisation day”, “eligible oil field”, “licensee” and “relevant income”                        (in each case, as those expressions are defined for Chapter 7 of Part 8 of CTA 2010), for “357” substitute “ 356AA ”.

### **PART 3**U.K.Commencement and transitional provision

#### Commencement of onshore allowanceU.K.

6(1)The amendments made by paragraphs 3 and 5(1), (2)(a), (3) and (4) have effect in relation to capital expenditure incurred                        on or after 5 December 2013.U.K.

(2)The amendments made by paragraph 4 have effect in relation to any accounting period of a company in which a post-commencement                        authorisation day falls.

(3)In sub-paragraph (2) “post-commencement authorisation day” means an authorisation day (as defined for Chapter 7 of Part 8 of CTA 2010) that is 5 December 2013 or a later day.

(4)Section 5 of CAA 2001 (when capital expenditure is incurred) applies for the purposes of this paragraph as for the purposes                        of that Act.

#### Option to defer commencementU.K.

7(1)This paragraph applies in relation to any oil field whose development (in whole or in part) is authorised for the first time                        on or after 5 December 2013 but before 1 January 2015.U.K.

(2)At any time before 1 January 2015, the companies that are licensees in the oil field may jointly elect that the law is to                        have effect in relation to each of those companies as if the date specified in—

(a)section 352(2)(a) of CTA 2010 (as inserted by paragraph 4(4) of this Schedule),

(b)section 356C(3) of CTA 2010 (as inserted by paragraph 3 of this Schedule), and

(c)paragraph 6(3),

were 1 January 2015.

(3)Expressions used in this paragraph and in Chapter 7 of Part 8 of CTA 2010 have the same meaning in this paragraph as in that                        Chapter.

#### Straddling accounting periodsU.K.

8(1)Paragraphs 9 and 10 apply where a company has an accounting period (the “straddling accounting period”) that begins before                        and ends on or after commencement day.U.K.

(2)In paragraphs 9 and 10 “commencement day” means—

(a)5 December 2013 (except where paragraph (b) applies);

(b)1 January 2015, in relation to a company that makes an election under paragraph 7.

(3)Expressions used in paragraph 9 or 10 and in Chapter 8 of Part 8 of CTA 2010 (as inserted by paragraph 3) have the same meaning                        in the paragraph concerned as in that Chapter.

9(1)The amount (if any) by which the company's adjusted ring fence profits for the straddling accounting period are reduced under                        section 356D of CTA 2010 (as inserted by paragraph 3) cannot exceed the appropriate proportion of those profits.U.K.

(2)Section 356DA of CTA 2010 (carrying forward of activated allowance) applies in relation to the company and the accounting                        period as if the reference in subsection (1)(b) of that section to the adjusted ring fence profits were to the appropriate                        proportion of those profits.

(3)The “appropriate proportion” of the company's adjusted ring fence profits for the straddling accounting period is—

where—

D is the number of days in the straddling accounting period that fall on or after commencement day;

Y is the number of days in the straddling accounting period;

N is the amount of the company's adjusted ring fence profits for the accounting period.

(4)If the basis of apportionment in sub-paragraph (3) would work unjustly or unreasonably in the company's case, the company                        may elect for its adjusted ring fence profits to be apportioned on another basis that is just and reasonable and specified                        in the election.

10(1)For the purpose of determining the amount of activated allowance the company has with respect to any site—U.K.

(a)for the straddling accounting period (see section 356E of CTA 2010, as inserted by paragraph 3), or

(b)for a reference period that is part of the straddling accounting period (see section 356GB of CTA 2010, as so inserted),

the company's relevant income from the site in the straddling accounting period is taken to be the appropriate proportion                     of the actual amount of that relevant income.                  

(2)Accordingly, in relation to the company, the straddling accounting period and the site in question, section 356EB of CTA 2010                        (carrying forward of unactivated allowance) has effect as if Y in subsection (1) of that section were defined as the appropriate                        proportion of the company's relevant income for the straddling accounting period from that site.

(3)The “appropriate proportion” of the company's relevant income from a site in the straddling accounting period is—

D is the number of days in the straddling accounting period that fall on or after commencement day;

Y is the number of days in the straddling accounting period;

I is the amount of the company's relevant income from the site in the straddling accounting period.

(4)If the basis of apportionment in sub-paragraph (3) would work unjustly or unreasonably in the company's case, the company                        may elect for its adjusted ring fence profits to be apportioned on another basis that is just and reasonable and specified                        in the election.

 Section 73

## SCHEDULE 16U.K.Oil contractors: ring-fence trade etc

### CTA 2010U.K.

1U.K.CTA 2010 is amended as follows.

2U.K.In section 1 (overview of Act), in subsection (3), after paragraph (a) insert—

“(aa)oil contractor activities (see Part 8ZA),                  

(ab)profits arising from the exploitation of patents etc (see Part 8A),”.                  

3U.K.In Chapter 4 of Part 8 (oil activities: calculation of profits), after section 285 insert—

#### “Hire of relevant assetsU.K.

##### 285ARestriction on hire etc of relevant assets to be brought into account

(1)This section applies if—                  

(a)oil contractor activities are, or are to be, carried out, and                  

(b)a company that carries on a ring fence trade makes, or is to make, one or more payments under a lease of a relevant asset,                           or part of a relevant asset, which is, or is to be, provided, operated or used in the relevant offshore service in question.                  

(2)The total amount that may be brought into account in respect of the payments for the purposes of calculating the company's                           ring fence profits in an accounting period is limited to the hire cap.                  

(3)The “hire cap” is an amount equal to the relevant percentage of TC for the accounting period, subject to subsection (4).                  

(4)If payments in relation to which subsection (2) or section 356N(2) (restriction on hire for oil contractors under Part 8ZA)                           applies are also made, or to be made, by one or more other companies in respect of the relevant asset or part, the “hire cap”                           is to be such proportion of the amount mentioned in subsection (3) as is just and reasonable, having regard (in particular)                           to the amounts of the payments made, or to be made, by each company.                  

(5)The “relevant percentage” and TC are to be determined in accordance with section 356N(5) to (16).                  

(6)To the extent that, by virtue of this section, payments within subsection (1)(b) cannot be brought into account for the purposes                           of calculating the company's ring fence profits in an accounting period, the payments may be—                  

(a)allowed as a deduction from the company's total profits for the accounting period, or                  

(b)treated as a surrenderable amount of the company for the accounting period for the purposes of Part 5 (group relief) (see                           section 99(7)) as if they were a trading loss,                  

but this is subject to subsection (7).                  

(7)No deduction may be made by virtue of subsection (6) from total profits so far as they are ring fence profits or contractor's                           ring fence profits.                  

(8)If the company or an associated person enters into arrangements the main purpose or one of the main purposes of which is to                           secure that subsection (2) does not apply in relation to one or more payments to any extent, that subsection applies in relation                           to the payments to the extent that it would not otherwise do so.                  

(9)In subsection (8) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).                  

(10)In this section—                  
          -  “associated person” has the meaning given by section 356LB;                         
          -  “contractor's ring fence profits” has the meaning given by section 356LD;                         
          -  “oil contractor activities” and “relevant offshore service” have the meaning given by section 356L;                         
          -  “relevant asset” has the meaning given by section 356LA;                         
          -  “lease” has the meaning given by section 868.”                         

4U.K.After Part 8 (oil activities) insert—

#### **“PART 8ZA**U.K.Oil contractors

##### CHAPTER 1U.K.Introduction

###### 356KOverview of Part

(1)This Part is about the corporation tax treatment of oil contractor activities.                  

(2)Chapter 2 contains basic definitions used in this Part.                  

(3)Chapter 3 treats oil contractor activities as a separate trade.                  

(4)Chapter 4 makes provision about the calculation of profits from oil contractor activities.                  

(5)For the meaning of oil contractor activities, see section 356L.                  

##### CHAPTER 2U.K.Basic definitions

###### 356L“Oil contractor activities” etc

(1)The definitions in this section have effect for the purposes of this Part.                  

(2)“Oil contractor activities” means activities carried on by a company (“the contractor”), which are not oil-related activities (within the meaning of                           section 274), but are—                  

(a)exploration or exploitation activities in, or in connection with, which the contractor provides, operates or uses a relevant                           asset (see section 356LA) in a relevant offshore service, or                  

(b)otherwise carried on in, or in connection with, the provision by the contractor of a relevant offshore service.                  

(3)The contractor provides a “relevant offshore service” if the contractor provides, operates or uses a relevant asset in, or                           in connection with, the carrying on of exploration or exploitation activities in a relevant offshore area by the contractor                           or any other associated person.                  

(4)“Exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of the seabed and subsoil and their natural                           resources.                  

(5)“Relevant offshore area” means—                  

(a)the territorial sea of the United Kingdom;                  

(b)the areas designated by Order in Council under section 1(7) of the Continental Shelf Act 1964.                  

###### 356LA“Relevant asset”

(1)In this Part “relevant asset” means an asset within subsection (2) in respect of which conditions A and B are met.                  

(2)An asset is within this subsection if it is a structure that—                  

(a)can be moved from place to place (whether or not under its own power) without major dismantling or modification, and                  

(b)can be used to—                  

(i)drill for the purposes of searching for, or extracting, oil, or                  

(ii)provide accommodation for individuals who work on or from another structure used in a relevant offshore area for, or in connection                           with, exploration or exploitation activities (“offshore workers”).                  

(3)But an asset is not within subsection (2)(b)(ii) if it is reasonable to suppose that its use to provide accommodation for                           offshore workers is unlikely to be more than incidental to another use, or other uses, to which the asset is likely to be                           put.                  

(4)In subsection (2)—                  
          -  “oil” means any substance capable of being won under the authority of a licence granted under Part 1 of the Petroleum Act 1998                              or the Petroleum (Production) Act (Northern Ireland) 1964;                         
          -  “structure” includes a ship or other vessel.                         

(5)Condition A is that the asset, or any part of the asset, is leased (whether by the contractor or not) from an associated person                           other than the contractor.                  

(6)Condition B is that the asset is of the requisite value.                  

(7)The asset is of the “requisite value” if its market value is £2,000,000 or more.                  

(8)The Treasury may by regulations modify the meaning of “requisite value”.                  

(9)Regulations under subsection (8) may—                  

(a)amend this section,                  

(b)make different provision for different cases or different purposes, and                  

(c)make incidental, consequential, supplementary or transitional provision or savings.                  

###### 356LB“Associated person”

(1)For the purposes of this Part each of the following is an “associated person”—                  

(a)the contractor,                  

(b)any person who is, or has been, connected with the contractor,                  

(c)any person who has acted, acts or is to act, together with the contractor to provide a service, and                  

(d)any person who is connected with a person falling within paragraph (b) or (c).                  

(2)A person does not act together with the contractor to provide a service by reason only of leasing an asset, to any person,                           which is provided, operated or used in the service.                  

###### 356LC“Lease”

In this Part “lease” has the meaning given by section 868 and “leased” and “leasing” are to be construed accordingly.                  

###### 356LD“Contractor's ring fence profits”

In this Part the “contractor's ring fence profits”, in relation to an accounting period, means the contractor's income arising from oil contractor activities for that period.                  

##### CHAPTER 3U.K.Deemed separate trade

###### 356MOil contractor activities treated as separate trade

If the contractor carries on oil contractor activities as part of a trade, those activities are treated for the purposes of                        the charge to corporation tax on income as a separate trade, distinct from all other activities carried on by the contractor                        as part of the trade.                  

##### CHAPTER 4U.K.Calculation of profits

###### Hire of relevant assetsU.K.

###### 356NRestriction on hire etc of relevant assets to be brought into account

(1)This section applies if the contractor makes, or is to make, one or more payments under a lease of—                  

(a)a relevant asset, or                  

(b)part of a relevant asset.                  

(2)The total amount that may be brought into account in respect of the payments for the purposes of calculating the contractor's                           ring fence profits in an accounting period is limited to the hire cap.                  

(3)The “hire cap” is an amount equal to the relevant percentage of TC for the accounting period, subject to subsection (4).                  

(4)If payments in relation to which subsection (2) or section 285A(2) (restriction on hire for company carrying on a ring fence                           trade under Part 8) applies are also made, or to be made, by one or more other companies in respect of the relevant asset                           or part, the “hire cap” is to be such proportion of the amount mentioned in subsection (3) as is just and reasonable, having                           regard (in particular) to the amounts of the payments made, or to be made, by the contractor and each other company.                  

(5)Subject to subsection (7), the “relevant percentage” is—                  

where—                     

UROS is the number of days in the accounting period that the relevant asset is provided, operated or used in a relevant offshore                              service, and                        

TU is the number of days in the accounting period that the relevant asset is provided, operated or used (whether or not in                              a relevant offshore service).                        

(6)Accordingly, the relevant percentage is zero if the relevant asset is not provided, operated or used in the accounting period.                  

(7)If the accounting period is less than 12 months, the relevant percentage is to be proportionally reduced.                  

(8)TC is—                  

(9)Unless subsection (11) applies, OC is the sum of—                  

(a)any consideration given for the acquisition of the relevant asset or part when it was first acquired by an associated person,                           and                  

(b)any expenses incurred by an associated person in connection with that acquisition (other than the costs of financing the acquisition).                  

This is subject to subsections (12) and (13).                  

(10)Subsection (11) applies if the relevant asset or part—                  

(a)is leased by an associated person from a person who is not an associated person, and                  

(b)has never been owned by an associated person.                  

(11)OC is the sum of—                  

(a)the consideration that it is reasonable to suppose would have been given for the acquisition of the relevant asset or part,                           if it had been acquired by an associated person by way of a bargain at arm's length at the time it was first leased as mentioned                           in subsection (10)(a), and                  

(b)the expenses (other than the costs of financing the acquisition) that it is reasonable to suppose would have been incurred                           by an associated person in connection with such an acquisition.                  

This is subject to subsections (12) and (13).                  

(12)If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned                           in subsection (10)(a), before the beginning of the accounting period, OC does not include any part of the consideration mentioned                           in subsection (9)(a) or (as the case may be) (11)(a) that it is reasonable to attribute to anything that no longer forms part                           of the relevant asset or part at the beginning of the accounting period.                  

(13)If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned                           in subsection (10)(a), in the accounting period, OC for the accounting period is—                  

where—                     

D is the total number of days in the accounting period,                        

DBA is the number of days in the accounting period before the day on which the relevant asset or part was first acquired or                              first leased, and                        

OC is the amount given by subsection (9) or (as the case may be) (11).                        

(14)CE is capital expenditure on the relevant asset or part (other than capital expenditure in respect of its acquisition or the                           acquisition of a lease of it) incurred by an associated person—                  

(a)after it was first acquired by an associated person or (as the case may be) was first leased as mentioned in subsection (10)(a),                           and                  

(b)before the end of the accounting period.                  

This is subject to subsections (15) and (16).                  

(15)CE does not include any capital expenditure mentioned in subsection (14) that is—                  

(a)incurred before the beginning of the accounting period, and                  

(b)not reflected in the state or nature of the relevant asset or part at the beginning of the accounting period.                  

(16)If any capital expenditure mentioned in subsection (14) is incurred on a day in the accounting period, the amount of CE for                           the accounting period in respect of that capital expenditure is—                  

where—                     

D is the total number of days in the accounting period,                        

DBI is the number of days in the accounting period before the day on which that capital expenditure is incurred, and                        

CEA is the amount of that capital expenditure.                        

###### 356NARestriction on hire: further provision

(1)The Treasury may by regulations modify the “relevant percentage” for the purposes of section 356N or 285A.                  

(2)Regulations under subsection (1) may—                  

(a)amend section 356N or section 285A,                  

(b)make different provision for different cases or different purposes, and                  

(c)make incidental, consequential, supplementary or transitional provision or savings.                  

(3)To the extent that, by virtue of section 356N, payments within subsection (1) of that section cannot be brought into account                           for the purposes of calculating the contractor's ring fence profits in an accounting period, the payments may be—                  

(a)allowed as a deduction from the contractor's total profits for the accounting period, or                  

(b)treated as a surrenderable amount of the contractor for the accounting period for the purposes of Part 5 (group relief) (see                           section 99(7)) as if they were a trading loss,                  

subject to subsection (4).                  

(4)No deduction may be made by virtue of subsection (3) from total profits so far as they are contractor's ring fence profits                           or ring fence profits for the purposes of Part 8.                  

(5)If an associated person enters into arrangements the main purpose or one of the main purposes of which is to secure that section                           356N(2) does not apply in relation to one or more payments to any extent, that provision applies in relation to the payments                           to the extent it would not otherwise do so.                  

(6)In subsection (5) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).                  

###### Loan relationshipsU.K.

###### 356NBRestriction on debits to be brought into account

(1)Debits may not be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the contractor's                           loan relationships in any way that results in a reduction of what would otherwise be the contractor's ring fence profits,                           but this is subject to subsections (2) to (4).                  

(2)Subsection (1) does not apply so far as a loan relationship is in respect of money borrowed by the contractor which has been—                  

(a)used to meet expenditure incurred by the contractor in carrying on oil contractor activities, or                  

(b)appropriated to meeting expenditure to be so incurred by the contractor.                  

(3)Subsection (1) does not apply, in the case of debits falling to be brought into account as a result of section 329 of CTA                           2009 (pre-loan relationship and abortive expenses) in respect of a loan relationship that has not been entered into, so far                           as the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned                           in subsection (2).                  

(4)Subsection (1) does not apply, in the case of debits in respect of a loan relationship to which Chapter 2 of Part 6 of CTA                           2009 (relevant non-lending relationships) applies, so far as—                  

(a)the payment of interest under the relationship is expenditure incurred as mentioned in subsection (2)(a), or                  

(b)the exchange loss arising from the relationship is in respect of a money debt on which the interest payable (if any) is, or                           would be, such expenditure.                  

(5)If a debit—                  

(a)falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of a loan relationship of the contractor,                           but                  

(b)as a result of this section cannot be brought into account in a way that results in any reduction of what would otherwise                           be the contractor's ring fence profits,                  

the debit is to be brought into account for those purposes as a non-trading debit despite anything in section 297 of that                        Act.                  

(6)References in this section to a loan relationship, in relation to the borrowing of money, do not include a relationship to                           which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies.                  

###### 356NCRestriction on credits to be brought into account

(1)Credits in respect of exchange gains from the contractor's loan relationships may not be brought into account for the purposes                           of Part 5 of CTA 2009 (loan relationships) in any way that results in an increase of what would otherwise be the contractor's                           ring fence profits, but this is subject to subsections (2) to (4).                  

(2)Subsection (1) does not apply so far as a loan relationship is in respect of money borrowed by the contractor which has been—                  

(a)used to meet expenditure incurred by the contractor in carrying on oil contractor activities, or                  

(b)appropriated to meeting expenditure to be so incurred by the contractor.                  

(3)Subsection (1) does not apply, in the case of credits falling to be brought into account as a result of section 329 of CTA                           2009 (pre-loan relationship and abortive expenses) in respect of a loan relationship that has not been entered into, so far                           as the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned                           in subsection (2).                  

(4)Subsection (1) does not apply, in the case of credits in respect of a loan relationship to which Chapter 2 of Part 6 of CTA                           2009 (relevant non-lending relationships) applies, so far as—                  

(a)the payment of interest under the relationship is expenditure incurred as mentioned in subsection (2)(a), or                  

(b)the exchange gain arising from the relationship is in respect of a money debt on which the interest payable (if any) is, or                           would be, such expenditure.                  

(5)If a credit—                  

(a)falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of a loan relationship of the contractor,                           but                  

(b)as a result of this section cannot be brought into account in a way that results in any increase of what would otherwise be                           the contractor's ring fence profits,                  

the credit is to be brought into account for those purposes as a non-trading credit despite anything in section 297 of that                        Act.                  

(6)Section 356NB(6) applies for the purposes of this section.                  

###### ReliefU.K.

###### 356NDManagement expenses

No deduction under section 1219 of CTA 2009 (expenses of management of a company's investment business) is to be allowed from                        the contractor's ring fence profits.                  

###### 356NELosses

Relief in respect of a loss incurred by the contractor may not be given under section 37 (relief for trade losses against                        total profits) against the contractor's ring fence profits except so far as the loss arises from oil contractor activities.                  

###### 356NFGroup relief

(1)On a claim for group relief made by a claimant company in relation to a surrendering company, group relief may not be allowed                           against the claimant company's contractor's ring fence profits except so far as the claim relates to losses incurred by the                           surrendering company that arose from oil contractor activities.                  

(2)In section 105 (restriction on surrender of losses etc within section 99(1)(d) to (g)) the references to the surrendering                           company's gross profits of the surrender period do not include the company's relevant contractor's ring fence profits for                           that period.                  

(3)The company's “relevant contractor's ring fence profits” for that period are—                  

(a)if for that period there are no qualifying charitable donations made by the company that are allowable under Part 6 (charitable                           donations relief), the company's contractor's ring fence profits for that period, or                  

(b)otherwise, so much of the contractor's ring fence profits of the company for that period as exceeds the amount of the qualifying                           charitable donations made by the company that are allowable under section 189 for that period.                  

(4)In this section “claimant company” and “surrendering company” are to be read in accordance with Part 5 (group relief) (see                           section 188).                  

###### 356NGCapital allowances

A capital allowance may not to any extent be given effect under section 259 or 260 of CAA 2001 (special leasing) by deduction                        from the contractor's ring fence profits.”                  

5U.K.In Schedule 4 (index of defined expressions), insert the following entries at the appropriate places—

### Commencement etcU.K.

6U.K.This Schedule is to be treated as having come into force on 1 April 2014 (“the commencement date”).

7U.K.Section 356L of CTA 2010 has effect in relation to activities carried out on or after the commencement date.

8(1)If, on the commencement date, a company was carrying on a trade that consisted of, or included, carrying out oil contractor                        activities, an accounting period ends (if it would not otherwise do so) with 31 March 2014.U.K.

(2)Sub-paragraph (3) applies if—

(a)but for sub-paragraph (1), a company would have had an accounting period that began before the commencement date and ended                        on or after that date (“the split accounting period”), and

(b)the company's accounting period beginning with 1 April 2014 ends when the split accounting period would have ended but for                        that sub-paragraph.

(3)For the purposes of Chapter 4 of Part 22 of CTA 2010 (surrender of tax refund within group)—

(a)the company is to be treated as having the split accounting period,

(b)any tax refund due to the company for—

(i)the accounting period ending with 31 March 2014, or

(ii)the accounting period beginning with 1 April 2014,

is to be treated as if it were a tax refund due to the company for the split accounting period, and

(c)if the company surrenders a tax refund that is so treated (or part of such a refund), the references in section 964(6) of                        CTA 2010 to the date on which corporation tax became due and payable are to be treated as references to the date on which                        corporation tax would have become due and payable had the company had the split accounting period.

9(1)A company may be given relief under section 45 of CTA 2010 (carry forward of trade loss against subsequent trade profits)                        for a loss made in an accounting period ending before the commencement date against profits of a ring fence trade so far as                        (and only so far as) the loss would have been a loss of the ring fence trade had section 356L of that Act had effect in relation                        to activities carried out before the commencement date and Part 8ZA therefore applied.U.K.

(2)In sub-paragraph (1) “ring fence trade” means oil contractor activities that constitute a separate trade (whether by virtue of section 356M of that Act or otherwise).

 Section 74

## SCHEDULE 17U.K.Partnerships

### **PART 1**U.K.Limited liability partnerships: treatment of salaried members

#### Main provisionU.K.

1U.K.In Part 9 of ITTOIA 2005 (partnerships) after section 863 (limited liability partnerships) insert—

##### “863ALimited liability partnerships: salaried members

(1)Subsection (2) applies at any time when conditions A to C in sections 863B to 863D are met in the case of an individual (“M”)                           who is a member of a limited liability partnership in relation to which section 863(1) applies.                  

(2)For the purposes of the Income Tax Acts—                  

(a)M is to be treated as being employed by the limited liability partnership under a contract of service instead of being a member                           of the partnership, and                  

(b)accordingly, M's rights and duties as a member of the limited liability partnership are to be treated as rights and duties                           under that contract of service.                  

(3)This section needs to be read with section 863G (anti-avoidance).                  

##### 863BCondition A

(1)The question of whether condition A is met is to be determined at the following times—                  

(a)if relevant arrangements are in place—                  

(i)at the beginning of the tax year 2014-15, or                  

(ii)if later, when M becomes a member of the limited liability partnership,                  

at the time mentioned in sub-paragraph (i) or (ii) (as the case may be);                  

(b)at any subsequent time when relevant arrangements are put in place or modified;                  

(c)where—                  

(i)the question has previously been determined, and                  

(ii)the relevant arrangements which were in place at the time of the previous determination do not end, and are not modified,                           by the end of the period which was the relevant period for the purposes of the previous determination (see step 1 in subsection                           (3)),                  

immediately after the end of that period.                  

(2)“Relevant arrangements” means arrangements under which amounts are to be, or may be, payable by the limited liability partnership in respect of                           M's performance of services for the partnership in M's capacity as a member of the partnership.                  

(3)Take the following steps to determine whether condition A is met at a time (“the relevant time”).                  
          -  *Step 1* Identify the relevant period by reference to the relevant arrangements which are in place at the relevant time.“The relevant period” means the period—                          (a)
beginning with the relevant time, and                                 
(b)
ending at the time when, as at the relevant time, it is reasonable to expect that the relevant arrangements will end or be                                       modified.                                 
 
          -  *Step 2* Condition A is met if, at the relevant time, it is reasonable to expect that at least 80% of the total amount payable by                              the limited liability partnership in respect of M's performance during the relevant period of services for the partnership                              in M's capacity as a member of the partnership will be disguised salary. An amount within the total amount is “disguised salary”                              if it—                          (a)
is fixed,                                 
(b)
is variable, but is varied without reference to the overall amount of the profits or losses of the limited liability partnership,                                       or                                 
(c)
is not, in practice, affected by the overall amount of those profits or losses.                                 
 

(4)If condition A is determined to be met, or not to be met, at a time, the condition is to be treated as met, or as not met,                           at all subsequent times until the question is required to be re-determined under subsection (1)(b) or (c).                  

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

##### 863CCondition B

Condition B is that the mutual rights and duties of the members of the limited liability partnership, and of the partnership                        and its members, do not give M significant influence over the affairs of the partnership.                  

##### 863DCondition C

(1)Condition C is that, at the time at which it is being determined whether the condition is met (“the relevant time”), M's contribution to the limited liability partnership (see sections 863E and 863F) is less than 25% of the amount given                           by subsection (2) (subject to subsection (7)).                  

(2)That amount is the total amount of the disguised salary which, at the relevant time, it is reasonable to expect will be payable                           by the limited liability partnership in respect of M's performance during the relevant tax year of services for the partnership                           in M's capacity as a member of the partnership.                  

In this section “the relevant tax year” means the tax year in which the relevant time falls and an amount is “disguised salary” if it falls within any of paragraphs                        (a) to (c) at step 2 in section 863B(3).                  

(3)The question of whether condition C is met is to be determined—                  

(a)at the beginning of the tax year 2014-15 or, if later, the time at which M becomes a member of the limited liability partnership;                  

(b)after that, at the beginning of each tax year.                  

(4)If in a tax year—                  

(a)there is a change in M's contribution to the limited liability partnership, or                  

(b)there is otherwise a change of circumstances which might affect the question of whether condition C is met,                  

the question of whether the condition is met is to be re-determined at the time of the change.                  

This subsection is subject to section 863F(3).                  

(5)If condition C is determined to be met (including by virtue of subsection (7)), or not to be met, at the relevant time, the                           condition is to be treated as met, or as not met, at all subsequent times until the question is required to be re-determined                           under subsection (3)(b) or (4).                  

(6)Subsection (7) applies if—                  

(a)the relevant time coincides with an increase in M's contribution to the limited liability partnership, and                  

(b)apart from subsection (7), that increase would cause condition C not to be met at the relevant time.                  

(7)Condition C is to be treated as met at the relevant time unless, at that time, it is reasonable to expect that condition C                           will not be met for the remainder of the relevant tax year (ignoring this subsection).                  

(8)If there are any excluded days in the relevant tax year (see subsections (9) to (11)), in subsection (1) the reference to                           M's contribution to the limited liability partnership is to be read as a reference to that contribution multiplied by the                           following fraction—                  

where—                     

D is the number of days in the relevant tax year, and                        

E is the number of excluded days in the relevant tax year.                        

(9)Any day in the relevant tax year—                  

(a)which is before the day on which the relevant time falls, and                  

(b)on which M is not a member of the limited liability partnership,                  

is an “excluded” day for the purposes of subsection (8).                  

(10)If, at the relevant time, it is reasonable to expect that M will not be a member of the limited liability partnership for                           the remainder of the relevant tax year, any day in the relevant tax year—                  

(a)which is after the day on which the relevant time falls, and                  

(b)on which it is reasonable to expect that M will not be a member of the limited liability partnership,                  

is an “excluded” day for the purposes of subsection (8).                  

(11)If the relevant time coincides with an increase in M's contribution to the limited liability partnership, any day in the relevant                           tax year—                  

(a)which is before the day on which the relevant time falls, and                  

(b)on which condition C is met,                  

is an “excluded” day for the purposes of subsection (8).                  

(12)In subsections (6) and (11) references to an increase in M's contribution to the limited liability partnership include (in                           particular)—                  

(a)the making of M's first contribution to the capital of the limited liability partnership, and                  

(b)M being treated as having made a contribution by section 863F(2).                  

##### 863EM's contribution to the limited liability partnership: the basic calculation

(1)For the purposes of condition C in section 863D M's contribution to the limited liability partnership at a time is amount                           A.                  

(2)Amount A is the total amount which M has contributed to the limited liability partnership as capital less so much of that                           amount (if any) as is within subsection (6).                  

(3)In particular, M's share of any profits of the limited liability partnership is to be included in the amount which M has contributed                           to the partnership as capital so far as that share has been added to the partnership's capital.                  

(4)In subsection (3) the reference to profits is to profits calculated in accordance with generally accepted accounting practice                           (before any adjustment required or authorised by law in calculating profits for income tax purposes).                  

(5)Subsection (3) applies as well for the purpose of construing references to contributions to the capital of the limited liability                           partnership in sections 863D(12)(a) and 863F.                  

(6)An amount of capital is within this subsection if it is an amount which—                  

(a)M has previously drawn out or received back,                  

(b)M is or may be entitled to draw out or receive back at any time when M is a member of the limited liability partnership, or                  

(c)M is or may be entitled to require another person to reimburse to M.                  

(7)In subsection (6) any reference to drawing out or receiving back an amount is to doing so directly or indirectly.                  

##### 863FM's contribution to the limited liability partnership: deemed contributions

(1)This section applies if—                  

(a)by the time mentioned in section 863D(3)(a), M has given an undertaking (whether or not legally enforceable) to make a contribution                           to the capital of the limited liability partnership but has not made the contribution,                  

(b)the undertaking requires M to make the contribution by the end of—                  

(i)the period of 3 months ending with 5 July 2014, or                  

(ii)if it ends after that date, the period of 2 months beginning with the date on which M becomes a member of the limited liability                           partnership, and                  

(c)when it is made, the contribution will be included in amount A under section 863E.                  

In the following subsections “the relevant period” means the period mentioned in paragraph (b)(i) or (ii) (as the case may be).                  

(2)For the purpose of determining whether condition C in section 863D is met—                  

(a)at the time mentioned in section 863D(3)(a), or                  

(b)at any subsequent time during the relevant period,                  

M is to be treated as having made the contribution at the time mentioned in section 863D(3)(a) (so far as M has not (actually)                        made the contribution at the time at which it is being determined whether condition C is met).                  

(3)If M (actually) makes the contribution (in whole or in part) during the relevant period, the question of whether condition                           C is met is not to be re-determined under section 863D(4) just because of the making of the contribution (in whole or in part).                  

(4)If M does not (actually) make the contribution (in whole or in part) by the end of the relevant period, any determination                           in relation to which subsection (2) applied is to be made again (as at the time at which it was originally made).                  

(5)In making a determination again—                  

(a)if it is the whole of the contribution which M does not make by the end of the relevant period, subsection (2) is to be ignored;                  

(b)if M makes part of the contribution by the end of the relevant period, in subsection (2) references to the contribution are                           to be read as references to that part of it.                  

##### 863GAnti-avoidance

(1)In determining whether section 863A(2) applies in the case of an individual who is a member of a limited liability partnership,                           no regard is to be had to any arrangements the main purpose, or one of the main purposes, of which is to secure that section                           863A(2) does not apply in the case of—                  

(a)the individual, or                  

(b)the individual and one or more other individuals.                  

(2)Subsection (4) applies if—                  

(a)an individual (“X”) personally performs services for a limited liability partnership at a time when X is not a member of the                           partnership,                  

(b)X performs the services under arrangements involving a member of the limited liability partnership (“Y”) who is not an individual,                  

(c)the main purpose, or one of the main purposes, of those arrangements is to secure that section 863A(2) does not apply in the                           case of X or in the case of X and one or more other individuals, and                  

(d)in relation to X's performance of the services, an amount falling within subsection (3) arises to Y in respect of Y's membership                           of the limited liability partnership.                  

(3)An amount falls within this subsection if—                  

(a)were X performing the services under a contract of service by which X were employed by the limited liability partnership,                           and                  

(b)were the amount to arise to X directly from the limited liability partnership,                  

the amount would be employment income of X in respect of the employment.                  

(4)If this subsection applies, in relation to X's performance of the services, X is to be treated on the following basis—                  

(a)X is a member of the limited liability partnership in whose case section 863A(2) applies,                  

(b)the amount arising to Y arises instead to X directly from the limited liability partnership,                  

(c)that amount is employment income of X in respect of the employment under section 863A(2) accordingly, and                  

(d)neither that amount, nor any amount representing that amount, is to be income of X for income tax purposes on any other basis.                  

(4A)Section 863A(2) does not apply in the case of a member of a limited liability partnership if, apart from this subsection,                           it would apply in consequence of arrangements the main purpose, or one of the main purposes, of which is to secure that section                           850C does not apply for one or more periods of account in relation to—                  

(a)the member, or                  

(b)the member and one or more other members of the limited liability partnership.                  

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

2U.K.In Part 17 of CTA 2009 (partnerships) after section 1273 (limited liability partnerships) insert—

##### “1273ALimited liability partnerships: salaried members

(1)Subsection (2) applies at any time when section 863A(2) of ITTOIA 2005 (limited liability partnerships: salaried members)                           applies in the case of an individual (“M”) who is a member of a limited liability partnership in relation to which section                           1273(1) applies.                  

(2)In relation to the charge to corporation tax on income, for the purposes of the Corporation Tax Acts—                  

(a)M is to be treated as being employed by the limited liability partnership under a contract of service instead of being a member                           of the partnership, and                  

(b)accordingly, M's rights and duties as a member of the limited liability partnership are to be treated as rights and duties                           under that contract of service.”                  

#### Supplementary provision: deductionsU.K.

3(1)ITTOIA 2005 is amended as follows.U.K.

(2)At the end of Chapter 5 of Part 2 (trade profits: rules allowing deductions) insert—

##### “Limited liability partnerships: salaried membersU.K.

###### 94AADeductions in relation to salaried members

(1)This section applies in relation to a limited liability partnership if section 863A(2) (limited liability partnerships: salaried                           members) applies in the case of a member of the partnership (“M”).                  

(2)In calculating for a period of account under section 849 (calculation of firm's profits and losses) the profits of a trade                           carried on by the limited liability partnership, a deduction is allowed for expenses paid by the partnership in respect of                           M's employment under section 863A(2) if no deduction would otherwise be allowed for the payment.                  

(3)This section is subject to section 33 (capital expenditure), section 34 (expenses not wholly and exclusively for trade etc),                           section 45 (business entertainment and gifts) and section 53 (social security contributions).”                  

(3)In Chapter 3 of Part 3 (profits of property businesses: basic rules), in the table in section 272(2) (application of trading                        income rules), after the entry for section 94A insert—

4(1)CTA 2009 is amended as follows.U.K.

(2)At the end of Chapter 5 of Part 3 (trade profits: rules allowing deductions) insert—

##### “Limited liability partnerships: salaried membersU.K.

###### 92ADeductions in relation to salaried members

(1)This section applies in relation to a limited liability partnership if section 1273A(2) (limited liability partnerships: salaried                           members) applies in the case of a member of the partnership (“M”).                  

(2)In calculating for an accounting period under section 1259 (calculation of firm's profits and losses) the profits of a trade                           carried on by the limited liability partnership, a deduction is allowed for expenses paid by the partnership in respect of                           M's employment under section 1273A(2) if no deduction would otherwise be allowed for the payment.                  

(3)This section is subject to—                  

(a)section 53 (capital expenditure),                  

(b)section 54 (expenses not wholly and exclusively for trade etc),                  

(c)section 1298 (business entertainment and gifts), and                  

(d)section 1302 (social security contributions).”                  

(3)In Chapter 3 of Part 4 (profits of property businesses: basic rules), in the table in section 210(2) (application of trading                        income rules), after the entry for section 92 insert—

(4)In Chapter 2 of Part 16 (companies with investment business: management expenses)—

(a)in section 1224(1) (accounting period to which expenses are referable) for “1227” substitute “ 1227A ”, and

(b)after section 1227 insert—

##### “1227AManagement expenses in relation to salaried members of limited liability partnerships

(1)This section applies in relation to a company if—                  

(a)as a member of a limited liability partnership, the company is a company with investment business,                  

(b)section 1273A(2) (limited liability partnerships: salaried members) applies in the case of a member of the partnership (“M”),                           and                  

(c)expenses of management of the company's investment business are paid in respect of M's employment under section 1273A(2) but                           are not referable to any accounting period under sections 1225 to 1227.                  

(2)The expenses are to be treated as referable to the accounting period in which they are paid.”                  

#### Supplementary provision: arrangements made by intermediariesU.K.

5U.K.In Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers under arrangements made by intermediaries) in section                        54 (deemed employment payment) after subsection (1) insert—

“(1A)For the purposes of step 1 of subsection (1), any payment or benefit which is employment income of the worker by virtue of                           section 863G(4) of ITTOIA 2005 (salaried members of limited liability partnerships: anti-avoidance) is to be ignored.”                  

#### CommencementU.K.

6(1)Subject to what follows, the amendments made by this Part are treated as having come into force on 6 April 2014.U.K.

(2)Section 863G(4A) of ITTOIA 2005 (as inserted by paragraph 1) comes into force on the day after the day on which this Act is                        passed.

### **PART 2**U.K.Partnerships with mixed membership

#### Main provisionU.K.

7(1)Part 9 of ITTOIA 2005 (partnerships) is amended as follows.U.K.

(2)In section 850 (allocation of firm's profits and losses between partners) in subsection (1) for “and 850B” substitute “ to 850D ”.

(3)After section 850B insert—

##### “850CExcess profit allocation to non-individual partners

(1)Subsections (4) and (5) apply if—                  

(a)for a period of account (“the relevant period of account”)—                  

(i)the calculation under section 849 in relation to an individual partner (“A”) (see subsection (6)) produces a profit for the                           firm, and                  

(ii)A's share of that profit determined under section 850 or 850A (“A's profit share”) is a profit or is neither a profit nor                           a loss,                  

(b)a non-individual partner (“B”) (see subsection (6)) has a share of the profit for the firm mentioned in paragraph (a)(i) (“B's                           profit share”) which is a profit (see subsection (7)), and                  

(c)condition X or Y is met.                  

(2)Condition X is that it is reasonable to suppose that—                  

(a)amounts representing A's deferred profit (see subsection (8)) are included in B's profit share, and                  

(b)in consequence, both A's profit share and the relevant tax amount (see subsection (9)) are lower than they would otherwise                           have been.                  

(3)Condition Y is that—                  

(a)B's profit share exceeds the appropriate notional profit (see subsections (10) to (17)),                  

(b)A has the power to enjoy B's profit share (“A's power to enjoy”) (see subsections (18) to (21)), and                  

(c)it is reasonable to suppose that—                  

(i)the whole or any part of B's profit share is attributable to A's power to enjoy, and                  

(ii)both A's profit share and the relevant tax amount (see subsection (9)) are lower than they would have been in the absence                           of A's power to enjoy.                  

(4)A's profit share is increased by so much of the amount of B's profit share as, it is reasonable to suppose, is attributable                           to—                  

(a)A's deferred profit, or                  

(b)A's power to enjoy,                  

as determined on a just and reasonable basis.                  

But any increase by virtue of paragraph (b) is not to exceed the amount of the excess mentioned in subsection (3)(a) after                        deducting from that amount any increase by virtue of paragraph (a).                  

(5)If B is chargeable to income tax, in applying sections 850 to 850B in relation to B for the relevant period of account, such                           adjustments are to be made as are just and reasonable to take account of the increase in A's profit share under subsection                           (4).                  

(This subsection does not apply for the purposes of subsection (7) or section 850D(7).)                  

(6)A partner in a firm is an “individual partner” if the partner is an individual and “non-individual partner” is to be read                           accordingly; but “non-individual partner” does not include the firm itself where it is treated as a partner under section 863I (allocation of profit to AIFM firm).                  

(7)B's profit share is to be determined by applying section 850 and, if relevant, section 850A in relation to B for the relevant                           period of account (whether or not B is chargeable to income tax) on the assumption that the calculation under section 849                           in relation to B produces the profit for the firm mentioned in subsection (1)(a)(i).                  

(8)“A's deferred profit”—                  

(a)is any remuneration or other benefits or returns the provision of which to A has been deferred (whether pending the meeting                           of any conditions (including conditions which may never be met) or otherwise), and                  

(b)includes A's share (as determined on a just and reasonable basis) of any remuneration or other benefits or returns the provision                           of which to A and one or more other persons, taken together, has been deferred (whether pending the meeting of any conditions                           (including conditions which may never be met) or otherwise).                  

(9)“The relevant tax amount” is the total amount of tax which, apart from this section, would be chargeable in respect of A and                           B's income as partners in the firm.                  

(10)“The appropriate notional profit” is the sum of the appropriate notional return on capital and the appropriate notional consideration                           for services.                  

(11)“The appropriate notional return on capital” is—                  

(a)the return which B would receive for the relevant period of account in respect of B's contribution to the firm were the return                           to be calculated on the basis mentioned in subsection (12), less                  

(b)any return actually received for the relevant period of account in respect of B's contribution to the firm which is not included                           in B's profit share.                  

(12)The return mentioned in subsection (11)(a) is to be calculated on the basis that it is a return which is—                  

(a)by reference to the time value of an amount of money equal to B's contribution to the firm, and                  

(b)at a rate which (in all the circumstances) is a commercial rate of interest.                  

(13)For the purposes of subsections (11) and (12) B's contribution to the firm is amount A determined under section 108 of ITA                           2007 (meaning of “contribution to the LLP”).                  

(14)That section is to be applied—                  

(a)reading references to the individual as references to B and references to the LLP as references to the firm, and                  

(b)with the omission of—                  

(i)subsections (5)(b) and (9), and                  

(ii)in subsection (6) the words from “but” to the end.                  

(15)“The appropriate notional consideration for services” is—                  

(a)the amount which B would receive in consideration for any services provided to the firm by B during the relevant period of                           account were the consideration to be calculated on the basis mentioned in subsection (16), less                  

(b)any amount actually received in consideration for any such services which is not included in B's profit share.                  

(16)The consideration mentioned in subsection (15)(a) is to be calculated on the basis that B is not a partner in the firm and                           is acting at arm's length from the firm.                  

(17)Any services, the provision of which involves any partner in the firm in addition to B, are to be ignored for the purposes                           of subsection (15).                  

(18)A has the power to enjoy B's profit share if—                  

(a)A is connected with B by virtue of a provision of section 993 of ITA 2007 (meaning of “connected” persons) other than subsection                           (4) of that section,                  

(b)A is a party to arrangements the main purpose, or one of the main purposes, of which is to secure that an amount included                           in B's profit share—                  

(i)is charged to corporation tax rather than income tax, or                  

(ii)is otherwise subject to the provisions of the Corporation Tax Acts rather than the provisions of the Income Tax Acts, or                  

(c)any of the enjoyment conditions (see subsection (20)) is met in relation to B's profit share or any part of B's profit share.                  

(19)In subsection (18)(b) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).                  

(20)The enjoyment conditions are—                  

(a)B's profit share, or the part, is in fact so dealt with by any person as to be calculated at some time to enure for the benefit                           of A, whether in the form of income or not;                  

(b)the receipt or accrual of B's profit share, or the part, by or to B operates to increase the value to A of any assets held                           by, or for the benefit of, A;                  

(c)A receives or is entitled to receive at any time any benefit provided or to be provided (directly or indirectly) out of B's                           profit share or the part;                  

(d)A may become entitled to the beneficial enjoyment of B's profit share, or the part, if one or more powers are exercised or                           successively exercised by any person;                  

(e)A is able in any manner to control (directly or indirectly) the application of B's profit share or the part.                  

(21)In subsection (20) references to A include any person connected with A apart from B.                  

(22)Subsection (23) applies if—                  

(a)the increase under subsection (4), or any part of it, is allocated by A to the firm itself under section 863I (allocation                           of profit to AIFM firm), and                  

(b)B makes a payment to the firm representing any income tax for which the firm is liable by virtue of section 863I in respect                           of the amount of the increase allocated to it.                  

(23)For income tax purposes, the payment—                  

(a)is not to be income of any partner in the firm, and                  

(b)is not to be taken into account in calculating any profits or losses of B or otherwise deducted from any income of B.                  

##### 850DExcess profit allocation: cases involving individuals who are not partners

(1)Subsections (4) and (5) apply if—                  

(a)at a time during a period of account (“the relevant period of account”) in respect of a firm, an individual (“A”) personally                           performs services for the firm,                  

(b)if A had been a partner in the firm throughout the relevant period of account, the calculation under section 849 in relation                           to A for the relevant period of account would have produced a profit for the firm,                  

(c)a non-individual partner (“B”) in the firm (see subsection (6)) has a share of that profit (“B's profit share”) which is a                           profit (see subsection (7)),                  

(d)it is reasonable to suppose that A would have been a partner in the firm at a time during the relevant period of account or                           any earlier period of account but for the provision contained in section 850C (see also subsections (8) to (10)), and                  

(e)condition X or Y is met.                  

(2)Condition X is that it is reasonable to suppose that amounts representing A's deferred profit (see subsection (11)) are included                           in B's profit share.                  

(3)Condition Y is that—                  

(a)B's profit share exceeds the appropriate notional profit (see subsection (12)),                  

(b)A has the power to enjoy B's profit share (“A's power to enjoy”) (see subsection (13)), and                  

(c)it is reasonable to suppose that the whole or any part of B's profit share is attributable to A's power to enjoy.                  

(4)A is to be treated on the following basis—                  

(a)A is a partner in the firm throughout the relevant period of account (but not for the purposes of section 863I (allocation                           of profit to AIFM firm)),                  

(b)A's share of the firm's profit for the relevant period of account is so much of the amount of B's profit share as, it is reasonable                           to suppose, is attributable to—                  

(i)A's deferred profit, or                  

(ii)A's power to enjoy,                  

as determined on a just and reasonable basis, and                  

(c)A's share of the firm's profit is chargeable to income tax under the applicable provisions of the Income Tax Acts for the                           tax year in which the relevant period of account ends.                  

But A's share of the firm's profit by virtue of paragraph (b)(ii) is not to exceed the amount of the excess mentioned in subsection                        (3)(a) after deducting from that amount A's share of the firm's profit (if any) by virtue of paragraph (b)(i).                  

(5)If B is chargeable to income tax, in applying sections 850 to 850B in relation to B for the relevant period of account, such                           adjustments are to be made as are just and reasonable to take account of A's share of the firm's profit under subsection (4).                  

(This subsection does not apply for the purposes of subsection (7) or section 850C(7).)                  

(6)“Non-individual partner” is to be read in accordance with section 850C(6).                  

(7)B's profit share is to be determined by applying section 850 and, if relevant, section 850A in relation to B for the relevant                           period of account (whether or not B is chargeable to income tax) on the assumption that the calculation under section 849                           in relation to B produces the profit for the firm mentioned in subsection (1)(b).                  

(8)The requirement of subsection (1)(d) is to be assumed to be met if, at a time during the relevant period of account, A is                           a member of a partnership which is associated with the firm.                  

(9)A partnership is “associated” with the firm if—                  

(a)it is a member of the firm, or                  

(b)it is a member of a partnership which is associated with the firm (whether by virtue of paragraph (a) or this paragraph).                  

(10)In subsections (8) and (9) “partnership” includes a limited liability partnership whether or not section 863(1) applies in relation to it.                  

(11)“A's deferred profit” is to be read in accordance with section 850C(8).                  

(12)Section 850C(10) to (17) applies for the purpose of determining “the appropriate notional profit”; and A is to be treated                           as a partner in the firm for the purposes of section 850C(17).                  

(13)Section 850C(18) to (21) applies for the purpose of determining if A has the power to enjoy B's profit share.                  

##### 850EPayments by B out of the excess part of B's profit share

(1)Subsection (2) applies in a case in which section 850C(4) or section 850D(4) applies if—                  

(a)there is an agreement in place in relation to the excess part of B's profit share,                  

(b)as a result of the agreement, B makes a payment to another person out of the excess part of B's profit share, and                  

(c)the payment is not made under any arrangements the main purpose, or one of the main purposes, of which is the obtaining of                           a tax advantage for any person.                  

(2)For income tax purposes, the payment—                  

(a)is not to be income of the recipient,                  

(b)is not to be taken into account in calculating any profits or losses of B or otherwise deducted from any income of B, and                  

(c)is not to be regarded as a distribution.                  

(3)In this section—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                         
          -  “B's profit share” has the same meaning as in section 850C or 850D (as the case may be),                         
          -  “the excess part of B's profit share” means so much of the amount of B's profit share as is represented by the amount of, as the case may be—                          (a)
the increase under section 850C(4), or                                 
(b)
A's share of the firm's profit under section 850D(4), and                                 
 
          -  “tax advantage” has the meaning given by section 1139 of CTA 2010.”                         

8(1)Chapter 3 of Part 4 of ITA 2007 (trade loss relief: restrictions for certain partners) is amended as follows.U.K.

(2)In section 102 (overview of Chapter) after subsection (2) insert—

“(2A)This Chapter also provides for no relief to be given for a loss made by an individual in a trade carried on by the individual                           as a partner in a firm in certain cases where some or all of the loss is allocated to the individual rather than a person                           who is not an individual (see section 116A).”                  

(3)At the end insert—

##### “Partnerships with mixed membership etcU.K.

###### 116AExcess loss allocation to partners who are individuals

(1)Subsection (2) applies if—                  

(a)in a tax year, an individual (“A”) makes a loss in a trade as a partner in a firm, and                  

(b)A's loss arises, wholly or partly—                  

(i)directly or indirectly in consequence of, or                  

(ii)otherwise in connection with,                  

relevant tax avoidance arrangements.                  

(2)No relevant loss relief may be given to A for A's loss.                  

(3)In subsection (1)(b) “relevant tax avoidance arrangements” means arrangements—                  

(a)to which A is party, and                  

(b)the main purpose, or one of the main purposes, of which is to secure that losses of a trade are allocated, or otherwise arise,                           in whole or in part to A, rather than a person who is not an individual, with a view to A obtaining relevant loss relief.                  

(4)In subsection (3)(b) references to A include references to A and other individuals.                  

(5)For the purposes of subsection (3)(b) it does not matter if the person who is not an individual is not a partner in the firm                           or is unknown or does not exist.                  

(6)In this section—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                              and                         
          -  “relevant loss relief” means—                          (a)
sideways relief,                                 
(b)
relief under section 83 (carry-forward trade loss relief),                                 
(c)
relief under section 89 (terminal trade loss relief), or                                 
(d)
capital gains relief.                                 
 

(7)This section applies to professions as it applies to trades.”                  

9(1)Chapter 4 of Part 4 of ITA 2007 (losses from property businesses) is amended as follows.U.K.

(2)In section 117 (overview of Chapter) in subsection (3) for “and 127B” substitute “ to 127C ”.

(3)After section 127B insert—

##### “127CExcess loss allocation to partners who are individuals

(1)Subsection (2) applies if—                  

(a)in a tax year, an individual (“A”) makes a loss in a UK property business or an overseas property business as a partner in                           a firm, and                  

(b)A's loss arises, wholly or partly—                  

(i)directly or indirectly in consequence of, or                  

(ii)otherwise in connection with,                  

relevant tax avoidance arrangements.                  

(2)No relevant loss relief may be given to A for A's loss.                  

(3)In subsection (1)(b) “relevant tax avoidance arrangements” means arrangements—                  

(a)to which A is party, and                  

(b)the main purpose, or one of the main purposes, of which is to secure that losses of a UK property business or an overseas                           property business are allocated, or otherwise arise, in whole or in part to A, rather than a person who is not an individual,                           with a view to A obtaining relevant loss relief.                  

(4)In subsection (3)(b) references to A include references to A and other individuals.                  

(5)For the purposes of subsection (3)(b) it does not matter if the person who is not an individual is not a partner in the firm                           or is unknown or does not exist.                  

(6)In this section—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                              and                         
          -  “relevant loss relief” means relief under section 118 (carry-forward property loss relief) or section 120 (property loss relief against general                              income).”                         

10(1)Part 17 of CTA 2009 (partnerships) is amended as follows.U.K.

(2)In section 1262 (allocation of firm's profits and losses between partners) in subsection (1) for “and 1264” substitute “ to 1264A ”.

(3)After section 1264 insert—

##### “1264AExcess profit allocation to non-individual partners etc

(1)Subsection (2) applies in a case in which—                  

(a)section 850C(4) or 850D(4) of ITTOIA 2005 applies for a period of account (“the relevant period of account”), and                  

(b)the partner who is “B” for the purposes of section 850C or 850D of that Act (as the case may be) is a company.                  

(2)In applying sections 1262 to 1264 in relation to the company—                  

(a)for the accounting period of the firm which coincides with the relevant period of account, or                  

(b)if no accounting period of the firm coincides with the relevant period of account, for accounting periods of the firm in which                           the relevant period of account falls,                  

such adjustments are to be made as are just and reasonable to take account of the increase under section 850C(4) of ITTOIA                        2005 or A's share of the firm's profit under section 850D(4) of that Act.                  

(3)Sections 850C(23) and 850E(2) of ITTOIA 2005 apply for corporation tax purposes as they apply for income tax purposes.”                  

#### CommencementU.K.

11(1)Subject to sub-paragraph (2), the amendments made by paragraphs 7 and 10 are treated as having come into force on 5 December                        2013 and have effect in accordance with paragraphs 12 and 13.U.K.

(2)Section 850C(8)(b), (18)(b) and (19) of ITTOIA 2005 is treated as having come into force on 6 April 2014.

12(1)Section 850C of ITTOIA 2005 has effect for periods of account beginning on or after 6 April 2014 (and section 850E of ITTOIA                        2005 and section 1264A of CTA 2009 have effect accordingly).U.K.

(2)Sub-paragraphs (3) and (4) apply in relation to a firm where a period of account (“the straddling period”) begins before 6                        April 2014 but ends on or after that date.

(3)Assume that the part of the straddling period falling on or after 6 April 2014 is a separate period of account.

(4)If section 850C(4) of ITTOIA 2005 would apply in relation to one or more partners in the firm for the assumed separate period                        of account, Part 9 of that Act has effect as if that part of the straddling period were a separate period of account.

13(1)Section 850D of ITTOIA 2005 has effect for periods of account beginning on or after 6 April 2014 (and section 850E of ITTOIA                        2005 and section 1264A of CTA 2009 have effect accordingly).U.K.

(2)Sub-paragraphs (3) and (4) apply in relation to a firm where a period of account (“the straddling period”) begins before 6                        April 2014 but ends on or after that date.

(3)Assume that the part of the straddling period falling on or after 6 April 2014 is a separate period of account.

(4)If section 850D(4) of ITTOIA 2005 would apply in relation to one or more individuals for the assumed separate period of account,                        Part 9 of that Act has effect as if that part of the straddling period were a separate period of account.

14(1)The amendments made by paragraphs 8 and 9 have effect in relation to losses made in the tax year 2014-15 and subsequent tax                        years.U.K.

(2)Sub-paragraphs (3) and (4) apply for the purposes of section 116A or 127C of ITA 2007 if a loss made by an individual as a                        partner in a firm arises in a period of account (“the straddling period”) which begins before 6 April 2014 but ends on or                        after that date.

(3)The loss is to be apportioned between the part of the straddling period falling before 6 April 2014 and the part falling on                        or after that date—

(a)on a time basis according to the respective lengths of those parts of the straddling period, or

(b)if that method produces a result that is unjust or unreasonable, on a just and reasonable basis.

(4)Section 116A or 127C of ITA 2007 does not apply in relation to the loss so far as it is apportioned to the part of the straddling                        period falling before 6 April 2014.

### **PART 3**U.K.Alternative investment fund managers: deferred remuneration etc

#### Main provisionU.K.

15U.K.At the end of Part 9 of ITTOIA 2005 (partnerships) insert—

##### “Alternative investment fund managersU.K.

###### 863HElection for special provision for alternative investment fund managers to apply

(1)Section 863I applies in relation to an AIFM trade of an AIFM firm if the AIFM firm elects for that section to apply.                  

(2)An election under this section must be made within 6 months after the end of the first period of account for which the election                           is to have effect.                  

(3)An “AIFM firm” is a firm—                  

(a)the regular business of which is managing one or more AIFs, or                  

(b)which carries out one or more functions of managing one or more AIFs—                  

(i)as the delegate of, or                  

(ii)as the sub-delegate of a delegate of,                  

a person whose regular business is managing one or more AIFs.                  

(4)An “AIFM trade” is a trade of an AIFM firm which involves the firm's activities mentioned in subsection (3)(a) or (b).                  

(5)Subsection (3)(a) and (b) is to be construed as if it were contained in regulation 4 of the Alternative Investment Fund Managers                           Regulations 2013 (S.I. 2013/1773).                  

###### 863IAllocation of profit to the AIFM firm

(1)This section applies for a period of account of the AIFM trade if—                  

(a)the calculation under section 849 in relation to a partner (“P”) in the AIFM firm produces a profit, and                  

(b)P's share of that profit determined under section 850, 850A or 850C would, apart from this section, be a profit consisting                           (wholly or partly) of relevant restricted profit (see subsections (6) to (9)) chargeable to income tax under Chapter 2 of                           Part 2.                  

(2)P may allocate all or a part of the relevant restricted profit (“the allocated profit”) to the AIFM firm itself.                  

(3)If P does so—                  

(a)the allocated profit is to be excluded from P's share of the AIFM firm's profit mentioned in subsection (1)(b),                  

(b)the AIFM firm is to be treated in accordance with subsection (4) as if it were itself a person who is a partner in the AIFM                           firm (and for this purpose, in the case of a limited liability partnership, it is the body corporate which is to be treated                           as that person), and                  

(c)all enactments applying generally to income tax are to apply accordingly with any necessary modifications (subject to subsection                           (5)).                  

(4)The AIFM firm is treated on the following basis—                  

(a)the calculation under section 849 in relation to the AIFM firm for the period of account produces the profit mentioned in                           subsection (1)(a),                  

(b)the AIFM firm's share of that profit determined under section 850 is the allocated profit (and sections 850A and 850C are                           to be ignored),                  

(c)that share is chargeable to tax under Chapter 2 of Part 2 for the tax year in which the period of account ends (with the person                           liable for the tax charged being the AIFM firm), and                  

(d)the tax is charged at the additional rate.                  

(5)The Commissioners for Her Majesty's Revenue and Customs may make regulations modifying any of the following enactments applying                           to income tax as they apply by virtue of this section in relation to the AIFM firm—                  

(a)those relating to returns of information and supply of accounts, statements and reports,                  

(b)those relating to the assessing, collecting and receiving of income tax,                  

(c)those conferring or regulating a right of appeal, and                  

(d)those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law                           of any part of the United Kingdom.                  

(6)P's profit determined under section 850, 850A or 850C is “relevant restricted profit” so far as it represents variable remuneration                           awarded to P—                  

(a)as deferred remuneration (including deferred remuneration which, if it vests in P, will vest in the form of instruments),                           or                  

(b)as upfront remuneration which vests in P in the form of instruments with a retention period of at least 6 months.                  

(7)In order for any variable remuneration to count for the purposes of subsection (6) it must be awarded to P in accordance with                           arrangements which are consistent with the AIFMD remuneration guidelines (see section 863L).                  

(8)In the case of a firm which is an AIFM firm by virtue of section 863H(3)(b) only, this section applies only in relation to                           partners who fall within a category of staff which is classified as identified staff.                  

(9)Terms used in subsections (6) to (8) have the same meaning as in the AIFMD remuneration guidelines.                  

###### 863JVesting of remuneration represented by the allocated profit

(1)Subsection (2) applies if all or a part of the variable remuneration represented by the allocated profit vests in P at a time                           when P is carrying on the AIFM trade (whether as a partner in the AIFM firm or otherwise).                  

(2)The amount given by subsection (5) is treated as a profit of the relevant tax year (see subsection (7)) made by P in the AIFM                           trade chargeable to income tax under Chapter 2 of Part 2.                  

(3)Subsection (4) applies if all or a part of the variable remuneration represented by the allocated profit vests in P at a time                           when P is no longer carrying on the AIFM trade (whether as a partner in the AIFM firm or otherwise).                  

(4)If this subsection applies—                  

(a)P is treated as receiving, in the relevant tax year (see subsection (7)), income of the amount given by subsection (5),                  

(b)income tax is charged under this subsection on that income, and                  

(c)P is the person liable for that tax.                  

(5)The amount to be treated as a profit or as income received by P is—                  

(a)the amount of the allocated profit, or the part of it representing the part of the variable remuneration, net of the income                           tax for which the AIFM firm is liable by virtue of section 863I in respect of the allocated profit or the part of it, plus                  

(b)an amount equal to—                  

(i)so much of the income tax mentioned in paragraph (a) as is paid by the AIFM firm by the time the vesting occurs, or                  

(ii)if the vesting occurs in the tax year for which the allocated profit is chargeable to tax under Chapter 2 of Part 2 by virtue                           of section 863I, so much of the income tax mentioned in paragraph (a) as is paid by the AIFM firm.                  

(6)Further—                  

(a)P is treated as paying, when the vesting occurs, an amount of income tax equal to the amount given by subsection (5)(b), and                  

(b)that amount is accordingly to be taken into account in determining the income tax payable by, or repayable to, P.                  

(7)“The relevant tax year” is—                  

(a)if the variable remuneration or the part of it is deferred remuneration, the tax year in which the vesting occurs, or                  

(b)if the variable remuneration or the part of it is upfront remuneration, the tax year for which the allocated profit would                           have been chargeable to income tax under Chapter 2 of Part 2 as mentioned in section 863I(1)(b).                  

(8)Terms used in this section have the same meaning as in the AIFMD remuneration guidelines (see section 863L).                  

(9)Section 850E (payment from B to other persons after application of section 850C(4) or 850D(4)) is to be ignored for the purposes                           of this section.                  

###### 863KVesting statements

(1)This section applies if all or a part of the variable remuneration represented by the allocated profit vests in P.                  

(2)If P requests it in writing, the AIFM firm must provide P with a statement showing—                  

(a)the amount of the allocated profit, or the part of it representing the part of the variable remuneration, gross of the income                           tax for which the AIFM firm is liable by virtue of section 863I in respect of the allocated profit or the part of it,                  

(b)the amount of the income tax for which the AIFM firm is liable, and                  

(c)so much of that amount of income tax as is paid by the AIFM firm by the time the vesting occurs or, if section 863J(5)(b)(ii)                           applies, as is paid by the AIFM firm.                  

(3)The duty to comply with a request under this section is enforceable by P.                  

(4)In the case of a limited liability partnership, the duty is enforceable against the body corporate.                  

###### 863LThe AIFMD remuneration guidelines

In sections 863I to 863K “the AIFMD remuneration guidelines” means the “Guidelines on Sound Remuneration Policies under the AIFMD” issued by the European Securities and Markets Authority                        on 3 July 2013 (ESMA/2013/232).”                  

#### Supplementary provisionU.K.

16(1)TMA 1970 is amended as follows.U.K.

(2)In Part 2 (returns of income and gains) after section 12AD insert—

##### “12ADAAIFM firms

(1)An officer of Revenue and Customs may by notice require a partnership which has made an election under section 863H of ITTOIA                           2005 (whether or not the election has been revoked) to provide the officer with such information as the officer may reasonably                           require for purposes connected with the operation of sections 863H to 863K of ITTOIA 2005.                  

(2)The information must be provided within such reasonable time as the officer may specify in the notice.”                  

(3)In column 2 of the Table in section 98 (special returns etc), at the appropriate place, insert “ section 12ADA of this Act ”.

17U.K.In Part 3 of TCGA 1992 (which makes special provision about partnerships etc) after section 59A insert—

##### “59BAlternative investment fund managers (1)

(1)Subsection (2) applies if—                  

(a)under section 863I of ITTOIA 2005, a partner (“P”) in a partnership allocates to the partnership an amount of profit (“the                           allocated profit”) representing variable remuneration which, if it vests in P, will vest in the form of instruments,                  

(b)there is a disposal to P of instruments which are partnership assets of the partnership for the purposes of section 59, and                  

(c)by virtue of that disposal the variable remuneration vests in P.                  

(2)Both the persons making the disposal and P are to be treated as if the instruments were acquired by P from those persons for                           a consideration of an amount equal to the allocated profit net of the income tax for which the partnership is liable by virtue                           of section 863I of ITTOIA 2005 in respect of the allocated profit.                  

(3)Terms used in this section which are also used in section 863I or 863J of ITTOIA 2005 have the same meaning as in that section.                  

##### 59CAlternative investment managers (2)

(1)Subsection (2) applies if—                  

(a)under section 863I of ITTOIA 2005, a partner (“P”) in a partnership allocates to the partnership an amount of profit (“the                           allocated profit”) representing variable remuneration which, if it vests in P, will vest in the form of instruments,                  

(b)there is a disposal to P of instruments by a company which is a partner in the partnership,                  

(c)by virtue of that disposal the variable remuneration vests in P, and                  

(d)the company would, as a partner in the partnership, have been charged to tax on the allocated profit but for adjustments made                           in the case of the company under section 1264A(2) of CTA 2009 or section 850C(5) of ITTOIA 2005.                  

(2)Both the company and P are to be treated as if the instruments were acquired by P from the company for a consideration of                           an amount equal to the allocated profit net of the income tax for which the partnership is liable by virtue of section 863I                           of ITTOIA 2005 in respect of the allocated profit.                  

(3)Terms used in this section which are also used in section 863I or 863J of ITTOIA 2005 have the same meaning as in that section.”                  

18U.K.In Part 4 of FA 2004 (pensions) in section 189 (relevant UK individual) after subsection (2A) insert—

“(2B)The income covered by subsection (2)(b) includes—                  

(a)an amount treated as a profit under section 863J(2) of ITTOIA 2005, and                  

(b)income treated as received under section 863J(4) of that Act.”                  

19U.K.In section 23 of ITA 2007 (calculation of income tax liability) at the end of Step 4 insert— “ See also section 863I of ITTOIA 2005 which provides for certain partnership profits to be charged at the additional rate.                           ”

#### Power to apply amendments to other types of firms carrying on regulated activitiesU.K.

20(1)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend any Act—U.K.

(a)so as to apply (with or without modifications), in relation to regulated firms of a specified description, the provision made                        by the amendments made by this Part, or

(b)so as to make, in relation to regulated firms of a specified description, provision corresponding to the provision made by                        the amendments made by this Part.

(2)“Regulated firm” means a firm carrying on a regulated activity within the meaning of the Financial Services and Markets Act 2000 (see section                        22 of that Act); and “firm” has the same meaning as in ITTOIA 2005 (see section 847 of that Act) (and includes a limited liability partnership in relation                        to which section 863(1) of that Act applies).

(3)Regulations under this paragraph may—

(a)make different provision for different cases or different purposes;

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

#### CommencementU.K.

21U.K.The amendments made by this Part have effect for the tax year 2014-15 and subsequent tax years.

### **PART 4**U.K.Disposals of assets through partnerships

#### Income taxU.K.

22U.K.Part 13 of ITA 2007 (tax avoidance) is amended as follows.

23(1)In Chapter 5A (transfers of income streams) section 809AZF (partnership shares) is amended as follows.U.K.

(2)In subsection (1) omit “if condition A or B is met”.

(3)Omit subsections (2) and (3).

(4)The amendments made by this paragraph have effect for cases where the transfer of a right to relevant receipts occurs on or                        after 6 April 2014.

24(1)After Chapter 5A insert—U.K.

##### “Chapter 5AAU.K.Disposals of income streams through partnerships

###### 809AAZAApplication of Chapter

(1)This Chapter applies (subject to subsection (2)) if directly or indirectly in consequence of, or otherwise in connection with,                           arrangements involving a person within the charge to income tax (“the transferor”) and another person (“the transferee”)—                  

(a)there is, or is in substance, a disposal of a right to relevant receipts by the transferor to the transferee,                  

(b)the disposal is effected (wholly or partly) by or through a partnership (“the relevant partnership”),                  

(c)at any time—                  

(i)the transferor is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(ii)the transferee is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(d)the main purpose, or one of the main purposes, of one or more steps taken in effecting the disposal is the obtaining of a                           tax advantage for any person.                  

(2)This Chapter does not apply if—                  

(a)the transferor is the spouse or civil partner of the transferee and they are living together, or                  

(b)the transferor is a brother, sister, ancestor or lineal descendant of the transferee.                  

(3)In subsection (1)(a) the reference to a disposal of a right to relevant receipts includes anything constituting a disposal                           of such a right for the purposes of TCGA 1992.                  

(4)For the purposes of subsection (1)(b) the disposal might, in particular, be effected by an acquisition or disposal of, or                           an increase or decrease in, an interest in the relevant partnership (including a share of the profits or assets of the relevant                           partnership or an interest in such a share).                  

(5)For the purposes of subsection (1)(c) it does not matter if the transferor and the transferee are not members of a partnership                           as mentioned at the same time.                  

(6)For the purposes of subsection (1)(c) a partnership is “associated” with the relevant partnership if—                  

(a)it is a member of the relevant partnership, or                  

(b)it is a member of a partnership which is associated with the relevant partnership (whether by virtue of paragraph (a) or this                           paragraph).                  

(7)In subsections (1)(c) and (5) references to the transferor include a person connected with the transferor and references to                           the transferee include a person connected with the transferee.                  

(8)In this Chapter—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                         
          -  “partnership” includes a limited liability partnership whether or not section 863(1) of ITTOIA 2005 applies in relation to it,                         
          -  “relevant receipts” means any income—                          (a)
which (but for the disposal) would be charged to income tax as income of the transferor (whether directly or as a member of                                       a partnership), or                                 
(b)
which (but for the disposal) would be brought into account as income in calculating profits of the transferor (whether directly                                       or as a member of a partnership) for income tax purposes, and                                 
 
          -  “tax advantage” means a tax advantage, as defined in section 1139 of CTA 2010, in relation to income tax or the charge to corporation tax                              on income.                         

###### 809AAZBRelevant amount to be treated as income

(1)The relevant amount is to be treated as income of the transferor chargeable to income tax in the same way and to the same                           extent as that in which the relevant receipts—                  

(a)would have been chargeable to income tax as income of the transferor, or                  

(b)would have been brought into account as income in calculating profits of the transferor for income tax purposes,                  

but for the disposal.                  

(2)In subsection (1) “the relevant amount” is to be read in accordance with section 809AZB(2) and section 809AZB(3) to (6) applies for the purpose of determining when                           income under subsection (1) is treated as arising.                  

(3)For this purpose, in section 809AZB(2) to (6) references to the transfer of the right are to be read as references to the                           disposal of the right.                  

(4)If, apart from this subsection and section 809DZB(3)—                  

(a)both this Chapter and Chapter 5D would apply in relation to the disposal, and                  

(b)Chapter 5D would give a greater amount of income of the transferor chargeable to income tax,                  

this Chapter is not to apply in relation to the disposal.”                  

(2)The amendment made by this paragraph has effect for cases where the arrangements mentioned in section 809AAZA(1) of ITA 2007                        are made on or after 6 April 2014.

25(1)After Chapter 5C insert—U.K.

##### “Chapter 5DU.K.Disposals of assets through partnerships

###### 809DZAApplication of Chapter

(1)This Chapter applies if conditions A and B are met.                  

(2)Condition A is (subject to subsection (3)) that directly or indirectly in consequence of, or otherwise in connection with,                           arrangements involving a person within the charge to income tax (“the transferor”) and another person (“the transferee”)—                  

(a)there is, or is in substance, a disposal of an asset (“the transferred asset”) by the transferor to the transferee,                  

(b)the disposal is effected (wholly or partly) by or through a partnership (“the relevant partnership”),                  

(c)at any time—                  

(i)the transferor is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(ii)the transferee is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(d)the main purpose, or one of the main purposes, of one or more steps taken in effecting the disposal is the obtaining of a                           tax advantage for any person.                  

(3)Condition A is not met if—                  

(a)the transferor is the spouse or civil partner of the transferee and they are living together, or                  

(b)the transferor is a brother, sister, ancestor or lineal descendant of the transferee.                  

(4)In subsection (2)(a) the reference to a disposal of an asset includes anything constituting a disposal of an asset for the                           purposes of TCGA 1992.                  

(5)For the purposes of subsection (2)(b) the disposal might, in particular, be effected by an acquisition or disposal of, or                           an increase or decrease in, an interest in the relevant partnership (including a share of the profits or assets of the relevant                           partnership or an interest in such a share).                  

(6)For the purposes of subsection (2)(c) it does not matter if the transferor and the transferee are not members of a partnership                           as mentioned at the same time.                  

(7)For the purposes of subsection (2)(c) a partnership is “associated” with the relevant partnership if—                  

(a)it is a member of the relevant partnership, or                  

(b)it is a member of a partnership which is associated with the relevant partnership (whether by virtue of paragraph (a) or this                           paragraph).                  

(8)In subsections (2)(c) and (6) references to the transferor include a person connected with the transferor and references to                           the transferee include a person connected with the transferee.                  

(9)Condition B is that it is reasonable to assume that, had the transferred asset instead been disposed of directly by the transferor                           to the transferee, the relevant amount (or any part of it)—                  

(a)would have been chargeable to income tax as income of the transferor, or                  

(b)would have been brought into account as income in calculating profits of the transferor for income tax purposes.                  

(10)In this Chapter “the relevant amount” means the amount of the consideration received by the transferor for the disposal.                  

(11)If the transferor receives—                  

(a)no consideration for the disposal, or                  

(b)consideration which is substantially less than the market value of the transferred asset,                  

assume for the purposes of subsection (10) that the transferor receives consideration of an amount equal to the market value                        of the transferred asset.                  

(12)In subsection (11) references to the market value of the transferred asset are to that value at the time of the disposal.                  

(13)In this Chapter—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                         
          -  “partnership” includes a limited liability partnership whether or not section 863(1) of ITTOIA 2005 applies in relation to it, and                         
          -  “tax advantage” means a tax advantage, as defined in section 1139 of CTA 2010, in relation to income tax or the charge to corporation tax                              on income.                         

###### 809DZBRelevant amount to be treated as income

(1)The relevant amount is to be treated as income of the transferor chargeable to income tax in the same way and to the same                           extent as that in which it—                  

(a)would have been chargeable to income tax as income of the transferor, or                  

(b)would have been brought into account as income in calculating profits of the transferor for income tax purposes,                  

as mentioned in section 809DZA(9).                  

(2)Section 809AZB(3) to (6) applies for the purpose of determining when income under subsection (1) is treated as arising (reading                           references to the transfer of the right as references to the disposal of the transferred asset).                  

(3)If, apart from this subsection and section 809AAZB(4)—                  

(a)both this Chapter and Chapter 5AA would apply in relation to the disposal, and                  

(b)Chapter 5AA would give the same amount, or a greater amount, of income of the transferor chargeable to income tax,                  

this Chapter is not to apply in relation to the disposal.”                  

(2)The amendment made by this paragraph has effect for cases where the arrangements mentioned in section 809DZA(2) of ITA 2007                        are made on or after 6 April 2014.

#### Corporation taxU.K.

26U.K.Part 16 of CTA 2010 (factoring of income etc) is amended as follows.

27(1)In Chapter 1 (transfers of income streams) section 756 (partnership shares) is amended as follows.U.K.

(2)In subsection (1) omit “if condition A or B is met”.

(3)Omit subsections (2) and (3).

(4)The amendments made by this paragraph have effect for cases where the transfer of a right to relevant receipts occurs on or                        after 1 April 2014.

28(1)After Chapter 1 insert—U.K.

##### “Chapter 1AU.K.Disposals of income streams through partnerships

###### 757AApplication of Chapter

(1)This Chapter applies if directly or indirectly in consequence of, or otherwise in connection with, arrangements involving                           a company within the charge to corporation tax (“the transferor”) and another person (“the transferee”)—                  

(a)there is, or is in substance, a disposal of a right to relevant receipts by the transferor to the transferee,                  

(b)the disposal is effected (wholly or partly) by or through a partnership (“the relevant partnership”),                  

(c)at any time—                  

(i)the transferor is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(ii)the transferee is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(d)the main purpose, or one of the main purposes, of one or more steps taken in effecting the disposal is the obtaining of a                           tax advantage for any person.                  

(2)In subsection (1)(a) the reference to a disposal of a right to relevant receipts includes anything constituting a disposal                           of such a right for the purposes of TCGA 1992.                  

(3)For the purposes of subsection (1)(b) the disposal might, in particular, be effected by an acquisition or disposal of, or                           an increase or decrease in, an interest in the relevant partnership (including a share of the profits or assets of the relevant                           partnership or an interest in such a share).                  

(4)For the purposes of subsection (1)(c) it does not matter if the transferor and the transferee are not members of a partnership                           as mentioned at the same time.                  

(5)For the purposes of subsection (1)(c) a partnership is “associated” with the relevant partnership if—                  

(a)it is a member of the relevant partnership, or                  

(b)it is a member of a partnership which is associated with the relevant partnership (whether by virtue of paragraph (a) or this                           paragraph).                  

(6)In subsections (1)(c) and (4) references to the transferor include a person connected with the transferor and references to                           the transferee include a person connected with the transferee.                  

(7)In this Chapter—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                         
          -  “partnership” includes a limited liability partnership whether or not section 1273(1) of CTA 2009 applies in relation to it,                         
          -  “relevant receipts” means any income—                          (a)
which (but for the disposal) would be charged to corporation tax as income of the transferor (whether directly or as a member                                       of a partnership), or                                 
(b)
which (but for the disposal) would be brought into account as income in calculating profits of the transferor (whether directly                                       or as a member of a partnership) for corporation tax purposes, and                                 
 
          -  “tax advantage” means a tax advantage, as defined in section 1139, in relation to income tax or the charge to corporation tax on income.                         

###### 757BRelevant amount to be treated as income

(1)The relevant amount is to be treated as income of the transferor chargeable to corporation tax in the same way and to the                           same extent as that in which the relevant receipts—                  

(a)would have been chargeable to corporation tax as income of the transferor, or                  

(b)would have been brought into account as income in calculating profits of the transferor for corporation tax purposes,                  

but for the disposal.                  

(2)In subsection (1) “the relevant amount” is to be read in accordance with section 753(2) and section 753(3) and (4) applies for the purpose of determining when income                           under subsection (1) is treated as arising.                  

(3)For this purpose, in section 753(2) to (4) references to the transfer of the right are to be read as references to the disposal                           of the right.                  

(4)If, apart from this subsection and section 779B(3)—                  

(a)both this Chapter and Chapter 4 would apply in relation to the disposal, and                  

(b)Chapter 4 would give a greater amount of income of the transferor chargeable to corporation tax,                  

this Chapter is not to apply in relation to the disposal.”                  

(2)The amendment made by this paragraph has effect for cases where the arrangements mentioned in section 757A(1) of CTA 2010                        are made on or after 1 April 2014.

29(1)After Chapter 3 insert—U.K.

##### “Chapter 4U.K.Disposals of assets through partnerships

###### 779AApplication of Chapter

(1)This Chapter applies if conditions A and B are met.                  

(2)Condition A is that directly or indirectly in consequence of, or otherwise in connection with, arrangements involving a company                           within the charge to corporation tax (“the transferor”) and another person (“the transferee”)—                  

(a)there is, or is in substance, a disposal of an asset (“the transferred asset”) by the transferor to the transferee,                  

(b)the disposal is effected (wholly or partly) by or through a partnership (“the relevant partnership”),                  

(c)at any time—                  

(i)the transferor is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(ii)the transferee is a member of the relevant partnership or of a partnership associated with the relevant partnership, and                  

(d)the main purpose, or one of the main purposes, of one or more steps taken in effecting the disposal is the obtaining of a                           tax advantage for any person.                  

(3)In subsection (2)(a) the reference to a disposal of an asset includes anything constituting a disposal of an asset for the                           purposes of TCGA 1992.                  

(4)For the purposes of subsection (2)(b) the disposal might, in particular, be effected by an acquisition or disposal of, or                           an increase or decrease in, an interest in the relevant partnership (including a share of the profits or assets of the relevant                           partnership or an interest in such a share).                  

(5)For the purposes of subsection (2)(c) it does not matter if the transferor and the transferee are not members of a partnership                           as mentioned at the same time.                  

(6)For the purposes of subsection (2)(c) a partnership is “associated” with the relevant partnership if—                  

(a)it is a member of the relevant partnership, or                  

(b)it is a member of a partnership which is associated with the relevant partnership (whether by virtue of paragraph (a) or this                           paragraph).                  

(7)In subsections (2)(c) and (5) references to the transferor include a person connected with the transferor and references to                           the transferee include a person connected with the transferee.                  

(8)Condition B is that it is reasonable to assume that, had the transferred asset instead been disposed of directly by the transferor                           to the transferee, the relevant amount (or any part of it)—                  

(a)would have been chargeable to corporation tax as income of the transferor, or                  

(b)would have been brought into account as income in calculating profits of the transferor for corporation tax purposes.                  

(9)In this Chapter “the relevant amount” means the amount of the consideration received by the transferor for the disposal.                  

(10)If the transferor receives—                  

(a)no consideration for the disposal, or                  

(b)consideration which is substantially less than the market value of the transferred asset,                  

assume for the purposes of subsection (9) that the transferor receives consideration of an amount equal to the market value                        of the transferred asset.                  

(11)In subsection (10) references to the market value of the transferred asset are to that value at the time of the disposal.                  

(12)In this Chapter—                  
          -  “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),                         
          -  “partnership” includes a limited liability partnership whether or not section 1273(1) of CTA 2009 applies in relation to it, and                         
          -  “tax advantage” means a tax advantage, as defined in section 1139, in relation to income tax or the charge to corporation tax on income.                         

###### 779BRelevant amount to be treated as income

(1)The relevant amount is to be treated as income of the transferor chargeable to corporation tax in the same way and to the                           same extent as that in which it—                  

(a)would have been chargeable to corporation tax as income of the transferor, or                  

(b)would have been brought into account as income in calculating profits of the transferor for corporation tax purposes,                  

as mentioned in section 779A(8).                  

(2)Section 753(3) and (4) applies for the purpose of determining when income under subsection (1) is treated as arising (reading                           references to the transfer of the right as references to the disposal of the transferred asset).                  

(3)If, apart from this subsection and section 757B(4)—                  

(a)both this Chapter and Chapter 1A would apply in relation to the disposal, and                  

(b)Chapter 1A would give the same amount, or a greater amount, of income of the transferor chargeable to corporation tax,                  

this Chapter is not to apply in relation to the disposal.”                  

(2)The amendment made by this paragraph has effect for cases where the arrangements mentioned in section 779A(2) of CTA 2010                        are made on or after 1 April 2014.

 Section 86

## SCHEDULE 18U.K.Abolition of reduced rates for vehicles satisfying reduced pollution requirements

### **PART 1**U.K.Amendments of the Vehicle Excise and Registration Act 1994

1U.K.VERA 1994 is amended as follows.

2U.K.Omit section 61B (certificates as to reduced pollution).

3U.K.In consequence of the amendment made by paragraph 2—

(a)in section 45 (false declarations etc), in subsections (3A) and (3B) omit “or 61B”,

(b)in Schedule 1 (annual rates of duty)—

(i)in paragraph 3(6) omit paragraph (a) and the “and” following it,

(ii)in paragraph 4(7) omit paragraph (a) and the “and” following it,

(iii)in paragraph 5(6) omit paragraph (a) and the “and” following it, and

(iv)in paragraph 7(3) omit paragraph (a) and the “and” following it, and

(c)in paragraph 22 of Schedule 2 (exempt vehicles: vehicle testing etc)—

(i)in sub-paragraph (1)(a) for “, a vehicle weight test or a reduced pollution test” substitute “ or a vehicle weight test ”,

(ii)in sub-paragraph (2) omit “a reduced pollution test or”,

(iii)in sub-paragraph (2A), in both places it occurs, omit “or a reduced pollution test”,

(iv)in sub-paragraph (3) omit “, or a reduced pollution test,”,

(v)omit sub-paragraph (6AA),

(vi)in sub-paragraph (6B) for “, a vehicle weight test or a reduced pollution test” substitute “ or a vehicle weight test ”, and

(vii)in sub-paragraphs (8) and (9) omit paragraph (d) and the “or” following paragraph (c).

4U.K.In paragraph 3 of Schedule 1 (annual rates of duty: buses)—

(a)in sub-paragraph (1) omit “with respect to which the reduced pollution requirements are not satisfied”, and

(b)omit sub-paragraph (1A).

5U.K.In paragraph 6 of Schedule 1 (annual rates of duty: vehicles used for exceptional loads), in sub-paragraph (2A)—

(a)in paragraph (a) omit “in the case of a vehicle with respect to which the reduced pollution requirements are not satisfied,”,

(b)omit the “and” following paragraph (a), and

(c)omit paragraph (b).

6U.K.In paragraph 7 of Schedule 1 (annual rates of duty: haulage vehicles), for sub-paragraph (3A) substitute—

“(3A)The rate referred to in sub-paragraph (1)(b) is £350.”                  

7U.K.Omit paragraphs 9A and 9B of Schedule 1.

8U.K.Omit paragraphs 11A and 11B of Schedule 1.

9U.K.In paragraph 11C of Schedule 1 (annual rates of duty: tractive units), in sub-paragraph (2)—

(a)in paragraph (a) omit “in the case of a vehicle with respect to which the reduced pollution requirements are not satisfied,”,                        and

(b)omit paragraph (b).

10U.K.In consequence of the amendments made by paragraphs 4 to 9—

(a)in section 13 (trade licences: duration and amount of duty) omit subsection (7)(a) and the “and” following it,

(b)in section 13 (trade licences: duration and amount of duty) as set out in paragraph 8(1) of Schedule 4 to VERA 1994 which                        is to have effect on and after a day appointed by order, omit subsection (7)(a) and the “and” following it,

(c)in section 15 (vehicles becoming chargeable to duty at a higher rate), omit subsection (2A),

(d)in paragraph 9 of Schedule 1 (annual rates of duty: rigid goods vehicles)—

(i)in sub-paragraph (1), omit “is not a vehicle with respect to which the reduced pollution requirements are satisfied and which”,

(ii)omit sub-paragraph (3)(a), and

(iii)in sub-paragraph (4), omit paragraph (a) and the “and” following it, and

(e)in paragraph 11 of Schedule 1 (annual rates of duty: tractive units)—

(i)in sub-paragraph (1), omit “is not a vehicle with respect to which the reduced pollution requirements are satisfied and which”,

(ii)omit sub-paragraph (3)(a), and

(iii)in sub-paragraph (4), omit paragraph (a) and the “and” following it.

### **PART 2**U.K.Commencement

#### IntroductionU.K.

11U.K.This Part of this Schedule makes provision for the coming into force of the amendments made by Part 1.

#### Licences taken out on or after 1 April 2014U.K.

12U.K.In the case of an exceptional load vehicle—

(a)which is charged to HGV road user levy, and

(b)which satisfies the reduced pollution requirements for the purposes of VERA 1994,

the amendments made by paragraphs 5 and 10 have effect in relation to licences taken out on or after 1 April 2014.

13U.K.In the case of a rigid goods vehicle or tractive unit—

(a)which has a revenue weight of not less than 12,000 kgs, and

(b)which satisfies the reduced pollution requirements for the purposes of VERA 1994,

the amendments made by paragraphs 7 to 10 have effect in relation to licences taken out on or after 1 April 2014.

#### Licences taken out on or after 1 April 2016U.K.

14U.K.In the case of the vehicles described in paragraph 15 the amendments made by paragraphs 4 to 10 have effect in relation to                        licences taken out on or after 1 April 2016.

15U.K.Those vehicles are—

(a)a bus, light exceptional load vehicle or haulage vehicle which satisfies the reduced pollution requirements for the purposes                        of VERA 1994 because paragraph 4 of Schedule 2 to the Regulations applies to the vehicle as result of it falling within item                        1 or 2 of Table 1 or any of items 1 to 3 of Table 2 in that paragraph (or being taken to be a vehicle falling within item                        1 of Table 1 or Table 2 as a result of paragraph 5 of that Schedule), and

(b)a rigid goods vehicle or tractive unit—

(i)which has a revenue weight below 12,000 kgs, and

(ii)which satisfies the reduced pollution requirements for the purposes of VERA 1994 because paragraph 4 of Schedule 2 to the                        Regulations applies to the vehicle as result of it falling within item 1 or 2 of Table 1 or any of items 1 to 3 of Table 2                        in that paragraph (or being taken to be a vehicle falling within item 1 of Table 1 or Table 2 as a result of paragraph 5 of                        that Schedule).

#### Licences taken out on or after 1 January 2017U.K.

16U.K.In the case of the vehicles described in paragraphs 17 and 18 the amendments made by paragraphs 4 to 10 have effect in relation                        to licences taken out on or after 1 January 2017.

17U.K.A bus, light exceptional load vehicle or haulage vehicle which satisfies the reduced pollution requirements for the purposes                        of VERA 1994 because—

(a)paragraph 4 of Schedule 2 to the Regulations applies to the vehicle as result of it falling within item 3 or 4 of Table 1                        or item 4 of Table 2 in that paragraph,

(b)paragraph 4A of Schedule 2 to the Regulations applies to the vehicle as result of it meeting the requirements of paragraph                        4B of that Schedule, or

(c)paragraph 4C of Schedule 2 to the Regulations applies to the vehicle as result of it meeting the requirements of paragraph                        4D of that Schedule.

18(1)A rigid goods vehicle or tractive unit—U.K.

(a)which has a revenue weight below 12,000 kgs, and

(b)which satisfies the reduced pollution requirements for the purposes of VERA 1994 for any of the reasons in sub-paragraph (2).

(2)Those reasons are—

(a)paragraph 4 of Schedule 2 to the Regulations applies to the vehicle as result of it falling within item 3 or 4 of Table 1                        or item 4 of Table 2 in that paragraph,

(b)paragraph 4A of Schedule 2 to the Regulations applies to the vehicle as result of it meeting the requirements of paragraph                        4B of that Schedule, or

(c)paragraph 4C of Schedule 2 to the Regulations applies to the vehicle as result of it meeting the requirements of paragraph                        4D of that Schedule.

#### I January 2017U.K.

19U.K.The amendments made by paragraphs 2 and 3 come into force on 1 January 2017.

#### InterpretationU.K.

20U.K.In this Schedule—
          -  “bus” has the same meaning as in paragraph 3(2) of Schedule 1 to VERA 1994;                         
          -  “exceptional load vehicle” is a vehicle to which paragraph 6 of Schedule 1 to VERA 1994 applies by reason of falling within                           sub-paragraph (1) of that paragraph;                         
          -  “haulage vehicle” has the same meaning as in paragraph 7(2) of Schedule 1 to VERA 1994;                         
          -  “light exceptional load vehicle” means an exceptional load vehicle which is not charged to HGV road user levy;                         
          -  “the Regulations” means the Road Vehicles (Registration and Licensing) Regulations 2002 (S.I. 2002/2742);                         
          -  “rigid goods vehicle” and “tractive unit” have the same meaning as in VERA 1994.                         

 Section 91

## SCHEDULE 19U.K.Other amendments about vehicle excise duty

### **PART 1**U.K.Amendments of the Vehicle Excise and Registration Act 1994

1U.K.VERA 1994 is amended as follows.

2U.K.In section 7 (issue of vehicle licences), omit subsections (6) and (7).

3(1)Section 7A (supplement payable on vehicle ceasing to be appropriately covered) is amended as follows.U.K.

(2)In subsection (1B)—

(a)omit “or in respect of”, and

(b)omit the words from “unless” to the end.

(3)Omit subsection (1C).

4U.K.Omit section 10 (transfer of vehicle licences).

5U.K.In section 14 (trade licences: supplementary)—

(a)in subsection (2), for the words from “surrender” to the end substitute “ request that the Secretary of State cancel the licence ”, and

(b)omit subsection (4).

6(1)Section 19 (rebates) is amended as follows.U.K.

(2)In subsection (1), for the words from the beginning to “receive” substitute “ If any of the rebate conditions is satisfied in relation to a vehicle in respect of which a vehicle licence is in force,                           the relevant person is entitled to receive (by way of rebate of duty paid on the licence) ”.

(3)For subsection (3) substitute—

“(3)The rebate conditions are as follows—                  

(a)the vehicle has been stolen and the Secretary of State has been notified of that by the relevant person,                  

(b)the vehicle has been destroyed and the Secretary of State has been notified of that by the relevant person,                  

(c)a nil licence for the vehicle has been issued in accordance with regulations under section 22,                  

(d)a qualifying application for a vehicle licence for the vehicle has been received by the Secretary of State,                  

(e)the vehicle is neither used nor kept on a public road and the particulars and declaration required to be furnished and made                           by regulations under section 22(1D) have been furnished and made in relation to it in accordance with the regulations,                  

(f)the vehicle has been sold or disposed of and the particulars prescribed by regulations under section 22(1)(d) have been furnished                           in relation to it in accordance with the regulations, or                  

(g)the vehicle has been removed from the United Kingdom with a view to its remaining permanently outside the United Kingdom and                           the Secretary of State has been notified of that by the relevant person.”                  

(4)In subsection (3ZA), for “(3)(ca)” substitute “ (3)(d) ”.

(5)In subsection (3A), for “when the application is made” substitute “ when the rebate condition is satisfied ”.

(6)In subsection (3B), for paragraph (b) (and the “and” following it) substitute—

“(b)the rebate condition in question is that in subsection (3)(e), (f) or (g), and”.                  

(7)For subsection (4) substitute—

“(4)In subsections (1) and (3) “the relevant person” means the person in whose name the vehicle is registered immediately before the rebate condition is satisfied.”                  

(8)For subsections (5) and (6) substitute—

“(5)The Secretary of State may specify requirements which must be complied with before a rebate condition can be satisfied.                  

(5A)The requirements that may be specified include (in particular)—                  

(a)a requirement that particulars which are required to be furnished to the Secretary of State are transmitted to the Secretary                           of State by such electronic means as may be specified, and                  

(b)in a case within subsection (3)(a), requirements relating to the reporting to the police that the vehicle has been stolen.”                  

(9)For subsection (7) substitute—

“(7)Where any of the rebate conditions is satisfied in relation to a licence, the licence ceases to be in force.”                  

(10)In subsection (8)—

(a)for “trade licence is surrendered to the Secretary of State” substitute “ request is made ”,

(b)for “holder of the licence” substitute “ holder of the trade licence ”, and

(c)for “of the surrender” substitute “ the request is received by the Secretary of State ”.

7U.K.In section 22 (registration regulations)—

(a)omit subsection (2A)(c), and

(b)omit subsection (4).

8U.K.In section 29 (penalty for keeping unlicensed vehicle)—

(a)in subsection (4) omit the words from “unless” to the end, and

(b)omit subsection (5).

9U.K.In section 31 (relevant period for purposes of section 30), in subsection (7)(a), omit “surrender or”.

10U.K.In section 31A (offence by registered keeper where vehicle unlicensed)—

(a)in subsection (4) omit the words from “unless” to the end, and

(b)omit subsection (5).

11U.K.In section 31B (exceptions to section 31A), in subsection (9)(a)(i), omit “surrender or”.

12U.K.In section 31C (penalties for offences under section 31A), in subsection (7)(a) omit “surrender or”.

13U.K.Omit section 33 (offence of not exhibiting licence).

14U.K.Omit section 33A (not exhibiting licence: period of grace).

15U.K.Omit section 35 (failure to return licence).

16(1)Section 35A (dishonoured cheques) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a), for “contains a relevant requirement” substitute “ requires a person to pay the amount specified in subsection (4) within such reasonable period as is specified in the notice                           ”, and

(b)in paragraph (b), for “contained in the notice” substitute “ within that period ”.

(3)Omit subsection (3).

(4)In subsection (4), for “subsection (3)(b)” substitute “ subsection (1)(a) ”.

(5)For subsection (7) substitute—

“(7)In the case of a requirement in a notice relating to a vehicle licence, those times are—                  

(a)the end of the month in which the notice under section 19A(2)(b) or 19B(2)(c) or the further notice under section 19A(3)(d),                           19B(3)(d) or 19B(5)(f) was sent,                  

(b)the date on which the licence was due to expire, and                  

(c)the end of the month preceding that in which there first had effect a new vehicle licence for the vehicle in question;                  

and, in a case of a requirement in a notice relating to a trade licence, those times are the times specified in paragraphs                        (a) and (b).”                  

17(1)Section 36 (dishonoured cheques: additional liability) is amended as follows.U.K.

(2)For subsection (4A) substitute—

“(4A)In the case of a vehicle licence, those times are—                  

(a)the end of the month in which the relevant notice was sent,                  

(b)the date on which the licence was due to expire, and                  

(c)the end of the month preceding that in which there first had effect a new licence for the vehicle in question;                  

and, in the case of a trade licence, those times are the times specified in paragraphs (a) and (b).                  

(4B)In subsection (4A)(a), the “relevant notice” is the notice under section 19A(2)(b) or 19B(2)(c) or the further notice under                           section 19A(3)(d), 19B(3)(d) or 19B(5)(f) which contained the requirement which was not complied with, resulting in the conviction                           of an offence under section 35A.”                  

(3)In subsection (6)(b), for “section 35A(3)(b)” substitute “ section 35A(1)(a) ”.

18U.K.In section 44 (forgery and fraud), in subsection (2), omit paragraphs (a) to (c).

19U.K.In section 58 (fees prescribed by regulations) omit “7(6)(b),”.

20U.K.In section 62 (definitions), in the definition of “nil licence”, for the words from “document” to “and is” substitute “ licence ”.

### **PART 2**U.K.Amendments of other enactments

21U.K.In Schedule 3 to the Road Traffic Offenders Act 1988 (fixed penalty offences) omit the entry relating to section 33 of VERA                        1994.

### **PART 3**U.K.Commencement

22U.K.The amendments made by this Schedule come into force on 1 October 2014.

 Section 99

## SCHEDULE 20U.K.Climate change levy: exemptions for mineralogical and metallurgical processes etc

### **PART 1**U.K.The exemptions

1U.K.Schedule 6 to FA 2000 (climate change levy) is amended as follows.

2U.K.After paragraph 12 insert—

#### “Exemption: mineralogical and metallurgical processesU.K.

12A(1)A supply of a taxable commodity to a person is exempt from the levy if the commodity is to be used by the person in a mineralogical                           or metallurgical process.                  

(2)“Mineralogical process” has the same meaning as in Article 2(4)(b) of Council Directive 2003/96/EC of 27 October 2003 (which relates to the taxation of energy products and electricity).                  

(3)“Metallurgical process” means a process of any of the following descriptions.                  

(4)The descriptions are—                  

(a)a process falling within Division 24 of NACE Rev 2, excluding Class 24.46;                  

(b)a process falling within Group 25.5 of NACE Rev 2;                  

(c)a process falling within Class 25.61 of NACE Rev 2 which is—                  

(i)plating, anodising etc of metals;                  

(ii)heat treatment of metals;                  

(iii)deburring, sandblasting, tumbling and cleaning of metals where carried out in conjunction with a process mentioned in paragraph                           (a) or (b).                  

In this sub-paragraph “NACE Rev 2” is as set out in Annex I to Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 (relating to the statistical classification of economic                        activities).”                  

3(1)Paragraph 42 (amount payable by way of levy) is amended as follows.U.K.

(2)In sub-paragraph (1)—

(a)in paragraph (a) omit “or a supply for use in scrap metal recycling”,

(b)omit paragraph (d), and

(c)in the Table, in the heading for column 2, omit “*or a supply for use in scrap metal recycling*”.

(3)Omit sub-paragraph (1ZA).

4U.K.Omit paragraph 43A (supplies for use in scrap metal recycling) and the cross-heading before it.

5U.K.In paragraph 43B (supplies for use in scrap metal recycling etc: deemed supply) in sub-paragraph (1)(b) omit sub-paragraph                        (i).

6U.K.In paragraph 62 (tax credits) in sub-paragraph (1) omit paragraphs (ca) and (cb).

7U.K.In paragraph 101 (civil penalties: incorrect certificates) in sub-paragraph (2)(a)—

(a)in sub-paragraph (ii) after “12,” insert “ 12A, ”,

(b)after sub-paragraph (ii) insert “ or ”, and

(c)omit sub-paragraph (iiia) and the “or” after it.

8(1)The Climate Change Levy (General) Regulations 2001 (S.I. 2001/838) are amended as follows.U.K.

(2)In regulation 2 (general interpretation) in paragraph (1) omit “, recycling lower-rate part”, “a recycling lower-rate supply                        or” and the definition of “recycling lower-rate supply”.

(3)In regulation 8 (records which a registrable person is obliged to keep) in paragraph (c)(ii) omit “recycling lower-rate supply                        or a”.

(4)In regulation 11 (other tax credits: entitlement) in paragraph (1)—

(a)in sub-paragraph (c) omit “a recycling lower-rate supply or” (in both places), and

(b)omit sub-paragraph (ca).

(5)In regulation 12 (tax credits: general) in paragraph (1) omit “, recycling lower-rate supplies”.

(6)In regulation 33 (special rules for certain supplies)—

(a)in the heading omit “**, recycling lower-rate supplies**”, and

(b)in the text omit “, recycling lower-rate supplies”.

(7)In the title of Part 3 omit “, recycling lower-rate”.

(8)In regulation 34 (supplier certificates) in paragraph (1)(a) after “12 (transport),” insert “ 12A (mineralogical and metallurgical processes), ”.

(9)In regulation 35 (supplier certificates)—

(a)in paragraph (1) omit “a recycling lower-rate or”,

(b)in paragraph (2)(a) omit paragraph (ii) and the “or” before it, and

(c)in paragraph (3) omit “or is for use in scrap metal recycling”.

(10)Schedule 1 (certification etc) is amended as follows.

(11)In the title omit “, recycling lower-rate”.

(12)In paragraph 2—

(a)in the formula omit “+0.8L”,

(b)in the definition of “M”, after paragraph (b) insert—

“(ba)paragraph 12A—mineralogical and metallurgical processes;”, and                  

(c)omit the definition of “0.8L”.

(13)In paragraph 3(1) omit “recycling lower-rate and”.

(14)In paragraph 5(7) omit “Supplies for use in scrap metal recycling and”.

(15)In paragraph 6(1)—

(a)in paragraph (c) omit “a recycling lower-rate supply or” (in both places), and

(b)omit paragraph (ca).

(16)The amendments made by sub-paragraphs (8) and (12)(b) are to be treated as having been made by the Commissioners for Her Majesty's                        Revenue and Customs in exercise of the power conferred by paragraph 22 of Schedule 6 to FA 2000 (regulations giving effect                        to exemptions).

9(1)Schedule 1 to the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005 (S.I. 2005/1715) is amended as follows.U.K.

(2)In paragraph 1 omit “Aluminium” and “Copper”.

(3)In paragraph 2 for the words from “Gold” to “platinum group metal alloys and” substitute “ The electrolytic dissolution of ”.

(4)Omit paragraphs 18 to 24, 26, 27, 28, 32, 34, 36 and 37.

(5)The amendments made by this paragraph are to be treated as having been made by the Treasury in exercise of the power conferred                        by paragraph 18(2) of Schedule 6 to FA 2000 (exemption for supply not used as fuel).

10(1)The amendments made by this Part are treated as having come into force on 1 April 2014 and have effect as follows.U.K.

(2)In relation to supplies of gas or electricity, they have effect in relation to gas or electricity actually supplied on or                        after 1 April 2014.

(3)In relation to any other supplies, they have effect in relation to supplies treated as taking place on or after 1 April 2014.

### **PART 2**U.K.Other provision

11U.K.Schedule 6 to FA 2000 (climate change levy) is amended as follows.

12U.K.In paragraph 12A (as inserted by paragraph 2 above) after sub-paragraph (4) insert—

“(5)The Treasury may by regulations amend this paragraph so as to amend the definition of “mineralogical process”.                  

(6)The Treasury may by regulations amend sub-paragraph (4) so as to add, remove or modify a description.”                  

13U.K.In paragraph 13A (power to make provision amending paragraph 13) in sub-paragraph (3) omit “Parliament”.

14(1)Paragraph 146 (regulations and orders) is amended as follows.U.K.

(2)In sub-paragraphs (2)(b) and (3) omit “Parliament”.

(3)After sub-paragraph (3) insert—

“(3A)A statutory instrument that contains (whether alone or with other provision) regulations under paragraph 12A(5) that remove                           a process (in whole or in part) from the scope of the definition of “mineralogical process” shall not be made unless a draft                           of the statutory instrument containing the regulations has been laid before and approved by a resolution of the House of Commons.                  

(3B)A statutory instrument that contains (whether alone or with other provision) regulations under paragraph 12A(6) that—                  

(a)remove a description, or                  

(b)modify a description so as to narrow its scope,                  

shall not be made unless a draft of the statutory instrument containing the regulations has been laid before and approved                        by a resolution of the House of Commons.”                  

 Section 101

## SCHEDULE 21U.K.Goods shipped or carried as stores on ships or aircraft

### Meaning of “stores”U.K.

1(1)Section 1 of CEMA 1979 (interpretation) is amended as follows.U.K.

(2)In subsection (4)(a)(i), for “relevant journey” substitute “ journey made by the ship or aircraft ”.

(3)Omit subsection (4A).

### Surplus storesU.K.

2U.K.In section 39 of CEMA 1979 (entry of surplus stores), for subsection (1) substitute—

“(1)Surplus stores of any ship or aircraft—                  

(a)may remain on board the ship or aircraft without payment of duty; or                  

(b)may be entered for warehousing, notwithstanding that they could not lawfully be imported as merchandise.                  

This is subject to subsection (2) below.”                  

### Power to make regulations about storesU.K.

3U.K.In CEMA 1979, after section 60 insert—

#### “60APower to make regulations about stores

4(1)Section 61 of CEMA 1979 (provisions as to stores) is amended as follows.U.K.

(2)Omit subsections (1) to (4).

(3)In subsection (5), for the words from “for use on a voyage” to “duty” substitute “ without payment of duty ”.

(4)After subsection (5) insert—

“(5A)But subsection (5) above does not apply where the goods are entered for warehousing in accordance with section 39.”                  

(5)In subsection (6), omit “for use”.

(6)The heading of section 61 becomes “ **Supplementary provision relating to stores** ”.

5U.K.In consequence of the provision made by paragraph 4, in section 103 of F(No.2)A 1987 (consumption in port of goods transhipped                        for use as stores etc), omit subsections (1), (2) and (4) to (7).

### Penalties and enforcementU.K.

6U.K.In CEMA 1979, after section 60A (inserted by paragraph 3 above) insert—

#### “60BFailure to comply with regulations under section 60A

7U.K.In Schedule 55 to FA 2009 (penalty for failure to make returns etc), in the Table in paragraph 1, after item 20 insert—

8U.K.In Schedule 56 to FA 2009 (penalty for failure to make payments on time), in the Table in paragraph 1, after item 11G insert—

### Review and appealU.K.

9U.K.In paragraph 2 of Schedule 5 to FA 1994 (decisions under CEMA 1979 subject to review and appeal), after sub-paragraph (3)                        insert—

“(3A)Any decision which is made under or for the purposes of any regulations under section 60A of the Management Act (power to                           make regulations about stores) and is a decision about granting or withdrawing authorisation for goods to be shipped or carried                           as stores without payment of duty or on drawback.”                  

Prospective

### CommencementU.K.

10(1)Any power to make regulations conferred by virtue of this Schedule comes into force on the day on which 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 statutory instrument by the Commissioners for Her Majesty's Revenue                           and Customs.

11(1)Schedule 55 to FA 2009 (including the amendments of that Schedule made by Schedule 10 to F(No.3)A 2010) is taken to have come                           into force for the purposes of section 60A of CEMA 1979 on the date on which paragraph 7 of this Schedule comes into force.U.K.

(2)Schedule 56 to FA 2009 (including the amendments of that Schedule made by Schedule 11 to F(No.3)A 2010) is taken to have come                           into force for the purposes of section 60A of CEMA 1979 on the date on which paragraph 8 of this Schedule comes into force.

 Section 103

## SCHEDULE 22U.K.Supplies of electronic, broadcasting and telecommunication services: special accounting schemes

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

 Section 113

## SCHEDULE 23U.K.SDLT: charities relief

1U.K.Schedule 8 to FA 2003 (stamp duty land tax: charities relief) is amended as follows.

2U.K.In paragraph 1 (conditions for charities relief)—

(a)in sub-paragraph (2), omit the words from “that is” to the end;

(b)in sub-paragraph (3), for “not been” substitute “ been ”;

(c)after sub-paragraph (3) insert—

“(3A)For the purposes of this Schedule, a charity (“C”) holds a chargeable interest for qualifying charitable purposes if it holds                           it—                  

(a)for use in furtherance of the charitable purposes of C or another charity, or                  

(b)as an investment from which the profits are applied to the charitable purposes of C.”                  

3U.K.After paragraph 3 insert—

### “Joint purchasers: partial reliefU.K.

3A(1)Sub-paragraphs (3) to (5) apply in any case where—                  

(a)there are two or more purchasers under a land transaction,                  

(b)the purchasers acquire the subject-matter of the transaction as tenants in common (or, in Scotland, as owners in common),                  

(c)at least one of them is, and at least one of them is not, a qualifying charity, and                  

(d)no purchaser enters into the transaction for the purpose of the avoidance of tax under this Part (whether by that purchaser                           or another person).                  

(2)A charity (“C”) that is a purchaser under a land transaction is a “qualifying charity” in relation to the transaction if C intends to hold its undivided share of the subject-matter of the transaction for qualifying                           charitable purposes.                  

(3)The tax chargeable in respect of the transaction is reduced by the amount of the relief under sub-paragraph (4).                  

(4)The relief is equal to the relevant proportion of the tax that would have been chargeable in respect of the transaction without                           this Schedule.                  

(5)The “relevant proportion”, in the case of a qualifying charity, is the lower of P1 and P2, where—                  
          -  P1 is the proportion of the subject-matter of the transaction that is acquired by all the qualifying charities that are purchasers                              under the transaction (in aggregate);                         
          -  P2 is the proportion of the chargeable consideration for the transaction that is given by all the qualifying charities that                              are purchasers under the transaction (in aggregate).                         

### Withdrawal of relief given under paragraph 3AU.K.

3B(1)This paragraph applies where—                  

(a)relief has been given under paragraph 3A in respect of a transaction (“the relevant transaction”),                  

(b)a disqualifying event occurs in relation to a qualifying charity (“C”) which was a purchaser under the transaction, and                  

(c)the disqualifying event occurs in the circumstances required by sub-paragraphs (2) and (3).                  

(2)The disqualifying event must occur—                  

(a)before the end of the period of 3 years beginning with the effective date of the transaction, or                  

(b)in pursuance of, or in connection with, arrangements made before the end of that period.                  

(3)At the time of the disqualifying event C must hold a chargeable interest that—                  

(a)was acquired by C under the relevant transaction, or                  

(b)is derived from an interest so acquired.                  

(4)There is a “disqualifying event” in relation to C if —                  

(a)C ceases to be established for charitable purposes only, or                  

(b)the chargeable interest acquired by C under the transaction, or any interest or right derived from that interest, is used                           or held by C otherwise than for qualifying charitable purposes.                  

(5)C's portion of the relief mentioned in sub-paragraph (1)(a), or an appropriate proportion of C's portion of that relief, is                           withdrawn and tax is chargeable in accordance with this paragraph.                  

(6)The amount chargeable is equal to C's portion of the relief or, as the case may be, the appropriate proportion of C's portion                           of the relief.                  

(7)C's portion of the relief depends on whether P1 or P2 was lower in the calculation under paragraph 3A(5).                  

(8)If P1 was lower, C's portion of the relief is equal to—                  

where—                     

p1 is the proportion of the subject-matter of the transaction that was acquired by C under the transaction;                        

P1 has the same meaning as in paragraph 3A(5);                        

(9)If P2 was lower, C's portion of the relief is equal to—                  

where—                     

p2 is the proportion of chargeable consideration for the transaction that was given by C;                        

P2 has the same meaning as in paragraph 3A(5);                        

(10)In sub-paragraphs (5) and (6) “appropriate proportion” means an appropriate proportion having regard to—                  

(a)what was acquired by C under the relevant transaction and what is held by C at the time of the disqualifying event, and                  

(b)the extent to which what is held by C at that time becomes used or held for purposes other than qualifying charitable purposes.                  

### Partial relief: charity not fully meeting the “qualifying charity” conditionU.K.

3C(1)This paragraph applies where—                  

(a)a charity (“C”) is one of two or more purchasers acquiring the subject-matter of a land transaction (“the relevant transaction”)                           as tenants in common (or, in Scotland, as owners in common),                  

(b)C is not a qualifying charity in relation to the transaction,                  

(c)paragraph 3A(3) to (5) would apply if C were a qualifying charity, and                  

(d)C intends to hold the greater part of its undivided share of the subject-matter of the transaction for qualifying charitable                           purposes.                  

(2)In such a case—                  

(a)paragraph 3A has effect as if C were a qualifying charity, but                  

(b)for the purposes of paragraph 3B (withdrawal of relief under paragraph 3A) “disqualifying event” includes any additional disqualifying transaction.                  

(3)The following are “additional disqualifying transactions” if they are not made in furtherance of the charitable purposes of                           C—                  

(a)any transfer by C of a major interest in the whole or any part of the chargeable interest acquired by C under the relevant                           transaction;                  

(b)any grant by C at a premium of a low-rental lease of the whole or any part of that chargeable interest.                  

(4)Paragraph 3(3) (meaning of “at a premium” and “low-rental”) applies for the purposes of sub-paragraph (3)(b) as it applies for the purposes of paragraph 3(2)(b)(ii).                  

(5)In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 3B—                  

(a)the date of the event for those purposes is the effective date of the transaction;                  

(b)paragraph 3B has effect with the modifications in sub-paragraph (6).                  

(6)The modifications to paragraph 3B are—                  

(a)in sub-paragraph (3), for “At the time of” substitute “ Immediately before ”;                  

(b)in sub-paragraph (10)(a), for “at the time of” substitute “ immediately before and immediately after ”;                  

(c)omit sub-paragraph (10)(b).”                  

4U.K.In paragraph 4(3) (charitable trusts)—

(a)in paragraph (a), for the words from “references” to “are to” substitute “ references in paragraph 1(3A) to the charitable purposes of C are to those of ”;

(b)in paragraph (b), for “reference” substitute “ references ” and for “is” substitute “ , and to C in paragraph 3B(4)(a), are ”;

(c)in paragraph (c), for the words from “reference” to “is” substitute “ references in paragraphs 3(2)(b) and 3C(3) to the charitable purposes of C are ”.

5U.K.The amendments made by this section have effect in relation to any transaction of which the effective date (within the meaning                        of Part 4 of FA 2003) is on or after the day on which this Act is passed.

 Section 115

## SCHEDULE 24U.K.Abolition of stamp duty and SDRT: securities on recognised growth markets

### **PART 1**U.K.Stamp duty reserve tax

####  “Chargeable securities” U.K.

1U.K.Part 4 of FA 1986 (stamp duty reserve tax) is amended as follows.

2U.K.In section 99 (interpretation), after subsection (4A) insert—

“(4B)Chargeable securities” does not include securities falling within paragraph (a), (b) or (c) of subsection (3) which are admitted                           to trading on a recognised growth market but not listed on that or any other market.                  

(4C)In subsection (4B), “listed” and “recognised growth market” are to be construed in accordance with section 99A.”                  

3U.K.After that section insert—

##### “99ASection 99(4B): “listed” and “recognised growth market”

(1)This section applies for the purposes of section 99(4B).                  

(2)Section 1005(3) to (5) of the Income Tax Act 2007 (meaning of “listed” etc) applies as it applies in relation to the Income                           Tax Acts.                  

(3)“Recognised growth market” means a market recognised as a growth market by the Commissioners for Her Majesty's Revenue and Customs.                  

(4)On an application made by a market, the market is to be recognised by the Commissioners as a growth market if, and only if,                           the Commissioners are satisfied, on the basis of evidence provided by the market, that the market qualifies for recognition.                  

(5)A market qualifies for recognition at any time (“the relevant time”) if it is a recognised stock exchange which meets one or both of the following conditions—                  

(a)a majority of the companies whose stock or marketable securities are admitted to trading on the market are companies with                           market capitalisations of less than £170 million;                  

(b)the Commissioners are satisfied that the admission requirements of the market include provision requiring companies to demonstrate                           compounded annual growth in gross revenue or employment of at least 20% over the last three periods of account preceding admission                           (“the pre-admission periods”).                  

(6)In subsection (5)—                  
          -  “period of account” of a company means a period for which the company draws up accounts;                         
          -  “recognised stock exchange” has the meaning given by section 1005(1) of the Income Tax Act 2007.                         

(7)For the purposes of subsection (5)(a) a company's market capitalisation at the relevant time is the average of the closing                           market capitalisations of the company on the last trading day of each calendar month (or part of a calendar month) in the                           qualifying period.                  

(8)“The qualifying period” means whichever is the shorter of—                  

(a)the last three calendar years preceding the relevant time, or                  

(b)the period beginning with the day on which the company is admitted to trading on the market and ending at the end of the last                           calendar year preceding the relevant time.                  

(9)For the purposes of subsection (5)(a), a company is to be disregarded if it is admitted to trading on the market in the calendar                           year in which the relevant time falls.                  

(10)In the case of a company with a market capitalisation in a currency other than sterling, the closing market capitalisation                           for the last trading day of any calendar month is to be taken, for the purposes of subsection (7), to be the sterling equivalent                           of that capitalisation (calculated by reference to the spot rate of exchange for that last trading day).                  

(11)For the purposes of subsection (5)(b), the percentage of the compounded annual growth in gross revenue over the pre-admission                           periods is calculated by applying the formula—                  

where—                     

“EV” is the company's gross revenue for the last of the pre-admission periods,                        

“BV” is the company's gross revenue for the period of account immediately preceding the pre-admission periods.                        

(12)For those purposes, the percentage of the compounded annual growth in employment over the pre-admission periods is calculated                           by applying the formula—                  

where—                     

“EV” is the number of employees of the company at the end of the last of the pre-admission periods,                        

“BV” is the number of employees of the company at the end of the period of account immediately preceding the pre-admission                              periods.                        

(13)The Treasury may by regulations—                  

(a)make provision for the revocation by the Commissioners of a recognition under this section and about the consequences of a                           revocation;                  

(b)amend this section so as to add, remove or alter a condition which must be met in relation to a market for it to be recognised                           by the Commissioners under this section.                  

(14)Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.                  

(15)The power to make regulations under this section is exercisable by statutory instrument, and any statutory instrument containing                           such regulations is subject to annulment in pursuance of a resolution of the House of Commons.                  

(16)This section is to be construed as one with the Stamp Act 1891.”                  

#### Commencement of Part 1 and transitional provisionU.K.

4(1)The amendment made by paragraph 2 has effect in relation to any agreement to transfer securities—U.K.

(a)where the agreement is conditional, if the condition is satisfied on or after 28 April 2014, and

(b)in any other case, if the agreement is made on or after that date.

(2)Subject to sub-paragraph (3), the amendment made by paragraph 3 is treated as having come into force on 28 April 2014.

(3)The following provisions of section 99A of FA 1986 (inserted by paragraph 3) come into force on the day on which this Act                        is passed—

(a)paragraph (b) of subsection (13), and

(b)subsections (14) and (15) so far as relating to that paragraph.

(4)Where, having been satisfied as mentioned in subsection (4) of section 99A of FA 1986, the Commissioners for Her Majesty's                        Revenue and Customs have recognised a market as a growth market in anticipation of the coming into force of that section,                        that recognition has effect on and after 28 April 2014 as if it were a recognition under that section.

### **PART 2**U.K.Stamp duty

#### Main chargeU.K.

5U.K.Stamp duty is not chargeable under Schedule 13 to FA 1999 (transfers on sale) on instruments relating to stock or marketable                        securities admitted to trading on a recognised growth market but not listed on any market.

#### Charge in relation to the purchase by a company of its own sharesU.K.

6U.K.Stamp duty is not chargeable by virtue of section 66(2) of FA 1986 (return relating to company's purchase of own shares treated                        as instrument of transfer on sale) on returns relating to shares admitted to trading on a recognised growth market but not                        listed on any market.

#### Charge in relation to property vested by Act or purchased under statutory powerU.K.

7U.K.Section 12 of FA 1895 (collection of stamp duty in cases of property vested by Act or purchased under statutory powers) does                        not apply to stock or marketable securities admitted to trading on a recognised growth market but not listed on any market.

#### Interpretation of paragraphs 5 to 7U.K.

8U.K.In paragraphs 5 to 7 “listed” and “recognised growth market” are to be construed in accordance with section 99A of FA 1986                        (inserted by paragraph 3 of this Schedule).

#### Depositary receipts: chargeU.K.

9U.K.In section 67 of FA 1986 (depositary receipts), after subsection (8) insert—

“(8A)Where an instrument transfers shares or stock or marketable securities admitted to trading on a recognised growth market but                           not listed on any market, subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.                  

(8B)In subsection (8A) “listed” and “recognised growth market” are to be construed in accordance with section 99A below.”                  

#### Clearance services: chargeU.K.

10U.K.In section 70 of that Act (clearance services), after subsection (8) insert—

“(8A)Where an instrument transfers shares or stock or marketable securities admitted to trading on a recognised growth market but                           not listed on any market, subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.                  

(8B)In subsection (8A) “listed” and “recognised growth market” are to be construed in accordance with section 99A below.”                  

#### Charge on transfers of partnership interestsU.K.

11(1)Schedule 15 to FA 2003 (SDLT: partnerships) is amended as follows.U.K.

(2)In paragraph 31(1) (stamp duty on transfers of partnership interests: continued application), after “that section)” insert                        “ or in Schedule 24 to the Finance Act 2014 (abolition of stamp duty in relation to certain securities) ”.

(3)In paragraph 33—

(a)in sub-paragraph (1A), for “stock or marketable” substitute “ relevant ”,

(b)in sub-paragraph (3), for “stock or marketable” substitute “ relevant ”,

(c)in that sub-paragraph omit “that stock and” (in both places),

(d)in sub-paragraph (6), for “stock or” (in each place) substitute “ relevant ”,

(e)in sub-paragraph (7), for “stock or” (in both places) substitute “ relevant ”, and

(f)after sub-paragraph (8) insert—

“(8A)In this paragraph “relevant securities” means stock or marketable securities other than any stock or marketable securities admitted to trading on a recognised growth                           market but not listed on any market.”                  

#### Commencement of Part 2U.K.

12(1)Paragraph 6 has effect in relation to any purchase of shares by a company on or after 28 April 2014.U.K.

(2)Paragraph 7 has effect in relation to—

(a)any Act passed on or after 28 April 2014, and

(b)any instrument of transfer pursuant to such an Act executed on or after that date.

(3)Paragraph 8 is treated as having come into force on 28 April 2014.

(4)Subject to that, this Part of this Schedule has effect in relation to—

(a)any instrument which is executed on or after 28 April 2014 in pursuance of—

(i)an agreement made on or after that date, or

(ii)a conditional agreement made before that date where the condition is satisfied on or after that date, and

(b)any instrument which is not executed in pursuance of a contract and is executed on or after that date.

 Section 117

## SCHEDULE 25U.K.Inheritance tax

### IntroductoryU.K.

1U.K.IHTA 1984 is amended as follows.

### Rate bands for tax years 2015-16, 2016-17 and 2017-18U.K.

2U.K.Section 8 (indexation) does not have effect by virtue of any difference between the consumer prices index for the month of                        September in 2014, 2015 or 2016 and the previous September.

### Treatment of certain liabilitiesU.K.

3(1)After section 162A (liabilities attributable to financing excluded property) insert—U.K.

#### “162AALiabilities attributable to financing non-residents' foreign currency accounts

(1)This section applies if—                  

(a)in determining the value of a person's estate immediately before death, a balance on any qualifying foreign currency account                           (“the relevant balance”) is to be left out of account under section 157 (non-residents' bank accounts), and                  

(b)the person has a liability which is attributable, in whole or in part, to financing (directly or indirectly) the relevant                           balance.                  

(2)To the extent that the liability is attributable as mentioned in subsection (1)(b), it may only be taken into account in determining                           the value of the person's estate immediately before death so far as permitted by subsection (3).                  

(3)If the amount of the liability that is attributable as mentioned in subsection (1)(b) exceeds the value of the relevant balance,                           the excess may be taken into account, but only so far as the excess does not arise for either of the reasons mentioned in                           subsection (4).                  

(4)The reasons are—                  

(a)arrangements the main purpose, or one of the main purposes, of which is to secure a tax advantage, or                  

(b)an increase in the amount of the liability (whether due to the accrual of interest or otherwise).                  

(5)In subsection (4)(a)—                  
          -  “arrangements” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable,                              and any associated operations;                         
          -  “tax advantage” means—                          (a)
the avoidance or reduction of a charge to tax, or                                 
(b)
the avoidance of a possible determination in respect of tax.”                                 
 

(2)Section 162C (sections 162A and 162B: supplementary provision) is amended as follows.

(3)In the heading, after “162A” insert “ , 162AA ”.

(4)In subsection (1), after “162A(1) or (5)” insert “ , 162AA(1) ”.

(5)After subsection (1) insert—

“(1A)In a case in which the value of a person's estate immediately before death is to be determined, where a liability was discharged                           in part before that time—                  

(a)any part of the liability that, at the time of discharge, was not attributable as mentioned in subsection (1) is, so far as                           possible, to be taken to have been discharged first,                  

(b)any part of the liability that, at the time of discharge, was attributable as mentioned in section 162B(1)(b), (3)(b) or (5)(c)                           is, so far as possible, only to be taken to have been discharged after any part of the liability within paragraph (a) was                           discharged,                  

(c)any part of the liability that, at the time of discharge, was attributable as mentioned in section 162AA(1) is, so far as                           possible, only to be taken to have been discharged after any parts of the liability within paragraph (a) or (b) were discharged,                           and                  

(d)any part of the liability that, at the time of discharge, was attributable as mentioned in section 162A(1) or (5) is, so far                           as possible, only to be taken to have been discharged after any parts of the liability within paragraphs (a) to (c) were discharged.”                  

(6)In subsection (2)—

(a)for “Where” substitute “ In any other case, where ”, and

(b)in paragraph (a), for “subsection (1)” substitute “ section 162A(1) or (5) or 162B(1)(b), (3)(b) or (5)(c) ”.

(7)In section 175A (discharge of liabilities after death), in subsection (7)—

(a)after paragraph (a) insert—

“(aa)any part of the liability that is attributable as mentioned in section 162AA(1) is, so far as possible, taken to be discharged                           only after any part of the liability within paragraph (a) is discharged,”,                  

(b)in paragraph (b)—

(i)for “part”, in the second place it appears, substitute “ parts ”, and

(ii)for “(a) is” substitute “ (a) or (aa) are ”,

(c)in paragraph (c)—

(i)for “paragraph (a) or (b)” substitute “ any of paragraphs (a) to (b) ”, and

(ii)for “either” substitute “ any ”.

(8)The amendments made by this paragraph have effect in relation to transfers of value made, or treated as made, on or after                        the day on which this Act is passed.

### Ten-year anniversary chargeU.K.

4(1)In section 64 (charge at ten-year anniversary), after subsection (1) insert—U.K.

“(1A)For the purposes of subsection (1) above, property held by the trustees of a settlement immediately before a ten-year anniversary                           is to be regarded as relevant property comprised in the settlement at that time if—                  

(a)it is income of the settlement,                  

(b)the income arose before the start of the five years ending immediately before the ten-year anniversary,                  

(c)the income arose (directly or indirectly) from property comprised in the settlement that, when the income arose, was relevant                           property, and                  

(d)when the income arose, no person was beneficially entitled to an interest in possession in the property from which the income                           arose.                  

(1B)Where the settlor of a settlement was not domiciled in the United Kingdom at the time the settlement was made, income of the                           settlement is not to be regarded as relevant property comprised in the settlement as a result of subsection (1A) above so                           far as the income—                  

(a)is situated outside the United Kingdom, or                  

(b)is represented by a holding in an authorised unit trust or a share in an open-ended investment company.                  

(1C)Income of the settlement is not to be regarded as relevant property comprised in the settlement as a result of subsection                           (1A) above so far as the income—                  

(a)is represented by securities issued by the Treasury subject to a condition of the kind mentioned in subsection (2) of section                           6 above, and                  

(b)it is shown that all known persons for whose benefit the settled property or income from it has been or might be applied,                           or who are or might become beneficially entitled to an interest in possession in it, are persons of a description specified                           in the condition in question.”                  

(2)In section 66 (rate of ten-yearly charge), after subsection (2) insert—

“(2A)Subsection (2) above does not apply to property which is regarded as relevant property as a result of section 64(1A) (and                           accordingly that property is charged to tax at the rate given by subsection (1) above).”                  

(3)The amendments made by this paragraph have effect in relation to occasions on which tax falls to be charged under section                        64 of IHTA 1984 on or after 6 April 2014.

### Delivery of account and payment of taxU.K.

5(1)In section 216(6) (time for delivery of accounts), before paragraph (b) insert—U.K.

“(ad)in the case of an account to be delivered by a person within subsection (1)(c) above, before the expiration of the period                           of six months from the end of the month in which the occasion concerned occurs;”.                  

(2)In section 226 (payment of tax: general rules), after subsection (3B) insert—

“(3C)Tax chargeable under Chapter 3 of Part 3 of this Act on the value transferred by a chargeable transfer, other than any for                           which the due date is given by subsection (3B) above, is due six months after the end of the month in which the chargeable                           transfer is made.”                  

(3)In section 233 (interest on unpaid tax)—

(a)in subsection (1)(a), after “transfer” insert “ not within paragraph (aa) below and ”,

(b)after subsection (1)(a) insert—

“(aa)an amount of tax charged under Chapter 3 of Part 3 of this Act on the value transferred by a chargeable transfer remains unpaid                           after the end of the period of six months beginning with the end of the month in which the chargeable transfer was made, or”, and                  

(c)in subsection (1)(b), for “any other chargeable transfer” substitute “ a chargeable transfer not within paragraph (a) or (aa) above ”.

(4)The amendments made by this paragraph have effect in relation to chargeable transfers made on or after 6 April 2014.

 Section 120

## SCHEDULE 26U.K.The bank levy: miscellaneous changes

### IntroductionU.K.

1U.K.Schedule 19 to FA 2011 (the bank levy) is amended in accordance with this Schedule.

### High quality liquid assets etcU.K.

2U.K.In paragraph 15 (chargeable equity and liabilities of a UK banking group or a building society group)—

(a)in sub-paragraph (2)(c), for “finally,” substitute “ finally (subject to sub-paragraph (6)) ”, and

(b)for sub-paragraph (6) substitute—

“(6)Where any amount (“A”) within sub-paragraph (2)(c) is used to reduce short term liabilities, the amount of the reduction is                           determined as if A were an amount equal to half of A.”                  

3U.K.In paragraph 17 (chargeable equity and liabilities of foreign banking groups)—

(a)in sub-paragraph (6)(c), for “finally,” substitute “ finally (subject to sub-paragraph (16)) ”,

(b)in sub-paragraph (12)(c), for “finally,” substitute “ finally (subject to sub-paragraph (16)) ”, and

(c)for sub-paragraph (16) substitute—

“(16)Where any amount (“A”) within sub-paragraph (6)(c) or (12)(c) is used to reduce short term liabilities, the amount of the                           reduction is determined as if A were an amount equal to half of A.”                  

4U.K.In paragraph 19 (chargeable equity and liabilities of non-banking groups)—

(a)in sub-paragraph (6)(c), for “finally,” substitute “ finally (subject to sub-paragraph (16)) ”,

(b)in sub-paragraph (12)(c), for “finally,” substitute “ finally (subject to sub-paragraph (16)) ”, and

(c)for sub-paragraph (16) substitute—

“(16)Where an amount (“A”) within sub-paragraph (6)(c) or (12)(c) is used to reduce short term liabilities, the amount of the reduction                           is determined as if A were an amount equal to half of A.”                  

5U.K.In paragraph 21 (chargeable equity and liabilities of UK resident banks and building societies which are not members of groups)—

(a)in sub-paragraph (2)(c), for “finally,” substitute “ finally (subject to sub-paragraph (6)) ”, and

(b)for sub-paragraph (6) substitute—

“(6)Where an amount (“A”) within sub-paragraph (2)(c) is used to reduce short term liabilities, the amount of the reduction is                           determined as if A were an amount equal to half of A.”                  

6U.K.In paragraph 27 (determination of foreign bank's chargeable equity and liabilities)—

(a)in sub-paragraph (2)(c), for “finally,” substitute “ finally (subject to sub-paragraph (6)) ”, and

(b)for sub-paragraph (6) substitute—

“(6)Where an amount (“A”) within sub-paragraph (2)(c) is used to reduce short term liabilities, the amount of the reduction is                           determined as if A were an amount equal to half of A.”                  

7U.K.The amendments made by paragraphs 2 to 6 have effect in relation to chargeable periods ending on or after 1 January 2015.

### Protected depositsU.K.

8(1)Paragraph 29 (“excluded” equity and liabilities: protected deposits) is amended as follows.U.K.

(2)Omit sub-paragraphs (4) to (6).

(3)In sub-paragraph (8) omit “, and sub-paragraphs (4), (5) and (6) so far as relating to a scheme within sub-paragraph (2),”.

(4)In sub-paragraph (9) omit “, and sub-paragraphs (4), (5) and (6) so far as relating to a scheme within sub-paragraph (3),”.

(5)The amendments made by this paragraph have effect for chargeable periods ending on or after 1 January 2015.

### Tier one capital equity and liabilitiesU.K.

9(1)Paragraph 30 (“excluded” equity and liabilities: tier one capital equity and liabilities) is amended as follows.U.K.

(2)For sub-paragraph (2) substitute—

“(2)Tier one capital equity and liabilities” means, in relation to an entity or group of entities, so much of the entity or group's                           equity and liabilities as is tier one capital within the meaning of Article 25 of the Capital Requirements Regulation (taking                           account of the transitional provisions in Part Ten of that Regulation).                  

(3)For the purposes of sub-paragraph (2), the Capital Requirements Regulation is to be treated as applying, in relation to all                           entities and groups of entities, as if—                  

(a)to the extent it would not otherwise be the case, the Prudential Regulation Authority were the competent authority in relation                           to those entities and groups,                  

(b)the only determinations made, and discretions exercised, by the Prudential Regulation Authority for the purposes of the Capital                           Requirement Regulation were those published by it in accordance with that Regulation, and                  

(c)those entities and groups (to the extent that it would not otherwise be the case) were subject to the provisions of the PRA                           Handbook immediately before 1 January 2014.                  

(4)“The Capital Requirements Regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment                           firms.”                  

(3)The amendment made by this paragraph has effect in relation to chargeable periods ending on or after 1 January 2014.

### Liabilities representing QCP margin in relation to trades executed under clearing agreementsU.K.

10(1)After paragraph 38 insert—U.K.

“38A(1)Liabilities are excluded if they represent cash collateral provided as QCP margin in relation to a trade executed or to be                           executed under a client clearing agreement.                  

(2)Cash collateral is provided as “QCP margin” if, and to the extent that—                  

(a)it exceeds the fair value of the instrument to which the trade relates, and                  

(b)it corresponds to either—                  

(i)an asset held in respect of the qualifying central counterparty which represents cash collateral provided to that qualifying                           central counterparty, or                  

(ii)cash collateral provided to the qualifying central counterparty which has the effect of reducing a liability of the clearing                           member to the qualifying central counterparty.                  

(3)In this paragraph—                  
          -  “clearing member”, in relation to a recognised central counterparty, has the meaning given by Article 2(14) of the EMIR Regulation,                         
          -  “client” has the meaning given by Article 2(15) of the EMIR Regulation,                         
          -  “client clearing agreement” means a contract between a clearing member of a qualifying central counterparty and a client, relating to the clearing of                              transactions with the qualifying central counterparty,                         
          -  “derivative contract” has the meaning given by international accounting standards,                         
          -  “the EMIR Regulation” means Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories,                         
          -  “qualifying central counterparty” means a central counterparty that has been either authorised or recognised under the EMIR Regulation,                         
          -  “trade” means a transaction relating to the sale and purchase of a financial instrument or to the entering into of a derivative                              contract.”                         

(2)The amendment made by this paragraph has effect in relation to chargeable periods ending on or after 1 January 2014.

### Certain liabilities deemed short term liabilitiesU.K.

11(1)After paragraph 76 insert—U.K.

“76A(1)Liabilities under derivative contracts are never “long term” (and are therefore always short term).                  

(2)In this paragraph “derivative contract” has the meaning given by international accounting standards.”                  

(2)In paragraph 75 (liabilities not required to be repaid within 12 months etc are long term liabilities), after sub-paragraph                        (2) insert—

“(3)This paragraph is subject to paragraph 76A.”                  

(3)In paragraph 77 (which relates to the calculation of “UK allocated equity and liabilities”), for “76” substitute “ 76A ”.

(4)The amendments made by this paragraph have effect for chargeable periods ending on or after 1 January 2015.

### Amendments consequential on regulatory changesU.K.

12U.K.In paragraph 81 (power to make consequential amendments), in sub-paragraph (1), omit the “or” at the end of paragraph (b),                        and after paragraph (c) insert “, or 

(d)any regulatory requirement, or change to any regulatory requirement, imposed by EU legislation, or by or under any Act (whenever                           adopted, enacted or made).”                  

### Transitional provisionU.K.

13(1)This paragraph applies where—U.K.

(a)an amount of the bank levy is treated as if it were an amount of corporation tax chargeable on an entity (“E”) for an accounting                        period of E,

(b)the chargeable period in respect of which the amount of the bank levy is charged falls (or partly falls) on or after 1 January                        2014, and

(c)under the Instalment Payment Regulations, one or more instalment payments, in respect of the total liability of E for the                        accounting period, were treated as becoming due and payable before the commencement date (“pre-commencement instalment payments”).

(2)Paragraphs 9 and 10 of this Schedule are to be ignored for the purpose of determining the amount of any pre-commencement instalment                        payment.

(3)If there is at least one instalment payment, in respect of the total liability of E for the accounting period, which under                        the Instalment Payment Regulations is treated as becoming due and payable on or after the commencement date (“post-commencement                        instalment payments”), the amount of that instalment payment, or the first of them, is to be increased by the adjustment amount.

(4)If there are no post-commencement instalment payments, a further instalment payment, in respect of the total liability of                        E for the accounting period, of an amount equal to the adjustment amount is to be treated as becoming due and payable at the                        end of the period of 30 days beginning with the commencement date.

(5)“The adjustment amount” is the difference between—

(a)the aggregate amount of the pre-commencement instalments determined in accordance with sub-paragraph (2), and

(b)the aggregate amount of those instalment payments determined ignoring sub-paragraph (2) (and so taking account of paragraphs                        9 and 10).

(6)In the Instalment Payment Regulations—

(a)in regulations 6(1)(a), 7(2), 8(1)(a) and (2)(a), 9(5), 10(1), 11(1) and 13, references to regulation 4A, 4B, 4C, 4D, 5, 5A                        or 5B of those Regulations are to be read as including a reference to sub-paragraphs (1) to (5) above (and in regulation 7(2)                        “the regulation in question”, and in regulation 8(2) “that regulation”, are to be read accordingly), and

(b)in regulation 9(3), the reference to those Regulations is to be read as including a reference to sub-paragraphs (1) to (5)                        above.

(7)In section 59D of TMA 1970 (general rule as to when corporation tax is due and payable), in subsection (5), the reference                        to section 59E is to be read as including a reference to sub-paragraphs (1) to (6) above.

(8)In this paragraph—
          -  “the chargeable period” is to be construed in accordance with paragraph 4 or (as the case may be) 5 of Schedule 19 to FA 2011;                         
          -  “the commencement date” means the day on which this Act is passed;                         
          -  “the Instalment Payment Regulations” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175);                         

and references to the total liability of E for an accounting period are to be construed in accordance with regulation 2(3)                     of the Instalment Payment Regulations.                  

 Section 177

## SCHEDULE 27U.K.Suspension and revocation of remote operating licences

### Breach noticeU.K.

1(1)The Commissioners may give a breach notice to the holder of a remote operating licence if it appears to them that there has                        been a breach of—U.K.

(a)a requirement to be registered under this Part in respect of an activity authorised by the licence,

(b)any conditions or requirements relating to registration under this Part in respect of such an activity,

(c)a requirement to pay general betting duty, pool betting duty or remote gaming duty in respect of such an activity, or

(d)a requirement imposed in respect of such an activity by a notice given under section 170 (requirement to provide security                        or further security) or 171 (requirement to appoint UK representative).

(2)The breach notice must specify—

(a)the breach,

(b)the action that must be taken in order to remedy the breach, and

(c)the period (which must be at least 90 days) within which the action must be taken.

(3)The Commissioners may by regulations—

(a)make provision as to cases in which a breach notice may or may not be given (including provision amending this paragraph);

(b)amend sub-paragraph (2)(c) by substituting for the period for the time being specified there a different period.

### Final noticeU.K.

2(1)If it appears to the Commissioners that the breach has not been remedied in full within the period specified in the breach                        notice, they may give the holder of the remote operating licence a final notice.U.K.

(2)The final notice must—

(a)specify the breach and the extent to which it has not been remedied since the breach notice was given,

(b)specify the period within which a review may be required or appeal brought, and

(c)state that (unless the breach is remedied and subject to the outcome of any review, appeal or further appeal) the Commissioners                        will direct the Gambling Commission to suspend the remote operating licence after the end of the period.

(3)The decision to give the final notice is to be treated as a relevant decision for the purposes of sections 15A and 15C to                        16 of FA 1994 (customs and excise reviews and appeals) and, accordingly, the final notice must include an offer of a review                        of the decision under section 15A of that Act.

(4)Only the holder of the remote operating licence may bring an appeal under section 16 of FA 1994 as applied by sub-paragraph                        (3).

### Direction to suspend remote operating licenceU.K.

3(1)After the review request period has ended, the Commissioners may direct the Gambling Commission to suspend the remote operating                        licence if the breach specified in the final notice has not been remedied in full to the satisfaction of the Commissioners.U.K.

(2)But if the Commissioners have been required to review the decision, or an appeal has been brought against the decision, a                        direction may be given under sub-paragraph (1) only if—

(a)the decision to give the final notice has been upheld (in whole or in part) and the period within which any appeal or further                        appeal may ordinarily be brought has ended,

(b)the proceedings on the review, appeal or any further appeal have been abandoned, withdrawn or discontinued, or

(c)the proceedings on the review, appeal or any further appeal are in progress and—

(i)the Commissioners consider that the holder of the remote operating licence usually lives in or, if a body corporate, is legally                        constituted in a country or territory with which the United Kingdom does not have satisfactory arrangements for the enforcement                        of liabilities,

(ii)the breach was a failure to pay an amount of general betting duty, pool betting duty or remote gaming duty, and

(iii)the holder of the licence has not given to the Commissioners such security as appears to them adequate for the payment of                        the amount of duty that remains due.

(3)A direction under this paragraph may include provision directing the Gambling Commission as to how it is to exercise its powers                        under section 118(4) of the Gambling Act 2005 (time and duration of suspension and saving and transitional provision).

(4)In this paragraph “the review request period” means the period of 30 days beginning with the date of the final notice, subject to any extension given under section 15D                        of FA 1994.

### Reinstatement of remote operating licenceU.K.

4(1)The Commissioners may direct the Gambling Commission to reinstate a remote operating licence suspended pursuant to a direction                        under paragraph 3 if the Commissioners are satisfied that—U.K.

(a)the breach specified in the final notice has been remedied in full,

(b)there are no other grounds on which a breach notice could be given in respect of the licence, and

(c)the holder of the licence has given to the Commissioners any security requested by them for the payment of amounts of general                        betting duty, pool betting duty and remote gaming duty likely to be due in future in respect of any activity authorised by                        the licence.

(2)Where the holder of a suspended licence requests the Commissioners to give a direction under this paragraph and the Commissioners                        refuse to give the direction, they must notify the holder of their decision.

(3)That decision is to be treated as a relevant decision for the purposes of sections 15A and 15C to 16 of FA 1994 (customs and                        excise reviews and appeals) and, accordingly, the notice under sub-paragraph (2) must include an offer of a review of the                        decision under section 15A of that Act.

(4)Only the holder of the suspended licence may bring an appeal under section 16 of FA 1994 as applied by sub-paragraph (3).

5(1)An appeal tribunal may direct the Gambling Commission to reinstate a remote operating licence suspended pursuant to a direction                        under paragraph 3 if the tribunal gives permission to appeal against a decision to give a final notice under section 16(1F)                        of FA 1994 (appeal out of time).U.K.

(2)The reinstatement of a remote operating licence pursuant to a direction given under sub-paragraph (1) does not prevent the                        Commissioners from giving a further direction under paragraph 3(1) in reliance on the final notice if—

(a)the decision to give the notice is upheld (in whole or in part) in the proceedings on the appeal or any further appeal, or                        the proceedings on the appeal or any further appeal have been abandoned, withdrawn or discontinued, and

(b)the period during which any further appeal may ordinarily be brought has ended without an appeal being brought.

(3)In this paragraph “appeal tribunal” has the same meaning as in Chapter 2 of Part 1 of FA 1994.

### Revocation of remote operating licenceU.K.

6(1)The Commissioners may direct the Gambling Commission to revoke a remote operating licence suspended pursuant to a direction                        under paragraph 3 if the breach specified in the final notice has not been remedied in full to the satisfaction of the Commissioners                        within the period of 6 months beginning with the day on which the direction under paragraph 3 was given.U.K.

(2)A direction under this paragraph may include provision directing the Gambling Commission as to how it is to exercise its powers                        under section 119(4) of the Gambling Act 2005 (time of revocation and saving and transitional provision).

(3)The Commissioners must notify the holder of the suspended licence of their decision to give the direction.

(4)That decision is to be treated as a relevant decision for the purposes of sections 15A and 15C to 16 of FA 1994 (customs and                        excise reviews and appeals) and, accordingly, the notice must include an offer of a review of the decision under section 15A                        of that Act.

(5)Only the holder of the suspended licence may bring an appeal under section 16 of FA 1994 as applied by sub-paragraph (4).

### Consent requirement for grant of new remote operating licenceU.K.

7(1)The Gambling Commission requires the consent of the Commissioners to issue a remote operating licence to the holder of a licence—U.K.

(a)which is suspended pursuant to a direction under paragraph 3, or

(b)which has been revoked pursuant to a direction under paragraph 6.

(2)The Commissioners must notify the holder of the suspended or revoked licence of any decision—

(a)not to give their consent under this paragraph, or

(b)to give it subject to conditions.

(3)That decision is to be treated as a relevant decision for the purposes of sections 15A and 15C to 16 of FA 1994 (customs and                        excise reviews and appeals) and, accordingly, the notice under sub-paragraph (2) must include an offer of a review of the                        decision under section 15A of that Act.

(4)Only the holder of the suspended or revoked licence may bring an appeal under section 16 of FA 1994 as applied by sub-paragraph                        (3).

### SupplementaryU.K.

8(1)A notice under this Schedule—U.K.

(a)must be in writing, and

(b)may specify more than one breach.

(2)The fact that a breach notice specifying one or more breaches has been given to the holder of a remote operating licence does                        not prevent a breach notice specifying other breaches being given to the holder of the licence.

9U.K.References in this Schedule to the holder of a remote operating licence are to the person to whom the licence is or was issued.

 Section 196

## SCHEDULE 28U.K.Part 3: consequential amendments and repeals

### **PART 1**U.K.Betting and Gaming Duties Act 1981

1U.K.BGDA 1981 is amended as follows.

2U.K.Omit sections 1 to 12 (general betting duty and pool betting duty).

3U.K.In section 17 (bingo duty) for subsection (2A) substitute—

“(2A)Bingo duty is not charged on the playing of a game of bingo which is not licensed bingo if every person playing the game participates                           by the use of—                  

(a)the internet,                  

(b)telephone,                  

(c)television,                  

(d)radio, or                  

(e)any other kind of electronic or other technology for facilitating communication.”                  

4U.K.Omit sections 26A to 26M (remote gaming duty).

5U.K.In section 27 (offences by bodies corporate), omit “paragraph 13(1) or (3) or 14(1) of Schedule 1 or”.

6U.K.In section 31 (protection of officers), for “general betting duty, bingo duty or remote gaming duty” substitute “ bingo duty ”.

7U.K.Omit Schedule A1 (general betting duty and pool betting duty: double taxation relief).

8U.K.Omit Schedule 1 (administration of general betting duty and pool betting duty).

9U.K.Omit Schedule 4B (remote gaming duty: double taxation relief).

### **PART 2**U.K.Other amendments and repeals

#### Customs and Excise Management Act 1979U.K.

10U.K.CEMA 1979 is amended as follows

11(1)Section 1(1) (interpretation) is amended as follows.U.K.

(2)In the definition of “the revenue trade provisions of the customs and excise Acts”, after paragraph (f) insert—

“(g)the provisions of Part 3 of the Finance Act 2014;”.                  

(3)In the definition of “revenue trader”—

(a)in paragraph (a)(ic), for “gaming within the meaning of the Betting and Gaming Duties Act 1981 (see section 33(1))” substitute                        “ any activity that constitutes betting or gaming for the purposes of Part 3 of the Finance Act 2014 (see sections 150, 183                           and 188) ”,

(b)after paragraph (a)(id) insert—

“(ie)the management or administration of any Chapter 1 stake fund, Chapter 2 stake fund or gaming prize fund within the meaning                           of Part 3 of the Finance Act 2014 (see sections 134, 143 and 154);”, and                  

(c)in paragraph (a)(ii) for “or (id)” substitute “ , (id) or (ie) ”.

12U.K.After section 118BC insert—

##### “118BCAInspection powers: betting duties and remote gaming duty

(1)Subsection (2) applies to premises if an officer has reasonable cause to believe that—                  

(a)betting facilities are being provided, have been provided or are to be provided there,                  

(b)a totalisator is being operated, has been operated or is to be operated there, or                  

(c)any business in respect of which a person is or may become liable to remote gaming duty is being carried on, has been carried                           on or is to be carried on there.                  

(2)The officer may at any reasonable time enter and inspect the premises and inspect—                  

(a)accounts, records and other documents in the custody or control of a relevant person, and                  

(b)any relevant equipment.                  

(3)Subsection (1) does not permit an officer to enter or inspect a particular part of premises if—                  

(a)the officer has no reasonable cause to believe that paragraph (a), (b) or (as the case may be) (c) of that subsection is satisfied                           with respect to that particular part, and                  

(b)that part is used only as a dwelling.                  

(4)An officer may at any reasonable time (whether or not as part of an inspection under subsection (2)) require a relevant person                           or anyone acting on such a person's behalf—                  

(a)to open any relevant equipment, and                  

(b)to carry out any other operation that may be necessary to enable the officer to ascertain whether any general betting duty,                           pool betting duty or remote gaming duty is payable in respect of it and, if so, how much.                  

(5)A “relevant person” is a person—                  

(a)who by virtue of being a bookmaker, being treated by section 133 of the Finance Act 2014 as a bookmaker or providing facilities                           for making bets is liable to general betting duty,                  

(b)who by virtue of being a bookmaker is liable to pool betting duty,                  

(c)who by virtue of entering into arrangements for chargeable persons to participate in remote gaming is liable to remote gaming                           duty, or                  

(d)who is reasonably suspected by the officer of being, having been or being about to become liable as mentioned in paragraph                           (a), (b) or (c).                  

(6)“Relevant equipment” is equipment that is being, or that the officer reasonably suspects of having been or of being intended                           to be, used on the premises for or in connection with any activity that constitutes betting or gaming for the purposes of                           Part 3 of the Finance Act 2014 (see sections 150, 183 and 188).                  

(7)Expressions used in this section and Part 3 of the Finance Act 2014 have the same meanings in this section as in that Part.”                  

13(1)Section 118BD (inspection powers: supplementary provision) is amended as follows.U.K.

(2)In subsections (1) and (2), for “or 118BC,” substitute “ , 118BC or 118BCA, ”.

(3)In subsection (3), for “and 118BC” substitute “ , 118BC and 118BCA ”.

14U.K.In section 118G(1) (offence of failing comply with requirements imposed under Part 9A), for “or 118BC(4)” substitute “ , 118BC(4) or 118BCA(4) ”.

#### Finance Act 1994U.K.

15U.K.FA 1994 is amended as follows.

16U.K.In section 12 (assessments to excise duty), in subsection (2)(c)—

(a)omit “1 or”, and

(b)after “2012” insert “ or Part 3 of the Finance Act 2014 ”.

17U.K.Omit section 13A(2)(ga) (relevant decision: double taxation relief repayment).

18(1)Paragraph 6 of Schedule 5 (decisions subject to review and appeal) is amended as follows.U.K.

(2)Omit sub-paragraph (1)(a).

(3)In sub-paragraph (2)—

(a)omit paragraph (a), and

(b)in paragraph (b), for “that Act” substitute “ the Betting and Gaming Duties Act 1981 ”.

(4)Omit sub-paragraph (3).

#### Value Added Tax Act 1994U.K.

19(1)Section 23A (meaning of “relevant machine game”) of VATA 1994 is amended as follows.U.K.

(2)In subsection (2)(f), for “section 26A of the Betting and Gaming Duties Act 1981 (remote gaming duty: interpretation)” substitute                        “ section 154(1) of the Finance Act 2014 (meaning of remote gaming) ”.

(3)In subsection (3), in the definition of “real game of chance”, for “the Betting and Gaming Duties Act 1981” substitute “ Part 3 of the Finance Act 2014 (see section 188(1)(b)) ”.

#### Finance Act 1997U.K.

20(1)Schedule 1 to FA 1997 (gaming duty: administration and enforcement) is amended as follows.U.K.

(2)In paragraph 12(4), for “the offences” substitute “ the offence ”.

(3)In paragraph 16, for “general betting duty” substitute “ bingo duty ”.

#### Criminal Justice and Police Act 2001U.K.

21U.K.Omit paragraph 27 of Schedule 1 to the Criminal Justice and Police Act 2001 (application of section 50 to power of seizure                        under paragraph 16(2) of Schedule 1 to BGDA 1981).

#### Gambling Act 2005U.K.

22U.K.The Gambling Act 2005 is amended as follows.

23U.K.In section 67 (remote operating licence), at the end insert—

“(4)The power of the Commission to issue a remote operating licence to the holder of a licence suspended or revoked pursuant to                           a direction given under Schedule 27 to the Finance Act 2014 is subject to paragraph 7 of that Schedule (requirement for HMRC's                           consent).”                  

24U.K.In section 118 (suspension of operating licence), after subsection (3) insert—

“(3A)The Commission must suspend an operating licence if directed to do so under paragraph 3 of Schedule 27 to the Finance Act                           2014.”                  

25U.K.After that section insert—

##### “118AReinstatement

(1)If an operating licence has been suspended in accordance with section 118(3A), the Commission must reinstate the licence if                           directed to do so under paragraph 4 or 5 of Schedule 27 to the Finance Act 2014.                  

(2)Where the Commission reinstate an operating licence it—                  

(a)must specify the time when the reinstatement takes effect, and                  

(b)may make the reinstatement subject to conditions.”                  

26U.K.In section 119 (revocation of operating licence), after subsection (3) insert—

“(3A)The Commission must revoke an operating licence if directed to do so under paragraph 6 of Schedule 27 to the Finance Act 2014.”                  

#### Finance Act 2008U.K.

27(1)The Table in paragraph 1 of Schedule 41 to FA 2008 (penalties: failure to notify and certain VAT and excise wrongdoing) is                        amended as follows.U.K.

(2)For the entries relating to general betting duty and pool betting duty substitute—

(3)For the entry relating to remote gaming duty substitute—

Prospective

#### Finance Act 2009U.K.

28U.K.FA 2009 is amended as follows.

29U.K.The Table in paragraph 1 of Schedule 55 (penalty for failure to make returns etc) is amended as follows—

(a)in item 23 (general betting duty), for “paragraph 2 of Schedule 1 to BGDA 1981” substitute “ section 166 of FA 2014 ”,

(b)in item 24 (pool betting duty), for “paragraph 2A of Schedule 1 to BGDA 1981” substitute “ section 166 of FA 2014 ”, and

(c)in item 28 (remote gaming duty), for “26K of BGDA 1981” substitute “ 166 of FA 2014 ”.

30(1)The Table in paragraph 1 of Schedule 56 (penalty for failure to make payments on time) is amended as follows.U.K.

(2)For items 11H and 11I substitute—

(3)For item 11M substitute—

#### Finance Act 2012U.K.

31(1)Schedule 24 to FA 2012 (machine games duty) is amended as follows.U.K.

(2)In paragraph 3(2), for “BGDA 1981” substitute “ Part 3 of FA 2014 ”.

(3)In paragraph 37(5), for “the offences” substitute “ the offence ”.

(4)In paragraph 38, for “remote gaming duty” substitute “ bingo duty ”.

 Section 197

## SCHEDULE 29U.K.Part 3: transitional and saving provisions

### Final accounting periods under BGDA 1981U.K.

1(1)The final accounting period for the purposes of a person's liability to general betting duty, pool betting duty or remote                        gaming duty under BGDA 1981 ends with 30 November 2014 (whether or not it would otherwise have ended with that day).U.K.

(2)The Commissioners may by direction make transitional arrangements for the purposes of the final accounting period, and those                        arrangements may (in particular)—

(a)make provision about the date on which the period begins, and

(b)combine what would otherwise be more than one accounting period.

(3)A direction under this paragraph—

(a)may apply generally or only to a particular case or class of case, and

(b)must be published unless it applies only to a particular case.

### Withdrawal of double taxation reliefU.K.

2(1)The final reconciliation period for the purposes of a person's entitlement to a credit under section 5E, 8ZA or 26IA of BGDA                        1981 (double taxation relief) ends with 30 November 2014 (whether or not it would otherwise have ended with that day).U.K.

(2)The Commissioners are not required to entertain a claim for a repayment made under section 5E, 8ZA or 26IA of BGDA 1981 after                        30 November 2015.

### Post-commencement receipts etc from pre-commencement general or pool bettingU.K.

3(1)In this paragraph “new accounting period” means an accounting period beginning on or after 1 December 2014.U.K.

(2)Where a bet to which section 2(1) of BGDA 1981 (general bets with bookmaker in the United Kingdom) applies is made with a                        bookmaker before 1 December 2014, amounts in respect of the bet which fall due to the bookmaker in a new accounting period                        are to be included among the amounts aggregated at Step 1 in section 131 of this Act in calculating the bookmaker's ordinary                        profits in respect of general bets for that period.

(3)Where—

(a)a bet to which section 3(1) of BGDA 1981 (spread bets with bookmaker in the United Kingdom) applies is made with a bookmaker                        before 1 December 2014, and

(b)the bet is a financial spread bet for the purposes of section 3 of BGDA 1981,

amounts in respect of the bet which fall due to the bookmaker in a new accounting period are to be included among the amounts                     aggregated at Step 1 in section 131 of this Act in calculating the bookmaker's ordinary profits in respect of financial spread                     bets for that period.                  

(4)Where—

(a)a bet to which section 3(1) of BGDA 1981 (spread bets with bookmaker in the United Kingdom) applies is made with a bookmaker                        before 1 December 2014, and

(b)the bet is not a financial spread bet for the purposes of section 3 of BGDA 1981,

amounts in respect of the bet which fall due to the bookmaker in a new accounting period are to be included among the amounts                     aggregated at Step 1 in section 131 of this Act in calculating the bookmaker's ordinary profits in respect of non-financial                     spread bets for that period.                  

(5)Where a bet by way of pool betting to which section 4(1) of BGDA 1981 applies is made before 1 December 2014 by means of facilities                        provided by a person, amounts in respect of the bet which fall due to the person in a new accounting period are to be included                        among the amounts aggregated under section 137(a) of this Act in calculating the person's profits for that period in respect                        of ordinary Chapter 1 pool bets.

(6)Where a dutiable pool bet (as defined by section 7B of BGDA 1981) is made before 1 December 2014, amounts in respect of the                        bet which in accordance with section 7D of BGDA 1981 fall due—

(a)to the operator of the totalisator by means of which the bet is made, or

(b)to the promoter,

in a new accounting period are to be included among the amounts aggregated under section 146(a) of this Act in calculating                     that person's profits for that period in respect of ordinary Chapter 2 pool bets.                  

(7)Section 5(2), (4) and (5) of BGDA 1981 (amounts due: timing and calculation) apply for the purposes of sub-paragraphs (2)                        to (5).

### Post-commencement winnings paid on pre-commencement general or pool bettingU.K.

4(1)In this paragraph “transitional accounting period” means an accounting period—U.K.

(a)beginning on or after 1 December 2014, and

(b)ending on or before 30 November 2018.

(2)Where a bet to which section 2(1) of BGDA 1981 (general bets with bookmaker in the United Kingdom) applies is made with a                        bookmaker before 1 December 2014, amounts paid by the bookmaker in a transitional accounting period by way of winnings to                        the person who made the bet are to be included among the amounts aggregated at Step 2 in section 131 of this Act in calculating                        the bookmaker's ordinary profits in respect of general bets for that period.

(3)Where—

(a)a bet to which section 3(1) of BGDA 1981 (spread bets with bookmaker in the United Kingdom) applies is made with a bookmaker                        before 1 December 2014, and

(b)the bet is a financial spread bet for the purposes of section 3 of BGDA 1981,

amounts paid by the bookmaker in a transitional accounting period by way of winnings to the person who made the bet are to                     be included among the amounts aggregated at Step 2 in section 131 of this Act in calculating the bookmaker's ordinary profits                     in respect of financial spread bets for that period.                  

(4)Where—

(a)a bet to which section 3(1) of BGDA 1981 (spread bets with bookmaker in the United Kingdom) applies is made with a bookmaker                        before 1 December 2014, and

(b)the bet is not a financial spread bet for the purposes of section 3 of BGDA 1981,

amounts paid by the bookmaker in a transitional accounting period by way of winnings to the person who made the bet are to                     be included among the amounts aggregated at Step 2 in section 131 of this Act in calculating the bookmaker's ordinary profits                     in respect of non-financial spread bets for that period.                  

(5)Where a bet by way of pool betting to which section 4(1) of BGDA 1981 applies is made before 1 December 2014 by means of facilities                        provided by a person (“the provider”), amounts paid by the provider in a transitional accounting period by way of winnings to the person who made the bet are                        to be included among the amounts aggregated under section 137(b) of this Act in calculating the provider's profits for that                        period in respect of ordinary Chapter 1 pool bets.

(6)Where a dutiable pool bet (as defined by section 7B of BGDA 1981) is made before 1 December 2014, amounts paid—

(a)by the operator of the totalisator by means of which the bet is made, or

(b)by the promoter,

in a transitional accounting period by way of winnings to the person who made the bet are to be included among the amounts                     aggregated under section 146(b) of this Act in calculating the profits of the operator, or (as the case may be) the promoter,                     for that period in respect of ordinary Chapter 2 pool bets.                  

(7)Section 5(6) of BGDA 1981 (meaning of “paid”) applies for the purposes of sub-paragraphs (2) to (5).

(8)Section 7F of BGDA 1981 (meaning of “paid”) applies for the purposes of sub-paragraph (6).

### Post-commencement receipts & winnings etc in the case of pre-commencement remote gamingU.K.

5(1)This paragraph applies where—U.K.

(a)a person (“the provider”) provides facilities for playing a game of chance,

(b)the playing of the game is remote gaming for the purposes of remote gaming duty charged by BGDA 1981,

(c)the provision of the facilities by the provider is not exempt by virtue of section 26H of BGDA 1981, and

(d)the game is begun to be played before 1 December 2014.

(2)In this paragraph—
          -  “new accounting period” means any accounting period beginning on or after 1 December 2014;                         
          -  “transitional accounting period” means an accounting period—                          (a)
beginning on or after 1 December 2014, and
(b)
ending on or before 30 November 2018.
 

(3)Amounts due to the provider in a new accounting period in respect of entitlement to use the facilities to play the game are                        to be included among the amounts aggregated under section 157(1)(a) of this Act in calculating the provider's profits in respect                        of ordinary gaming.

(4)Amounts in respect of the game that—

(a)are within section 26E(1)(b) of BGDA 1981 as it applies in relation to the provider, and

(b)are staked, or fall due to be paid, in a new accounting period,

are also to be included among the amounts aggregated under section 157(1)(a) of this Act in calculating the provider's profits                     in respect of ordinary gaming.                  

(5)In the case of each prize in the game that is a prize—

(a)provided in a transitional accounting period by the provider, and

(b)won by a person using the facilities to play the game,

the value of the prize is to be included among the amounts aggregated under section 157(2) of this Act in calculating the                     provider's profits for the period in respect of ordinary gaming.                  

(6)Section 26F(2) to (7) of BGDA 1981 (provision and value of prizes) apply for the purposes of sub-paragraph (5).

### Post-commencement relief for unrelieved pre-commencement lossesU.K.

6(1)In this paragraph “new accounting period” means an accounting period beginning on or after 1 December 2014.U.K.

(2)Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative amount of net stake receipts for an accounting period                        ending on 30 November 2014 in respect of bets to which section 2(1) of BGDA 1981 applies, the amount may be carried forward                        in reduction of the person's profits on general bets for one or more new accounting periods.

(3)Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative amount of net stake receipts for an accounting period                        ending on 30 November 2014 in respect of bets—

(a)to which section 3(1) of BGDA 1981 applies, and

(b)which are financial spread bets for the purposes of section 3 of BGDA 1981,

the amount may be carried forward in reduction of the person's profits on financial spread bets for one or more new accounting                     periods.                  

(4)Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative amount of net stake receipts for an accounting period                        ending on 30 November 2014 in respect of bets—

(a)to which section 3(1) of BGDA 1981 applies, and

(b)which are not financial spread bets for the purposes of section 3 of BGDA 1981,

the amount may be carried forward in reduction of the person's profits on non-financial spread bets for one or more new accounting                     periods.                  

(5)Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative amount of net stake receipts for an accounting period                        ending on 30 November 2014 in respect of bets by way of pool betting to which section 4(1) of BGDA 1981 applies, the amount                        may be carried forward in reduction of the person's profits on Chapter 1 pool bets for one or more new accounting periods.

(6)Where under section 7ZA(3) or 7A of BGDA 1981 a person has a negative amount of net pool betting receipts for an accounting                        period ending on 30 November 2014, the amount may be carried forward in reduction of the person's profits on Chapter 2 pool                        bets for one or more new accounting periods.

(7)Where the amount of a person's remote gaming profits (see section 26C(2) of BGDA 1981) for an accounting period ending on                        or before 30 November 2014 is a negative amount then that amount, so far as it has not been carried forward under section                        26G of BGDA 1981 in reduction of the profits of one or more later accounting periods ending on or before 30 November 2014,                        may be carried forward in reduction of the person's profits on remote gaming (see section 155(4) of this Act) for one or more                        new accounting periods.

### Post-commencement winnings on non-dutiable pre-commencement general or pool bettingU.K.

7(1)In this paragraph “transitional accounting period” means an accounting period—U.K.

(a)beginning on or after 1 December 2014, and

(b)ending on or before 30 November 2018.

(2)For the purposes of this paragraph, a bet is “non-dutiable” if—

(a)neither of sections 2(1) and 3(1) of BGDA 1981 applies to it,

(b)it is not a bet by way of pool betting on which general betting duty is charged under section 4(1) of BGDA 1981, and

(c)it is not a dutiable pool bet as defined by section 7B of BGDA 1981.

(3)Where—

(a)a non-dutiable bet is made with a bookmaker before 1 December 2014, and

(b)the bet is a general bet as defined by section 126 of this Act,

amounts paid by the bookmaker in a transitional accounting period by way of winnings to the person who made the bet may be                     included among the amounts aggregated at Step 2 in section 131 of this Act in calculating the bookmaker's ordinary profits                     in respect of general bets for that period.                  

(4)Where—

(a)a non-dutiable bet is made with a bookmaker before 1 December 2014, and

(b)the bet is a financial spread bet as defined by section 128 of this Act,

amounts paid by the bookmaker in a transitional accounting period by way of winnings to the person who made the bet may be                     included among the amounts aggregated at Step 2 in section 131 of this Act in calculating the bookmaker's ordinary profits                     in respect of financial spread bets for that period.                  

(5)Where—

(a)a non-dutiable bet is made with a bookmaker before 1 December 2014, and

(b)the bet is a non-financial spread bet as defined by section 128 of this Act,

amounts paid by the bookmaker in a transitional accounting period by way of winnings to the person who made the bet may be                     included among the amounts aggregated at Step 2 in section 131 of this Act in calculating the bookmaker's ordinary profits                     in respect of non-financial spread bets for that period.                  

(6)Where—

(a)a non-dutiable bet is made with a bookmaker before 1 December 2014, and

(b)the bet is a Chapter 1 pool bet as defined by section 134 of this Act,

amounts paid by the bookmaker in a transitional accounting period by way of winnings in respect of the bet may be included                     among the amounts aggregated under section 137(b) of this Act in calculating the bookmaker's profits for that period in respect                     of ordinary Chapter 1 pool bets.                  

(7)Where—

(a)a non-dutiable bet is made with a bookmaker before 1 December 2014, and

(b)the bet is a Chapter 2 pool bet as defined by section 143 of this Act,

amounts paid by or on behalf of the bookmaker in a transitional accounting period by way of winnings in respect of the bet                     may be included among the amounts aggregated under section 146(b) of this Act in calculating the bookmaker's profits for that                     period in respect of ordinary Chapter 2 pool bets.                  

(8)Section 140 of this Act (meaning of “winnings”) applies for the purposes of sub-paragraphs (3) to (6).

(9)Section 149 of this Act (meaning of “winnings”) applies for the purposes of sub-paragraph (7).

### Post-commencement winnings on non-dutiable pre-commencement remote gamingU.K.

8(1)In this paragraph “transitional accounting period” means an accounting period—U.K.

(a)beginning on or after 1 December 2014, and

(b)ending on or before 30 November 2018.

(2)Sub-paragraph (3) applies where—

(a)under arrangements between a chargeable person (as defined by section 155(2)) and another person (“the provider”), the chargeable person participates in playing a game of chance,

(b)the game is begun to be played before 1 December 2014,

(c)the chargeable person's participation in playing the game under the arrangements is remote gaming (as defined by section 154(1))                        which is ordinary gaming (as defined by section 154(3)),

(d)remote gaming duty under section 26B of BGDA 1981 is not charged on the provision of any facilities—

(i)used by the chargeable person to play the game, and

(ii)provided by the provider, and

(e)the condition in paragraph (d) is not met only by virtue of section 26H of BGDA 1981 (exemptions).

(3)The value of any prize—

(a)provided by or on behalf of the provider in a transitional accounting period, and

(b)won by the chargeable person as a result of participating in playing the game under the arrangements,

may be included among the values aggregated under section 157(2) in calculating the provider's expenditure for the period                     on prizes in respect of ordinary gaming.                  

(4)Section 160 (provision and value of prizes) applies for the purposes of sub-paragraph (3).

### Saving for amendments and repeals made by Schedule 28U.K.

9(1)The amendments and repeals made by Schedule 28 do not affect—U.K.

(a)the operation on and after 1 December 2014 of any enactment amended or repealed by that Schedule, as the enactment stood immediately                        before that date, for the purposes of accounting periods for general betting duty, pool betting duty or remote gaming duty                        that end before that date, or for the purposes of entitlement to double taxation relief for such accounting periods,

(b)the operation on and after that date of any regulations or orders made, directions given or notices published under BGDA 1981                        before that date so far as they relate to any of those duties (but see paragraph (c)),

(c)the exercise on and after that date of any power of the Commissioners or the Treasury under BGDA 1981 as saved by paragraph                        (a), including (in particular) any such power to make, amend, revoke, publish, revise or replace regulations, orders, directions                        or notices,

(d)the charges under sections 2(1), 3(1) and 4(1) of BGDA 1981 on bets made before that date,

(e)the charge under section 5AB of BGDA 1981 so far as relating to bets determined before that date,

(f)the charge under section 7 of BGDA 1981 so far as relating to net pool betting receipts for accounting periods ending before                        that date, or

(g)the charges under sections 17 and 26B of BGDA 1981 so far as relating to games of chance that began to be played before that                        date.

(2)Sub-paragraph (1)—

(a)has effect subject to the preceding provisions of this Schedule, and

(b)does not prejudice the generality of section 16(1) of the Interpretation Act 1978.

 Section 209

## SCHEDULE 30U.K.Section 208 penalty: value of the denied advantage

### IntroductionU.K.

1U.K.This Schedule applies for the purposes of calculating penalties under section 209.

### Value of denied advantage: normal ruleU.K.

2(1)The value of the denied advantage is the additional amount due or payable in respect of tax as a result of counteracting the                        denied advantage.U.K.

(2)The reference in sub-paragraph (1) to the additional amount due or payable includes a reference to—

(a)an amount payable to HMRC having erroneously been paid by way of repayment of tax, and

(b)an amount which would be repayable by HMRC if the denied advantage were not counteracted.

(3)The following are ignored in calculating the value of the denied advantage—

(a)group relief, and

(b)any relief under section 458 of CTA 2010 (relief in respect of repayment etc of loan) which is deferred under subsection (5)                        of that section.

(4)This paragraph is subject to paragraphs 3 and 4.

### Value of denied advantage: lossesU.K.

3(1)To the extent that the denied advantage has the result that a loss is wrongly recorded for purposes of direct tax and the                        loss has been wholly used to reduce the amount due or payable in respect of tax, the value of the denied advantage is determined                        in accordance with paragraph 2.U.K.

(2)To the extent that the denied advantage has the result that a loss is wrongly recorded for purposes of direct tax and the                        loss has not been wholly used to reduce the amount due or payable in respect of tax, the value of the denied advantage is—

(a)the value under paragraph 2 of so much of the denied advantage as results from the part (if any) of the loss which is used                        to reduce the amount due or payable in respect of tax, plus

(b)10% of the part of the loss not so used.

(3)Sub-paragraphs (1) and (2) apply both—

(a)to a case where no loss would have been recorded but for the denied advantage, and

(b)to a case where a loss of a different amount would have been recorded (but in that case sub-paragraphs (1) and (2) apply only                        to the difference between the amount recorded and the true amount).

(4)To the extent that a denied advantage creates or increases an aggregate loss recorded for a group of companies—

(a)the value of the denied advantage is calculated in accordance with this paragraph, and

(b)in applying paragraph 2 in accordance with sub-paragraphs (1) and (2), group relief may be taken into account (despite paragraph                        2(3)).

(5)To the extent that the denied advantage results in a loss, the value of it is nil where, because of the nature of the loss                        or P's circumstances, there is no reasonable prospect of the loss being used to support a claim to reduce a tax liability                        (of any person).

### Value of denied advantage: deferred taxU.K.

4(1)To the extent that the denied advantage is a deferral of tax, the value of that advantage is—U.K.

(a)25% of the amount of the deferred tax for each year of the deferral, or

(b)a percentage of the amount of the deferred tax, for each separate period of deferral of less than a year, equating to 25%                        per year,

or, if less, 100% of the amount of the deferred tax.

(2)This paragraph does not apply to a case to the extent that paragraph 3 applies.

 Section 215

## SCHEDULE 31U.K.Follower notices and partnerships

### IntroductionU.K.

1U.K.This Schedule makes special provision about the application of Chapter 2 to partners and partnerships.

### InterpretationU.K.

2(1)This paragraph applies for the purposes of this Schedule.U.K.

(2)“Partnership follower notice” means a follower notice given by reason of—

(a)a tax enquiry being in progress into a partnership return, or

(b)an appeal having been made in relation to an amendment of a partnership return or against a conclusion stated by a closure                        notice in relation to a tax enquiry into a partnership return.

(3)“Partnership return” means a return in pursuance of a notice under section 12AA(2) or (3) of TMA 1970.

(4)“The representative partner”, in relation to a partnership return, means the person who was required by a notice served under or for the purposes of                        section 12AA(2) or (3) of TMA 1970 to deliver the return.

(5)“Relevant partner”, in relation to a partnership return, means a person who was a partner in the partnership to which the return relates at                        any time during the period in respect of which the return was required.

(6)References to a “successor”, in relation to the representative partner are to be construed in accordance with section 12AA(11) of TMA 1970.

### Giving of follower notices in relation to partnership returnsU.K.

3(1)If the representative partner in relation to a partnership return is no longer available, then, for the purposes of section                        204 the return, or an appeal in respect of the return, is to be regarded as made by the person who is for the time being the                        successor of that partner (if that would not otherwise be the case).U.K.

(2)Where, at any time after a partnership follower notice is given to P, P is no longer available, any reference in this Chapter                        (other than section 204 and this sub-paragraph) to P is to be read as a reference to the person who is, for the time being,                        the successor of the representative partner.

(3)For the purposes of Condition B in section 204 a partnership return, or appeal in respect of a partnership return, is made                        on the basis that a particular tax advantage results from particular tax arrangements if—

(a)it is made on the basis that an increase or reduction in one or more of the amounts mentioned in section 12AB(1) of TMA 1970                        (amounts in the partnership statement in a partnership return) results from those tax arrangements, and

(b)that increase or reduction results in that tax advantage for one or more of the relevant partners.

(4)For the purposes of Condition D in section 204—

(a)a notice given to a person in the person's capacity as the representative partner of a partnership, or a successor of that                        partner, and a notice given to that person otherwise than in that capacity are not to be treated as given to the same person,                        and

(b)all notices given to the representative partner and successors of that partner, in that capacity, are to be treated as given                        to the same person.

(5)In this paragraph references to a person being “no longer available” have the same meaning as in section 12AA(11) of TMA 1970.

### Penalty if corrective action not taken in response to partnership follower noticeU.K.

4(1)Section 208 applies, in relation to a partnership follower notice, in accordance with this paragraph.U.K.

(2)Subsection (2) applies as if the reference to P were to each relevant partner.

(3)References to the denied advantage are to be read as references to the increase or reduction in an amount in the partnership                        statement mentioned in paragraph 3(3) which is denied by the application of the principles laid down or the reasoning given                        in the judicial ruling identified in the partnership follower notice under section 206(a) or, if only part of any increase                        or reduction is so denied, that part.

(4)In subsection (6)(b) the words from “and (where different)” to the end are to be ignored, and accordingly subsection (7) does                        not apply.

### Calculation of penalty etcU.K.

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

 Section 228

## SCHEDULE 32U.K.Accelerated payments and partnerships

### InterpretationU.K.

1(1)This paragraph applies for the purposes of this Schedule.U.K.

(2)“Partnership return” means a return in pursuance of a notice under section 12AA(2) or (3) of TMA 1970.

(3)“The representative partner”, in relation to a partnership return, means the person who was required by a notice served under or for the purposes of                        section 12AA(2) or (3) of TMA 1970 to deliver the return.

(4)“Relevant partner”, in relation to a partnership return, means a person who was a partner in the partnership to which the return relates at                        any time during the period in respect of which the return was required.

(5)References to a “successor”, in relation to the representative partner, are to be construed in accordance with section 12AA(11) of TMA 1970.

### Restriction on circumstances when accelerated payment notices can be givenU.K.

2(1)This paragraph applies where—U.K.

(a)a tax enquiry is in progress in relation to a partnership return, or

(b)an appeal has been made in relation to an amendment of such a return or against a conclusion stated by a closure notice in                        relation to a tax enquiry into such a return.

(2)No accelerated payment notice may be given to the representative partner of the partnership, or a successor of that partner,                        by reason of that enquiry or appeal.

(3)But this Schedule makes provision for partner payment notices and accelerated partner payments in such cases.

### Circumstances in which partner payment notices may be givenU.K.

3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Content of partner payment noticesU.K.

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

### Representations about a partner payment noticeU.K.

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

### Effect of partner payment noticeU.K.

6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Penalty for failure to comply with partner payment noticeU.K.

7U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### Withdrawal, suspension or modification of partner payment noticesU.K.

8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

 Section 233

## SCHEDULE 33U.K.Part 4: consequential amendments

### Taxes Management Act 1970U.K.

1U.K.In section 9B of TMA 1970 (amendment of return by relevant person during enquiry), in subsection (1), after “taxpayer)” insert                        “ , or in accordance with Chapter 2 of Part 4 of the Finance Act 2014 (amendment of return after follower notice), ”.

2U.K.In section 103ZA of that Act (disapplication of sections 100 to 103 (penalty provisions) in the case of certain penalties)—

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

(b)at the end of paragraph (g) insert “, or 

(h)Part 4 of the Finance Act 2014 (follower notices and accelerated payments).”                  

### Finance Act 2007U.K.

3U.K.In paragraph 12 of Schedule 24 to FA 2007 (penalties for errors: interaction with other penalties), after sub-paragraph (2)                        insert—

“(2A)In sub-paragraph (2) “any other penalty” does not include a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc).”                  

### Finance Act 2008U.K.

4U.K.In paragraph 15 of Schedule 41 to FA 2008 (penalties: failure to notify: interaction with other penalties), after sub-paragraph                        (1) insert—

“(1A)In sub-paragraph (1) “any other penalty” does not include a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc).”                  

### Finance Act 2009U.K.

5U.K.In paragraph 17 of Schedule 55 to FA 2009 (penalty for failure to make returns etc: interaction with other penalties), after                        sub-paragraph (2)(b) insert “, or 

(c)a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc).”                  

 Section 237

## SCHEDULE 34U.K.Promoters of tax avoidance schemes: threshold conditions

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

 Section 274

## SCHEDULE 35U.K.Promoters of tax avoidance schemes: penalties

### IntroductionU.K.

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

### Penalties for failure to complyU.K.

2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Daily default penalties for failure to complyU.K.

3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Penalties for inaccurate information and documentsU.K.

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

### Power to change amount of penaltiesU.K.

5(1)If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by                        regulations substitute for the sums for the time being specified in paragraph 2, 3 or 4 such other sums as appear to them                        to be justified by the change.U.K.

(2)Regulations under sub-paragraph (1) may include any amendment of paragraph 10(b) that is appropriate in consequence of an                        amendment made by virtue of sub-paragraph (1).

(3)The “relevant date”, in relation to a specified sum, means—

(a)the date on which this Act is passed, and

(b)each date on which the power conferred by sub-paragraph (1) has been exercised in relation to that sum.

### Concealing, destroying etc documents following imposition of a duty to provide informationU.K.

6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Concealing, destroying etc documents following informal notificationU.K.

7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Failure to comply with time limitU.K.

8U.K.A failure to do anything required to be done within a limited period of time does not give rise to liability to a penalty                        under this Schedule if the person did it within such further time, if any, as an officer of Revenue and Customs or the tribunal                        may have allowed.

### Reasonable excuseU.K.

9(1)Liability to a penalty under this Schedule does not arise if there is a reasonable excuse for the failure.U.K.

(2)For the purposes of this paragraph—

(a)an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control,

(b)if the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable                        care to avoid the failure,

(c)if the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued                        to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased,

(d)reliance on legal advice is to be taken automatically not to constitute a reasonable excuse where the person is a monitored                        promoter if either—

(i)the advice was not based on a full and accurate description of the facts, or

(ii)the conclusions in the advice that the person relied on were unreasonable, and

(e)reliance on legal advice is to be taken automatically not to constitute a reasonable excuse in the case of a penalty for failure                        to comply with section 258, if the advice was given or procured by the monitored promoter mentioned in subsection (1) of that                        section.

### Assessment of penalty and appealsU.K.

10U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

### Interest on penaltiesU.K.

11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

### Double jeopardyU.K.

12U.K.A person is not liable to a penalty under this Schedule in respect of anything in respect of which the person has been convicted                        of an offence.

### Overlapping penaltiesU.K.

13U.K.A person is not liable to a penalty under—

(a)Schedule 24 to the FA 2007 (penalties for errors),

(b)Part 7 of FA 2004, or

(c)any other provision which is prescribed,

by reason of any failure to include in any return or account a reference number required by section 253.

 Section 281

## SCHEDULE 36U.K.Promoters of tax avoidance schemes: partnerships

### **PART 1**U.K.Partnerships as persons

####  “Person” includes a partnershipU.K.

1(1)Persons carrying on a business in partnership—U.K.

(a)are regarded as a person for the purposes of this Part of this Act;

(b)are referred to in this Part as a “partnership”.

(2)But in this Part of this Act “partnership” does not include a body of persons forming a legal person that is distinct from themselves (and paragraphs 2 to 21 may accordingly                        be disregarded in applying this Part of this Act to such a body of persons).

(3)In the references in this Part to carrying on a business in partnership, “partnership” has the same meaning as in the Partnership Act 1890.

#### Continuity of partnershipsU.K.

2U.K.A partnership is regarded for the purposes of this Part of this Act as continuing to be the same partnership (and the same                        person) regardless of a change in membership, provided that a person who was a member before the change remains a member after                        the change.

#### Meeting of conditionsU.K.

3(1)Accordingly, for the purposes of this Part of this Act a partnership is taken—U.K.

(a)to have done any act that bound the members, and

(b)to have failed to comply with any obligation of the firm which the members failed to comply with;

but see sub-paragraph (3).

(2)In sub-paragraph (1), “the members” means those who were the members of the partnership or (in the case of a limited partnership) the general partners of the                        partnership at the time when the act was done or the failure to comply occurred.

(3)Where a member of a partnership (“M”) has done, or failed to do, an act at any time (“the earlier time”), the partnership                        is not treated at any later time as having done, or failed to do, that act unless—

(a)M, or

(b)another person who was a member of the partnership at the earlier time,

is a member of the partnership at the later time.

(4)In this paragraph “firm” has the same meaning as in the Partnership Act 1890.

#### Threshold conditions: actions of partners in a personal capacityU.K.

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

### **PART 2**U.K.Conduct notices and monitoring notices

#### Conduct noticesU.K.

5(1)A conduct notice that is given to a partnership must state that it is a partnership conduct notice.U.K.

(2)In accordance with paragraphs 1 and 2, where the person to whom a conduct notice is given is a partnership, section 238 authorises                        the imposition of conditions relating to—

(a)the persons who are members of the partnership when the conduct notice is given, and

(b)any person who becomes a member of the partnership after the conduct notice is given.

#### Monitoring noticesU.K.

6U.K.A monitoring notice that is given to a partnership must state that it is a partnership monitoring notice.

#### Person continuing to carry on partnership business as a sole traderU.K.

7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Persons leaving a partnership: conduct noticesU.K.

8(1)Sub-paragraphs (2) and (3) apply where—U.K.

(a)a person (“P”) who was a controlling member of a partnership at the time when a conduct notice (“the original notice”) was                        given to the partnership has ceased to be a member of the partnership,

(b)the conduct notice had effect in relation to the partnership at the time of that cessation, and

(c)P is carrying on a business as a promoter.

(2)An authorised officer may give P a conduct notice.

(3)If P is carrying on a business as a promoter in partnership with one or more other persons and is a controlling member of                        that partnership (“the new partnership”), an authorised officer may give a conduct notice to the new partnership.

(4)A conduct notice given under sub-paragraph (3) ceases to have effect if P ceases to be a member of the new partnership.

(5)A notice under sub-paragraph (2) or (3) may not be given after the termination date of the original notice (under section                        241(2)(a) or (b)).

#### Persons leaving a partnership: monitoring noticesU.K.

9(1)Sub-paragraphs (2) and (3) apply where—U.K.

(a)a person (“P”) who was a controlling member of a partnership at the time when a monitoring notice was given to the partnership                        has ceased to be a member of the partnership,

(b)the monitoring notice had effect in relation to the partnership at the time of that cessation, and

(c)P is carrying on a business as a promoter.

(2)An authorised officer may give P a monitoring notice.

(3)If P is carrying on a business as a promoter in partnership with one or more other persons, and is a controlling member of                        that partnership (“the new partnership”), an authorised officer may give a monitoring notice to the new partnership.

(4)A monitoring notice given under sub-paragraph (3) ceases to have effect if P ceases to be a member of the new partnership.

#### Division of partnership businessU.K.

10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Notices under paragraphs 8 to 10: generalU.K.

11(1)In this Part of this Act—U.K.
          -  “replacement conduct notice” means a notice under paragraph 8(2) or (3) or 10(3)(a) or (4)(a);                         
          -  “replacement monitoring notice” means a notice given under paragraph 9(2) or (3) or 10(3)(b) or (4)(b).                         

(2)In this Part of this Act, “the original monitoring notice” means—

(a)in relation to a replacement monitoring notice given under paragraph 9(2), the monitoring notice mentioned in paragraph 9(1),                        and

(b)in relation to a replacement monitoring notice given under paragraph 10(3)(b) or (4)(b), the monitoring notice mentioned in                        paragraph 10(2),

and that original monitoring notice is also the “original monitoring notice” in relation to any monitoring notice that (under paragraph 9(2) or (3) or 10(3)(b) or (4)(b)) replaces a replacement monitoring                     notice.                  

12U.K.A notice under paragraph 8(2) or (3) or 10(3)(a) or (4)(a)—

(a)has no effect after the termination date of the original notice;

(b)must state that that date is its termination date.

13U.K.An authorised officer may not give a replacement conduct notice or replacement monitoring notice to a person if a conduct                        notice or monitoring notice previously given to the person still has effect in relation to the person.

#### Publication under section 248U.K.

14U.K.Where the monitored promoter referred to in section 248(2) is a partnership, paragraphs (a), (b) and (d) of that subsection                        are to be read as referring to details of the partnership (for instance, the name under which the business of the partnership                        is carried on), not to details of particular partners.

### **PART 3**U.K.Responsibility of partners

#### Responsibility of partnersU.K.

15(1)A notice given to a partnership under this Part of this Act has effect, at any time, in relation to the persons who are members                        of the partnership at that time (“the responsible partners”).U.K.

(2)Sub-paragraph (1) does not affect any liability of a person who has ceased to be a member of a partnership in respect of things                        that the responsible partners did or failed to do before that person ceased to be a member of the partnership.

(3)Anything required to be done by the responsible partners under or by virtue of a provision of this Part of this Act is required                        to be done by all the responsible partners (but see paragraph 18).

(4)In relation to any right (such as a right of appeal) conferred by this Part of this Act references to a person have the meaning                        that is appropriate in consequence of sub-paragraphs (1) to (3).

#### Joint and several liability of responsible partnersU.K.

16(1)Where the responsible partners are liable to a penalty under this Part of this Act, or to interest on such a penalty, their                        liability is joint and several.U.K.

(2)No amount may be recovered under sub-paragraph (1) from a person who did not become a responsible partner until after the                        relevant time.

(3)“The relevant time” means—

(a)in relation to so much of the penalty as is payable in respect of any day, or to interest on so much of a penalty as is so                        payable, the beginning of that day;

(b)in relation to any other penalty, or interest on such a penalty, the time when the act or omission occurred that caused the                        penalty to become payable.

#### Service of noticesU.K.

17(1)Any notice given to a partnership by an officer of Revenue and Customs under this Part of this Act must be served either—U.K.

(a)on all the persons who are members of the partnership when the notice is given, or

(b)on a representative partner.

(2)“Representative partner” means—

(a)a nominated partner, or

(b)if no partner has been nominated under paragraph 18(2), a partner designated by an authorised officer as a representative                        partner.

(3)A designation under sub-paragraph (2), or the revocation of such a designation, has effect only when notice of the designation,                        or revocation, has been given to the partnership by an authorised officer.

#### Nominated partnersU.K.

18(1)Anything required to be done by the responsible partners under this Part of this Act may instead be done by any nominated                        partner.U.K.

(2)“Nominated partner” means a partner nominated by a majority of the partners to act as the representative of the partnership for the purposes                        of this Part of this Act.

(3)A nomination under sub-paragraph (2), or the revocation of such a nomination, has effect only after notice of the nomination,                        or revocation, has been given to an authorised officer.

### **PART 4**U.K.Interpretation

#### Meaning of “controlling member”U.K.

19(1)For the purposes of this Schedule a person (“P”) is a “controlling member” of a partnership at any time when the person has                        a right to a share of more than half the assets, or of more than half the income, of the partnership.U.K.

(2)For that purpose there are to be attributed to P any interests or rights of—

(a)any individual who is connected with P (if P is an individual), and

(b)any body corporate that P controls.

(3)An individual is “connected” with P if the individual is—

(a)P's spouse or civil partner;

(b)a relative of P;

(c)the spouse or civil partner of a relative of P;

(d)a relative of P's spouse or civil partner, or

(e)the spouse or civil partner of a relative of P's spouse or civil partner.

(4)In sub-paragraph (3) “relative” means brother, sister, ancestor or lineal descendant.

(5)P controls a body corporate (“B”) if P has power to secure—

(a)by means of the holding of shares or the possession of voting power in relation to B or any other body corporate, or

(b)as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of B are conducted in accordance with P's wishes.

#### Meaning of “managing partner”U.K.

20U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

#### Power to amend definitionsU.K.

21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

 Section 290

## SCHEDULE 37U.K.Companies owned by employee-ownership trusts

### **PART 1**U.K.Capital gains tax relief

#### Relief on disposals to employee-ownership trustsU.K.

1U.K.In Part 7 of TCGA 1992 (other property, businesses, investments etc), after section 236G insert—

##### “Employee-ownership trustsU.K.

###### 236HDisposals to employee-ownership trusts

###### 236ITrading requirement

###### 236JAll-employee benefit requirement

###### 236KFurther provision about the equality requirement

###### 236LCases in which all-employee benefit requirement treated as met

###### 236MControlling interest requirement

###### 236NLimited participation requirement

###### 236ONo section 236H relief if disqualifying event in next tax year

###### 236PEvents which trigger deemed disposal and reacquisition by trustees

###### 236QRelief for deemed disposals under section 71

###### 236RNo section 236Q relief if disqualifying event in next tax year

###### 236SIdentification of shares where section 236H or 236Q applies

###### 236TFurther provision about significant and controlling interests

###### 236UInterpretation of sections 236H to 236U

#### Commencement and transitional provisionU.K.

2U.K.Subject to paragraph 3, the amendment made by paragraph 1 has effect in relation to disposals made on or after 6 April 2014.

3U.K.In relation to disposals made on or after 6 April 2014 but before 26 June 2014, TCGA 1992 has effect as if—

(a)in section 236H—

(i)in subsection (4)(b), for the words from “at the time of the disposal” to the end there were substituted “ (see sections 236J to 236L) ”,

(ii)subsection (4)(c)(ii) (and the “and” before it) were omitted, and

(iii)subsections (5) and (8) were omitted,

(b)in section 236N—

(i)in subsection (1), for “Conditions A and B are” there were substituted “ Condition A is ”, and

(ii)subsection (3) were omitted,

(c)section 236O were omitted,

(d)in section 236P—

(i)in subsection (1) the words “, after the end of the tax year following the tax year in which the acquisition occurs, when”                        were omitted,

(ii)for subsection (2) there were substituted—

“(2)A “disqualifying event” occurs in relation to the acquisition if and when—                  

(a)at any time after that tax year—                  

(i)C ceases to meet the trading requirement, or                  

(ii)the settlement ceases to meet the controlling interest requirement, or                  

(b)at any time after the acquisition—                  

(i)the settlement ceases to meet the all-employee benefit requirement,                  

(ii)the participator fraction exceeds 2/5, or                  

(iii)the trustees act in a way which the trusts, as required by the all-employee benefit requirement, do not permit.”, and                  

(iii)in subsection (3) for “before” there were substituted “ after ”,

(e)section 236Q(7) were omitted, and

(f)section 236R were omitted.

4(1)For the purposes of determining if the requirement of section 236L(1)(c) of TCGA 1992 (requirement as to conduct of trustees                        for 12 months) is met, anything done by the trustees before 10 December 2013 is to be disregarded.U.K.

(2)But sub-paragraph (1) does not apply in relation to section 236L of TCGA 1992 as applied by section 312E(3) of ITEPA 2003                        (rules determining whether payment is a qualifying bonus payment for the purposes of Chapter 10A of Part 4 of ITEPA 2003).

### **PART 2**U.K.Employment income exemption

5U.K.In Part 4 of ITEPA 2003 (employment income: exemptions), after Chapter 10 insert—

#### “CHAPTER 10AU.K.Exemptions: bonus payments by certain employers

##### 312ALimited exemption for qualifying bonus payments

##### 312B“Qualifying bonus payments”

##### 312CSection 312B: the participation and equality requirements

##### 312DSection 312B: the trading requirement

##### 312ESection 312B: the indirect employee-ownership requirement

##### 312FSection 312B: the office-holder requirement

##### 312G“Service company”

##### 312HExcluded payments

##### 312IInterpretation of Chapter 10A

6U.K.In section 717 (orders and regulations made by Treasury etc), in subsection (4) (instruments not subject to negative resolution                        procedure), after “to which” insert “ section 312A(10) (reduction of tax-exempt amount in respect of certain bonus payments) or ”.

7U.K.In Part 2 of Schedule 1 (index of defined expressions), at the appropriate places insert—

8U.K.The amendment made by paragraph 5 has effect in relation to payments received on or after 1 October 2014.

### **PART 3**U.K.Inheritance tax relief

9U.K.IHTA 1984 is amended as follows.

10(1)After section 13 insert—U.K.

#### “13ADispositions by close companies to employee-ownership trusts

(2)The amendment made by this paragraph has effect in relation to dispositions of property made on or after 6 April 2014.

11(1)After section 28 insert—U.K.

#### “28AEmployee-ownership trusts

(2)The amendment made by this paragraph has effect in relation to transfers of value made on or after 6 April 2014.

12(1)In section 29A (abatement of exemption where claim settled out of beneficiary's own resources), in subsection (6)—U.K.

(a)for “to 28” substitute “ to 28A ”, and

(b)for “or 28” substitute “ , 28 or 28A ”.

(2)The amendment made by this paragraph has effect in relation to transfers of value made on or after 6 April 2014.

13(1)Section 72 (property leaving employee trusts and newspaper trusts) is amended as follows.U.K.

(2)In subsection (2), after “Subject to subsections” insert “ (3A), ”.

(3)After subsection (3) insert—

“(3A)Where settled property ceases to be property to which this section applies because paragraph (d) of section 86(3) no longer                           applies, tax is not chargeable under this section by virtue of subsection (2)(a) if the only reason that paragraph no longer                           applies is that one or both of the trading requirement and the controlling interest requirement mentioned in that paragraph                           are no longer met with respect to the company so mentioned.”                  

(4)The amendments made by this paragraph are treated as having come into force on 6 April 2014.

14(1)After section 75 insert—U.K.

#### “75AProperty becoming subject to employee-ownership trust

(2)The amendment made by this paragraph is treated as having come into force on 6 April 2014.

15(1)Section 86 (trusts for benefit of employees) is amended as follows.U.K.

(2)In subsection (3), after paragraph (c) insert “, or 

(d)the settled property consists of or includes ordinary share capital of a company which meets the trading requirement and the                           trusts on which the settled property is held are those of a settlement which—                  

(i)meets the controlling interest requirement with respect to the company, and                  

(ii)meets the all-employee benefit requirement with respect to the company.”                  

(3)After that subsection insert—

“(3A)For the purpose of determining whether subsection (3)(d) is satisfied in relation to settled property which consists of or                           includes ordinary share capital of a company—                  

(a)section 236I of the 1992 Act applies to determine whether the company meets the trading requirement (with references to “C”                           being read as references to that company),                  

(b)sections 236J, 236K, 236M and 236T (but not 236L) of the 1992 Act apply to determine whether the settlement meets the all-employee                           benefit requirement and the controlling interest requirement (with references in those sections to “C” being read as references                           to that company), and                  

(c)“ordinary share capital” has the meaning given by section 1119 of the Corporation Tax Act 2010.”                  

(4)The amendments made by this paragraph are treated as having come into force on 6 April 2014.

16(1)In section 144 (distribution etc from property settled by will), in subsection (1)(b), after “section 75” insert “ , 75A ”.U.K.

(2)The amendment made by this section is treated as having come into force on 6 April 2014.

### **PART 4**U.K.Miscellaneous amendments

#### Finance Act 1986U.K.

17(1)In section 102 of FA 1986 (gifts with reservation), in subsection (5) omit the “and” after paragraph (h) and after paragraph                        (i) insert “; and U.K.

(j)section 28A (employee-ownership trusts).”                  

(2)The amendment made by this paragraph has effect in relation to disposals made on or after 6 April 2014.

#### Taxation of Chargeable Gains Act 1992U.K.

18(1)In section 104 of TCGA 1992 (share pooling: general interpretative provisions), after subsection (4) insert—U.K.

“(4A)For the purposes of this Chapter, securities of a company which are held by the trustees of a settlement, having been last                           acquired or deemed to be acquired by them in circumstances where section 236H or 236Q applied, shall (notwithstanding that                           they would otherwise fall to be treated as of the same class) be treated as of a different class from any other securities                           of the company acquired by those trustees.”                  

(2)The amendment made by this paragraph has effect in relation to any disposal on or after 6 April 2014 of any securities (whenever                        acquired).

#### Income Tax (Earnings and Pensions) Act 2003U.K.

19(1)Paragraph 27 of Schedule 2 to ITEPA 2003 (share incentive plans: requirement as to listing etc) is amended as follows.U.K.

(2)In sub-paragraph (1), omit the “or” at the end of paragraph (b) and after that paragraph insert—

“(ba)shares in a company which is subject to an employee-ownership trust, or”.                  

(3)After sub-paragraph (2) insert—

“(3)But a company is not a close company for the purposes of sub-paragraph (2) if it is subject to an employee-ownership trust.                  

(4)A company (“C”) is “subject to an employee-ownership trust” if—                  

(a)C meets the trading requirement set out in section 312D,                  

(b)C meets the indirect employee-ownership requirement,                  

(c)neither C, nor any other company which is a member of the same group of companies as C, is a service company, and                  

(d)C is not under the control of another company (ignoring for this purpose another company acting in its capacity as the trustee                           of the settlement by virtue of which C meets the indirect employee-ownership requirement).                  

(5)Section 312E (the indirect employee-ownership requirement) applies for the purposes of sub-paragraph (4), subject to the following                           modifications—                  

(a)subsection (3) of that section has effect as if—                  

(i)the words “during the qualifying period” were omitted, and                  

(ii)in paragraph (a) for “10 December 2013” there were substituted “ 1 October 2014 ”, and                  

(b)subsection (4) has effect as if for paragraph (b) there were substituted—                  

“(b)section 236L of that Act applies as if the reference in subsection (1)(c) of that section to the period of 12 months ending                           with the time in question were a reference to any time on or after 1 October 2014.”                  

(6)Section 312G (meaning of “service company”) applies for the purposes of sub-paragraph (4)(c), subject to the following modifications—                  

(a)in subsection (3)(b), the reference to the company which makes the payment is to be read as a reference to C,                  

(b)in subsection (4)(a), the reference to the time the payment is made is to be read as a reference to any time, and                  

(c)in subsection (4)(b), the reference to any time before the time the payment is made is to be read as a reference to any time.”                  

(4)The amendments made by this paragraph come into force on 1 October 2014.

20(1)Paragraph 19 of Schedule 3 to ITEPA 2003 (SAYE option schemes: requirements as to listing) is amended as follows.U.K.

(2)In sub-paragraph (1), omit the “or” at the end of paragraph (b) and after that paragraph insert—

“(ba)shares in a company which is subject to an employee-ownership trust (within the meaning of paragraph 27(4) to (6) of Schedule                           2), or”.                  

(3)After sub-paragraph (2) insert—

“(3)But a company is not a close company for the purposes of sub-paragraph (2) if it is subject to an employee-ownership trust                           (within the meaning of paragraph 27(4) to (6) of Schedule 2).”                  

(4)The amendments made by this paragraph come into force on 1 October 2014.

21(1)In paragraph 17 of Schedule 4 to ITEPA 2003 (CSOP schemes: requirements as to eligible shares), in sub-paragraph (1), omit                        the “or” after paragraph (a) and after paragraph (b) insert “, or U.K.

(ba)shares in a company which is subject to an employee-ownership trust (within the meaning of paragraph 27(4) to (6) of Schedule                           2).”                  

(2)The amendment made by this paragraph come into force on 1 October 2014.

22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

#### Corporation Tax Act 2009U.K.

23(1)In section 1292 of CTA 2009 (employee benefit contributions: provision of qualifying benefits), after subsection (6A) insert—U.K.

“(6B)For those purposes qualifying benefits are also provided, where a payment of money is made to a person, if and to the extent                           that the payment is exempt from income tax by virtue of section 312A of ITEPA 2003.”                  

(2)The amendment made by this paragraph has effect in relation to payments made on or after 1 October 2014.

 Section 296

## SCHEDULE 38U.K.Scottish basic, higher and additional rates of income tax

### **PART 1**U.K.Amendments of ITA 2007

1U.K.ITA 2007 is amended as follows.

2U.K.In section 6 (the basic rate, higher rate and additional rate)—

(a)omit subsections (2A) to (2C), and

(b)in subsection (3), after “see—” insert—

“(za)section 6A (Scottish basic, higher and additional rates),”.                  

3U.K.After section 6 insert—

#### “6AThe Scottish basic, higher and additional rates

(1)The Scottish basic rate, the Scottish higher rate and the Scottish additional rate for a tax year are calculated as follows.                  
          -  *Step 1* Take the basic rate, higher rate or additional rate.                         
          -  *Step 2* Deduct 10 percentage points.                         
          -  *Step 3* Add the Scottish rate (if any) set by the Scottish Parliament for that year.                         

(2)For provision about the setting of the Scottish rate, see Chapter 2 of Part 4A of the Scotland Act 1998.”                  

4U.K.In section 10 (income charged at the basic, higher and additional rates: individuals)—

(a)omit subsections (3B) and (3C), and

(b)in subsection (4), at the appropriate place, insert—

“section 11A (income charged at the Scottish basic, higher and additional rates),”.                  

5U.K.After section 11 insert—

#### “11AIncome charged at the Scottish basic, higher and additional rates

(1)Income tax is charged at the Scottish basic rate on the income of a Scottish taxpayer which—                  

(a)is non-savings income, and                  

(b)would otherwise be charged at the basic rate.                  

(2)Income tax is charged at the Scottish higher rate on the income of a Scottish taxpayer which—                  

(a)is non-savings income, and                  

(b)would otherwise be charged at the higher rate.                  

(3)Income tax is charged at the Scottish additional rate on the income of a Scottish taxpayer which—                  

(a)is non-savings income, and                  

(b)would otherwise be charged at the additional rate.                  

(4)For the purposes of this section, “non-savings income” means income which is not savings income.                  

(5)This section is subject to—                  
          -  section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and                         
          -  any provisions of the Income Tax Acts (apart from section 10) which provide for income of an individual to be charged at different                              rates of income tax in some circumstances.                         

(6)Section 16 has effect for determining the extent to which the non-savings income of a Scottish taxpayer would otherwise be                           charged at the basic, higher or additional rate.”                  

6U.K.In section 13 (income charged at the dividend ordinary, upper and additional rates)—

(a)in subsection (1)(b), after “the basic rate,” insert “ or the Scottish basic rate, ”,

(b)in subsection (2)(b), after “the higher rate,” insert “ or the Scottish higher rate, ”,

(c)in subsection (2A)(b), after “the additional rate,” insert “ or the Scottish additional rate, ”,

(d)in subsection (3), after “section 10” insert “ or 11A ”, and

(e)in subsection (4), after “the basic, higher or additional rate” insert “ or the Scottish basic, higher or additional rate ”.

7U.K.In section 16 (savings and dividend income to be treated as highest part of total income), in subsection (1), for paragraph                        (za) substitute—

“(za)the rate at which income tax would be charged on the non-savings income of a Scottish taxpayer apart from section 11A,”.                  

8U.K.In section 809H (charge on nominated income of long-term UK resident), for subsection (3A) substitute—

“(3A)If the individual is a Scottish taxpayer for the relevant tax year, the individual is to be treated for the purpose of calculating                           income tax charged by virtue of subsection (2) as if the individual were not a Scottish taxpayer for that year.”                  

9U.K.In section 828B (conditions to be met for exemption where individual resident but not domiciled in the UK), in subsection                        (5), after “the basic rate” insert “ , the Scottish basic rate ”.

10U.K.In section 989 (definitions for the purposes of the Income Tax Acts)—

(a)in the definitions of “additional rate”, “basic rate” and “higher rate”, omit “or (2B)”, and

(b)at the appropriate place, insert—

““Scottish additional rate” means the rate of income tax of that name calculated in accordance with section 6A,”,                  

““Scottish basic rate” means the rate of income tax of that name calculated in accordance with section 6A,”,                  

““Scottish higher rate” means the rate of income tax of that name calculated in accordance with section 6A,”,                  

““Scottish taxpayer” has the same meaning as in Chapter 2 of Part 4A of the Scotland Act 1998”.                  

11U.K.In Schedule 4 (index of defined expressions), at the appropriate place, insert—

12U.K.The amendments made by this Part have effect in relation to the tax year appointed by the Treasury under section 25(5) of                        the Scotland Act 2012 and subsequent tax years.

### **PART 2**U.K.Consequential amendments

13U.K.In section 1 of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of resolutions of House of Commons),                        omit subsection (3A).

14(1)In section 7 of TMA 1970 (notice of liability to income tax and capital gains tax), in subsection (6), after “the basic rate,”                        insert “ the Scottish basic rate, ”.U.K.

(2)The amendment made by sub-paragraph (1) has effect in relation to the tax year appointed by the Treasury under section 25(5)                        of the Scotland Act 2012 and subsequent tax years.

15(1)TCGA 1992 is amended as follows.U.K.

(2)In section 4 (rates of capital gains tax), in subsections (4) and (5), after “the higher rate” insert “ , the Scottish higher rate ”.

(3)In section 4A (section 4: special cases), in subsection (5), after “at the higher rate” insert “ , the Scottish higher rate ”.

(4)The amendments made by this paragraph have effect in relation to the tax year appointed by the Treasury under section 25(5)                        of the Scotland Act 2012 and subsequent tax years.

16(1)The Scotland Act 1998 is amended as follows.U.K.

(2)In section 80C (power to set Scottish rate for Scottish taxpayers), for subsection (2) substitute—

“(2)See section 6A of the Income Tax Act 2007 for provision about the calculation of those rates and section 11A of that Act for                           provision about the income charged at those rates.”                  

(3)Section 80G (supplemental powers to modify enactments) is amended in accordance with sub-paragraphs (4) to (8).

(4)For subsection (1) substitute—

“(1)The Treasury may by order modify section 11A of the Income Tax Act 2007 (income charged at the Scottish basic, higher and                           additional rates) for the purpose of altering—                  

(a)the definition of the income which is charged to income tax at the rates provided for under the section, or                  

(b)the application of the section in relation to a particular class of income which is so charged.                  

(1A)The Treasury may by order modify any enactment not contained in Chapter 2 of Part 2 of the Income Tax Act 2007 (rates at which                           income tax is charged) so that it makes provision, in relation to a Scottish taxpayer, by reference to the Scottish basic                           rate, the Scottish higher rate or the Scottish additional rate, instead of the basic rate, the higher rate or the additional                           rate.                  

(1B)If the Treasury consider it necessary or expedient to do so, they may by order provide that—                  

(a)the Scottish rate set by the Parliament for a tax year, or                  

(b)the fact that the Scottish rate has not been so set for a tax year,                  

does not require any change in the amounts repayable or deductible under PAYE regulations between the beginning of that year                        and such later date as may be specified in the order.”                  

(5)In subsection (2), for the words from “with—” to the end substitute “ with an order under subsection (1), (1A) or (1B) ”.

(6)Omit subsection (3).

(7)After subsection (4) insert—

“(5)The power under subsection (1) does not include power to provide that any income which is—                  

(a)savings income, or                  

(b)dividend income which would otherwise be charged to income tax at a rate provided for under section 13 of the Income Tax Act                           2007,                  

is income which is charged to income tax at a rate provided for under section 11A of that Act.”                  

(8)In section 110 (Scottish taxpayers for social security purposes), in subsection (2)—

(a)for “basic rate” substitute “ Scottish basic rate, Scottish higher rate or Scottish additional rate (within the meaning of the Income Tax Acts) ”, and

(b)omit the words from “(instead of” to the end.

(9)Schedule 7 (procedure for subordinate legislation) is amended in accordance with sub-paragraphs (10) and (11).

(10)In paragraph 1(2)—

(a)omit the entry for section 79, and

(b)at the appropriate place insert—

(11)At the end of paragraph 1, omit the Note relating to the entry for section 79.

(12)Sub-paragraph (8) comes into force on such day as the Secretary of State may by order made by statutory instrument appoint.

(13)Sub-paragraphs (10)(a) and (11) come into force on such day as the Treasury may by order appoint.

17U.K.In consequence of the amendments made by this Schedule, in the Scotland Act 2012 omit—

(a)section 26 (income tax for Scottish taxpayers),

(b)paragraph 1(2)(a) and (b) of Schedule 2 (amendments to section 110(2) of the Scotland Act 1998), and

(c)paragraph 1(4) of that Schedule (amendments to Schedule 7 to the Scotland Act 1998 relating to section 80G of that Act).

 Section 298

## SCHEDULE 39U.K.Taxation of co-operative societies etc

### Taxation of Chargeable Gains Act 1992 (c. 12)U.K.

1U.K.In section 217D of TCGA 1992 (disposal of assets on union, amalgamation or transfer of engagements), in subsection (3), after                        paragraph (a) insert—

“(aa)a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)),”.                  

### Co-operative and Community Benefit Societies Act 2014 (c. 14)U.K.

2U.K.Schedule 4 to the Co-operative and Community Benefit Societies Act 2014 (consequential amendments) is amended as follows.

3U.K.In paragraph 47 (which amends section 140E of TCGA 1992)—

(a)in sub-paragraph (2), after “Co-operative and Community Benefit Societies Act 2014” insert “ or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969                           ”, and

(b)in sub-paragraph (3), after “Co-operative and Community Benefit Societies Act 2014” insert “ , a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969                           ”.

4U.K.In paragraph 48 (which amends section 140F of TCGA 1992) after “Co-operative and Community Benefit Societies Act 2014” insert                        “ or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969                           ”.

5U.K.In paragraph 49 (which amends section 140G of TCGA 1992) after “Co-operative and Community Benefit Societies Act 2014” insert                        “ or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969                           ”.

6U.K.In paragraph 50 (which amends section 170 of TCGA 1992)—

(a)in sub-paragraph (2), for “within the meaning of the Co-operative and Community Benefits Societies Act 2014” substitute “ (see section 1119 of that Act) ”, and

(b)in sub-paragraph (3), for “within the meaning of the Co-operative and Community Benefits Societies Act 2014” substitute “ (see section 1119 of CTA 2010) ”.

7U.K.In paragraph 53 (which amends Schedule 7AC of TCGA 1992) for “within the meaning of the Co-operative and Community Benefits                        Societies Act 2014” substitute “ (see section 1119 of that Act) ”.

8U.K.In paragraph 82 (which amends paragraph 28 of Schedule 2 to ITEPA 2003), in the sub-paragraph (5) substituted by sub-paragraph                        (3)—

(a)omit the “or” following paragraph (b), and

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

(d)an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society.”                  

9U.K.In paragraph 94 (which amends section 379 of ITTOIA 2005), in the definition of “registered society” inserted by sub-paragraph                        (4)—

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

(b)after paragraph (b) insert—

“(c)a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or                  

(d)an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.                  

10U.K.In paragraph 105 (which amends section 151 of ITA 2007), in the definition of “registered society” inserted by sub-paragraph                        (3)—

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

(b)at the end of paragraph (b) insert “or 

(c)an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.                  

11U.K.In paragraph 110 (which amends section 887 of ITA 2007), in the subsection (5) substituted by sub-paragraph (5)—

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

(b)after paragraph (b) insert—

“(c)a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or                  

(d)an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society.”                  

12U.K.In paragraph 158 (which amends section 90 of CTA 2010), in the definition of “registered society” inserted by sub-paragraph                        (3)—

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

(b)at the end of paragraph (b) insert “or 

(c)an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.                  

13U.K.In paragraph 168 (which amends section 1119 of CTA 2010), in the definition of “registered society” inserted by sub-paragraph                        (3), for paragraph (c) and the “or” before it substitute—

“(c)a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or                  

(d)an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.                  

14U.K.In paragraph 171 (which amends section 118 of TIOPA 2010)—

(a)in sub-paragraph (2), after “Co-operative and Community Benefit Societies Act 2014” insert “ or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969                           ”, and

(b)in sub-paragraph (3), after “Co-operative and Community Benefit Societies Act 2014” insert “ , a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969                           ”.

### CommencementU.K.

15U.K.The amendments made by this Schedule come into force on 1 August 2014.