Finance Act 2015

SCHEDULES

Section 13

SCHEDULE 1 U.K. Extension of benefits code except in relation to certain ministers of religion

PART 1 U.K. Amendments of ITEPA 2003

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

2 U.K. In section 7 (meaning of “employment income”, “general earnings” and “specific employment income”), in subsection (5)(b), for “11” substitute “ 10 ”.

3 U.K. In section 17 (UK resident employees: treatment of earnings for year in which employment not held), in subsection (4), for “11” substitute “ 10 ”.

4 U.K. In section 30 (remittance basis and non-UK resident employees: treatment of earnings for year in which employment not held), in subsection (4), for “11” substitute “ 10 ”.

5 (1) Section 63 (the benefits code) is amended as follows. U.K.

(2) In subsection (1)—

(a) at the end of the entry relating to Chapter 7 insert “ and ”, and

(b) omit the entry relating to Chapter 11 and the “and” before it.

(3) Omit subsections (2) to (4).

6 U.K. In section 66 (meaning of “employment” and related expressions), after subsection (4) insert—

“(5) In the benefits code “lower-paid employment as a minister of religion” has the same meaning as in Part 4 (see section 290D).”

7 U.K. In section 148 (reduction of cash equivalent where car is shared), omit subsection (3).

8 U.K. In section 157 (reduction of cash equivalent where van is shared), omit subsection (3).

9 (1) Section 169 (car available to more than one family member etc employed by same employer) is amended as follows. U.K.

(2) For subsection (2)(b) substitute—

“(b) M's employment is lower-paid employment as a minister of religion.”

(3) Omit subsections (3) and (4).

10 (1) Section 169A (van available to more than one family member etc employed by same employer) is amended as follows. U.K.

(2) For subsection (2)(b) substitute—

“(b) M's employment is lower-paid employment as a minister of religion.”

(3) Omit subsections (3) and (4).

11 U.K. In section 184 (interest treated as paid), in subsection (3), for the words following “any of” substitute “the following Chapters of this Part—

• Chapter 3 (taxable benefits: expenses payments);

• Chapter 6 (taxable benefits: cars, vans and related benefits);

• Chapter 10 (taxable benefits: residual liability to charge).”

12 (1) Section 188 (loan released or written off: amount treated as earnings) is amended as follows. U.K.

(2) In subsection (2), for “an excluded employment”, in each place, substitute “ lower-paid employment as a minister of religion ”.

(3) In subsection (3)(a), for “excluded employment” substitute “ lower-paid employment as a minister of religion ”.

13 U.K. In section 228 (effect of exemptions in Part 4 on liability under provisions outside Part 2), in subsection (2)(d), for “290 and” substitute “ 290, 290C to ”.

14 (1) Section 239 (payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles) is amended as follows. U.K.

(2) In subsection (8), for “excluded employment” substitute “ lower-paid employment as a minister of religion (see section 290D) ”.

(3) Omit subsection (9).

15 U.K. In section 266 (exemption of non-cash vouchers for exempt benefits), in subsection (5), for “excluded employment” substitute “ lower-paid employment as a minister of religion ”.

16 U.K. In section 267 (exemption of credit-tokens used for exempt benefits), in subsection (1)(b), for “excluded employment” substitute “ lower-paid employment as a minister of religion ”.

17 U.K. In section 269 (exemption where benefits or money obtained in connection with taxable car or van or exempt heavy goods vehicle), in subsection (4)(b), for “excluded employment” substitute “ lower-paid employment as a minister of religion ”.

18 U.K. In section 290 (accommodation benefits of ministers of religion), in subsection (2), for “excluded employment” substitute “ lower-paid employment as a minister of religion (see section 290D) ”.

19 U.K. In section 290A (accommodation outgoings of ministers of religion)—

(a) in subsection (1), for “a religious denomination” substitute “ religion ”,

(b) in subsection (3), omit the definition of “lower-paid employment”, and

(c) in the heading of the section, after “outgoings of” insert “ lower-paid ”.

20 U.K. In section 290B (allowances paid to ministers of religion in respect of accommodation outgoings)—

(a) in subsection (1), for “a religious denomination” substitute “ religion ”,

(b) in subsection (3), for “and “lower-paid employment” have the same meanings” substitute “ has the same meaning ”, and

(c) in the heading of the section, after “to” insert “ lower-paid ”.

21 (1) Part 2 of Schedule 1 (index of defined expressions) is amended as follows. U.K.

(2) Omit both entries relating to “excluded employment” and the entry relating to “lower-paid employment”.

(3) At the appropriate place insert—

“lower-paid employment as a minister of religion (in the benefits code)	section 66(5)
lower-paid employment as a minister of religion (in Part 4)	section 290D”.

22 (1) Schedule 7 (transitionals and savings) is amended as follows. U.K.

(2) In paragraph 17 (taxable benefits: benefits code)—

(a) in sub-paragraph (2), for “the Chapters” to “lower-paid employments)” substitute “ Chapters 3, 6, 7 and 10 of the benefits code (provisions not applicable before the tax year 2016-17 to lower-paid employments) ”, and

(b) omit sub-paragraph (4).

(3) In paragraph 27(3) (loans released or written off)—

(a) in paragraph (a), for “ “not an excluded employment”” substitute “ “not lower-paid employment as a minister of religion” ”;

(b) in paragraph (b), for “ “excluded employment”” substitute “ “lower-paid employment as a minister of religion” ”.

PART 2 U.K. Amendments of other enactments

23 (1) The Social Security Contributions and Benefits Act 1992 is amended as follows. U.K.

(2) In section 10 (Class 1A contributions: benefits in kind etc), in subsection (1)(b)(ii), for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(3) In section 10ZB (non-cash vouchers provided by third parties), in subsection (2)—

(a) in paragraph (a), for “an excluded employment for the purposes of the benefits code” substitute “ lower-paid employment as a minister of religion ”, and

(b) in paragraph (b) and in the words following that paragraph, for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(4) In section 122 (interpretation of Parts 1 to 6), in subsection (1)—

(a) omit the entry relating to “excluded employment”, and

(b) at the appropriate place insert—

““lower-paid employment as a minister of religion” has the meaning given by section 290D of ITEPA 2003;”.

24 (1) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows. U.K.

(2) In section 10 (Class 1A contributions: benefits in kind etc), in subsection (1)(b)(ii), for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(3) In section 10ZB (non-cash vouchers provided by third parties), in subsection (2)—

(a) in paragraph (a), for “an excluded employment for the purposes of the benefits code” substitute “ lower-paid employment as a minister of religion ”, and

(b) in paragraph (b) and in the words following that paragraph, for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(4) In section 121 (interpretation of Parts 1 to 6), in subsection (1)—

(a) omit the entry relating to “excluded employment”, and

(b) at the appropriate place insert—

““lower-paid employment as a minister of religion” has the meaning given by section 290D of ITEPA 2003;”.

25 (1) Section 173 of FA 2004 (provision of benefits by registered pension scheme) is amended as follows. U.K.

(2) In subsection (2), for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(3) In subsection (3)—

(a) in the opening words, for “an excluded employment” substitute “ an employment which is lower-paid employment as a minister of religion ”, and

(b) in paragraph (a), for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(4) In subsection (6), for “an excluded employment” substitute “ lower-paid employment as a minister of religion ”.

(5) In subsection (7), for “an excluded employment” substitute “ an employment which is lower-paid employment as a minister of religion ”.

(6) In subsection (10), for the definition of “excluded employment” substitute—

““lower-paid employment as a minister of religion” has the meaning given by section 290D of that Act,”.

26 U.K. In CTA 2010, in section 1065 (exception for benefits treated as employment income etc), in the first column of the table, for the words from “in section 216” to “lower-paid employment)” substitute “ in section 290C of that Act (provisions of benefits code not applicable to lower-paid ministers of religion) ”.

Section 32

SCHEDULE 2 U.K. Restrictions applying to certain deductions made by banking companies

PART 1 U.K. Main provisions

1 U.K. In CTA 2010, after Part 7 insert—

“PART 7A U.K. Banking companies

CHAPTER 1 U.K. Introduction

269A Overview of Part

(1) This Part contains provision about banking companies.

(2) Chapter 2 defines “banking company” and contains other definitions applying for the purposes of this Part.

(3) Chapter 3 contains provision restricting the amount of certain deductions which a banking company may make in calculating its taxable total profits for an accounting period.

CHAPTER 2 U.K. Key definitions

“Banking company” U.K.

269B Meaning of “banking company”

(1) In this Part “banking company”, in relation to an accounting period, means—

(a) a company which meets conditions A to E,

(b) a company which—

(i) meets conditions A and B, and

(ii) is a member of a partnership which meets conditions C to E, or

(c) a building society.

In subsections (4) to (6) “the relevant entity” means the company or the partnership (as the case may be).

(2) Condition A is that at any time during the accounting period the company—

(a) is a UK resident company, or

(b) is a company which carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom.

(3) Condition B is that the company is not an excluded entity at any time during the accounting period (see section 269BA).

(4) Condition C is that, at any time during the accounting period, the relevant entity is an authorised person for the purposes of FISMA 2000 (see section 31 of that Act).

(5) Condition D is that, at any time during the accounting period—

(a) the relevant entity's activities include the relevant regulated activity described in the provision mentioned in section 269BB(a),

(b) the relevant entity is both an IFPRU 730k firm and a full scope IFPRU investment firm, whose activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in section 269BB(b) to (f), or

(c) the relevant entity is both a BIPRU 730k firm and a full scope BIPRU investment firm, whose activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in section 269BB(b) to (f).

(6) Condition E is that the relevant entity carries on that relevant regulated activity, or those relevant regulated activities, wholly or mainly in the course of trade.

(7) See also section 269BC (which contains definitions of terms used in this section).

269BA Excluded entities

(1) For the purposes of section 269B “excluded entity” means any of the following entities—

(a) an insurance company or an insurance special purpose vehicle;

(b) an entity which is a member of a group and does not carry on any relevant regulated activities otherwise than on behalf of an insurance company or insurance special purpose vehicle which is a member of the group;

(c) an entity which does not carry on any relevant regulated activities otherwise than as the manager of a pension scheme;

(d) an investment trust;

(e) an entity which does not carry on any relevant regulated activities other than asset management activities;

(f) an exempt IFPRU commodities firm or exempt BIPRU commodities firm;

(g) an entity which does not carry on any relevant regulated activities otherwise than for the purpose of trading in commodities or commodity derivatives;

(h) an entity which does not carry on any relevant regulated activities otherwise than for the purpose of dealing in contracts for differences—

(i) as principal with persons all or all but an insignificant proportion of whom are retail clients, or

(ii) with another person to enable the entity or other person to deal in contracts for differences as principal with persons all or all but an insignificant proportion of whom are retail clients;

(i) a society incorporated under the Friendly Societies Act 1992;

(j) a society registered as a credit union under the Co-operative and Community Benefit Societies Act 2014 or the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12));

(k) a building society.

(2) For the meaning of “relevant regulated activity”, see section 269BB.

See also section 269BC (which contains definitions of other terms used in this section).

269BB Relevant regulated activities

In this Part “relevant regulated activity” means an activity which is a regulated activity for the purposes of FISMA 2000 by virtue of any of the following provisions of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544)—

(a) article 5 (accepting deposits);

(b) article 14 (dealing in investments as principal);

(c) article 21 (dealing in investments as agent);

(d) article 25 (arranging deals in investments);

(e) article 40 (safeguarding and administering investments);

(f) article 61 (entering into regulated mortgage contracts).

269BC Banking companies: supplementary definitions

(1) This section contains definitions of terms used in sections 269B to 269BB (and this section).

(2) “Asset management activities” means activities which consist (or, if they were carried on in the United Kingdom, would consist) of any or all of the following—

(a) acting as the operator of a collective investment scheme (within the meaning of Part 17 of FISMA 2000: see sections 235 and 237 of that Act),

(b) acting as a discretionary investment manager for clients none of which is a linked entity (see subsection (3)), and

(c) acting as an authorised corporate director.

(3) In subsection (2)(b) “linked entity”, in relation to an entity (“E”), means—

(a) a member of the same group as E,

(b) a company in which a company which is a member of the same group as E has a major interest (within the meaning of Part 5 of CTA 2009: see section 473 of that Act), or

(c) a partnership the members of which include an entity—

(i) which is a member of the same group as E, and

(ii) whose share of the profits or losses of a trade carried on by the partnership for an accounting period of the partnership any part of which falls within the relevant accounting period is at least a 40% share (see Part 17 of CTA 2009 for provisions about shares of partnership profits and losses).

“The relevant accounting period” means the accounting period referred to in section 269B(3).

(4) “Building society” has the same meaning as in the Building Societies Act 1986.

(5) “Insurance company” and “insurance special purpose vehicle” have the meanings given by sections 65 and 139 of FA 2012 respectively.

(6) “Partnership” includes—

(a) a limited liability partnership, and

(b) an entity established under the law of a territory outside the United Kingdom of a similar character to a partnership,

and “member”, in relation to a partnership, is to be read accordingly.

(7) The terms in subsection (8)—

(a) in relation to a PRA-authorised person, have the meaning given by the PRA Handbook;

(b) in relation to any other authorised person, have the meaning given by the FCA Handbook.

(8) The terms referred to in subsection (7) are—

• “authorised corporate director”;

• “BIPRU 730k firm”;

• “contracts for differences”;

• “discretionary investment manager”;

• “exempt BIPRU commodities firm”;

• “exempt IFPRU commodities firm”;

• “full scope BIPRU investment firm”;

• “full scope IFPRU investment firm”;

• “IFPRU 730k firm”;

• “pension scheme”;

• “principal”;

• “retail client”.

(9) A company or partnership which would be a BIPRU 730k firm and a full scope BIPRU investment firm by virtue of activities carried on in the United Kingdom but for the fact that its registered office (or, if it does not have a registered office, its head office) is not in the United Kingdom is to be treated as being one for the purposes of section 269B.

(10) A company or partnership which would be an IFPRU 730k firm and a full scope IFPRU investment firm by virtue of activities carried on in the United Kingdom but for the fact that its registered office (or, if it does not have a registered office, its head office) is not in the United Kingdom is to be treated as being one for the purposes of section 269B.

(11) In subsection (7)—

• “authorised person” and “PRA-authorised person” have the same meaning as in FISMA 2000;

• “the FCA Handbook” means the Handbook made by the Financial Conduct Authority under FISMA 2000 (as that Handbook has effect from time to time);

• “the PRA Handbook” means the Handbook made by the Prudential Regulation Authority under FISMA 2000 (as that Handbook has effect from time to time).

“Group” U.K.

269BD Meaning of “group”

(1) In this Part “group” means a group for the purposes of—

(a) those provisions of international accounting standards relating to the preparation of consolidated financial statements (whether or not the company that is the parent within the meaning of those provisions (“the parent company”) prepares financial statements under those standards), or

(b) in a case where subsection (2) applies, those provisions of US GAAP which relate to the preparation of consolidated financial statements.

(2) This subsection applies if—

(a) as at the end of a period of account of the parent company—

(i) the parent company is resident in a territory outside the United Kingdom,

(ii) generally accepted accounting practice for companies resident in that territory is or includes US GAAP, and

(iii) the parent company is a parent for the purposes of those provisions of US GAAP which relate to the preparation of consolidated financial statements (as well as being a parent for the purposes of the provisions mentioned in subsection (1)(a)), and

(b) the parent company prepares consolidated financial statements for the period of account under US GAAP.

(3) Accordingly, for the purposes of this Part a company is a member of a group if—

(a) it is the parent company in relation to the group, or

(b) it is a member of the group for the purposes of the provisions mentioned in subsection (1)(a) or (b) (as the case may be).

(4) In this section “US GAAP” means United States Generally Accepted Accounting Principles.

(5) Section 1127(1) and (3) (meaning of “generally accepted accounting practice”) do not apply for the purposes of this section.

Power to make consequential changes U.K.

269BE Power to make consequential changes

(1) The Treasury may by regulations make such amendments of this Part as they consider appropriate in consequence of—

(a) any change made to, or replacement of, the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (or any replacement);

(b) any change made to, or replacement of, the FCA Handbook or the PRA Handbook (or any replacement);

(c) any change in international accounting standards or US GAAP;

(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).

(2) In this section—

• “the FCA Handbook” and “the PRA Handbook” have the meaning given by section 269BC(11);

• “US GAAP” has the meaning given by section 269BD(4).

CHAPTER 3 U.K. Restrictions on obtaining certain deductions

Introduction U.K.

269C Overview of Chapter

(1) This Chapter contains provision restricting the amount of certain deductions which a banking company may make in calculating its taxable total profits for an accounting period.

(2) Sections 269CA to 269CD contain the restrictions.

(3) Sections 269CE to 269CH contain exceptions to the restrictions.

(4) Section 269CK contains anti-avoidance provision.

(5) Sections 269CL to 269CN contain supplementary provision and definitions.

(6) For the meaning of “banking company”, see section 269B.

Restrictions on obtaining certain deductions U.K.

269CA Restriction on deductions for trading losses

(1) This section has effect for determining the taxable total profits of a banking company for an accounting period.

(2) Any deduction made by the company for the accounting period in respect of a pre-2015 carried-forward trading loss may not exceed 50% of the company's relevant trading profits for the accounting period.

Section 269CD contains provision for calculating a company's relevant trading profits for an accounting period (see step 5 in subsection (1) of that section).

(3) But subsection (2) does not apply where the amount given by step 1 in section 269CD(1) is not greater than nil.

(4) In this Chapter “pre-2015 carried-forward trading loss”, in relation to a company and an accounting period (“the current accounting period”), means a loss which—

(a) was made in a trade of the company in an accounting period ending before 1 April 2015, and

(b) is carried forward to the current accounting period under section 45 (carry forward of trade loss against subsequent trade profits).

(5) See also sections 269CE to 269CH (losses to which restrictions do not apply).

269CB Restriction on deductions for non-trading deficits from loan relationships

(1) This section has effect for determining the taxable total profits of a banking company for an accounting period.

(2) Any deduction made by the company for the accounting period in respect of a pre-2015 carried-forward non-trading deficit may not exceed 50% of the company's relevant non-trading profits for the accounting period.

Section 269CD contains provision for calculating a company's relevant non-trading profits for an accounting period (see step 6 in subsection (1) of that section).

(3) But subsection (2) does not apply where the amount given by step 1 in section 269CD(1) is not greater than nil.

(4) In this Chapter “pre-2015 carried-forward non-trading deficit”, in relation to a company and an accounting period (“the current accounting period”), means a non-trading deficit—

(a) which the company had from its loan relationships under section 301(6) of CTA 2009 for an accounting period ending before 1 April 2015, and

(b) which is carried forward under section 457 of that Act (carry forward of deficits to accounting periods after deficit period) to be set off against non-trading profits of the current accounting period.

(5) In subsection (4) “non-trading profits” has the same meaning as in section 457 of CTA 2009.

(6) See also sections 269CE to 269CH (losses to which restrictions do not apply).

269CC Restriction on deductions for management expenses etc

(1) This section has effect for determining the taxable total profits of a banking company for an accounting period.

(2) Any deduction made by the company for the accounting period in respect of pre-2015 carried-forward management expenses may not exceed the relevant maximum (see subsection (7)).

(3) But subsection (2) does not apply where the amount given by step 1 in section 269CD(1) is not greater than nil.

(4) In this Chapter “pre-2015 carried-forward management expenses”, in relation to a company and an accounting period (“the current accounting period”), means amounts falling within subsection (5) or (6).

See also sections 269CE to 269CH (losses to which restrictions do not apply).

(5) The amounts within this subsection are amounts—

(a) which fall within subsection (2) of section 1223 of CTA 2009 (carrying forward expenses of management and other amounts),

(b) which—

(i) for the purposes of Chapter 2 of Part 16 of CTA 2009 are referable to an accounting period ending before 1 April 2015, or

(ii) in the case of qualifying charitable donations, were made in such an accounting period, and

(c) which are treated by section 1223(3) of CTA 2009 as expenses of management deductible for the current accounting period.

(6) The amounts within this subsection are amounts of loss which—

(a) were made in an accounting period ending before 1 April 2015, and

(b) are treated by section 63(3) (carrying forward certain losses made by company with investment business which ceases to carry on UK property business) as expenses of management deductible for the current accounting period for the purposes of Chapter 2 of Part 16 of CTA 2009.

(7) The relevant maximum is determined as follows—

• Step 1 Calculate 50% of the company's relevant profits for the accounting period. Section 269CD contains provision for calculating a company's relevant profits for an accounting period.

• Step 2 Calculate the sum of any deductions made by the company for the accounting period which are—

  (a)

  deductions in respect of a pre-2015 carried-forward trading loss, or

  (b)

  deductions in respect of a pre-2015 carried-forward non-trading deficit.

• Step 3 The relevant maximum is the difference between the amount given by step 1 and the amount given by step 2. If the amount given by step 1 does not exceed the amount given by step 2, the relevant maximum is nil.

269CD Relevant profits

(1) To determine a company's relevant profits for an accounting period—

• Step 1 Calculate the company's total profits for the accounting period, ignoring any pre-2015 carried-forward trading losses or pre-2015 carried-forward non-trading deficits. (If the amount given by this step is not greater than nil, no further steps are to be taken: see sections 269CA(3), 269CB(3) and 269CC(3).)

• Step 2 Divide the amount given by step 1 into profits that are profits of a trade of the company (the company's “trade profits”) and profits that are not profits of a trade of the company (the company's “non-trading profits”).

• Step 3 Calculate the proportion (“the trading proportion”) of the amount given by step 1 that consists of the company's trade profits and the proportion (“the non-trading proportion”) of that amount that consists of its non-trading profits.

• Step 4 Calculate the sum of any amounts which can be relieved against the company's total profits for the accounting period (as calculated in accordance with step 1), ignoring the amount of any excluded deductions for the accounting period (see subsection (2)).

• Step 5 Deduct the trading proportion of the amount given by step 4 from the company's trade profits for the accounting period. The amount given by this step is the company's relevant trading profits for the accounting period. If the amount given by this step is not greater than nil, the company's relevant trading profits for the accounting period are nil.

• Step 6 Deduct the non-trading proportion of the amount given by step 4 from the company's non-trading profits for the accounting period. The amount given by this step is the company's relevant non-trading profits for the accounting period. If the amount given by this step is not greater than nil, the company's relevant non-trading profits for the accounting period are nil.

• Step 7 The company's relevant profits for the accounting period are the sum of its relevant trading profits for the accounting period and its relevant non-trading profits for the accounting period.

(2) The following are “excluded deductions” in relation to an accounting period (“the current accounting period”)—

(a) a deduction made in respect of pre-2015 carried-forward management expenses;

(b) a deduction for relief under section 37 (relief for trade losses against total profits) in relation to a loss made in an accounting period after the current accounting period;

(c) a deduction for relief under section 260(3) of CAA 2001 (special leasing of plant or machinery: carry-back of excess allowances) in relation to capital allowances for an accounting period after the current accounting period;

(d) a deduction for relief under section 459 of CTA 2009 (non-trading deficits from loan relationships) in relation to a deficit for a deficit period after the current accounting period.

Losses to which restrictions do not apply U.K.

269CE Losses arising before company began banking activity

(1) In this section “the first banking accounting period”, in relation to a company, means the accounting period in which the company first begins to carry on a relevant regulated activity.

(2) References in this Chapter to a pre-2015 carried-forward trading loss do not include a loss which was made in a trade of a company in an accounting period ending before the first banking accounting period.

(3) References in this Chapter to a pre-2015 carried-forward non-trading deficit do not include a non-trading deficit which a company had from its loan relationships under section 301(6) of CTA 2009 for an accounting period ending before the first banking accounting period.

(4) References in this Chapter to pre-2015 carried-forward management expenses, in relation to a company, do not include—

(a) any amounts falling within section 269CC(5) which—

(i) for the purposes of Chapter 2 of Part 16 of CTA 2009 are referable to an accounting period ending before the first banking accounting period, or

(ii) in the case of qualifying charitable donations, were made in an accounting period ending before the first banking accounting period, or

(b) any amounts of loss falling within section 269CC(6) which were made in an accounting period ending before the first banking accounting period.

(5) Section 269CL contains provision for determining when a company first begins to carry on a relevant regulated activity.

269CF Losses arising in company's start-up period

(1) References in this Chapter to a pre-2015 carried-forward trading loss do not include a loss which was made in a trade of a company in an accounting period ending in the company's start-up period.

(2) References in this Chapter to a pre-2015 carried-forward non-trading deficit do not include a non-trading deficit which a company had from its loan relationships under section 301(6) of CTA 2009 for an accounting period ending in the company's start-up period.

(3) References in this Chapter to pre-2015 carried-forward management expenses, in relation to a company, do not include—

(a) any amounts falling within section 269CC(5) which—

(i) for the purposes of Chapter 2 of Part 16 of CTA 2009 are referable to an accounting period ending in the company's start-up period, or

(ii) in the case of qualifying charitable donations, were made in such an accounting period, or

(b) any amounts of loss falling within section 269CC(6) which were made in an accounting period ending in the company's start-up period.

(4) For the purposes of this Chapter any amounts which, by virtue of subsections (1) to (3), are not relevant carried-forward losses of a company are to be regarded as having been taken into account in determining the taxable total profits of the company for accounting periods ending before 1 April 2015 before any amounts which are relevant carried-forward losses of the company.

(5) Subsection (6) applies where a company has an accounting period (“the straddling period”) beginning before, and ending after, the last day of its start-up period.

(6) For the purposes of this section—

(a) so much of the straddling period as falls within the start-up period, and so much of the straddling period as falls outside the start-up period, are treated as separate accounting periods, and

(b) any relevant carried-forward losses of the company for the straddling period are apportioned to the two separate accounting periods—

(i) in accordance with section 1172 (time basis), or

(ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.

(7) In subsection (6)(b) the reference to any relevant carried-forward losses of the company “for” the straddling period is a reference to—

(a) any pre-2015 carried-forward trading loss which was made in a trade of the company in the straddling period,

(b) any pre-2015 carried-forward non-trading deficit which the company had from its loan relationships for the straddling period, and

(c) any pre-2015 carried-forward management expenses which are referable to, or were made in, the straddling period (as the case may be).

(8) For provision about determining a company's start-up period, see section 269CG.

269CG The “start-up period”

(1) In this Chapter the “start-up period”, in relation to a company (“company C”), means the period of 5 years beginning with the day on which company C first begins to carry on a relevant regulated activity (“the start-up day”).

This is subject to the following provisions of this section.

(2) If on the start-up day—

(a) company C is a member of a group,

(b) there are one or more other members of the group that have carried on a relevant regulated activity while a member of the group, and

(c) none of those members first began to carry on such an activity more than 5 years before the start-up day,

company C's start-up period is the period beginning with the start-up day and ending with the relevant group period.

(3) The “relevant group period”, in relation to a group, means the period of 5 years beginning with the earliest day on which any member of the group first began to carry on a relevant regulated activity.

(4) If on the start-up day—

(a) company C is a member of a group,

(b) there are one or more other members of the group that have carried on a relevant regulated activity while a member of the group, and

(c) any of those members first began to carry on such an activity more than 5 years before the start-up day,

company C does not have a start-up period.

(5) This subsection applies if—

(a) on a day falling within company C's start-up period (“the relevant day”), company C becomes a member of a group,

(b) one or more of the members of the group which on the relevant day carry on a relevant regulated activity first began to do so before the beginning of company C's start-up period, and

(c) the relevant regulated activities carried on by company C do not form a significant proportion of the relevant regulated activities carried on immediately after the relevant day by the members of the group as a whole.

(6) Where subsection (5) applies, company C's start-up period—

(a) in the case where any of the members of the group first began to carry on a relevant regulated activity more than 5 years before the relevant day, ends immediately before the relevant day;

(b) in any other case, ends with the relevant group period.

(7) This subsection applies if—

(a) on a day falling within company C's start-up period (“the relevant day”), another company that carries on a relevant regulated activity (“the new member”) becomes a member of a group of which company C is a member,

(b) the new member first began to carry on a relevant regulated activity before the beginning of company C's start-up period, and

(c) the relevant regulated activities carried on by the new member form a significant proportion of the relevant regulated activities carried on immediately after the relevant day by the members of the group as a whole.

(8) Where subsection (7) applies, company C's start-up period—

(a) in the case where the new member first began to carry on a relevant regulated activity more than 5 years before the relevant day, ends immediately before the relevant day;

(b) in any other case, ends with the relevant group period.

(9) Any reference in this section to being, or becoming, a member of a group includes a reference to being, or becoming, a member of a partnership; and references to the “relevant group period” are to be read accordingly.

(10) Section 269CL contains provision for determining when a company first begins to carry on a relevant regulated activity.

269CH Losses covered by carried-forward loss allowance

(1) This section applies to a banking company if—

(a) it is a building society, or

(b) an amount of carried-forward loss allowance is allocated to the company by a building society in accordance with section 269CI or 269CJ.

(2) If a banking company to which this section applies has an amount of carried-forward loss allowance (see subsection (5)), the company may designate as unrestricted losses any losses which, in relation to any accounting period, would (in the absence of this section) be relevant carried-forward losses.

(3) A loss designated under this section as an unrestricted loss is to be treated for the purposes of this Chapter as if it were not a relevant carried-forward loss.

(4) The amount of losses which a company may designate at any time must not exceed the amount of carried-forward loss allowance which the company has at that time.

(5) The amount of carried-forward loss allowance which a company has at any time is the difference between the company's maximum available carried-forward loss allowance and the total amount of losses designated by the company under this section before that time.

(6) The “maximum available carried-forward loss allowance” is—

(a) in the case of a building society which has not made an allocation under section 269CI, £25,000,000;

(b) in the case of a building society which has made an allocation under section 269CI, the amount given by—

where—

A is £25,000,000,

B is the sum of—

(a)

any amounts which it has allocated to another company under section 269CI, and

(b)

any amounts allocated to another company under section 269CJ which immediately before the allocation were amounts of carried-forward loss allowance which the building society had, and

C is the sum of any amounts allocated to the building society under section 269CJ;

(c) in the case of any other company, the total amount of carried-forward loss allowance allocated to the company under section 269CI or 269CJ.

(7) References in this Chapter to an amount of carried-forward loss allowance allocated to a company are references to an amount allocated to the company under section 269CI or 269CJ.

(8) For the meaning of “relevant carried-forward loss”, see section 269CN.

(9) For information about the procedure for making a designation under this section, see Schedule 18 to FA 1998, in particular Part 9E of that Schedule.

269CI Allocation of carried-forward loss allowance within a group

(1) This section applies where a building society—

(a) is a member of a group, and

(b) has an amount of carried-forward loss allowance (see section 269CH(5)).

(2) The building society may allocate some or all of that amount of carried-forward loss allowance to any other member of the group which is a banking company.

(3) Where a building society makes an allocation under subsection (2), it must give HMRC a statement (a “statement of allocation”) which specifies—

(a) the amount of carried-forward loss allowance which the building society had immediately before it made the allocation,

(b) the companies (“the relevant companies”) to which an amount of carried-forward loss allowance has been allocated,

(c) the amount of carried-forward loss allowance allocated to each of the relevant companies, and

(d) the total amount of carried-forward loss allowance allocated by the building society.

(4) The statement of allocation must be given to HMRC on or before—

(a) the first day after the allocation on which the building society, or any of the relevant companies, delivers a company tax return which includes a designation made under section 269CH, or

(b) if earlier, the first day after the allocation on which a company tax return of the building society, or any of the relevant companies, is amended so as to include such a designation.

This is subject to subsection (5).

(5) An officer of Revenue and Customs may provide that the statement of allocation may be given to HMRC on or before a later day specified by the officer.

(6) An allocation made under subsection (2) is not effective unless the requirements of this section have been complied with.

(7) A statement of allocation that has been given to HMRC under this section may not be amended or withdrawn.

This is subject to section 269CJ.

269CJ Re-allocation of carried-forward loss allowance

(1) This section applies where—

(a) a building society is a member of a group,

(b) the building society has given HMRC a statement of allocation in accordance with section 269CI,

(c) the building society, or any other member of the group that is a banking company, (the “designating company”) would, if it had an amount (or an additional amount) of carried-forward loss allowance, be able to designate an amount of losses under section 269CH equal to that amount, and

(d) that amount is greater than the amount of carried-forward loss allowance which the building society could allocate under section 269CI.

(2) In this section the “available carried-forward loss allowance” means the total of any amounts of carried-forward loss allowance which any member of the group, other than the designating company, has (see section 269CH(5)).

(3) The building society may—

(a) allocate some or all of the available carried-forward loss allowance to the designating company, and

(b) provide that, to the extent that any of the amount allocated to the designating company under this subsection is an amount of carried-forward loss allowance which, immediately before the allocation, was an amount allocated to another company, that amount is no longer allocated to that other company.

(4) Where a building society makes an allocation under subsection (3), it must give HMRC a statement (a “revised statement of allocation”) which specifies—

(a) the amount of the available carried-forward loss allowance immediately before the allocation,

(b) the companies which had an amount of carried-forward loss allowance immediately before the allocation, and the amount of carried-forward loss allowance which each of those companies had at that time, and

(c) the companies which have an amount of carried-forward loss allowance immediately after the allocation (“the relevant companies”), and the amount of carried-forward loss allowance which each of those companies has.

(5) The revised statement of allocation must be given to HMRC on or before—

(a) the first day after the allocation on which any of the relevant companies delivers a company tax return which includes a designation made under section 269CH, or

(b) if earlier, the first day after the allocation on which a company tax return of any of the relevant companies is amended so as to include such a designation.

This is subject to subsection (6).

(6) An officer of Revenue and Customs may provide that the revised statement of allocation may be given to HMRC on or before a later day specified by the officer.

(7) An allocation made under subsection (3) is not effective unless the requirements of this section have been complied with.

(8) Except as provided for by this section, a revised statement of allocation that has been given to HMRC under this section may not be amended or withdrawn.

Anti-avoidance U.K.

269CK Profits arising from tax arrangements to be disregarded

(1) This section applies if conditions A to C are met.

(2) Condition A is that—

(a) the amount given by step 1 in section 269CD(1) as the total profits of a banking company for an accounting period includes profits which arise to the banking company as a result of any arrangements (“the tax arrangements”), and

(b) in the absence of those profits (“the additional profits”) any deduction which the banking company would be entitled to make for the accounting period in respect of any relevant carried-forward losses would be reduced.

(3) Condition B is that the main purpose, or one of the main purposes, of the tax arrangements is to secure a relevant corporation tax advantage—

(a) for the banking company, or

(b) if there are any companies connected with that company, for the banking company and those connected companies (taken together).

(4) In this section “relevant corporation tax advantage” means a corporation tax advantage involving—

(a) the additional profits, and

(b) the deduction of any relevant carried-forward losses from those profits.

(5) Condition C is that, at the time when the tax arrangements were entered into, it would have been reasonable to assume that the tax value of the tax arrangements would be greater than the non-tax value of the tax arrangements.

(6) The “tax value” of the tax arrangements is the total value of—

(a) the relevant corporation tax advantage, and

(b) any other economic benefits derived by—

(i) the banking company, or

(ii) if there are any companies connected with that company, the banking company and those connected companies (taken together),

as a result of securing the relevant corporation tax advantage.

(7) The “non-tax value” of the tax arrangements is the total value of any economic benefits, other than those falling within subsection (6)(a) or (b), derived by—

(a) the banking company, or

(b) if there are any companies connected with that company, the banking company and those connected companies (taken together),

as a result of the tax arrangements.

(8) If this section applies, the additional profits are not to be taken into account in calculating the banking company's relevant profits for the accounting period (see section 269CD).

(9) In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

• “corporation tax advantage” means—

  (a)

  a relief from corporation tax or increased relief from corporation tax,

  (b)

  a repayment of corporation tax or increased repayment of corporation tax,

  (c)

  the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax,

  (d)

  the avoidance of a possible assessment to corporation tax, or

  (e)

  the deferral of a payment of corporation tax or advancement of a repayment of corporation tax.

Supplementary U.K.

269CL When a company first begins to carry on relevant regulated activities

(1) For the purposes of this Chapter, a company first begins to carry on a relevant regulated activity on a particular day if the company—

(a) begins to carry on a relevant regulated activity on that day, and

(b) has not carried on any relevant regulated activity before that day.

This is subject to subsection (2).

(2) Where—

(a) there is a transfer of a trade, and

(b) immediately before the transfer the predecessor carried on a relevant regulated activity,

the successor is to be treated as having first begun to carry on a relevant regulated activity on the day on which the predecessor first began to carry on such an activity.

(3) Section 940B (meaning of “transfer of a trade” etc) applies for the purposes of this section as it applies for the purposes of Chapter 1 of Part 22.

269CM Joint venture companies

(1) Where a company (“the joint venturer”), together with one or more other persons, jointly controls another company that is a joint venture (“the joint venture company”), the joint venture company is to be treated for the purposes of this Chapter as a member of any group of which the joint venturer is a member.

(2) References in subsection (1) to a joint venture and to jointly controlling a company that is a joint venture are to be read in accordance with those provisions of international accounting standards which relate to joint ventures.

269CN Other definitions

In this Chapter—

• “banking company” has the meaning given by section 269B;

• “building society” has the same meaning as in the Building Societies Act 1986;

• “company tax return” has the same meaning as in Schedule 18 to FA 1998;

• “group” has the meaning given by section 269BD;

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

• “partnership” includes—

  (a)

  a limited liability partnership, and

  (b)

  an entity established under the law of a territory outside the United Kingdom of a similar character to a partnership,

  and “member”, in relation to a partnership, is to be read accordingly;

• “pre-2015 carried-forward management expenses” has the meaning given by section 269CC(4);

• “pre-2015 carried-forward non-trading deficit” has the meaning given by section 269CB(4);

• “pre-2015 carried-forward trading loss” has the meaning given by section 269CA(4);

• “relevant carried-forward loss” means—

  (a)

  a pre-2015 carried-forward trading loss,

  (b)

  a pre-2015 carried-forward non-trading deficit, or

  (c)

  any pre-2015 carried-forward management expenses;

• “relevant non-trading profits”, in relation to a company, means the amount given by step 6 in section 269CD(1);

• “relevant profits”, in relation to a company, means the amount given by step 7 in section 269CD(1);

• “relevant regulated activity” has the meaning given by section 269BB;

• “relevant trading profits”, in relation to a company, means the amount given by step 5 in section 269CD(1);

• “start-up period”, in relation to a company, has the meaning given by section 269CG.”

PART 2 U.K. Consequential amendments

FA 1998 U.K.

2 U.K. In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), after Part 9D insert—

“PART 9E U.K. Designation of losses as unrestricted losses for the purposes of Chapter 3 of Part 7A of the Corporation Tax Act 2010

Introduction

83Y (1) This Part of this Schedule applies to the designation of losses within sub-paragraph (2) as unrestricted losses by a banking company under section 269CH of the Corporation Tax Act 2010 (losses covered by carried-forward loss allowance).

(2) The losses mentioned in sub-paragraph (1) are losses which, in relation to any accounting period, would (in the absence of that section) be relevant carried-forward losses.

(3) Expressions used in this Part of this Schedule and in Chapter 3 of Part 7A of the Corporation Tax Act 2010 have the same meaning in this Part of this Schedule as they have in that Chapter.

Designation to be made in company tax return

83YA (1) A designation to which this Part of this Schedule applies must be made by being included in the company's tax return for the accounting period for which the company makes a deduction in respect of the losses.

(2) It may be included in the return originally made or by amendment.

Identification of losses

83YB Where a company designates any relevant carried-forward loss in a company tax return, the return must specify—

(a) the amount of the loss, and

(b) whether the loss is—

(i) a pre-2015 carried-forward trading loss,

(ii) a pre-2015 carried-forward non-trading deficit, or

(iii) pre-2015 carried-forward management expenses.

Amendment or withdrawal of designation

83YC A designation to which this Part of this Schedule applies may be amended or withdrawn by the company only by amending its company tax return.”

CTA 2009 U.K.

3 U.K. In section 1223 of CTA 2009 (carrying forward expenses of management and other amounts), in subsection (1)—

(a) the words after “because” become paragraph (a), and

(b) after that paragraph insert “, or

(b) in the case of amounts falling within subsection (2)(c), section 269CC of CTA 2010 (restriction on deductions for management expenses) has effect for the accounting period.”

CTA 2010 U.K.

4 U.K. In section 1 of CTA 2010 (overview of Act), in subsection (3)—

(a) for “Parts 8” substitute “ Parts 7A ”, and

(b) before paragraph (a) insert—

“(za) banking companies (see Part 7A),”.

5 U.K. In Schedule 4 to CTA 2010 (index of defined expressions), at the appropriate place insert—

“banking company (in Part 7A)

section 269B”;

“building society (in Chapter 3 of Part 7A)

section 269CN”;

“company tax return (in Chapter 3 of Part 7A)

section 269CN”;

“group (in Part 7A)

section 269BD”;

“HMRC (in Chapter 3 of Part 7A)

section 269CN”;

“partnership (in Chapter 3 of Part 7A)

section 269CN”;

“pre-2015 carried-forward management expenses (in Chapter 3 of Part 7A)

section 269CC(4)”;

“pre-2015 carried-forward non-trading deficit (in Chapter 3 of Part 7A)

section 269CB(4)”;

“pre-2015 carried-forward trading loss (in Chapter 3 of Part 7A)

section 269CA(4)”;

“relevant carried-forward loss (in Chapter 3 of Part 7A)

section 269CN”;

“relevant non-trading profits (in Chapter 3 of Part 7A)

section 269CN”;

“relevant profits (in Chapter 3 of Part 7A)

section 269CN”;

“relevant regulated activity (in Part 7A)

section 269BB”;

“relevant trading profits (in Chapter 3 of Part 7A)

section 269CN”;

“start-up period (in Chapter 3 of Part 7A)

section 269CG”.

TIOPA 2010 U.K.

F1 6 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Sch. 2 para. 6 omitted (with effect in accordance with s. 36(3)-(5) of the commencing Act) by virtue of Finance (No. 2) Act 2015 (c. 33), s. 36(2)(c)

PART 3 U.K. Commencement and anti-forestalling provision

Commencement U.K.

7 (1) The amendments made by paragraphs 1 to 5 of this Schedule have effect for the purposes of calculating the taxable total profits of companies for accounting periods beginning on or after 1 April 2015. U.K.

(2) But section 269CK of CTA 2010 (inserted by this Schedule) does not have effect in relation to any arrangements made before 3 December 2014.

(3) Sub-paragraph (4) applies where a company has an accounting period beginning before 1 April 2015 and ending on or after that date (“the straddling period”).

(4) For the purposes of Chapter 3 of Part 7A of CTA 2010—

(a) so much of the straddling period as falls before 1 April 2015, and so much of that period as falls on or after that date, are treated as separate accounting periods, and

(b) the profits or losses of the company for the straddling period are apportioned to the two separate accounting periods—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.

F2 8 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 Sch. 2 para. 8 omitted (with effect in accordance with s. 36(3)-(5) of the commencing Act) by virtue of Finance (No. 2) Act 2015 (c. 33), s. 36(2)(c)

Anti-forestalling provision U.K.

9 (1) This sub-paragraph applies if— U.K.

(a) for the purposes of corporation tax a banking company has profits (“pre-commencement profits”) for an accounting period ending before 1 April 2015,

(b) in the absence of this paragraph the banking company would, for corporation tax purposes, be entitled to deduct from the pre-commencement profits for the accounting period an amount in respect of any relevant carried-forward losses,

(c) the pre-commencement profits arise as a result of any arrangements entered into on or after 3 December 2014, and

(d) the main purpose, or one of the main purposes, of the arrangements is to secure a corporation tax advantage as a result of the fact that Chapter 3 of Part 7A of CTA 2010 (inserted by this Schedule) is not to have effect for the accounting period for which the deduction would be made.

(2) If sub-paragraph (1) applies, the banking company is not entitled to deduct from the pre-commencement profits any amount in respect of the relevant carried-forward losses.

(3) Sub-paragraph (1) does not apply in relation to a banking company which falls within section 269B(5)(b) of CTA 2010 (inserted by this Schedule).

(4) In this paragraph—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

• “corporation tax advantage” means—

  (a)

  a relief from corporation tax or increased relief from corporation tax,

  (b)

  a repayment of corporation tax or increased repayment of corporation tax,

  (c)

  the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax,

  (d)

  the avoidance of a possible assessment to corporation tax, or

  (e)

  the deferral of a payment of corporation tax or advancement of a repayment of corporation tax.

(5) Terms used in this paragraph and in Chapter 3 of Part 7A of CTA 2010 have the same meaning in this paragraph as in that Chapter; and, so far as necessary for the purposes of this sub-paragraph, that Part is to be treated as having come into force on the same day as this paragraph.

(6) This paragraph is treated as having come into force on 3 December 2014.

(7) Sub-paragraph (8) applies where a company has an accounting period beginning before 1 April 2015 and ending on or after that date (“the straddling period”).

(8) For the purposes of this paragraph—

(a) so much of the straddling period as falls before 1 April 2015, and so much of that period as falls on or after that date, are treated as separate accounting periods, and

(b) the profits or losses of the company for the straddling period are apportioned to the two separate accounting periods—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.

Section 33

SCHEDULE 3 U.K. Tax avoidance involving carried-forward losses

PART 1 U.K. Amendments of CTA 2010

1 U.K. In CTA 2010, after Part 14A insert—

“PART 14B U.K. Tax avoidance involving carried-forward losses

730E Overview

(1) This Part makes provision restricting the circumstances in which a company may make a deduction in respect of a relevant carried-forward loss.

(2) For the meaning of “relevant carried-forward loss”, see section 730F.

730F Meaning of “relevant carried-forward loss”

(1) In this Part “relevant carried-forward loss” means any of the following—

(a) a carried-forward trading loss (see subsection (2)),

(b) a carried-forward non-trading deficit (see subsection (3)),

(c) any carried-forward management expenses (see subsection (4)).

(2) “Carried-forward trading loss”, in relation to a company and an accounting period, means a loss in a trade of the company which is carried forward from a previous accounting period under section 45 (carry forward of trade loss against subsequent trade profits).

(3) “Carried-forward non-trading deficit”, in relation to a company and an accounting period, means a non-trading deficit which the company has from its loan relationships under section 301(6) of CTA 2009 and which is carried forward from a previous accounting period under section 457 of that Act (carry forward of deficits to accounting periods after deficit period).

(4) “Carried-forward management expenses”, in relation to a company and an accounting period, means—

(a) any amounts which—

(i) fall within subsection (2) of section 1223 of CTA 2009 (carrying forward expenses of management and other amounts), and

(ii) are treated by subsection (3) of that section as expenses of management deductible for the period, and

(b) any amounts which are treated by section 63(3) (carrying forward certain losses made by company with investment business which ceases to carry on UK property business) as expenses of management deductible for the period for the purposes of Chapter 2 of Part 16 of CTA 2009.

730G Disallowance of deductions for relevant carried-forward losses

(1) This section applies if conditions A to E are met.

(2) Condition A is that—

(a) for the purposes of corporation tax a company has profits (“relevant profits”) for an accounting period,

(b) the relevant profits arise to the company as a result of any arrangements (“the tax arrangements”), and

(c) in the absence of this section the company (“the relevant company”) would, for corporation tax purposes, be entitled to deduct from the relevant profits for the period an amount in respect of any relevant carried-forward losses.

(3) Condition B is that—

(a) the relevant company, or a company connected with that company, brings a deductible amount into account as a deduction for an accounting period, and

(b) it is reasonable to assume that neither the company, nor any company connected with it, would have brought that amount into account as a deduction for that period but for the tax arrangements.

(4) Condition C is that the main purpose, or one of the main purposes, of the tax arrangements is to secure a relevant corporation tax advantage—

(a) for the relevant company, or

(b) if there are any companies connected with that company, for the relevant company and those connected companies (taken together).

(5) In this section “relevant corporation tax advantage” means a corporation tax advantage involving—

(a) the deductible amount mentioned in subsection (3), and

(b) the deduction of any relevant carried-forward losses from the relevant profits.

(6) Condition D is that, at the time when the tax arrangements were entered into, it would have been reasonable to assume that the tax value of the tax arrangements would be greater than the non-tax value of the tax arrangements.

(7) The “tax value” of the tax arrangements is the total value of—

(a) the relevant corporation tax advantage, and

(b) any other economic benefits derived by—

(i) the relevant company, or

(ii) if there are any companies connected with that company, the relevant company and those connected companies (taken together),

as a result of securing the relevant corporation tax advantage.

(8) The “non-tax value” of the tax arrangements is the total value of any economic benefits, other than those falling within subsection (7)(a) or (b), derived by—

(a) the relevant company, or

(b) if there are any companies connected with that company, the relevant company and those connected companies (taken together),

as a result of the tax arrangements.

(9) Condition E is that the tax arrangements are not arrangements in relation to which section 269CK (banking companies: profits arising from tax arrangements to be disregarded) applies.

(10) If this section applies, the relevant company is not entitled to deduct from the relevant profits any amount in respect of the relevant carried-forward losses.

730H Interpretation of section 730G

(1) In section 730G—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

• “corporation tax advantage” means—

  (a)

  a relief from corporation tax or increased relief from corporation tax,

  (b)

  a repayment of corporation tax or increased repayment of corporation tax,

  (c)

  the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax,

  (d)

  the avoidance of a possible assessment to corporation tax, or

  (e)

  the deferral of a payment of corporation tax or advancement of a repayment of corporation tax;

• “deductible amount” means—

  (a)

  an expense of a trade, 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),

  (b)

  an expense of a UK property business or an overseas property business,

  (c)

  an expense of management of a company's investment business within the meaning of section 1219 of CTA 2009,

  (d)

  a non-trading debit within the meaning of Parts 5 and 6 of CTA 2009 (loan relationships and derivative contracts) (see section 301(2) of that Act), or

  (e)

  a non-trading debit within the meaning of Part 8 of CTA 2009 (intangible fixed assets) (see section 746 of that Act),

  but does not include any amount that has been taken into account in determining RTWDV within the meaning of Chapter 16A of Part 2 of CAA 2001 (restrictions on allowance buying) (see section 212K of that Act);

• “relevant carried-forward loss” has the meaning given by section 730F.

(2) References in section 730G to bringing an amount into account “as a deduction” in any period are to bringing it into account as a deduction in that period—

(a) in calculating profits, losses or other amounts for corporation tax purposes, or

(b) from profits or other amounts chargeable to corporation tax.”

2 U.K. In section 1 of CTA 2010 (overview of Act), in subsection (4), after paragraph (aa) insert—

“(ab) carried-forward losses (see Part 14B),”.

3 U.K. In Schedule 4 to CTA 2010 (index of defined expressions), at the appropriate place insert—

“relevant carried-forward loss (in Part 14B)

section 730F”.

PART 2 U.K. Commencement

4 (1) The amendments made by this Schedule have effect for the purposes of calculating the taxable total profits of companies for accounting periods beginning on or after 18 March 2015. U.K.

(2) Sub-paragraph (3) applies where a company has an accounting period beginning before 18 March 2015 and ending on or after that date (“the straddling period”).

(3) For the purposes of Part 14B of CTA 2010—

(a) so much of the straddling period as falls before 18 March 2015, 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 the taxable total profits of the company for the straddling period are apportioned to the two separate accounting periods—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.

Section 34

SCHEDULE 4 U.K. Pension flexibility: annuities etc

PART 1 U.K. Death benefits for nominees, successors and dependants

Introductory U.K.

1 U.K. Part 4 of FA 2004 is amended as follows.

Nominees' annuities and successors' annuities to be authorised payments U.K.

2 (1) Section 167(1) (the pension death benefit rules) is amended as follows. U.K.

(2) In pension death benefit rule 3A (payments that may, by way of exception, be made to a nominee) after “other than” insert “a nominees' annuity in respect of a money purchase arrangement or”.

(3) In pension death benefit rule 3B (payments that may, by way of exception, be made to a successor) after “other than” insert “a successors' annuity in respect of a money purchase arrangement or”.

Nominees' annuities and successors' annuities: definitions U.K.

3 (1) Part 2 of Schedule 28 (interpretation of the pension death benefit rules) is amended as follows. U.K.

(2) After paragraph 27A insert—

“Nominees' annuity U.K.

27AA (1) For the purposes of this Part an annuity payable to a nominee is a nominees' annuity if—

(a) either—

(i) it is purchased together with a lifetime annuity payable to the member and the member becomes entitled to that lifetime annuity on or after 6 April 2015, or

(ii) it is purchased after the member's death, the member dies on or after 3 December 2014 and the nominee becomes entitled to the annuity on or after 6 April 2015,

(b) it is payable by an insurance company, and

(c) it is payable until the nominee's death or until the earliest of the nominee's marrying, entering into a civil partnership or dying.

(2) For the purposes of sub-paragraph (1)(a) a nominees' annuity is purchased together with a lifetime annuity if the nominees' annuity is related to the lifetime annuity.

(3) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a nominees' annuity payable to a person (“the original nominees' annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied—

(i) towards the provision of another nominees' annuity (a “new nominees' annuity”) by the other insurance company, or

(ii) otherwise, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(4) The regulations may provide that—

(a) in a case where a new nominees' annuity becomes payable, the new nominees' annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original nominees' annuity, and

(b) in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.

(5) For the purposes of sub-paragraphs (3) and (4) a registered pension scheme is the relevant registered pension scheme if the original nominees' annuity was acquired using sums or assets held for the purposes of the pension scheme.”

(3) After paragraph 27F insert—

“Successors' annuity U.K.

27FA (1) For the purposes of this Part an annuity payable to a successor is a successors' annuity if—

(a) the successor becomes entitled to it on or after 6 April 2015,

(b) it is payable by an insurance company,

(c) it is payable until the successor's death or until the earliest of the successor's marrying, entering into a civil partnership or dying,

(d) it is purchased after the death of a dependant, nominee or successor of the member (“the beneficiary”),

(e) it is purchased using undrawn funds, and

(f) the beneficiary dies on or after 3 December 2014.

(2) For the purposes of sub-paragraph (1)(e), sums or assets held for the purposes of an arrangement after the beneficiary's death are undrawn funds if—

(a) immediately before the beneficiary's death, they were held for the purposes of the arrangement and, as the case may be, represented (alone or with other sums or assets) the beneficiary's—

(i) dependant's flexi-access drawdown fund,

(ii) dependant's drawdown pension fund,

(iii) nominee's flexi-access drawdown fund, or

(iv) successor's flexi-access drawdown fund,

in respect of the arrangement, or

(b) they arise, or (directly or indirectly) derive, from undrawn funds under paragraph (a) or from sums or assets which so arise or derive.

(3) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a successors' annuity payable to a person (“the original successors' annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied—

(i) towards the provision of another successors' annuity (a “new successors' annuity”) by the other insurance company, or

(ii) otherwise, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(4) The regulations may provide that—

(a) in a case where a new successors' annuity becomes payable, the new successors' annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original successors' annuity, and

(b) in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.

(5) For the purposes of sub-paragraphs (3) and (4) a registered pension scheme is the relevant registered pension scheme if the original successors' annuity was acquired using sums or assets held for the purposes of the pension scheme.”

(4) Regulations made before 25 December 2015 under the paragraph 27AA or 27FA inserted by this paragraph may, for cases where the transfer concerned takes place on or after 6 April 2015, include provision having effect in relation to times before the regulations are made.

Dependants' and nominees' annuities: testing against deceased member's lifetime allowance U.K.

4 (1) In section 216(1) (benefit crystallisation events and amounts crystallised) the table is amended as follows. U.K.

(2) In the second column of the entry relating to benefit crystallisation event 4, after “any related dependants' annuity” insert “and any related nominees' annuity”.

(3) After the entry relating to benefit crystallisation event 5C insert—

“5D. A person becoming entitled, on or after 6 April 2015 but before the end of the relevant two-year period, to a dependants' annuity or nominees' annuity in respect of the individual if— (a) the annuity is purchased using (whether or not exclusively) relevant unused uncrystallised funds, and (b) the individual died on or after 3 December 2014

The aggregate of— (a) the amount of such of the sums, and (b) the market value of such of the assets, applied to purchase the annuity as are relevant unused uncrystallised funds”

5 (1) Section 217 (persons liable to lifetime allowance charge) is amended as follows. U.K.

(2) In subsection (2A) (cases where dependant or nominee liable) after “event 5C,” insert “ or by reason of a person becoming entitled to an annuity as mentioned in the description of benefit crystallisation event 5D, ”.

(3) In subsection (4A) (events 5C and 7 are “relevant post-death” events) after “benefit crystallisation event 5C” insert “ , 5D ”.

6 U.K. In section 219(7A) (events 5C and 7 are “relevant post-death” events) after “benefit crystallisation event 5C” insert “ , 5D ”.

7 U.K. In Schedule 32 (supplementary provisions about benefit crystallisation events)—

(a) in paragraph 1 (meaning of “the relevant pension schemes”: in certain cases means schemes of which the individual was a member immediately before death) after “5C” insert “ or 5D ”,

(b) in paragraph 4(1) (further provision about benefit crystallisation event 4) for the words from “if” to “purchased” substitute “if—

(a) the lifetime annuity or a related dependants' annuity or a related nominees' annuity is, or

(b) the lifetime annuity and a related dependants' annuity are, or

(c) the lifetime annuity and a related nominees' annuity are, or

(d) a related dependants' annuity and a related nominees' annuity are, or

(e) the lifetime annuity and a related dependants' annuity and a related nominees' annuity are,

purchased ”,

(c) in paragraph 14B (event 5C: meaning of “relevant two-year period”), and in the italic heading before that paragraph, for “event 5C” substitute “ events 5C and 5D ”, and

(d) in paragraph 14C(1) (event 5C: meaning of “relevant unused uncrystallised funds”), and in the italic heading before paragraph 14C, for “event 5C” substitute “ events 5C and 5D ”.

Minor and consequential amendments U.K.

8 U.K. In section 172(6A)(b) (“benefit” in section 172 includes rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

9 (1) Section 172A (surrenders of benefits and rights) is amended as follows. U.K.

(2) In subsection (1)(aa) (surrender of rights to payments under certain annuities triggers operation of subsection (2)) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

(3) In subsection (9A)(b) (references to benefits include references to rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

10 (1) Section 172B (increase of rights of connected person on death) is amended as follows. U.K.

(2) In subsection (2)(aa) (relevant member includes person who has rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

(3) In subsection (7A) (section does not apply to certain increases in rights) after “dependants' annuity”, in both places, insert “, nominees' annuity, successors' annuity”.

(4) In subsection (7B)(b) (“benefit” in section 172B includes rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

11 U.K. In section 273B(1) (power of trustees or managers to make certain payments) after paragraph (f) insert—

“(fa) paid to purchase a nominees' annuity,

(fb) paid to purchase a successors' annuity,”.

12 U.K. In section 280(2) (index of defined expressions) at the appropriate places insert—

“nominees' annuity

paragraph 27AA of Schedule 28””

“related nominees' annuity

paragraph 3(4B) of Schedule 29”

“successors' annuity

paragraph 27FA of Schedule 28”

13 (1) Schedule 28 (interpretation of the pension rules and the pension death benefit rules) is amended as follows. U.K.

(2) In paragraph 3(2B)(a) (power to make regulations about cases where lifetime annuity ceases to be payable by insurance company) after “dependants' annuity” insert “, nominees' annuity”.

(3) In paragraph 6(1B)(a) (power to make regulations about cases where short-term annuity ceases to be payable by insurance company) after “dependants' annuity” insert “, nominees' annuity”.

(4) In paragraph 27E(3) (meaning of “unused drawdown funds”)—

(a) in paragraph (b), for “derive.” substitute “ derive, ”, and

(b) after paragraph (b) (but not as part of it) insert—

“and since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied towards the provision of a dependants' annuity, not been applied towards the provision of a nominees' annuity and not been applied towards the provision of a dependants' scheme pension.”

(5) In paragraph 27E(4)(b) and (5) (meaning of “unused uncrystallised funds”) after “not been applied towards the provision of a dependants' annuity” insert “, not been applied towards the provision of a nominees' annuity”.

(6) In paragraph 27K(3) (meaning of “unused drawdown funds of the beneficiary's”)—

(a) in paragraph (b) for “derive.” substitute “ derive, ”, and

(b) after paragraph (b) (but not as part of it) insert—

“and since the beneficiary's death they have not been designated as available for the payment of successors' drawdown pension and not been applied towards the provision of a successors' annuity.”

14 (1) Paragraph 3 of Schedule 29 (interpretation of the lump sum rule: meaning of “the applicable amount”) is amended as follows. U.K.

(2) In sub-paragraph (4) (amount applied to purchase certain annuities) after “any related dependants' annuity” insert “and any related nominees' annuity”.

(3) After sub-paragraph (4A) (when a dependants' annuity is related to a lifetime annuity) insert—

“(4B) For the purposes of this Part a nominees' annuity is related to a lifetime annuity payable to a member of a registered pension scheme—

(a) if they are purchased either in the form of a joint life annuity or separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased, and

(b) the nominees' annuity will be payable to a nominee of the member.”

(4) In sub-paragraph (5) (deductions in calculating applicable amount) after “any related dependants' annuity”, in both places, insert “or any related nominees' annuity”.

15 U.K. In paragraph 15(2)(a) of Schedule 29 (uncrystallised funds lump sum death benefit is sum paid in respect of funds not spent on certain annuities and other pensions) after “lifetime annuity,” insert “a nominees' annuity,”.

Consequential repeal U.K.

16 U.K. In consequence of paragraph 7(b) of this Schedule, omit paragraph 32 of Schedule 10 to FA 2005.

PART 2 U.K. Income tax on beneficiaries' annuities etc

Exemption in certain cases for annuities for dependants, nominees and successors U.K.

17 (1) In Chapter 17 of Part 9 of ITEPA 2003 (tax on pension income: exemptions) after section 646A insert— U.K.

“646B Registered schemes: beneficiaries' annuities from unused funds

(1) The charge to tax under this Part does not apply to a dependants' annuity, or nominees' annuity, payable to a person if—

(a) it is paid in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death,

(b) the member died on or after 3 December 2014,

(c) either—

(i) the annuity was purchased using unused drawdown funds or unused uncrystallised funds, or

(ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity that was payable to the person by that other company, and was a dependants' annuity or nominees' annuity (as the case may be) purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable,

(d) in a case where the annuity is purchased as mentioned in paragraph (c)(i) and using (whether or not exclusively) unused uncrystallised funds, the person became entitled to it before the end of the period of two years beginning with the earlier of—

(i) the day on which the scheme administrator first knew of the member's death, and

(ii) the day on which the scheme administrator could first reasonably have been expected to know of the death,

(e) in a case where the annuity is purchased as mentioned in paragraph (c)(ii) and the prior annuity purchased as mentioned in paragraph (c)(i) was purchased using (whether or not exclusively) unused uncrystallised funds, the person became entitled to that prior annuity before the end of the period of two years specified in paragraph (d),

(f) no payment of the annuity is made before 6 April 2015, and

(g) in a case where the annuity is purchased as mentioned in paragraph (c)(ii), no payment is made before 6 April 2015 of—

(i) the prior annuity purchased as mentioned in paragraph (c)(i), and

(ii) any other annuity purchased as mentioned in paragraph (c)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity.

(2) The charge to tax under this Part does not apply to a successor's annuity payable to a person if—

(a) it is paid in respect of a deceased member of a registered pension scheme,

(b) it is paid on the subsequent death of a dependant, nominee or successor of the member (“the beneficiary”),

(c) the beneficiary had not reached the age of 75 at the date of the beneficiary's death,

(d) the beneficiary died on or after 3 December 2014,

(e) either—

(i) the annuity was purchased using undrawn funds, or

(ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity that was payable to the person by that other company, and was a successors' annuity purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable,

(f) no payment of the annuity is made before 6 April 2015, and

(g) in a case where the annuity is purchased as mentioned in paragraph (e)(ii), no payment is made before 6 April 2015 of—

(i) the prior annuity purchased as mentioned in paragraph (e)(i), and

(ii) any other annuity purchased as mentioned in paragraph (e)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity.

(3) The charge to tax under this Part does not apply to a dependants' annuity or nominees' annuity payable to a person if—

(a) it is paid in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death,

(b) the member died on or after 3 December 2014,

(c) the annuity—

(i) was purchased together with a lifetime annuity payable to the member, or

(ii) was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity that was payable to the person by that other company, and was a dependants' annuity or nominees' annuity (as the case may be) purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable,

(d) no payment of the annuity is made before 6 April 2015, and

(e) in a case where the annuity is purchased as mentioned in paragraph (c)(ii), no payment is made before 6 April 2015 of—

(i) the prior annuity purchased as mentioned in paragraph (c)(i), and

(ii) any other annuity purchased as mentioned in paragraph (c)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity.

(4) The charge to tax under this Part does not apply to payments to a person of a lifetime annuity if—

(a) the payments are payable to the person under pension rule 2 (see section 165 of FA 2004),

(b) either—

(i) a member of a registered pension scheme was entitled to be paid the annuity immediately before the member's death, or

(ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity to which there was entitlement as mentioned in sub-paragraph (i), or which was purchased as mentioned in this sub-paragraph, ceasing to be payable,

(c) the member had not reached the age of 75 at the date of the member's death,

(d) the member died on or after 3 December 2014,

(e) any payment of the annuity made before 6 April 2015 is made to the member, and

(f) in a case where the annuity is one purchased as mentioned in paragraph (b)(ii), any payment made before 6 April 2015—

(i) of the prior annuity to which there is entitlement as mentioned in paragraph (b)(i), or

(ii) of any other annuity purchased as mentioned in paragraph (b)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity,

is made to the member.

(5) Paragraph 27E(3) to (5) of Schedule 28 to FA 2004 (meaning of “unused drawdown funds” and “unused uncrystallised funds”) apply for the purposes of subsection (1).

(6) Paragraph 27FA(2) of Schedule 28 to FA 2004 (meaning of “undrawn funds”) applies for the purposes of subsection (2)(e).

(7) For the purposes of subsection (3)(c), a dependants' annuity or nominees' annuity is purchased together with a lifetime annuity if the dependants' annuity or nominees' annuity (as the case may be) is related to the lifetime annuity, and paragraph 3(4A) and (4B) of Schedule 29 to FA 2004 (meaning of “related”) apply for the purposes of this subsection.

(8) For the purposes of this section, a person becomes entitled to an annuity when the person first acquires an actual (rather than a prospective right) to receive the annuity.

646C Registered schemes: beneficiaries' annuities from drawdown funds

(1) The charge to tax under this Part does not apply to a dependants' short-term annuity, nominees' short-term annuity, dependants' annuity or nominees' annuity paid to a person if—

(a) it is paid in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death,

(b) the member died on or after 3 December 2014, and

(c) the annuity was purchased using sums or assets out of the person's—

(i) dependant's drawdown pension fund,

(ii) dependant's flexi-access drawdown fund, or

(iii) nominee's flexi-access drawdown fund,

in respect of a money purchase arrangement under a registered pension scheme.

(2) The charge to tax under this Part does not apply to a successors' short-term annuity, or successors' annuity, paid to a person if—

(a) it is paid in respect of a deceased beneficiary of a deceased member of a registered pension scheme where the beneficiary had not reached the age of 75 at the date of the beneficiary's death,

(b) the beneficiary died on or after 3 December 2014, and

(c) the annuity was purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme,

and here “beneficiary” means dependant, nominee or successor.

(3) Subsection (1) is subject to subsections (4) to (6).

(4) Subsection (1) does not exempt payments on or after 6 April 2015 to a person of a dependants' short-term annuity, or dependants' annuity, payable in respect of a deceased member of a registered pension scheme and purchased using sums or assets out of the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme (“the drawdown fund”) if before 6 April 2015—

(a) any payment of the annuity was made,

(b) any payment was made of any other dependants' short-term annuity, or dependants' annuity, purchased using sums or assets out of—

(i) the drawdown fund, or

(ii) any fund represented (to any extent) by the drawdown fund, or

(c) any payment of dependants' income withdrawal was made from—

(i) the drawdown fund, or

(ii) any fund represented (to any extent) by the drawdown fund.

(5) Subsection (1) does not exempt payments to a person of a dependants' short-term annuity, or dependants' annuity, payable in respect of a deceased member of a registered pension scheme and purchased using sums or assets out of the person's dependant's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme (“the new fund”) if—

(a) any of the sums or assets that make up the new fund—

(i) became newly-designated dependant funds under paragraph 22A(2)(b) of Schedule 28 to FA 2004 or as a result of the operation of any of paragraphs 22B to 22D of that Schedule, or

(ii) arise, or (directly or indirectly) derive, from any such newly-designated funds or from sums or assets that to any extent so arise or derive,

(b) before 6 April 2015—

(i) any payment of dependants' income withdrawal in respect of the deceased member was made to the person from, or

(ii) any payment in respect of the deceased member was made to the person of a dependants' short-term annuity, or dependants' annuity, purchased using sums or assets out of,

the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme, and

(c) any of the sums or assets that made up that fund at the time of the payment make up, or are represented by sums or assets that to any extent make up, the new fund.

(6) Where relevant unused uncrystallised funds—

(a) are designated on or after 6 April 2015 as available for the payment of dependants' drawdown pension or nominees' drawdown pension, and

(b) as a result of the designation make up (to any extent) a person's dependant's flexi-access drawdown fund or nominee's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme, but

(c) are not so designated before the end of the relevant two-year period,

subsection (1) does not exempt payments to the person of a dependants' short-term annuity, nominees' short-term annuity, dependants' annuity or nominees' annuity if any of the sums or assets used to purchase the annuity represent, at the time of the purchase, the whole or any part of those relevant unused uncrystallised funds.

(7) In this section “the relevant two-year period”, in relation to relevant unused uncrystallised funds held for the purposes of a money purchase arrangement relating to a deceased individual under a registered pension scheme, means the period of two years beginning with the earlier of—

(a) the day on which the scheme administrator first knew of the individual's death, and

(b) the day on which the scheme administrator could first reasonably have been expected to know of it.

(8) For the purposes of this section, sums or assets held after the death of a member of a registered pension scheme for the purposes of a money purchase arrangement relating to the member under the scheme are “relevant unused uncrystallised funds” if—

(a) they are unused uncrystallised funds, and

(b) the member had not reached the age of 75 at the date of the member's death.

(9) Paragraph 27E(4) and (5) of Schedule 28 to FA 2004 (meaning of “unused uncrystallised funds”) apply for the purposes of subsection (8)(a).

646D Non-registered schemes: beneficiaries' annuities from unused funds

(1) The charge to tax under this Part does not apply to an annuity payable to a person if—

(a) it is paid in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, who had not reached the age of 75 at the date of the member's death,

(b) it would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be a dependants' annuity or nominees' annuity,

(c) the member died on or after 3 December 2014,

(d) either—

(i) the annuity was purchased using sums or assets that would, if the scheme were a registered pension scheme, be unused drawdown funds or unused uncrystallised funds, or

(ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity—

(a) that was payable to the person by that other insurance company,

(b) that was purchased as mentioned in sub-paragraph (i) or this sub-paragraph, and

(c) that would have been a dependants' annuity or nominees' annuity (as the case may be) if the scheme had been a registered pension scheme,

ceasing to be payable,

(e) no payment of the annuity is made before 6 April 2015, and

(f) in a case where the annuity is purchased as mentioned in paragraph (d)(ii), no payment is made before 6 April 2015 of—

(i) the prior annuity purchased as mentioned in paragraph (d)(i), and

(ii) any other annuity purchased as mentioned in paragraph (d)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity.

(2) The charge to tax under this Part does not apply to an annuity payable to a person if—

(a) it is paid in respect of a deceased member of an overseas pension scheme or relevant non-UK scheme,

(b) it is paid on the subsequent death of an individual who would, if the scheme were a registered pension scheme, be a dependant, nominee or successor of the member (“the beneficiary”),

(c) it would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be a successors' annuity,

(d) the beneficiary had not reached the age of 75 at the date of the beneficiary's death,

(e) the beneficiary died on or after 3 December 2014,

(f) either—

(i) the annuity was purchased using sums or assets that would, if the scheme were a registered pension scheme, be undrawn funds, or

(ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity—

(a) that was payable to the person by that other insurance company,

(b) that was purchased as mentioned in sub-paragraph (i) or this sub-paragraph, and

(c) that would have been a successors' annuity if the scheme had been a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8),

ceasing to be payable,

(g) no payment of the annuity is made before 6 April 2015, and

(h) in a case where the annuity is purchased as mentioned in paragraph (f)(ii), no payment is made before 6 April 2015 of—

(i) the prior annuity purchased as mentioned in paragraph (f)(i), and

(ii) any other annuity purchased as mentioned in paragraph (f)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity.

(3) The charge to tax under this Part does not apply to an annuity payable to a person if—

(a) it is paid in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, who had not reached the age of 75 at the date of the member's death,

(b) it would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be a dependants' annuity payable to a dependant of the member or a nominees' annuity payable to a nominee of the member,

(c) the member died on or after 3 December 2014,

(d) the annuity—

(i) was purchased together with an annuity payable to the member that would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), have been a lifetime annuity, or

(ii) was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity—

(a) that was payable to the person by that other insurance company, and

(b) that would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), have been a dependants' annuity or nominees' annuity (as the case may be) purchased as mentioned in sub-paragraph (i) or this sub-paragraph,

ceasing to be payable,

(e) no payment of the annuity is made before 6 April 2015, and

(f) in a case where the annuity is purchased as mentioned in paragraph (d)(ii), no payment is made before 6 April 2015 of—

(i) the prior annuity purchased as mentioned in paragraph (d)(i), and

(ii) any other annuity purchased as mentioned in paragraph (d)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity.

(4) The charge to tax under this Part does not apply to payments to a person of an annuity if—

(a) either—

(i) a member of an overseas pension scheme, or relevant non-UK scheme, was entitled to be paid the annuity immediately before the member's death, or

(ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity to which there was entitlement as mentioned in sub-paragraph (i), or which was purchased as mentioned in this sub-paragraph, ceasing to be payable,

(b) the payments would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be—

(i) payments of a lifetime annuity, and

(ii) payable to the person under pension rule 2 (see section 165 of FA 2004),

(c) the member had not reached the age of 75 at the date of the member's death,

(d) the member died on or after 3 December 2014,

(e) any payment of the annuity made before 6 April 2015 is made to the member, and

(f) in a case where the annuity is one purchased as mentioned in paragraph (a)(ii), any payment made before 6 April 2015—

(i) of the prior annuity to which there is entitlement as mentioned in paragraph (a)(i), or

(ii) of any other annuity purchased as mentioned in paragraph (a)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity,

is made to the member.

(5) Paragraph 27E(3) to (5) of Schedule 28 to FA 2004 (meaning of “unused drawdown funds” and “unused uncrystallised funds”) apply for the purposes of subsection (1).

(6) Paragraph 27FA(2) of Schedule 28 to FA 2004 (meaning of “undrawn funds”) applies for the purposes of subsection (2)(f).

(7) For the purposes of subsection (3)(d), an annuity is purchased together with another if they are purchased—

(a) in the form of a joint life annuity, or

(b) separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased.

(8) In this section “insurance company” means—

(a) an insurance company as defined by section 275 of FA 2004, or

(b) a person—

(i) whose normal business includes the activity of providing annuities,

(ii) who carries on that activity in a country or territory outside the United Kingdom, and

(iii) whose carrying on of that activity in any particular country or territory outside the United Kingdom—

(a) is regulated in that country or territory, or

(b) is lawful under the law of that country or territory because it is regulated in another country or territory,

and for this purpose an activity is regulated in a country or territory if it is regulated by the government of that country or territory or by a body established under the law of that country or territory for the purpose of regulating the carrying-on of the activity.

646E Non-registered schemes: beneficiaries' annuities from drawdown funds

(1) The charge to tax under this Part does not apply to an annuity paid to a person if—

(a) it is paid in respect of a deceased member of an overseas pension scheme, or a relevant non-UK scheme, who had not reached the age of 75 at the date of the member's death,

(b) the person would, if that scheme were a registered pension scheme, be a dependant or nominee of the member,

(c) the annuity was purchased using sums or assets held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme, and those sums or assets would if that scheme were a registered pension scheme form the whole or part of the person's—

(i) dependant's drawdown pension fund,

(ii) dependant's flexi-access drawdown fund, or

(iii) nominee's flexi-access drawdown fund,

in respect of the arrangement,

(d) the annuity would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a dependants' short-term annuity or dependants' annuity or (as the case may be) a nominees' short-term annuity or nominees' annuity, and

(e) the member died on or after 3 December 2014.

(2) The charge to tax under this Part does not apply to an annuity payable to a person if—

(a) it is paid in respect of a deceased individual (“the beneficiary”) who had not reached the age of 75 at the date of the beneficiary's death,

(b) the beneficiary would have been a dependant, nominee or successor of a deceased member of an overseas pension scheme, or relevant non-UK scheme, if that scheme had been a registered pension scheme,

(c) the person would, if that scheme were a registered pension scheme, be a successor of the member,

(d) the annuity was purchased using sums or assets out of a fund held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme and would, if that scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a successors' short-term annuity, or successors' annuity, purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of the arrangement, and

(e) the beneficiary died on or after 3 December 2014.

(3) Subsection (1) is subject to subsections (4) and (5).

(4) Subsection (1) does not exempt payments on or after 6 April 2015 to a person of an annuity payable in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, if—

(a) the annuity is purchased using sums or assets held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme,

(b) the annuity would, if that scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a dependants' short-term annuity or dependants' annuity,

(c) the annuity was purchased using sums or assets out of a fund that would, if that scheme were a registered pension scheme, be the person's dependant's drawdown pension fund in respect of the arrangement (“the drawdown fund”), and

(d) before 6 April 2015—

(i) any payment of the annuity was made,

(ii) any payment was made to the person of any other annuity purchased using sums or assets out of the drawdown fund or out of any fund represented (to any extent) by the drawdown fund, or

(iii) any payment was made to the person out of the drawdown fund, or out of any fund represented (to any extent) by the drawdown fund, of any pension that would be dependants' income withdrawal if the fund concerned were held for the purposes of a registered pension scheme.

(5) Subsection (1) does not exempt payments to a person of an annuity payable in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, if—

(a) the annuity was purchased using sums or assets held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme and would, if that scheme were a registered pension scheme and “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a dependants' short-term annuity or dependants' annuity,

(b) the annuity was purchased using sums or assets out of a fund (“the new fund”) that would, if that scheme were a registered pension scheme, be the person's dependant's flexi-access drawdown fund in respect of the arrangement,

(c) before 6 April 2015—

(i) any payment of pension in respect of the deceased member was made to the person from a fund held for the purposes of a money purchase arrangement under an overseas pension scheme, or relevant non-UK scheme, that would be a payment of dependants' income withdrawal from the person's dependant's drawdown pension fund in respect of the arrangement if the scheme were a registered pension scheme, or

(ii) any payment in respect of the deceased member was made to the person of an annuity purchased using sums or assets out of a fund held for the purposes of a money purchase arrangement under an overseas pension scheme, or relevant non-UK scheme, that would be a payment of a dependants' short-term annuity, or dependants' annuity, purchased using sums or assets out of the person's dependant's drawdown pension fund in respect of the arrangement if the scheme were a registered pension scheme, and

(d) any of the sums or assets that made up the fund mentioned in paragraph (c)(i) or (ii) make up, or are represented by sums or assets that to any extent make up, the new fund.

646F Interpretation of sections 646B to 646E

In sections 646B to 646E, an expression listed in the first column of the table has the meaning given by the provision of FA 2004 listed against that expression in the second column of the table.

Expression	Provision of FA 2004
dependant	Schedule 28, paragraph 15
dependants' annuity	Schedule 28, paragraph 17
dependant's drawdown pension fund	Schedule 28, paragraph 22
dependant's flexi-access drawdown fund	Schedule 28, paragraph 22A
dependants' income withdrawal	Schedule 28, paragraph 21
dependants' short-term annuity	Schedule 28, paragraph 20
insurance company (in sections 646B and 646C)	section 275
lifetime annuity	Schedule 28, paragraph 3
money purchase arrangement	section 152
nominee	Schedule 28, paragraph 27A
nominees' annuity	Schedule 28, paragraph 27AA
nominee's flexi-access drawdown fund	Schedule 28, paragraph 27E
nominees' short-term annuity	Schedule 28, paragraph 27C
overseas pension scheme	section 150(1) and (7)
relevant non-UK scheme	Schedule 34, paragraph 1(5)
successor	Schedule 28, paragraph 27F
successors' annuity	Schedule 28, paragraph 27FA
successor's flexi-access drawdown fund	Schedule 28, paragraph 27K
successors' short-term annuity	Schedule 28, paragraph 27H”.

(2) The amendment made by this paragraph has effect in relation to pension paid on or after 6 April 2015.

Exemption from tax under Part 9 of ITEPA 2003 not to give rise to tax under other provisions U.K.

18 U.K. In section 393B(2)(a) of ITEPA 2003 (tax on benefits under employer-financed retirement benefit schemes: “relevant benefits” do not include benefits charged to tax under Part 9) after “charged to tax under Part 9 (pension income)” insert “ , or that would be charged to tax under that Part but for section 573(2A) or (2B), 646D or 646E ”.

Annuity for dependant purchased before 6 April 2006 jointly with annuity for member U.K.

19 U.K. In Schedule 36 to FA 2004 (transitional provision etc in relation to pre-6 April 2006 pensions) after paragraph 45 insert—

“Taxation of certain annuities for dependants purchased pre-commencement U.K.

45A (1) The charge to tax under Part 9 of ITEPA 2003 (taxation of pension income) does not apply to an annuity payable to a person (“the dependant”) if—

(a) the annuity is payable on the death of a member of a pension scheme,

(b) the annuity is paid in respect of the deceased member,

(c) the member had not reached the age of 75 at the date of the member's death,

(d) the member died on or after 3 December 2014,

(e) no payment of the annuity is made before 6 April 2015,

(f) the annuity has fulfilled the transitional conditions at all times on or after 6 April 2006,

(g) the annuity was purchased together with an annuity payable to the member, and

(h) that annuity payable to the member fulfilled the transitional conditions at all times in the period beginning with 6 April 2006 and ending with the member's death.

(2) For the purposes of sub-paragraph (1)(g), an annuity is purchased together with another if they are purchased—

(a) in the form of a joint life annuity, or

(b) separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased.

(3) In sub-paragraph (1) “the transitional conditions” means the conditions specified in the subsection (3A) set out in article 2(3) of the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572).”

Minor and consequential amendments U.K.

20 U.K. In section 573 of ITEPA 2003 (foreign pensions to which other provisions of Part 9 of ITEPA 2003 do not apply) after subsection (2D) insert—

“(2E) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646D and 646E: certain beneficiaries' annuities purchased out of unused or drawdown funds).

(2F) See also paragraph 45A of Schedule 36 to FA 2004 (exemption in certain cases for payments on or after 6 April 2015 to beneficiaries under joint-life or similar annuities purchased before 6 April 2006).”

21 U.K. In Chapter 10 of Part 9 of ITEPA 2003 (other employment-related annuities) after section 611 insert—

“611A Exemptions from sections 609 to 611

(1) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646B to 646E: certain beneficiaries' annuities purchased out of unused or drawdown funds).

(2) See also paragraph 45A of Schedule 36 to FA 2004 (exemption in certain cases for payments on or after 6 April 2015 to beneficiaries under joint-life or similar annuities purchased before 6 April 2006).”

22 U.K. In section 579A of ITEPA 2003 (section applies to pensions under registered pension schemes, with exceptions) after subsection (2) insert—

“(3) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646B and 646C: certain beneficiaries' annuities purchased out of unused or drawdown funds).”

23 (1) For section 579CZA(5)(b) of ITEPA 2003 (tax exemption for dependants' income withdrawal overridden where any paid before 6 April 2015) substitute— U.K.

“(b) before 6 April 2015—

(i) any payment of dependants' income withdrawal in respect of the deceased member was made to the person from, or

(ii) any payment in respect of the deceased member was made to the person of a dependants' short-term annuity purchased using sums or assets out of,

the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme, and”.

(2) The amendment made by this paragraph has effect in relation to pension paid on or after 6 April 2015.

Section 35

SCHEDULE 5 U.K. Relief for contributions to flood and coastal erosion risk management projects

Income tax: trade profits U.K.

1 U.K. In Chapter 5 of Part 2 of ITTOIA 2005 (trade profits: rules allowing deductions), after section 86 insert—

“Contributions to flood and coastal erosion risk management projects U.K.

86A Contributions to flood and coastal erosion risk management projects

(1) This section applies if—

(a) a person carrying on a trade (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project, and

(b) a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.

(2) In determining whether the condition in subsection (1)(b) is satisfied, a deduction giving effect to a capital allowance is to be disregarded.

(3) In calculating the profits of the trade, a deduction is allowed under this section for the expenses.

(4) But if, in connection with the making of the contribution, the contributor or a connected person—

(a) receives a disqualifying benefit, or

(b) is entitled to receive such a benefit,

no deduction is allowed.

(5) For the purposes of subsection (4) it does not matter whether a person receives, or is entitled to receive, the benefit—

(a) from the carrying out of the project, or

(b) from any person.

(6) Subsection (7) applies if—

(a) a deduction has been made under this section in relation to the contribution, and

(b) the contributor or a connected person receives—

(i) a refund of any part of the contribution, if the contribution is a sum of money, or

(ii) compensation for any part of the contribution, if the contribution is the provision of services,

in money or money's worth.

(7) The amount of, or an amount equal to the value of, the refund or compensation (so far as not otherwise brought into account in calculating the profits of the trade or treated as a post-cessation receipt)—

(a) is brought into account in calculating the profits of the trade, as a receipt arising on the date on which the refund or compensation is received, or

(b) if the contributor has permanently ceased to carry on the trade before that date, is treated as a post-cessation receipt (see Chapter 18).

(8) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include—

(a) a refund of the contribution, if the contribution is a sum of money;

(b) compensation for the contribution, if the contribution is the provision of services;

(c) a structure that—

(i) is or is to be used for the purposes of flood or coastal erosion risk management, and

(ii) is put in place in carrying out the project;

(d) an addition to a structure where—

(i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and

(ii) the addition is made in carrying out the project;

(e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management;

(f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management.

(9) In subsection (8) “structure” includes road, path, pipe, earthwork, plant and machinery.

86B Interpretation of section 86A

(1) This section applies for the purposes of section 86A.

(2) A flood or coastal erosion risk management project is a qualifying project if—

(a) an English risk management authority has applied to the Environment Agency for a grant under section 16 of the Flood and Water Management Act 2010 in order to fund the project, or

(b) the Environment Agency has determined that it will carry out the project,

and the Environment Agency has allocated funding by way of grant-in-aid to the project.

(3) A contribution to a flood or coastal erosion risk management project is a qualifying contribution if the contribution is made—

(a) for the purposes of the project, and

(b) under an agreement between—

(i) the person making the contribution, and

(ii) the applicant authority or (as the case may be) the Environment Agency,

or between those two persons and other persons.

(4) References to a flood risk management project or a coastal erosion risk management project are to be interpreted in accordance with sections 1 to 3 of the Flood and Water Management Act 2010.

(5) In section 86A and this section—

• “contribution”, in relation to a period of account, means—

  (a)

  a sum of money paid in that period of account, or

  (b)

  any services provided in that period of account;

• “English risk management authority” has the meaning given by section 6(14) of the Flood and Water Management Act 2010.”

Income tax: profits of a property business U.K.

2 U.K. In section 272 of ITTOIA 2005 (application of trading income rules), in the table in subsection (2), after the entry for sections 82 to 86 insert—

“sections 86A and 86B

contributions to flood and coastal erosion risk management projects”

Corporation tax: trading income and trade profits U.K.

3 U.K. In Chapter 5 of Part 3 of CTA 2009 (trading income and trade profits: rules allowing deductions), after section 86 insert—

“Contributions to flood and coastal erosion risk management projects U.K.

86A Contributions to flood and coastal erosion risk management projects

(1) This section applies if—

(a) a company carrying on a trade (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project, and

(b) a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.

(2) In determining whether the condition in subsection (1)(b) is satisfied, a deduction giving effect to a capital allowance is to be disregarded.

(3) In calculating the profits of the trade, a deduction is allowed under this section for the expenses.

(4) But if, in connection with the making of the contribution, the contributor or a connected person—

(a) receives a disqualifying benefit, or

(b) is entitled to receive such a benefit,

no deduction is allowed.

(5) For the purposes of subsection (4) it does not matter whether a person receives, or is entitled to receive, the benefit—

(a) from the carrying out of the project, or

(b) from any person.

(6) Subsection (7) applies if—

(a) a deduction has been made under this section in relation to the contribution, and

(b) the contributor or a connected person receives—

(i) a refund of any part of the contribution, if the contribution is a sum of money, or

(ii) compensation for any part of the contribution, if the contribution is the provision of services,

in money or money's worth.

(7) The amount of, or an amount equal to the value of, the refund or compensation (so far as not otherwise brought into account in calculating the profits of the trade or treated as a post-cessation receipt)—

(a) is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the refund or compensation is received, or

(b) if the contributor has permanently ceased to carry on the trade before the refund or compensation is received, is treated as a post-cessation receipt (see Chapter 15).

(8) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include—

(a) a refund of the contribution, if the contribution is a sum of money;

(b) compensation for the contribution, if the contribution is the provision of services;

(c) a structure that—

(i) is or is to be used for the purposes of flood or coastal erosion risk management, and

(ii) is put in place in carrying out the project;

(d) an addition to a structure where—

(i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and

(ii) the addition is made in carrying out the project;

(e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management;

(f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management.

(9) In subsection (8) “structure” includes road, path, pipe, earthwork, plant and machinery.

86B Interpretation of section 86A

(1) This section applies for the purposes of section 86A.

(2) A flood or coastal erosion risk management project is a qualifying project if—

(a) an English risk management authority has applied to the Environment Agency for a grant under section 16 of the Flood and Water Management Act 2010 in order to fund the project, or

(b) the Environment Agency has determined that it will carry out the project,

and the Environment Agency has allocated funding by way of grant-in-aid to the project.

(3) A contribution to a flood or coastal erosion risk management project is a qualifying contribution if the contribution is made—

(a) for the purposes of the project, and

(b) under an agreement between—

(i) the company making the contribution, and

(ii) the applicant authority or (as the case may be) the Environment Agency,

or between those two bodies and other persons.

(4) References to a flood risk management project or a coastal erosion risk management project are to be interpreted in accordance with sections 1 to 3 of the Flood and Water Management Act 2010.

(5) In section 86A and this section—

• “contribution”, in relation to an accounting period, means—

  (a)

  a sum of money paid in that accounting period, or

  (b)

  any services provided in that accounting period;

• “English risk management authority” has the meaning given by section 6(14) of the Flood and Water Management Act 2010.”

Corporation tax: profits of a property business U.K.

4 U.K. In section 210 of CTA 2009 (application of trading income rules), in the table in subsection (2), after the entry for sections 82 to 86 insert—

“sections 86A and 86B

contributions to flood and coastal erosion risk management projects”

Corporation tax: investment business U.K.

5 U.K. In Chapter 2 of Part 16 of CTA 2009 (investment business: management expenses), in section 1221 (amounts treated as expenses of management), in subsection (3), after paragraph (i) insert—

“(ia) section 1244A (contributions to flood and coastal erosion risk management projects),”.

6 U.K. In Chapter 3 of Part 16 of CTA 2009 (investment business: amounts treated as expenses of management), after section 1244 insert—

“Contributions to flood and coastal erosion risk management projects U.K.

1244A Contributions to flood and coastal erosion risk management projects

(1) This section applies if a company with investment business (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project.

(2) The expenses are treated for the purposes of Chapter 2 as expenses of management.

(3) But if, in connection with the making of the contribution, the contributor or a connected person—

(a) receives a disqualifying benefit, or

(b) is entitled to receive such a benefit,

no deduction is allowed under section 1219.

(4) For the purposes of subsection (3) it does not matter whether a person receives, or is entitled to receive, the benefit—

(a) from the carrying out of the project, or

(b) from any person.

(5) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include—

(a) a refund of the contribution, if the contribution is a sum of money;

(b) compensation for the contribution, if the contribution is the provision of services;

(c) a structure that—

(i) is or is to be used for the purposes of flood or coastal erosion risk management, and

(ii) is put in place in carrying out the project;

(d) an addition to a structure where—

(i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and

(ii) the addition is made in carrying out the project;

(e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management;

(f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management.

(6) In subsection (5) “structure” includes road, path, pipe, earthwork, plant and machinery.

(7) Section 86B applies for the purposes of this section as it applies for the purposes of section 86A.”

7 U.K. In Chapter 5 of Part 16 of CTA 2009 (investment business: receipts), after section 1253 insert—

“1253A Contributions to flood and coastal erosion risk management projects: refunds etc

(1) This section applies if—

(a) a deduction has been made under section 1219 by virtue of section 1244A (contributions to flood and coastal erosion risk management projects: expenses of management), and

(b) the contributor or a connected person receives—

(i) a refund of any part of the contribution, if the contribution is a sum of money, or

(ii) compensation for any part of the contribution, if the contribution is the provision of services,

in money or money's worth.

(2) The contributor is to be treated as receiving, when the refund or compensation is received, an amount—

(a) which is equal to so much of the refund or compensation, or so much of the value of the refund or compensation, as is not otherwise taken into account for corporation tax purposes, and

(b) to which the charge to corporation tax on income applies.”

8 U.K. In section 253 of CAA 2001 (companies with investment business), in subsection (6), after “1233” insert “ or 1244A ”.

Commencement U.K.

9 U.K. The amendments made by this Schedule have effect in relation to contributions paid or provided on or after 1 January 2015.

Section 36

SCHEDULE 6 U.K. Investment reliefs: excluded activities

PART 1 U.K. Part 5B of ITA 2007: amendment coming into force on passing of Act

Tax relief for social investments: power to amend excluded activities U.K.

1 U.K. In Part 5B of ITA 2007 (tax relief for social investments), after section 257MV insert—

“257MW Excluded activities: power to amend

(1) The Treasury may by regulations add to, repeal or otherwise amend any provision of sections 257MQ to 257MT (excluded activities).

(2) Regulations under this section may—

(a) make different provision for different cases or purposes;

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

(3) So far as they cause an activity to cease to be an excluded activity, amendments made by regulations under this section may have effect in relation to times before they come into force, but not times before 6 April 2015.

(4) This section is without prejudice to any other power to amend any provision of this Part.”

PART 2 U.K. Part 5 of ITA 2007: excluded activities from 6 April 2015

Introductory U.K.

2 U.K. The following provisions of Part 5 of ITA 2007 (enterprise investment scheme) are amended as set out in paragraphs 3 and 4—

(a) section 198A (excluded activities for purposes of Part 5 (and, by virtue of section 257DA(9), Part 5A): subsidised generation or export of electricity), and

(b) section 198B (excluded activities for those purposes: subsidised generation of heat and subsidised production of gas or fuel).

Generation of electricity involving contracts for difference U.K.

3 U.K. In section 198A—

(a) in subsection (3), omit “or” at the end of paragraph (b) and for paragraph (c) substitute—

“(ba) a contract for difference has been entered into in connection with the generation of the electricity, or

(c) a scheme established in a territory outside the United Kingdom that—

(i) corresponds to one set out in a renewables obligation order under section 32 of the Electricity Act 1989, or

(ii) is similar to one established by virtue of regulations under Chapter 2 of Part 2 of the Energy Act 2013 (contracts for difference),

operates to incentivise the generation of the electricity.”, and

(b) in subsection (9), at the appropriate place insert—

““contract for difference” means a contract for difference within the meaning of Chapter 2 of Part 2 of the Energy Act 2013 (see section 6(2) of that Act);”.

Subsidised energy-related activities: anaerobic digestion and hydroelectric power U.K.

4 (1) In section 198A— U.K.

(a) in subsection (5), omit “, B or C” (exceptions for generation involving anaerobic digestion and hydroelectric power),

(b) omit subsections (7) and (8), and

(c) in subsection (9), omit the definition of “anaerobic digestion”.

(2) In section 198B—

(a) in subsection (3), omit “or B” (exception for generation or production involving anaerobic digestion), and

(b) omit subsection (5).

Application U.K.

5 U.K. The amendments made by this Part of this Schedule have effect in relation to shares issued on or after 6 April 2015.

PART 3 U.K. Part 6 of ITA 2007: excluded activities from 6 April 2015

Introductory U.K.

6 U.K. The following provisions of Part 6 of ITA 2007 (venture capital trusts) are amended as set out in paragraphs 7 and 8—

(a) section 309A (excluded activities for purposes of Part 6: subsidised generation or export of electricity), and

(b) section 309B (excluded activities for those purposes: subsidised generation of heat and subsidised production of gas or fuel).

Generation of electricity involving contracts for difference U.K.

7 U.K. In section 309A—

(a) in subsection (3), omit “or” at the end of paragraph (b) and for paragraph (c) substitute—

“(ba) a contract for difference has been entered into in connection with the generation of the electricity, or

(c) a scheme established in a territory outside the United Kingdom that—

(i) corresponds to one set out in a renewables obligation order under section 32 of the Electricity Act 1989, or

(ii) is similar to one established by virtue of regulations under Chapter 2 of Part 2 of the Energy Act 2013 (contracts for difference),

operates to incentivise the generation of the electricity.”, and

(b) in subsection (9), at the appropriate place insert—

““contract for difference” means a contract for difference within the meaning of Chapter 2 of Part 2 of the Energy Act 2013 (see section 6(2) of that Act);”.

Subsidised energy-related activities: anaerobic digestion and hydroelectric power U.K.

8 (1) In section 309A— U.K.

(a) in subsection (5), omit “, B or C” (exceptions for generation involving anaerobic digestion and hydroelectric power),

(b) omit subsections (7) and (8), and

(c) in subsection (9), omit the definition of “anaerobic digestion”.

(2) In section 309B—

(a) in subsection (3), omit “or B” (exception for generation or production involving anaerobic digestion), and

(b) omit subsection (5).

Application U.K.

9 U.K. The amendments made by this Part of this Schedule have effect in relation to relevant holdings issued on or after 6 April 2015.

PART 4 U.K. Further amendments of Parts 5 to 6 of ITA 2007

Parts 5 and 6: certain community-based activities to be excluded activities U.K.

10 (1) Part 5 of ITA 2007 is further amended as follows. U.K.

(2) In section 198A—

(a) omit subsections (5) and (6) (exception for community-based generation), and

(b) in subsection (9), omit the definitions of “community benefit society”, “co-operative society” and “NI industrial and provident society”.

(3) In section 198B—

(a) omit subsections (3) and (4) (exception for community-based generation or production), and

(b) omit subsection (6) (interpretation of section).

Modifications etc. (not altering text)

C1 Sch. 6 para. 10 modified (30.11.2015) by The Finance Act 2015 (Paragraphs 10 to 12 of Schedule 6) Regulations 2015 (S.I. 2015/1836), regs. 1, 2(a)

11 (1) Part 6 of ITA 2007 is further amended as follows. U.K.

(2) In section 309A—

(a) omit subsections (5) and (6) (exception for community-based generation), and

(b) in subsection (9), omit the definitions of “community benefit society”, “co-operative society” and “NI industrial and provident society”.

(3) In section 309B—

(a) omit subsections (3) and (4) (exception for community-based generation or production), and

(b) omit subsection (6) (interpretation of section).

Modifications etc. (not altering text)

C2 Sch. 6 para. 11 modified (30.11.2015) by The Finance Act 2015 (Paragraphs 10 to 12 of Schedule 6) Regulations 2015 (S.I. 2015/1836), regs. 1, 2(b)

12 U.K. In consequence of paragraphs 10 and 11—

(a) in FA 2014, omit section 56(3)(b) and (6)(b), and

(b) in the Co-operative and Community Benefit Societies Act 2014, omit paragraphs 106 and 107 of Schedule 4.

Modifications etc. (not altering text)

C3 Sch. 6 para. 12 modified (30.11.2015) by The Finance Act 2015 (Paragraphs 10 to 12 of Schedule 6) Regulations 2015 (S.I. 2015/1836), regs. 1, 2(c)

Part 5B: subsidised generation or export of electricity to cease to be excluded activity U.K.

13 (1) Part 5B of ITA 2007 is further amended as follows. U.K.

(2) In section 257MQ(1) (list of excluded activities) omit paragraph (f) (subsidised generation or export of electricity).

(3) Omit section 257MS (subsidised generation or export of electricity).

Application of Part U.K.

14 (1) The amendments made by this Part of this Schedule have effect in accordance with regulations made by the Treasury. U.K.

(2) Regulations under this paragraph may make different provision for different purposes.

(3) Section 1014(4) of ITA 2007 (regulations etc subject to annulment) does not apply in relation to regulations under this paragraph.

(4) Regulations under this paragraph may not provide for amendments of ITA 2007 to have effect—

(a) in the case of amendments of Part 5 of that Act, in relation to shares issued before 6 April 2015;

(b) in the case of amendments of Part 6 of that Act, in relation to relevant holdings issued before 6 April 2015.

Section 37

SCHEDULE 7 U.K. Disposals of UK residential property interests by non-residents etc

PART 1 U.K. Amendments of TCGA 1992

1 U.K. TCGA 1992 is amended in accordance with paragraphs 2 to 40.

2 U.K. In section 1 (the charge to tax), in subsection (2A), for the words from “gains are” to the end substitute “gains are—

(a) ATED-related gains in respect of which the companies are chargeable to capital gains tax under section 2B, or

(b) NRCGT gains in respect of which the companies are chargeable to capital gains tax under section 14D or 188D.”

3 (1) Section 2 (persons and gains chargeable to capital gains tax, and allowable losses) is amended as follows. U.K.

(2) After subsection (2) insert—

“(2A) Where subsection (1B) applies, the amounts that may be deducted under subsection (2)(a) include any allowable NRCGT losses accruing to the person in the overseas part of the tax year concerned (see section 14B(4)).

(2B) The amounts that may be deducted under subsection (2)(b) include any allowable NRCGT losses (other than group losses, as defined in section 188E(4)) accruing to the person in a tax year (“year P”) previous to the year mentioned in subsection (2)(a) (so far as those losses have not been allowed as a deduction from chargeable gains accruing in year P or any previous year).”

(3) After subsection (7A) insert—

“(7B) Except where otherwise specified (see subsections (2A) and (2B)), nothing in this section applies in relation to an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D.”

4 U.K. In section 2B (persons chargeable to capital gains tax on ATED-related gains), in subsection (10), in paragraph (b) of the definition of “ring-fenced ATED-related allowable losses”, for “from ATED-related chargeable gains accruing in any previous tax year on relevant high value disposals,” substitute “ from chargeable gains accruing in any previous tax year, ”.

5 (1) Section 3 (annual exempt amount) is amended as follows. U.K.

(2) In subsection (5), for the words from “is the amount” to the end substitute “is (what would apart from this section be) the total of the amounts for that year on which that individual is chargeable to capital gains tax in accordance with either (or both) of—

(a) section 2 (gains, other than ATED-related gains and NRCGT gains, chargeable to capital gains tax), and

(b) section 14D (NRCGT gains chargeable to capital gains tax).”

(3) After subsection (5B) insert—

“(5BA) In this section, “adjusted net gains”, in relation to a tax year and an individual, means—

(a) if the residence condition is met (see section 2(1A)) and the year is not a split year as respects the individual, the section 2 adjusted net gains;

(b) if the residence condition is not met, the section 14D adjusted net gains;

(c) if the residence condition is met and the year is a split year as respects the individual, the total of the section 2 adjusted net gains (if any) and the section 14D adjusted net gains (if any).”

(4) In subsection (5C), for the words from “In subsections” to “in his case by—” substitute “ In subsection (5BA) “section 2 adjusted net gains”, in relation to an individual and a tax year, means the amount given in the individual's case by— ”.

(5) After subsection (5C) insert—

“(5D) In subsection (5BA) “section 14D adjusted net gains”, in relation to an individual and a tax year, means the amount given in the individual's case by—

(a) taking the amount from which the deductions provided for by paragraphs (a) and (b) of subsection (2) of section 14D are to be made, and

(b) deducting only the amounts falling to be deducted in accordance with paragraph (a) of that subsection.”

(6) In subsection (7), for “(5C)” substitute “ (5D) ”.

6 U.K. In section 4 (rates of capital gains tax), after subsection (3A) insert—

“(3B) The rate of capital gains tax is 20% in respect of—

(a) gains chargeable under section 14D accruing to a company in a tax year, and

(b) gains chargeable under section 188D accruing in a tax year to the relevant body of an NRCGT group (as defined in that section).”

7 U.K. For section 4B (deduction of losses etc in most beneficial way) substitute—

“4B Deduction of losses etc in most beneficial way

(1) Where it is necessary to determine—

(a) from which chargeable gains an allowable loss accruing to a person is to be deducted, or

(b) which allowable losses are to be deducted from any chargeable gains accruing to a person,

(including in a case falling within subsection (2)), the losses concerned may be used in whichever way is most beneficial to that person.

(2) Where the gains accruing to a person in a tax year are (apart from this section) chargeable to capital gains tax at different rates, the exempt amount under section 3 may be used in respect of those gains in whichever way is most beneficial to that person.

(3) This section is subject to any enactment which contains a limitation on the gains from which allowable losses may be deducted.”

8 (1) Section 8 (company's profits for corporation tax purposes to include chargeable gains) is amended as follows. U.K.

(2) In subsection (1), in paragraph (b), omit the words from “period” to the end and insert “period—

(i) any allowable losses previously accruing to the company while it has been within the charge to corporation tax, and

(ii) any allowable NRCGT losses previously accruing to the company.”

(3) After subsection (4A) insert—

“(4B) Subject to subsection (1)(b)(ii), nothing in this section applies in relation to an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D.”

9 U.K. In section 10A (temporary non-residents), as that section has effect where the year of departure (as defined in Part 4 of Schedule 45 to FA 2013) is the tax year 2012-13 or an earlier tax year, in subsection (5) after “section 10” insert “ , 14D ”.

10 U.K. In section 13 (attribution of gains to members of non-resident companies), in subsection (1A), for the words from “an ATED-related gain” to the end substitute—

“(a) an ATED-related gain chargeable to capital gains tax by virtue of section 2B (capital gains tax on ATED-related gains), or

(b) an NRCGT gain chargeable to capital gains tax by virtue of section 14D or 188D (capital gains tax on NRCGT gains).”

11 U.K. After section 14A insert—

“UK residential property: non-resident CGT U.K.

14B Meaning of “non-resident CGT disposal”

(1) For the purposes of this Act a disposal made by a person is a “non-resident CGT disposal” if—

(a) it is a disposal of a UK residential property interest, and

(b) condition A or B is met.

But see also subsection (5).

(2) Condition A is—

(a) in the case of an individual, that the individual is not resident in the United Kingdom for the tax year in question (see subsection (3)),

(b) in the case of personal representatives of a deceased person, that the single and continuing body mentioned in section 62(3) is not resident in the United Kingdom,

(c) in the case of the trustees of a settlement, that the single person mentioned in section 69(1) is not resident in the United Kingdom during any part of the tax year in question, and

(d) in any other case, that the person is not resident in the United Kingdom at the relevant time.

(3) In subsection (2)—

(a) “the tax year in question” means the tax year in which any gain on the disposal accrues (or would accrue were there to be such a gain);

(b) “the relevant time” means the time at which any gain on the disposal accrues (or would accrue were there to be such a gain).

(4) Condition B is that—

(a) the person is an individual, and

(b) any gain accruing to the individual on the disposal would accrue in the overseas part of a tax year which is a split year as respects the individual.

(5) A disposal by a person of a UK residential property interest is not a non-resident CGT disposal so far as any chargeable gains accruing to the person on the disposal—

(a) would be gains in respect of which the person would be chargeable to capital gains tax—

(i) under section 10(1) (non-resident with UK branch or agency), or

(ii) under section 2 as a result of subsection (1C) of that section (corresponding provision relating to the overseas part of a split year), or

(b) would be gains forming part of the person's chargeable profits for corporation tax purposes by virtue of section 10B (non-resident company with UK permanent establishment).

14C Meaning of “disposal of a UK residential property interest”

Schedule B1 gives the meaning in this Act of “disposal of a UK residential property interest”.

14D Persons chargeable to capital gains tax on NRCGT gains

(1) A person is chargeable to capital gains tax in respect of any chargeable NRCGT gain accruing to the person in the tax year on a non-resident CGT disposal.

See also section 188D(1).

(2) Capital gains tax is charged on the total amount of chargeable NRCGT gains accruing to the person in the tax year, after deducting—

(a) any allowable losses accruing to the person in the tax year on disposals of UK residential property interests, and

(b) so far as they have not been allowed as a deduction from chargeable gains accruing in any previous tax year, any allowable losses accruing to the person in any previous tax year (not earlier than the tax year 1965-66) on disposals of UK residential property interests.

(3) In subsection (2), the reference to chargeable NRCGT gains does not include any such gains which accrue to a member of an NRCGT group.

(4) The only deductions that can be made from chargeable NRCGT gains to which subsection (2) applies are those permitted by this section.

This is subject to section 62(2AA) (carry-back of losses accruing in year of death).

(5) See section 57B and Schedule 4ZZB for how to determine—

(a) whether an NRCGT gain (or loss) accrues on a non-resident CGT disposal, and

(b) the amount of any NRCGT gain (or loss) so accruing.

14E Further provision about use of NRCGT losses

(1) Subsections (2) to (4) apply in relation to an allowable NRCGT loss accruing to a person in a tax year on a non-resident CGT disposal.

(2) The loss is not allowable as a deduction from chargeable gains accruing in any earlier tax year.

This is subject to section 62(2) and (2AA) (carry-back of losses accruing in year of death).

(3) Relief is not to be given under this Act more than once in respect of the loss or any part of the loss.

(4) Relief is not to be given under this Act in respect of the loss if, and so far as, relief has been or may be given in respect of it under the Tax Acts.

14F Persons not chargeable under section 14D if a claim is made

(1) A person is not chargeable to capital gains tax under section 14D in respect of a chargeable NRCGT gain accruing to the person on a non-resident CGT disposal if the person—

(a) is an eligible person in relation to the disposal, and

(b) makes a claim under this section with respect to the disposal.

(2) A diversely-held company which makes a non-resident CGT disposal is an eligible person in relation to the disposal.

(3) A scheme (see subsection (7)) which makes a non-resident CGT disposal is an eligible person in relation to the disposal if condition A or B is met.

(4) Condition A is that the scheme is a widely-marketed scheme throughout the relevant ownership period.

(5) Condition B is that—

(a) an investor in the scheme is an offshore fund, an open-ended investment company or an authorised unit trust (“the feeder fund”),

(b) the scheme is a widely-marketed scheme throughout the alternative period, after taking into account—

(i) the scheme documents relating to the feeder fund, and

(ii) the intended investors in the feeder fund, and

(c) the scheme and the feeder fund have the same manager.

(6) A company carrying on life assurance business (as defined in section 56 of the Finance Act 2012) which makes a non-resident CGT disposal is an eligible person if immediately before the time of the disposal the interest in UK land which is the subject of that disposal is held for the purpose of providing benefits to policyholders in the course of that business.

(7) In this section “scheme” means any of the following—

(a) a unit trust scheme;

(b) a company which is an open-ended investment company incorporated by virtue of regulations under section 262 of the Financial Services and Markets Act 2000;

(c) a company incorporated under the law of a territory outside the United Kingdom which is, under that law, the equivalent of an open-ended investment company.

(8) In this section “the relevant ownership period”, in relation to a scheme, means—

(a) the period beginning with the day on which the scheme acquired the interest in UK land which (or part of which) is the subject of the non-resident CGT disposal and ending with the day on which that disposal occurs, or

(b) if shorter, the period of 5 years ending with the day on which that disposal occurs.

(9) For the purposes of subsection (5), the “alternative period”, in relation to a scheme, is the shorter of—

(a) the relevant ownership period, and

(b) the period beginning when the feeder fund first became an investor in the scheme and ending with the date of the disposal.

(10) In this section—

• “diversely-held company” means a company which is not a closely-held company;

• “interest in UK land” has the same meaning as in Schedule B1;

• “open-ended investment company” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 236 of that Act).

(11) In Schedule C1—

(a) Part 1 sets out the rules for determining whether or not a company is a closely-held company;

(b) Part 2 sets out how to determine whether or not a scheme is a widely-marketed scheme at any time.

14G Section 14F: divided companies

(1) This section applies where a company which makes a non-resident CGT disposal—

(a) is a divided company, and

(b) would, without this section, be an eligible person for the purposes of section 14F in relation to the disposal.

(2) In determining for the purposes of section 14F whether or not the company is an eligible company in relation to the disposal, the company is to be treated as if it were a closely-held company if the conditions in subsection (3) are met.

(3) The conditions are that—

(a) the gain or loss accruing on the disposal is primarily or wholly attributable to a particular division of the company, and

(b) if that division were a separate company, that separate company would be a closely-held company.

(4) For the purposes of this section a company is a “divided company” if, under the law under which the company is formed, under the company's articles of association or other document regulating the company or under arrangements entered into by or in relation to the company—

(a) some or all of the assets of the company are available primarily, or only, to meet particular liabilities of the company, and

(b) some or all of the members of the company, and some or all of its creditors, have rights primarily, or only, in relation to particular assets of the company.

(5) References in this section to a “division” of a divided company are to an identifiable part of the company that carries on distinct business activities and to which particular assets and liabilities of the company are primarily or wholly attributable.

14H Section 14F: arrangements for avoiding tax

(1) Subsection (2) applies where—

(a) arrangements are entered into, and

(b) the main purpose, or one of the main purposes, of any party entering into them (or any part of them) is to avoid capital gains tax being charged under section 14D as a result of a person not being an eligible person in relation to the disposal by virtue of subsection (2) (diversely-held companies) or, as the case may be, subsection (3) (widely-marketed schemes) of section 14F (persons not chargeable under section 14D if a claim is made).

(2) The arrangements (or that part of the arrangements) are to be disregarded in determining whether or not the company is an eligible person by virtue of that subsection.

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

12 U.K. In section 16 (computation of losses), in subsection (3), for “or 10B,” substitute “ , 10B, 14D or 188D ”.

13 U.K. After section 25 insert—

“25ZA Deemed disposal of UK residential property interest under section 25(3)

(1) This section applies if, ignoring subsections (3) and (4)—

(a) a gain or loss would accrue to a person on a disposal of a UK residential property interest deemed to have been made by virtue of section 25(3), and

(b) on the assumptions in subsection (2), that gain or loss would be an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D (see section 57B and Schedule 4ZZB).

(2) The assumptions are—

(a) the disposal is a non-resident CGT disposal, and

(b) if the person is a company, any claim which the company could make under section 14F is made.

(3) No gain or loss accrues to the person on that disposal.

(4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the gain or loss which would have accrued to the person were it not for subsection (3)—

(a) is deemed to accrue to the person (in addition to any gain or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal.

(5) A person may make an election for subsections (3) and (4) not to apply in relation to the disposal mentioned in subsection (1)(a).

(6) If the person is a company, such an election must be made within 2 years after the day on which the company ceases to carry on a trade in the United Kingdom through a branch or agency.

(7) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.”

14 U.K. After section 48 insert—

“48A Unascertainable consideration

(1) This section applies where—

(a) a person (“P”) has made a non-resident CGT disposal in relation to which there accrued to P an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D (“the original disposal”),

(b) P acquired a right as the whole or part of the consideration for that disposal,

(c) on P's acquisition of the right, there was no corresponding disposal of it, and

(d) the right is a right to unascertainable consideration (see subsections (4) to (6)).

(2) If P subsequently receives consideration (“the ascertained consideration”) representing the whole or part of the consideration referred to in subsection (1)(d) and condition A in section 14B would have been met in relation to the original disposal had a gain on that disposal accrued at the time of the receipt of the ascertained consideration—

(a) the ascertained consideration is treated as not accruing on the disposal of the right,

(b) the costs of P's acquisition of the right (or, in the case of a part disposal of the right, those costs so far as referable to the part disposed of) are taken to be nil, and

(c) the following steps are taken.

• Step 1 Any amount by which the ascertained consideration exceeds the relevant original consideration is treated as consideration (or further consideration) accruing on the original disposal. If the relevant original consideration exceeds the ascertained consideration, the consideration accruing on the original disposal is treated as reduced by the amount of the excess.

• Step 2 Compute the difference that the adjustment under step 1 makes to what (if any) NRCGT gain or loss, ATED-related gain or loss or other gain or loss accrues on the original disposal (computing this separately for each type of gain or loss). The difference is “positive” if a loss is decreased (to nil or otherwise) or a gain created or increased. The difference is “negative” if a gain is reduced (to nil or otherwise) or a loss created or increased.

• Step 3 Any positive amount computed under step 2 is treated for the purposes of this Act and the Management Act as a gain (of the type appropriate to the computation) accruing to P at the time of the receipt of the ascertained consideration. Any negative amount computed under step 2 is treated for the purposes of this Act and the Management Act as a loss (of the type appropriate to the computation) accruing to P at the time of the receipt of the ascertained consideration.

(3) In step 1 in subsection (2), “the relevant original consideration” means the consideration accruing on the original disposal, so far as referable to the right mentioned in subsection (1)(b) (or, in the case of a part disposal of the right, referable to the part disposed of).

(4) A right is a right to unascertainable consideration if, and only if—

(a) it is a right to consideration the amount or value of which is unascertainable at the time when the right is conferred, and

(b) that amount or value is unascertainable at that time on account of its being referable, in whole or in part, to matters which are uncertain at that time because they have not yet occurred.

This subsection is subject to subsections (5) and (6).

(5) The amount or value of any consideration is not to be regarded as being unascertainable by reason only—

(a) that the right to receive the whole or any part of the consideration is postponed or contingent, if the consideration or, as the case may be, that part of it is, in accordance with section 48, brought into account in the computation of the gain accruing to a person on the disposal of an asset, or

(b) in a case where the right to receive the whole or any part of the consideration is postponed and is to be, or may be, to any extent satisfied by the receipt of property of one description or property of some other description, that some person has a right to select the property, or the description of property, that is to be received.

(6) A right is not to be taken to be a right to unascertainable consideration by reason only that either the amount or the value of the consideration has not been fixed, if—

(a) the amount will be fixed by reference to the value, and the value is ascertainable, or

(b) the value will be fixed by reference to the amount, and the amount is ascertainable.”

15 U.K. In section 57A (gains and losses on relevant high value disposals), after subsection (2) insert—

“(3) Subsection (2) does not apply where Part 4 of Schedule 4ZZB applies (non-resident CGT disposals which are or involve relevant high value disposals).”

16 U.K. In Part 2, after Chapter 5 insert—

“CHAPTER 6 U.K. Computation of gains and losses: non-resident CGT disposals

57B Gains and losses on non-resident CGT disposals

(1) Schedule 4ZZB makes provision about the computation of—

(a) NRCGT gains or losses, and

(b) other gains or losses,

on non-resident CGT disposals.

(2) For further provision about non-resident CGT disposals and NRCGT gains and losses see sections 14B to 14H and 188D and 188E.”

17 (1) Section 62 (death: general provisions) is amended as follows. U.K.

(2) In subsection (2A), for the words from “are gains” to the end substitute “are—

(a) gains that are treated as accruing by virtue of section 87 or 89(2) (read, where appropriate, with section 10A), or

(b) NRCGT gains (see section 57B and Schedule 4ZZB).”

(3) After subsection (2A) insert—

“(2AA) Where allowable NRCGT losses (see section 57B and Schedule 4ZZB) are sustained by an individual in the year of assessment in which the individual dies, the losses may, so far as they cannot be deducted from chargeable gains accruing to the individual in that year, be deducted from any gains such as are mentioned in subsection (2A)(b) that accrued to the deceased in the 3 years of assessment preceding the year of assessment in which the death occurs, taking chargeable gains accruing in a later year before those accruing in an earlier year.”

18 U.K. After section 80 insert—

“80A Deemed disposal of UK residential property interest under section 80

(1) Subsection (2) applies if, ignoring subsections (2) to (4)—

(a) a gain or loss would accrue to the trustees of a settlement on a disposal of a UK residential property interest deemed to have been made by virtue of section 80(2), and

(b) on the assumption that the disposal is a non-resident CGT disposal, that gain or loss would be a chargeable NRCGT gain or an allowable NRCGT loss (see section 57B and Schedule 4ZZB).

(2) The trustees may elect for subsections (3) and (4) to have effect.

(3) No gain or loss accrues to the trustees on that disposal.

(4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the gain or loss which would have accrued to the trustees were it not for subsection (3)—

(a) is deemed to accrue to the trustees (in addition to any gain or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as a chargeable NRCGT gain or an allowable NRCGT loss accruing on a non-resident CGT disposal.

(5) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.”

19 U.K. In section 86 (attribution of gains to settlors with interest in non-resident or dual-resident settlements), after subsection (4) insert—

“(4ZA) Where a disposal of any settled property (which would apart from this subsection meet the condition in subsection (1)(e) with respect to the tax year) is a non-resident CGT disposal—

(a) any chargeable gain or allowable loss accruing on the disposal, other than an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D, is to be treated as if it were a chargeable gain or (as the case requires) allowable loss falling to be taken into account in calculating the amount mentioned in subsection (1)(e) for the tax year, and

(b) the disposal is otherwise to be disregarded for the purposes of subsection (1)(e).”

20 U.K. In section 87 (non-UK resident settlements: attribution of gains to beneficiaries), after subsection (5) insert—

“(5A) For the purpose of determining the section 2(2) amount for a settlement for a tax year—

(a) any chargeable gain or allowable loss accruing in that tax year on a non-resident CGT disposal made (or treated as made) by the trustees, other than an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D, is to be treated as if it were a chargeable gain or (as the case requires) allowable loss falling to be taken into account in calculating the amount mentioned in subsection (4)(a), and

(b) such a disposal is otherwise to be disregarded.”

21 (1) Section 139 (reconstruction involving transfer of business) is amended as follows. U.K.

(2) In subsection (1A)—

(a) in paragraph (a), after “chargeable assets” insert “ or NRCGT assets ”;

(b) in paragraph (b), after “chargeable assets” insert “ or NRCGT assets ”.

(3) After subsection (1A) insert—

“(1AA) For the purposes of subsection (1A), an asset is an “NRCGT asset” in relation to a company at any time if—

(a) the disposal of the asset by the company at that time would be a non-resident CGT disposal, and

(b) the company would not be, in relation to that disposal, an eligible person (as defined in section 14F).”

22 U.K. After section 159 insert—

“159A Non-resident CGT disposals: roll-over relief

(1) Section 152 does not apply in relation to a person who would (apart from that section) be chargeable to capital gains tax under section 14D or 188D in respect of NRCGT gains accruing on the disposal of the old assets, unless the new assets are qualifying residential property interests immediately after the time they are acquired.

(2) For the purposes of this section an asset is a “qualifying residential property interest” at any time if it—

(a) is an interest in UK land, and

(b) consists of or includes a dwelling.

(3) In this section—

(a) “dwelling” has the meaning given by paragraph 4 of Schedule B1;

(b) “interest in UK land” has the meaning given by paragraph 2 of Schedule B1;

(c) “the old assets” and “the new assets” have the same meaning as in section 152;

(d) the reference to disposal of the old assets includes a reference to disposal of an interest in them;

(e) the reference to acquisition of the new assets includes a reference to acquisition of an interest in them or entering into an unconditional contract for the acquisition of them.”

23 (1) Section 165 (relief for gifts of business assets) is amended as follows. U.K.

(2) In subsection (1), after “167,” insert “ 167A, ”.

(3) After subsection (7) insert—

“(7A) Subsections (7B) and (7C) apply in any case where—

(a) the disposal is a non-resident CGT disposal, and

(b) the transferee is resident in the United Kingdom.

(7B) Subsections (4) and (6) have effect in relation to the disposal as if the references to “chargeable gain” were references to “chargeable NRCGT gain”.

(7C) Subsection (7) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “the chargeable NRCGT gain which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”.”

24 U.K. In section 166 (gifts to non-residents), in subsection (1), for “Section 165(4)” substitute “ Subject to section 167A, section 165(4) ”.

25 U.K. In section 167 (gifts to foreign-controlled companies), in subsection (1), for “Section 165(4)” substitute “ Subject to section 167A, section 165(4) ”.

26 U.K. After section 167 insert—

“167A Gifts of UK residential property interests to non-residents

(1) This section applies where the disposal in relation to which a claim could be made under section 165 is a disposal of a UK residential property interest to a transferee who is not resident in the United Kingdom and, ignoring section 165—

(a) a gain would accrue to the transferor on the disposal, and

(b) on the assumption that the disposal is a non-resident CGT disposal (whether or not that is the case), that gain would be a chargeable NRCGT gain (see section 57B and Schedule 4ZZB).

(2) Section 165(4) has effect in relation to the disposal as if it read—

“(4) Where a claim for relief is made under this section in respect of the disposal, the amount of any chargeable gain which, apart from this section, would accrue to the transferor on the disposal, shall be reduced by an amount equal to the held-over gain on the disposal.”

(3) Where the disposal is a non-resident CGT disposal—

(a) section 165(4), as modified by subsection (2) of this section, has effect in relation to the disposal as if the reference to “chargeable gain” were a reference to “chargeable NRCGT gain”,

(b) section 165(6) has effect in relation to the disposal as if the references to “chargeable gain” were references to “chargeable NRCGT gain”, and

(c) section 165(7) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “the chargeable NRCGT gain which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”.

(4) Where a claim for relief is made under section 165 in relation to the disposal mentioned in subsection (1), on a subsequent disposal by the transferee of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1), the whole or a corresponding part of the held-over gain (see section 165(6))—

(a) is deemed to accrue to the transferee (in addition to any gain or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal.

(5) Where the subsequent disposal mentioned in subsection (4) is (or proves to be) a chargeable transfer for inheritance tax purposes, section 165(10) has effect in relation to the disposal as if—

(a) the reference to “the chargeable gain accruing to the transferee on the disposal of the asset” were a reference to the chargeable gain accruing on the disposal as computed apart from subsection (4), and

(b) the reference in section 165(10)(b) to “the chargeable gain” were a reference to—

(i) the chargeable gain chargeable to capital gains tax by virtue of any provision of this Act accruing on the disposal, and

(ii) the held-over gain deemed to accrue under subsection (4).

(6) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.”

27 U.K. In section 168 (emigration of donee), in subsection (1), after paragraph (a) insert—

“(aa) the transferee is resident in the United Kingdom at the time of that disposal; and”.

28 U.K. After section 168 insert—

“168A Deemed disposal of UK residential property interest under section 168

(1) Subsection (2) applies if, ignoring subsections (2) to (4)—

(a) a gain would accrue to a transferee on a disposal of a UK residential property interest deemed to have been made by virtue of section 168(1), and

(b) on the assumption that the disposal is a non-resident CGT disposal, that gain would be an NRCGT gain chargeable to capital gains tax by virtue of section 14D (see section 57B and Schedule 4ZZB).

(2) The transferee may elect for subsections (3) and (4) to have effect.

(3) The held-over gain (within the meaning of section 165 or 260) does not accrue to the transferee on that disposal.

(4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the held-over gain which would have accrued to the transferee were it not for subsection (3)—

(a) is deemed to accrue to the transferee (in addition to any gain or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal.

(5) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.”

29 U.K. After section 187A insert—

“187B Deemed disposal of UK residential property interest under section 185

(1) This section applies if, ignoring subsections (3) and (4)—

(a) a gain or loss would accrue to a company on a disposal of a UK residential property interest deemed to have been made by virtue of section 185(2), and

(b) on the assumptions in subsection (2), that gain or loss would be an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D (see section 57B and Schedule 4ZZB).

(2) The assumptions are that—

(a) the disposal is a non-resident CGT disposal, and

(b) any claim which the company could make under section 14F is made.

(3) No gain or loss accrues to the company on that disposal.

(4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the gain or loss which would have accrued to the company were it not for subsection (3)—

(a) is deemed to accrue to the company (in addition to any gain or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal.

(5) A company may make an election for subsections (3) and (4) not to apply in relation to the disposal mentioned in subsection (1)(a).

(6) Such an election must be made within 2 years after the day on which the company ceases to be resident in the United Kingdom.

(7) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.”

30 U.K. Before section 189 (and the italic heading before it), insert—

“Pooling of NRCGT gains and losses U.K.

188A Election for pooling

(1) A “pooling election” is an election which—

(a) specifies the date from which the election is to have effect (the “effective date” of the election), and

(b) is made by all those members of a group (the “potential pooling group”) which are qualifying members.

(2) For this purpose the “qualifying members” of a group are all the companies which are members of that group and meet the qualifying conditions on the effective date of the election.

(3) The “qualifying conditions” are met by a company at any time when it—

(a) is not resident in the United Kingdom,

(b) is a closely-held company,

(c) is not a company carrying on life assurance business (as defined in section 56 of the Finance Act 2012),

(d) does not hold any chargeable residential assets, and

(e) holds an asset the disposal of which would be a disposal of a UK residential property interest.

(4) For the purposes of subsection (3), an asset is a “chargeable residential asset” at any time if a disposal of the asset at that time would be a non-resident CGT disposal but for section 14B(5) (gains forming part of chargeable profits for corporation tax purposes by virtue of section 10B etc).

(5) The day on which a pooling election is made must not be later than the 30th day after the day specified as its effective date.

(6) A pooling election is irrevocable.

(7) In this section—

• “closely-held company” is to be interpreted in accordance with Part 1 of Schedule C1;

• “group” is to be interpreted in accordance with section 170.

188B Meaning of “NRCGT group”

(1) The companies which make a pooling election form an NRCGT group.

(2) An NRCGT group continues to exist as long as at least one member of the NRCGT group continues to be a member of the potential pooling group and to meet the conditions in paragraphs (a) to (d) of section 188A(3).

(3) See also section 188F (companies becoming eligible to join NRCGT group) and section 188G (company ceasing to be a member of an NRCGT group).

188C Transfers within an NRCGT group

(1) This section applies where a company (“company A”) makes a non-resident CGT disposal to another company (“company B”) at a time when both companies are members of the same NRCGT group.

(2) In subsections (3) to (5) “the asset” means the asset which is the subject of that disposal.

(3) For the relevant purposes (see subsection (4))—

(a) company A's acquisition of the asset is treated as company B's acquisition of the asset,

(b) everything done by company A in relation to the asset in the period of company A's ownership of the asset is accordingly treated as done by company B, and

(c) the disposal mentioned in subsection (1) is accordingly disregarded.

(4) The “relevant purposes” means the purposes of—

(a) the determination of whether or not an NRCGT gain or loss accrues on the disposal mentioned in subsection (1) or any subsequent disposal of the asset;

(b) the determination of the amount of any such gain or loss;

(c) the treatment for capital gains tax purposes of any such gain or loss.

(5) Accordingly, references in subsection (3) to an acquisition made by, or anything else done by, company A include anything that company A is treated as having done as a result of the application of this section in relation to an earlier disposal of the asset.

(6) Nothing in this section affects the treatment of the disposal in question for any other purposes (including the computation of any gains or losses, other than NRCGT gains or losses, that may accrue on the disposal).

188D Person chargeable to capital gains tax on NRCGT gains accruing to members of an NRCGT group

(1) The relevant body for a tax year (“year Y”) of an NRCGT group (see subsection (4)) is chargeable to capital gains tax in respect of chargeable NRCGT gains accruing to members of the group in the tax year on non-resident CGT disposals (and section 14D(1) does not apply to such gains).

(2) Capital gains tax is charged on the total amount of chargeable NRCGT gains accruing in year Y to members of the NRCGT group, after deducting—

(a) any allowable NRCGT losses accruing in year Y to any member of the NRCGT group,

(b) so far as they have not been allowed as a deduction from chargeable gains accruing in any previous tax year, any allowable NRCGT losses which in any previous tax year (not earlier than the tax year 2015-16) accrued to any member of the NRCGT group, and

(c) so far as they have not been allowed as a deduction from chargeable gains accruing in any previous tax year, any allowable losses (not falling within paragraph (b)) on disposals of UK residential property interests which in any previous tax year (not earlier than the tax year 1965-66) accrued to any company which is, at any time in year Y, a member of the NRCGT group.

(3) The only deductions that can be made in calculating the total amount of chargeable NRCGT gains accruing as mentioned in subsection (2) are those permitted by this section.

(4) The “relevant body” of an NRCGT group for a tax year is the body constituted by all the companies which are members of that NRCGT group at any time in that tax year.

(5) This Act and the Management Act have effect with any modifications that may be necessary in relation to cases where the relevant body of an NRCGT group is chargeable to capital gains tax in accordance with this section.

188E Further provision about group losses

(1) Relief is not to be given under this Act more than once in respect of a group loss or any part of a group loss.

(2) Relief is not to be given under this Act in respect of a group loss if, and so far as, relief has been or may be given in respect of it under the Tax Acts.

(3) No relief is to be given otherwise than in accordance with this section for group losses.

(4) In this section “group loss” means an NRCGT loss accruing to a member of an NRCGT group.

188F Companies becoming eligible to join an NRCGT group

(1) A company which is not a member of an NRCGT group and is eligible to become a member of that group may elect to do so.

(2) A company is eligible to become a member of an NRCGT group at any time when it—

(a) is a member of the potential pooling group, and

(b) meets the qualifying conditions.

But see subsections (3) and (4).

(3) Subsection (4) applies if, throughout a period of 12 months, a company—

(a) holds a UK residential asset, and

(b) is eligible to become a member of an NRCGT group.

(4) If the company has not elected to become a member of the NRCGT group by the end of that period of 12 months, the company is not eligible to become a member of the NRCGT group at any time after the end of that period of 12 months.

(5) The effect of subsection (4) in relation to a company expires if at any time the company—

(a) no longer holds the whole or part of any UK residential asset that was held by the company at any time in the 12 month period referred to in subsection (3), but

(b) holds another UK residential asset.

(6) For the purposes of this section a person holds a “UK residential asset” at any time when the person holds an interest in UK land the disposal of which would be a disposal of a UK residential property interest.

188G Company ceasing to be a member of an NRCGT group

(1) A company ceases to be a member of an NRCGT group if it ceases—

(a) to be a member of the potential pooling group, or

(b) to meet the any of the conditions in paragraphs (a) to (d) of section 188A(3).

(2) Where a company ceases to be a member of an NRCGT group, the company is treated for the purposes of this Act and the Management Act as having—

(a) disposed of the relevant assets immediately before the company ceased to be a member of the NRCGT group, and

(b) immediately re-acquired them,

at their market value at that time.

(3) References in subsection (2) to a company ceasing to be a member of an NRCGT group do not apply to cases where a company ceases to be a member of the potential pooling group in consequence of another member of that group ceasing to exist.

(4) Subsection (2) does not apply in a case where all the companies which are members of an NRCGT group cease to be members of that NRCGT group by reason only of an event which causes—

(a) the principal company of the potential pooling group to cease to be a closely-held company, or

(b) the head of a sub-group of which they are members, to cease to be a closely-held company or to become a member of another group (as defined in section 170).

(5) Subsection (2) does not apply where a company which is a member of an NRCGT group ceases to be a member of the potential pooling group by reason only of the fact that the principal company of the potential pooling group becomes a member of another group (as defined in section 170).

(6) In subsection (2) “the relevant assets” means any assets the company holds immediately before it ceases to be a member of the NRCGT group the disposal of which would be a disposal of a UK residential property interest (see Schedule B1).

(7) For the purposes of this section—

• “sub-group” means anything that would be a group (as defined in section 170) in the absence of subsections (4) and (6) of section 170;

• the “head” of a sub-group is the company which is not a 75% subsidiary of any other member of the sub-group;

• references to the “principal company” of the potential pooling group are to be interpreted in accordance with section 170.

188H The responsible members of an NRCGT group

(1) Anything required or authorised to be done under this Act or the Management Act by or in relation to the relevant body of an NRCGT group is required or authorised to be done by or in relation to all the responsible members of that NRCGT group for that tax year.

(2) The “responsible members” of an NRCGT group for a tax year are—

(a) all the companies which are members of the NRCGT group at any time in that tax year, and

(b) any companies which have subsequently become members of the NRCGT group.

(3) This section is subject to section 188J (representative company).

188I Joint and several liability of responsible members

Where the responsible members of an NRCGT group are liable, in connection with their responsibility under section 188H to make a payment of tax or interest on unpaid tax, or pay any other amount, that liability is a joint and several liability of those responsible members.

188J The representative company of an NRCGT group

(1) Anything required or authorised to be done under this Act or the Management Act by or in relation to the relevant body of an NRCGT group may instead be done by or in relation to the company which is for the time being the representative company of the group.

(2) This includes the making of the declaration required by section 9(2) or 12ZB(4)(b) of the Management Act (declaration that return is correct and complete).

(3) The “representative company” means a member of the NRCGT group nominated by all the members of that group for the purposes of this section.

(4) A nomination under subsection (3), or the revocation of such a nomination, has effect only after written notice of the nomination or revocation has been given to an officer of Revenue and Customs.

188K Interpretation of sections 188A to 188J

(1) In sections 188A to 188J—

(a) references to the “relevant body” of an NRCGT group are to be interpreted in accordance with section 188D(4);

(b) references to an NRCGT gain or loss accruing to a member of an NRCGT group are to such a gain or loss accruing to a company at a time when the company is a member of the NRCGT group.

(2) In sections 188A to 188J and this section—

• “company” is to be interpreted in accordance with section 170(9);

• “interest in UK land” has the same meaning as in Schedule B1;

• “pooling election” has the meaning given by section 188A(1);

• “potential pooling group”, in relation to an NRCGT group, is to be interpreted in accordance with section 188A(1)(b);

• “qualifying conditions” has the meaning given by section 188A(3).”

31 (1) Section 260 (gifts on which inheritance tax is chargeable etc) is amended as follows. U.K.

(2) In subsection (1), for “and 261” substitute “ , 261 and 261ZA ”.

(3) After subsection (6) insert—

“(6ZA) Subsections (6ZB) and (6ZC) apply in any case where—

(a) the disposal is a non-resident CGT disposal, and

(b) the transferee is resident in the United Kingdom.

(6ZB) Subsections (3) and (4) have effect in relation to the disposal as if the reference to “chargeable gain” were a reference to “chargeable NRCGT gain”.

(6ZC) Subsection (5) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “the chargeable NRCGT gain which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”.”

32 U.K. In section 261 (section 260 relief: gifts to non-residents), in subsection (1), for “Section 260(3)” substitute “ Subject to section 261ZA, section 260(3) ”.

33 U.K. After section 261 insert—

“261ZA Gifts of UK residential property interests to non-residents

(1) This section applies where the disposal in relation to which a claim could be made under section 260 is a disposal of a UK residential property interest to a transferee who is not resident in the United Kingdom and, ignoring section 260—

(a) a gain would accrue to the transferor on the disposal, and

(b) on the assumption that the disposal is a non-resident CGT disposal (whether or not that is the case), that gain would be a chargeable NRCGT gain (see section 57B and Schedule 4ZZB).

(2) Section 260(3) has effect in relation to the disposal as if it read—

“(3) Where this subsection applies in relation to a disposal, the amount of any chargeable gain which, apart from this section, would accrue to the transferor on the disposal, shall be reduced by an amount equal to the held-over gain on the disposal.”

(3) Where the disposal is a non-resident CGT disposal—

(a) section 260(3), as modified by subsection (2) of this section, and section 260(4) have effect in relation to the disposal as if the references to “chargeable gain” were references to “chargeable NRCGT gain”, and

(b) section 260(5) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “the chargeable NRCGT gain which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”.

(4) Where a claim for relief is made under section 260 in relation to the disposal mentioned in subsection (1), on a subsequent disposal by the transferee of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1), the whole or a corresponding part of the held-over gain (see section 260(4))—

(a) is deemed to accrue to the transferee (in addition to any gain or loss that actually accrues on that subsequent disposal), and

(b) (if that would not otherwise be the case) is to be treated as a chargeable NRCGT gain accruing on a non-resident CGT disposal.

(5) Where the subsequent disposal mentioned in subsection (4) is a disposal within section 260(2)(a), subsection (7) of that section has effect in relation to the disposal as if—

(a) the reference to “the chargeable gain accruing to the transferee on the disposal of the asset” were a reference to the chargeable gain accruing on the disposal as computed apart from subsection (4), and

(b) the reference in section 260(7)(b) to “the chargeable gain” were a reference to—

(i) the chargeable gain (or, where the disposal is a non-resident CGT disposal, the chargeable NRCGT gain) accruing on the disposal, and

(ii) the held-over gain deemed to accrue under subsection (4).

(6) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.”

34 U.K. In section 288 (interpretation), in subsection (1), at the appropriate places insert—

““disposal of a UK residential property interest” has the meaning given by Schedule B1;””

““non-resident CGT disposal” has the meaning given by section 14B;”

““NRCGT gain” is to be interpreted in accordance with section 57B and Schedule 4ZZB;”

““NRCGT group” is to be interpreted in accordance with section 188B (read with sections 188F and 188G);”

““NRCGT loss” is to be interpreted in accordance with section 57B and Schedule 4ZZB;”

““NRCGT return” has the meaning given by section 12ZB(2) of the Management Act;”.

35 (1) Schedule 1 (application of exempt amount etc in cases involving settled property) is amended as follows. U.K.

(2) In paragraph 1(1), for “(5C)” substitute “ (5D) ”.

(3) In paragraph 2(1), for “(5C)” substitute “ (5D) ”.

36 U.K. After Schedule A1, insert—

“SCHEDULE B1 U.K. Disposals of UK residential property interests

Meaning of “disposal of a UK residential property interest” U.K.

1 (1) For the purposes of this Act, the disposal by a person (“P”) of an interest in UK land (whether made before or after this Schedule comes into force) is a “disposal of a UK residential property interest” if the first or second condition is met.

(2) The first condition is that—

(a) the land has at any time in the relevant ownership period consisted of or included a dwelling, or

(b) the interest in UK land subsists for the benefit of land that has at any time in the relevant ownership period consisted of or included a dwelling.

(3) The second condition is that the interest in UK land subsists under a contract for an off-plan purchase.

(4) In sub-paragraph (2) “relevant ownership period” means the period—

(a) beginning with the day on which P acquired the interest in UK land or 6 April 2015 (whichever is later), and

(b) ending with the day before the day on which the disposal occurs.

(5) If the interest in UK land disposed of by P as mentioned in sub-paragraph (1) results from interests in UK land which P has acquired at different times (“the acquired interests”), P is regarded for the purposes of sub-paragraph (4)(a) as having acquired the interest when P first acquired any of the acquired interests.

(6) In this paragraph—

• “contract for an off-plan purchase” means a contract for the acquisition of land consisting of, or including, a building or part of a building that is to be constructed or adapted for use as a dwelling;

• “dwelling” has the meaning given by paragraph 4.

(7) Paragraphs 10 and 21 of Schedule 4ZZB contain further provision about interests under contracts for off-plan purchases.

“Interest in UK land” U.K.

2 (1) In this Schedule, “interest in UK land” means—

(a) an estate, interest, right or power in or over land in the United Kingdom, or

(b) the benefit of an obligation, restriction or condition affecting the value of any such estate, interest, right or power,

other than an excluded interest.

(2) The following are excluded interests—

(a) any security interest;

(b) a licence to use or occupy land;

(c) in England and Wales or Northern Ireland—

(i) a tenancy at will;

(ii) a manor.

(3) In sub-paragraph (2) “security interest” means an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any other obligation.

(4) In relation to land in Scotland the reference in sub-paragraph (3) to a rentcharge is to be read as a reference to a feu duty or a payment mentioned in section 56(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000 (asp 5).

(5) The Treasury may by regulations provide that any other description of interest or right in relation to land in the United Kingdom is an excluded interest.

(6) Regulations under sub-paragraph (5) may make incidental, consequential, supplementary or transitional provision or savings.

Grants of options U.K.

3 (1) Sub-paragraph (2) applies where—

(a) a person (“P”) grants at any time an option binding P to sell an interest in UK land, and

(b) a disposal by P of that interest in UK land at that time would be a disposal of a UK residential property interest by virtue of paragraph 1.

(2) The grant of the option is regarded for the purposes of this Schedule as the disposal of an interest in the land in question (if it would not be so regarded apart from this paragraph).

(3) Nothing in this paragraph affects the operation of section 144 in relation to the grant of the option (or otherwise).

(4) Subsection (6) of section 144 (interpretation of references to “sale” etc) applies for the purposes of this paragraph as it applies for the purposes of that section.

Meaning of “dwelling” U.K.

4 (1) For the purposes of this Schedule, a building counts as a dwelling at any time when—

(a) it is used or suitable for use as a dwelling, or

(b) it is in the process of being constructed or adapted for such use.

(2) Land that at any time is, or is intended to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on such land) is taken to be part of that dwelling at that time.

(3) For the purposes of sub-paragraph (1) a building is not used (or suitable for use) as a dwelling if it is used as—

(a) residential accommodation for school pupils;

(b) residential accommodation for members of the armed forces;

(c) a home or other institution providing residential accommodation for children;

(d) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder;

(e) a hospital or hospice;

(f) a prison or similar establishment;

(g) a hotel or inn or similar establishment.

(4) For the purposes of sub-paragraph (1) a building is not used (or suitable for use) as a dwelling if it is used, or suitable for use, as an institution (not falling within any of paragraphs (c) to (f) of sub-paragraph (3)) that is the sole or main residence of its residents.

(5) For the purposes of sub-paragraph (1) a building is not used (or suitable for use) as a dwelling if it falls within—

(a) paragraph 4 of Schedule 14 to the Housing Act 2004 (certain buildings occupied by students and managed or controlled by their educational establishment etc),

(b) any corresponding provision having effect in Scotland, or

(c) any corresponding provision having effect in Northern Ireland.

(6) In sub-paragraph (5) “corresponding provision” means provision designated by regulations made by the Treasury as corresponding to the provision mentioned in sub-paragraph (5)(a).

(7) If the accommodation provided by a building meets the conditions in sub-paragraph (8) in a tax year, the building is not to be regarded for the purposes of sub-paragraph (1) as used or suitable for use as a dwelling at any time in that tax year.

(8) The conditions are that the accommodation—

(a) includes at least 15 bedrooms,

(b) is purpose-built for occupation by students, and

(c) is occupied by students on at least 165 days in the tax year.

In the expression “purpose-built” the reference to building includes conversion.

(9) For the purposes of sub-paragraph (8), accommodation is occupied by students if it is occupied exclusively or mainly by persons who occupy it for the purpose of undertaking a course of education (otherwise than as school pupils).

(10) A building which (for any reason) becomes temporarily unsuitable for use as a dwelling is treated for the purposes of sub-paragraph (1) as continuing to be suitable for use as a dwelling; but see also the special rules in—

(a) paragraph 6 (damage to a dwelling), and

(b) paragraph 8(7) (periods before or during certain works).

(11) In this paragraph “building” includes a part of a building.

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

5 (1) The Treasury may by regulations amend paragraph 4 for the purpose of clarifying or changing the cases where a building is or is not to be regarded as being used as a dwelling (or suitable for use as a dwelling).

(2) The provision that may be made under sub-paragraph (1) includes, in particular, provision omitting or adding cases where a building is or is not to be regarded as being used (or as suitable for use) as a dwelling.

(3) Regulations under this paragraph may make incidental, consequential, supplementary or transitional provision or savings.

(4) In this paragraph “building” includes a part of a building.

Damage to a dwelling U.K.

6 (1) Sub-paragraph (2) applies where a person disposes of an interest in UK land and a building that forms, or has formed, part of the land has at any time in the relevant ownership period been temporarily unsuitable for use as a dwelling.

(2) Paragraph 4(10) (disregard of temporary unsuitability) does not apply in relation to the building's temporary unsuitability for use as a dwelling if—

(a) the temporary unsuitability resulted from damage to the building, and

(b) the first and second conditions are met.

(3) The first condition is that the damage was—

(a) accidental, or

(b) otherwise caused by events beyond the control of the person disposing of the interest in UK land.

(4) The second condition is that, as a result of the damage, the building was unsuitable for use as a dwelling for a period of at least 90 consecutive days.

(5) Where the first and second conditions are met, work done in the 90-day period to restore the building to suitability for use as a dwelling does not count, for the purposes of paragraph 4(1), as construction or adaptation of the building for use as a dwelling.

(6) The first condition is regarded as not being met if the damage occurred in the course of work that—

(a) was being done for the purpose of altering the building, and

(b) itself involved, or could be expected to involve, making the building unsuitable for use as a dwelling for 30 days or more.

(7) The 90-day period mentioned in sub-paragraph (4) must end at or before the end of the relevant ownership period but may begin at any time (whether or not within the ownership period).

(8) In this paragraph—

(a) references to alteration include partial demolition;

(b) “building” includes a part of a building;

(c) “relevant ownership period” has the meaning given by paragraph 1(4).

Demolition of a building U.K.

7 A building is regarded as ceasing to exist from the time when it has either—

(a) been demolished completely to ground level, or

(b) been demolished to ground level except for a single facade (or, in the case of a building on a corner site, a double facade) the retention of which is a condition or requirement of planning permission or development consent.

Disposal of a building that has undergone works U.K.

8 (1) This paragraph applies where a person disposes of an interest in UK land, and a building which is (or was formerly) on the land and has at any time in the relevant ownership period been suitable for use as a dwelling—

(a) has undergone complete or partial demolition or any other works during the relevant ownership period, and

(b) as a result of the works, has, at or at any time before the completion of the disposal, either ceased to exist or become unsuitable for use as a dwelling.

(2) If the conditions in sub-paragraph (4) are met at, or at any time before, the completion of the disposal, the building is taken to have been unsuitable for use as a dwelling throughout the part of the relevant ownership period when the works were in progress.

(3) If the conditions in sub-paragraph (4) are met at, or at any time before, the completion of the disposal, the building is also taken to have been unsuitable for use as a dwelling throughout any period which—

(a) ends immediately before the commencement of the works, and

(b) is a period throughout which the building was, for reasons connected with the works, not used as a dwelling.

(4) The conditions are that—

(a) as a result of the works the building has (at any time before the completion of the disposal) either ceased to exist or become suitable for use otherwise than as a dwelling,

(b) any planning permission or development consent required for the works, or for any change of use with which they are associated, has been granted, and

(c) the works have been carried out in accordance with any such permission or consent.

(5) If at the completion of the disposal the conditions in sub-paragraph (4) have not been met, the works are taken not to have affected the building's suitability for use as a dwelling (at any time before the disposal).

(6) Sub-paragraph (2) does not apply in relation to any time when—

(a) the building was undergoing any work, or put to a use, in relation to which planning permission or development consent was required but had not been granted, or

(b) anything was being done in contravention of a condition or requirement attached to a planning permission or development consent relating to the building.

(7) Where a building is treated under sub-paragraph (2) or (3) as unsuitable for use as a dwelling, the unsuitability is not regarded as temporary for the purposes of paragraph 4(10).

(8) In this paragraph—

• “building” includes a part of a building;

• “relevant ownership period” has the meaning given by paragraph 1(4).

Retrospective planning permission or development consent U.K.

9 (1) The condition in paragraph 8(4)(b) is taken to have been met at the time of the completion of the disposal if the required planning permission or development consent is given subsequently.

(2) For the purposes of paragraph 8(6)(a), the fact that planning permission or development consent had not been given at any time in relation to any work or use of a building is ignored if the required planning permission or development consent is given subsequently.

Interpretation U.K.

10 (1) For the purposes of this Schedule, the “completion” of the disposal of an interest in UK land is taken to occur—

(a) at the time of the disposal, or

(b) if the disposal is under a contract which is completed by a conveyance, at the time when the interest is conveyed.

(2) In this Schedule—

• “conveyance” includes any instrument (and “conveyed” is to be construed accordingly);

• “development consent” means development consent under the Planning Act 2008;

• “interest in UK land” has the meaning given by paragraph 2;

• “land” includes a building;

• “planning permission” has the meaning given by the relevant planning enactment.

(3) In sub-paragraph (2) “the relevant planning enactment” means—

(a) in relation to land in England and Wales, section 336(1) of the Town and Country Planning Act 1990;

(b) in relation to land in Scotland, section 227(1) of the Town and Country Planning (Scotland) Act 1997;

(c) in relation to land in Northern Ireland, Article 2(2) of the Planning (Northern Ireland) Order 1991 (S.I. 1991/1220 (N.I. 11)).”

37 U.K. After Schedule B1 (as inserted by paragraph 36), insert—

“SCHEDULE C1 U.K. Section 14F: meaning of “closely-held company” and “widely-marketed scheme”

PART 1 U.K. Meaning of “closely-held company”

Introduction U.K.

1 This Part of this Schedule sets out the rules for determining, for the purposes of sections 14F and 14G, whether or not a company is a closely-held company.

Main definition U.K.

2 (1) “Closely-held company” means a company in relation to which condition A or B is met.

(2) Condition A is that the company is under the control of 5 or fewer participators.

(3) Condition B is that 5 or fewer participators together possess or are entitled to acquire—

(a) such rights as would, in the event of the winding up of the company (“the relevant company”) on the basis set out in paragraph 3, entitle them to receive the greater part of the assets of the relevant company which would then be available for distribution among the participators, or

(b) such rights as would, in that event, so entitle them if there were disregarded any rights which any of them or any other person has as a loan creditor (in relation to the relevant company or any other company).

3 (1) This paragraph applies for the purposes of paragraph 2(3).

(2) In the notional winding up of the relevant company, the part of the assets available for distribution among the participators which any person is entitled to receive is the aggregate of—

(a) any part of those assets which the person would be entitled to receive in the event of the winding up of the relevant company, and

(b) any part of those assets which the person would be entitled to receive if—

(i) any other company which is a participator in the relevant company and is entitled to receive any assets in the notional winding up were also wound up on the basis set out in this paragraph, and

(ii) the part of the assets of the relevant company to which the other company is entitled were distributed among the participators in the other company in proportion to their respective entitlement to the assets of the other company available for distribution among the participators.

(3) In the application of sub-paragraph (2)—

(a) to the notional winding up of the other company mentioned in paragraph (b) of that sub-paragraph, and

(b) to any further notional winding up required by that paragraph (or by any further application of that paragraph),

references to “the relevant company” are to be read as references to the company concerned.

4 (1) This paragraph applies for the purpose of determining whether, under sub-paragraph (3) of paragraph 2, 5 or fewer participators together possess or are entitled to acquire rights such as are mentioned in paragraph (a) or (b) of that sub-paragraph.

(2) A person is to be treated as a participator in the relevant company if the person is a participator in any other company which would be entitled to receive assets in the notional winding up of the relevant company on the basis set out in paragraph 3.

(3) No account is to be taken of a participator which is a company unless the company possesses or is entitled to acquire the rights in a fiduciary or representative capacity.

(4) But sub-paragraph (3) does not apply for the purposes of paragraph 3.

5 (1) A company is not to be treated as a closely-held company if condition A or B is met.

(2) Condition A is that the company cannot be treated as a closely-held company except by taking, as one of the 5 or fewer participators requisite for its being so treated, a person which is a diversely-held company.

(3) Condition B is that the company—

(a) would not be a closely-held company were it not for paragraph (a) of paragraph 2(3) or paragraph (d) of paragraph 7(2), and

(b) would not be a closely-held company if the references in paragraphs 2(3)(a) and 7(2)(d) to participators did not include loan creditors which are diversely-held companies or qualifying institutional investors.

(4) In this paragraph “qualifying institutional investor” means any of the following persons—

(a) a scheme (as defined in section 14F(7)) which is a widely-marketed scheme;

(b) the trustee or manager of a qualifying pension scheme;

(c) a company carrying on life assurance business (as defined in section 56 of the Finance Act 2012);

(d) a person who cannot be liable for corporation tax or income tax (as relevant) on the ground of sovereign immunity.

(5) In sub-paragraph (4)(b) “qualifying pension scheme” means a pension scheme (as defined in section 150(1) of the Finance Act 2004) other than—

(a) an investment-regulated pension scheme within the meaning of Part 1 of Schedule 29A to that Act, or

(b) a pension scheme that would be an investment-regulated pension scheme if it were a registered pension scheme.

(6) The Treasury may by regulations amend sub-paragraphs (4) and (5).

(7) Regulations under sub-paragraph (6) may make incidental, consequential, supplementary or transitional provision or savings.

6 (1) Sub-paragraph (2) applies where a participator in a company is a qualifying institutional investor.

(2) For the purpose of determining whether or not the company is a closely-held company, any share or interest which the qualifying institutional investor has as a participator in the company (in any of the ways set out in section 454(2) of CTA 2010 or otherwise) is treated as a share or interest held by more than 5 participators.

(3) Sub-paragraph (4) applies where a participator in a company is a general partner of a limited partnership which is a collective investment scheme (as defined in section 235 of the Financial Services and Markets Act 2000).

(4) For the purpose of determining whether or not the company is a closely-held company, any share or interest which the general partner has as a participator in the company (in any of the ways set out in section 454(2) of CTA 2010 or otherwise) is treated as a share or interest held by more than 5 participators.

(5) Sub-paragraph (4) does not apply to—

(a) any rights which would, in the event of the winding up of the company (“the relevant company”) on the basis set out in paragraph 3, or in any other circumstances, entitle the general partner (or a participator in the general partner) to receive assets of the company which would then be available for distribution among the participators, or

(b) any rights which would, in that event, so entitle the general partner (or a participator in the general partner) if there were disregarded any rights which a person has as a loan creditor (in relation to the relevant company or another company).

(6) In this paragraph “limited partnership” means—

(a) a limited partnership registered under the Limited Partnerships Act 1907, or

(b) a firm or entity of a similar character formed under the law of a territory outside the United Kingdom.

(7) In this paragraph, “general partner”, in relation to a limited partnership, means a partner other than a limited partner.

(8) In this paragraph, “limited partner” means a person carrying on business as a partner in a limited partnership who—

(a) is not entitled to take part in the management of that business, and

(b) is entitled to have any liabilities of that business (or those beyond a certain limit) for debts or obligations incurred for the purposes of that business met or reimbursed by some other person.

(9) In this paragraph “qualifying institutional investor” has the same meaning as in paragraph 5.

Meaning of “control” U.K.

7 (1) For the purposes of this Schedule, a person (“P”) is treated as having control of a company (“C”) if P—

(a) exercises,

(b) is able to exercise, or

(c) is entitled to acquire,

direct or indirect control over C's affairs.

(2) In particular, P is treated as having control of C if P possesses or is entitled to acquire—

(a) the greater part of the share capital or issued share capital of C,

(b) the greater part of the voting power in C,

(c) so much of the issued share capital of C as would, on the assumption that the whole of the income of C were distributed among the participators, entitle P to receive the greater part of the amount so distributed, or

(d) such rights as would entitle P, in the event of the winding up of C or in any other circumstances, to receive the greater part of the assets of C which would then be available for distribution among the participators.

(3) Any rights that P or any other person has as a loan creditor are to be disregarded for the purposes of the assumption in sub-paragraph (2)(c).

(4) If two or more persons together satisfy any of the conditions in sub-paragraphs (1) and (2), they are treated as having control of C.

8 (1) This paragraph applies for the purposes of paragraph 7.

(2) If a person—

(a) possesses any rights or powers on behalf of another person (“A”), or

(b) may be required to exercise any rights or powers on A's direction or on A's behalf,

those rights or powers are to be attributed to A.

(3) There are also to be attributed to P all the rights and powers of any associate of P (including rights and powers exercisable jointly by any two or more associates of P).

(4) In this paragraph “associate”, in relation to P, means—

(a) any relative of P,

(b) the trustees of any settlement in relation to which P is a settlor, and

(c) the trustees of any settlement in relation to which any relative of P (living or dead) is or was a settlor.

(5) In this paragraph “relative” means—

(a) a spouse or civil partner,

(b) a parent or remoter forebear,

(c) a child or remoter issue, or

(d) a brother or sister.

Interpretation U.K.

9 In this Part of this Schedule—

• “diversely-held company” means a company which is not a closely-held company;

• “loan creditor” has the meaning given by section 453 of CTA 2010;

• “open-ended investment company” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 236 of that Act);

• “participator”, in relation to a company, has the meaning given by section 454 of CTA 2010.

PART 2 U.K. Unit trust schemes and OEICs: widely-marketed schemes

Introduction U.K.

10 (1) This Part of this Schedule sets out the rules for determining, for the purposes of this Schedule and section 14F, whether or not a scheme is a widely-marketed scheme at any time.

(2) In this Part of this Schedule “scheme” has the same meaning as in section 14F.

Widely-marketed schemes U.K.

11 (1) A scheme is a widely-marketed scheme at any time when the scheme meets conditions A to C.

(2) Condition A is that the scheme produces documents, available to investors and to Her Majesty's Revenue and Customs, which contain—

(a) a statement specifying the intended categories of investor,

(b) an undertaking that units in the scheme will be widely available, and

(c) an undertaking that units in the scheme will be marketed and made available in accordance with the requirements of sub-paragraph (5)(a).

(3) Condition B is that—

(a) the specification of the intended categories of investor does not have a limiting or deterrent effect, and

(b) any other terms or conditions governing participation in the scheme do not have a limiting or deterrent effect.

(4) In sub-paragraph (3) “limiting or deterrent effect” means an effect which—

(a) limits investors to a limited number of specific persons or specific groups of connected persons, or

(b) deters a reasonable investor falling within one of (what are specified as) the intended categories of investor from investing in the scheme.

(5) Condition C is that—

(a) units in the scheme are marketed and made available—

(i) sufficiently widely to reach the intended categories of investors, and

(ii) in a manner appropriate to attract those categories of investors, and

(b) a person who falls within one of the intended categories of investors can, upon request to the manager of the scheme, obtain information about the scheme and acquire units in it.

(6) A scheme is not regarded as failing to meet condition C at any time by reason of the scheme's having, at that time, no capacity to receive additional investments, unless—

(a) the capacity of the scheme to receive investments in it is fixed by the scheme documents (or otherwise), and

(b) a pre-determined number of specific persons or specific groups of connected persons make investments in the scheme which collectively exhaust all, or substantially all, of that capacity.

Interpretation U.K.

12 In this Part of this Schedule—

• “open-ended investment company” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 236 of that Act);

• “units” means the rights or interests (however described) of the participants in a unit trust scheme or open-ended investment company.”

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

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

(3) After that sub-paragraph insert—

“(2) See also Part 4 of Schedule 4ZZB, which—

(a) makes provision about non-resident CGT disposals which are, or involve, relevant high value disposals, and

(b) includes provision about the computation of gains or losses on such disposals which are neither NRCGT gains or losses (as defined in section 57B and Schedule 4ZZB) nor ATED-related.”

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

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

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

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

(6) After paragraph 6 insert—

“Special rule for certain disposals to which both this Schedule and Schedule 4ZZB relate U.K.

6A (1) This paragraph applies where conditions A and B are met.

(2) Condition A is that the relevant high value disposal is—

(a) a non-resident CGT disposal (see section 14B), or

(b) one of two or more disposals which are (by virtue of section 2C and this Schedule) treated as comprised in a non-resident CGT disposal.

(3) Condition B is that—

(a) the interest disposed of by the relevant high value disposal was held by P on 5 April 2015,

(b) neither Case 2 nor Case 3 in paragraph 2 applies, and

(c) no election under paragraph 5 of this Schedule (or paragraph 2(1)(b) of Schedule 4ZZB) is or has been made in relation to the chargeable interest which (or a part of which) is the subject of the relevant high value disposal.

(4) The ATED-related gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount of the post-April 2015 ATED-related gain or loss.

• Step 2 Determine the amount of the pre-April 2015 ATED-related gain or loss.

• Step 3 Add—

  (a)

  the amount of any gain or loss determined under Step 1, and

  (b)

  the amount of any gain or loss determined under Step 2,

  (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the ATED-related gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the ATED-related loss on the relevant high value disposal.

(5) The post-April 2015 ATED-related gain or loss is equal to the amount that would be given by paragraph 3(1) as the amount of the ATED-related gain or loss if the relevant year for the purposes of that paragraph were 2015.

(6) The “pre-April 2015 ATED-related gain or loss” means the relevant fraction of the notional pre-April 2015 gain or loss.

(7) “The relevant fraction” is—

where—

“CD” is the number of days in the relevant ownership period which are ATED chargeable days;

“TD” is the total number of days in the relevant ownership period.

(8) If the interest disposed of was not held by P on 5 April 2013, the “notional pre-April 2015 gain or loss” is the gain or loss which would have accrued on 5 April 2015 had the interest been disposed of on that date for a consideration equal to its market value on that date.

(9) If the interest disposed of was held by P on 5 April 2013, the “notional pre-April 2015 gain or loss” is the gain or loss which would have accrued on 5 April 2015 if P had—

(a) acquired the interest on 5 April 2013 for a consideration equal to its market value on that date, and

(b) disposed of it on 5 April 2015 for a consideration equal to its market value on that date.

(10) Paragraph 3(3) applies for the purposes of sub-paragraphs (8) and (9) as for the purposes of paragraph 3(2).

(11) In sub-paragraph (7) “relevant ownership period” means the period—

(a) beginning with the day on which P acquired the chargeable interest or, if later, 6 April 2013, and

(b) ending with 5 April 2015.

(12) For how to compute the amount of the gain or loss on the relevant high value disposal that is neither ATED-related nor an NRCGT gain or loss (as defined in section 57B and Schedule 4ZZB) see paragraphs 16 to 19 of Schedule 4ZZB.”

(7) After paragraph 7 insert—

“Wasting assets U.K.

8 (1) Sub-paragraph (2) applies where it is necessary, in computing in accordance with paragraph 3(2) the notional post-commencement gain or loss accruing to a person on a relevant high value disposal, to determine whether or not the interest which is the subject of the disposal is a wasting asset.

(2) The assumption in paragraph 3(2) that the interest was acquired on a particular 5 April is to be ignored in determining that question.

(3) Sub-paragraph (4) applies where it is necessary, in computing in accordance with paragraph 6A(9) the notional pre-April 2015 gain or loss accruing to a person on a disposal, to determine whether or not the interest which is the subject of the disposal is a wasting asset.

(4) The assumption in paragraph 6A(9) that the interest was acquired on 5 April 2013 is to be ignored in determining that question.

(5) In this paragraph references to a “wasting asset” are to a wasting asset as defined for the purposes of Chapter 2 of Part 2 of this Act.

Capital allowances U.K.

9 (1) Sub-paragraph (2) applies where it is to be assumed for the purpose of computing—

(a) the notional post-commencement gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 3(2), or

(b) the notional pre-April 2015 gain or loss accruing to a person on a disposal in accordance with paragraph 6A(9),

that an asset was acquired by a person on 5 April 2013 for a consideration equal to its market value on that date.

(2) For the purposes of that computation, sections 41 (restriction of losses by reference to capital allowances etc) and 47 (wasting assets qualifying for capital allowances) are to apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by the person in acquiring or providing the asset as if that allowance were made in respect of the expenditure treated as incurred by the person on 5 April 2013 as mentioned in sub-paragraph (1).”

39 U.K. After Schedule 4ZZA insert—

“SCHEDULE 4ZZB U.K. Non-resident CGT disposals: gains and losses

PART 1 U.K. Introduction

1 (1) This Schedule applies for the purpose of determining, in relation to a non-resident CGT disposal made by a person (“P”)—

(a) whether an NRCGT gain or loss accrues to P on the disposal, and the amount of any such gain or loss, and

(b) whether a gain or loss other than an NRCGT gain or loss accrues to P on the disposal, and the amount of any such gain or loss;

(and see also sub-paragraph (2)(c)).

(2) In this Schedule—

(a) Part 2 is about elections to vary the method of computation of gains and losses;

(b) Part 3 contains the main rules for computing the gains and losses;

(c) Part 4 contains separate rules for computing, in a case where the non-resident CGT disposal is, or involves, a relevant high value disposal (as defined in section 2C)—

(i) the amount of any NRCGT gains or losses accruing on the disposal, and

(ii) the amount of any gains or losses accruing on the disposal that are neither ATED-related nor NRCGT gains or losses;

(d) Part 5 contains special rules about non-resident CGT disposals made by companies;

(e) Part 6 (miscellaneous provisions) contains special rules relating to wasting assets and capital allowances;

(f) Part 7 contains definitions for the purposes of this Schedule.

(3) See section 14B for the meaning of “non-resident CGT disposal”.

PART 2 U.K. Elections for alternative methods of computation

2 (1) A person (“P”) making a non-resident CGT disposal of (or of a part of) an interest in UK land which P held on 5 April 2015 may—

(a) make an election for straight-line time apportionment in relation to the interest in UK land;

(b) make an election for the retrospective basis of computation to apply in relation to that interest,

(but may not do both).

(2) P may not make an election under sub-paragraph (1)(a) if the disposal is one to which Part 4 of this Schedule applies (cases involving relevant high value disposals).

(3) For the effect of making an election under sub-paragraph (1)(a), see paragraph 8.

(4) For the effect of making (or not making) an election under sub-paragraph (1)(b), see paragraphs 5(1)(b), 9(1)(b), 13(1)(b), 14(1)(a) and 15(1)(c) (and paragraph 6A(3)(c) of Schedule 4ZZA).

(5) An election made under paragraph 5 of Schedule 4ZZA (including any such election made before the coming into force of this paragraph) has effect as if it were also an election under sub-paragraph (1)(b).

3 (1) An election under paragraph 2(1) is irrevocable (and where an election has been made under paragraph 2(1) or paragraph 5 of Schedule 4ZZA in relation to an asset, no election may subsequently be made under either of those provisions in relation to the asset).

(2) An election under paragraph 2(1) may (regardless of section 42(2) of the Management Act) be made by being included in—

(a) a tax return under the Management Act for the tax year in which the first non-resident CGT disposal by P of the interest in UK land (or any part of it) is made, or

(b) the NRCGT return relating to the disposal,

(but not by any other method).

(3) References in sub-paragraph (2) to an election being included in a return include an election being included by virtue of an amendment of the return.

(4) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under paragraph 2(1).

PART 3 U.K. Main computation rules

Disposals to which this Part applies U.K.

4 (1) This Part of this Schedule applies where a person (“P”) makes a non-resident CGT disposal of (or of a part of) an interest in UK land.

(2) But this Part of this Schedule does not apply if the disposal is—

(a) a relevant high value disposal, or

(b) a disposal in which a relevant high value disposal is comprised (see paragraph 12(3)).

(3) In this Part of this Schedule “the disposed of interest” means—

(a) the interest in UK land, or

(b) if the disposal is of part of that interest, the part disposed of.

Introduction to paragraphs 6 to 8 U.K.

5 (1) Paragraphs 6 to 8 apply where—

(a) the disposed of interest was held by P on 5 April 2015, and

(b) P has not made an election under paragraph 2(1)(b) in relation to the interest in UK land.

(2) In paragraphs 6 and 7—

(a) “notional post-April 2015 gain or loss” means the gain or loss which would have accrued on the disposal had P acquired the disposed of interest on 5 April 2015 for a consideration equal to its market value on that date;

(b) “notional pre-April 2015 gain or loss” means the gain or loss which would have accrued on 5 April 2015 had the disposed of interest been disposed of for a consideration equal to its market value on that date;

but see also paragraph 8(1).

(3) For the purpose of determining the amount of the hypothetical gain or loss mentioned in sub-paragraph (2)(a), no account is taken of section 57B or this Schedule (apart from paragraph 23).

Assets held at 5 April 2015: default method U.K.

6 (1) The NRCGT gain or loss accruing on the disposal is equal to the relevant fraction of the notional post-April 2015 gain or loss (as the case may be).

But see also sub-paragraph (3).

(2) “The relevant fraction” is—

where—

“RD” is the number of days in the post-commencement ownership period on which the subject matter of the disposed of interest consists wholly or partly of a dwelling;

“TD” is the total number of days in the post-commencement ownership period.

(3) If there has been mixed use of the subject matter of the disposed of interest on one or more days in the post-commencement ownership period, the NRCGT gain or loss accruing on the disposal is the fraction of the amount that would (apart from this sub-paragraph) be given by sub-paragraphs (1) and (2) that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings.

(4) For the purposes of this paragraph there is “mixed use” of land on any day on which the land consists partly, but not exclusively, of one or more dwellings.

(5) “Post-commencement ownership period” means the period beginning with 6 April 2015 and ending with the day before the day on which the disposal occurs.

7 The gain or loss accruing on the disposal which is not an NRCGT gain or (as the case may be) loss is computed as follows.

• Step 1 Determine the amount of the notional pre-April 2015 gain or loss.

• Step 2 In a case where there is a notional post-April 2015 gain, determine the amount of that gain remaining after the deduction of the NRCGT gain determined under paragraph 6.

• Step 3 In a case where there is a notional post-April 2015 loss, determine the amount of that loss remaining after the deduction of the NRCGT loss determined under paragraph 6.

• Step 4 Add—

  (a)

  the amount of any gain or loss determined under Step 1, and

  (b)

  the amount of any gain determined under Step 2 or (as the case may be) any loss determined under Step 3,

  (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the gain on the disposal which is not an NRCGT gain. If the result is a negative amount, that amount (expressed as a positive number) is the loss on the disposal which is not an NRCGT loss.

Modified application of paragraphs 5 to 7 where election made for straight-line time apportionment U.K.

8 (1) Where the non-resident CGT disposal is of (or of a part of) an interest in UK land in respect of which P makes, or has made, an election for straight-line time apportionment under paragraph 2(1)(a)—

(a) paragraphs (a) and (b) of paragraph 5(2) do not apply in relation to the disposal, and

(b) for the purposes of paragraphs 6 and 7, the “notional pre-April 2015 gain or loss” and the “notional post-April 2015 gain or loss” are to be determined in accordance with the following steps.

• Step 1 Determine the amount of the gain or loss which accrues to P on the disposal. For the purpose of determining that amount, no account is taken of section 57B or this Schedule (apart from paragraph 23).

• Step 2 An amount equal to the post-commencement fraction of that gain or loss is the notional post-April 2015 gain or (as the case may be) loss.

• Step 3 An amount equal to the pre-commencement fraction of that gain or loss is the notional pre-April 2015 gain or (as the case may be) loss.

(2) The “post-commencement fraction” is—

where—

“PCD” is the number of days in the post-commencement ownership period;

“TD” is the total number of days in the ownership period.

(3) The “pre-commencement fraction” is—

where “PCD” and “TD” have the same meanings as in sub-paragraph (2).

(4) In this paragraph—

• “ownership period” means the period beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982 and ending with the day before the day on which the disposal occurs;

• “post-commencement ownership period” has the meaning given by paragraph 6(5).

Cases where asset acquired after 5 April 2015 or election made under paragraph 2(1)(b) U.K.

9 (1) This paragraph applies if—

(a) the disposed of interest was not held by P throughout the period beginning with 5 April 2015 and ending with the disposal, or

(b) the non-resident CGT disposal is of (or of part of) an interest in UK land in respect of which P makes, or has made, an election under paragraph 2(1)(b).

(2) The NRCGT gain or loss accruing on the disposal is computed as follows.

• Step 1 Determine the amount of the gain or loss which accrues to P. For the purpose of determining the amount of that gain or loss, no account is taken of section 57B or this Schedule (apart from paragraph 23).

• Step 2 The NRCGT gain or (as the case may be) loss accruing on the disposal is an amount equal to the relevant fraction of that gain or loss (but see Step 3).

• Step 3 If there has been mixed use of the subject matter of the disposed of interest on one or more days in the relevant ownership period, the NRCGT gain or loss accruing on the disposal is equal to the appropriate fraction of the amount given by Step 2.

(3) For the purposes of this paragraph there is “mixed use” of land on any day on which the land consists partly, but not exclusively, of one or more dwellings.

(4) In Step 3 “the appropriate fraction” means the fraction that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings.

(5) The gain or loss accruing on the disposal which is not an NRCGT gain or (as the case may be) loss is to be computed as follows.

• Step 1 In a case where there is a gain under Step 1 of sub-paragraph (2), determine the amount of that gain remaining after the deduction of the NRCGT gain determined under that sub-paragraph. That remaining gain is the gain accruing on the disposal which is not an NRCGT gain.

• Step 2 In a case where there is a loss under Step 1 of sub-paragraph (2), determine the amount of that loss remaining after deduction of the NRCGT loss determined under that sub-paragraph. That remaining loss is the loss accruing on the disposal which is not an NRCGT loss.

(6) For the purposes of sub-paragraph (2), “the relevant fraction” is—

where—

“RD” is the number of days in the relevant ownership period on which the subject matter of the disposed of interest consists wholly or partly of a dwelling;

“TD” is the total number of days in the relevant ownership period.

(7) “The relevant ownership period” means the period—

(a) beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982, and

(b) ending with the day before the day on which the disposal mentioned in paragraph 4(1) occurs.

Interest subsisting under contract for off-plan purchase U.K.

10 (1) Sub-paragraph (2) applies where the non-resident CGT disposal referred to in paragraph 4(1) is a disposal of a UK residential property interest only because of the second condition in paragraph 1 of Schedule B1 (interest subsisting under a contract for the acquisition of land that consists of, or includes, a building that is to be constructed for use as a dwelling etc).

(2) The land that is the subject of the contract concerned is treated for the purposes of this Part of this Schedule as consisting of (or, as the case requires, including) a dwelling throughout P's period of ownership of the disposed of interest.

PART 4 U.K. Cases involving relevant high value disposals

Overview U.K.

11 (1) This Part is about non-resident CGT disposals which are, or involve, relevant high value disposals (see section 2B, which charges capital gains tax on ATED-related gains on relevant high value disposals).

(2) Paragraphs 12 to 15 contain provision about how any NRCGT gains and losses on such a disposal are computed, including provision—

(a) for the NRCGT gains or losses to be computed for each relevant high value disposal comprised in the non-resident CGT disposal (paragraphs 13 to 15), and

(b) for the results to be added (where necessary) to find the NRCGT gain or loss on the non-resident CGT disposal (see paragraph 12).

(3) For provision about how to compute any ATED-related gains or losses accruing on the relevant high value disposals, see Schedule 4ZZA.

(4) Paragraphs 16 to 19 contain provisions for computing any gains or losses accruing on the disposals mentioned in sub-paragraph (1) which are neither ATED-related nor NRCGT gains or losses, including provision—

(a) for such balancing gains or losses to be computed for each relevant high value disposal comprised in the non-resident CGT disposal, and

(b) for the results to be added together (where necessary) to find the balancing gain or loss on the non-resident CGT disposal (see paragraph 16).

(5) Paragraph 20 is about cases where a disposal which is not a relevant high value disposal is also comprised in the non-resident CGT disposal.

Disposal involving one or more relevant high value disposals U.K.

12 (1) This Part of this Schedule applies where—

(a) a person (other than an excluded person) (“P”) makes a non-resident CGT disposal of (or of part of) an interest in UK land, and

(b) that disposal (“the disposal of land”) is a relevant high value disposal or a relevant high value disposal is comprised in it.

In this sub-paragraph “excluded person” has the meaning given by section 2B(2).

(2) The NRCGT gain or loss accruing on the disposal of land is computed as follows.

• Step 1 Determine in accordance with paragraphs 13 to 15 the amount of the NRCGT gain or loss accruing on each relevant high value disposal.

• Step 2 Add together the amounts of any gains or losses determined under Step 1 (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the NRCGT gain on the disposal of land. If the result is a negative amount, that amount (expressed as a positive number) is the NRCGT loss on the disposal of land. See paragraphs 16 to 19 for how to compute the gain or loss on the disposal of land which is neither ATED-related nor an NRCGT gain or loss.

(3) For the purposes of this Schedule, a relevant high value disposal is “comprised in” a non-resident CGT disposal if—

(a) the non-resident CGT disposal is treated for the purposes of section 2C and Schedule 4ZZA as two or more disposals, and

(b) the relevant high value disposal is one of those.

(4) In this Part of this Schedule—

(a) “the asset”, in relation to a relevant high value disposal, means the chargeable interest which (or a part of which) is the subject of that disposal, and

(b) “the disposed of interest”, in relation to a relevant high value disposal, means the asset or, if only part of the asset is the subject of the relevant high value disposal, that part of the asset.

(5) For the purposes of this Part of this Schedule a day is a “section 14D chargeable day” in relation to a relevant high value disposal if—

(a) it is a day on which the subject matter of the disposed of interest consists wholly or partly of a dwelling, but

(b) it is not an ATED chargeable day (as defined in paragraph 3 of Schedule 4ZZA).

Assets held at 5 April 2015 (where no election made and no rebasing in 2016 required) U.K.

13 (1) This paragraph applies where—

(a) the disposed of interest was held by P on 5 April 2015,

(b) P has not made an election under paragraph 2(1)(b) (or paragraph 5 of Schedule 4ZZA) in respect of the asset, and

(c) paragraph 15 does not apply.

(2) The NRCGT gain or loss accruing on the relevant high value disposal is equal to the special fraction of the notional post-April 2015 gain or loss (as the case may be) on that disposal.

(3) “Notional post-April 2015 gain or loss” means the gain or loss which would have accrued on the relevant high value disposal had P acquired the disposed of interest on 5 April 2015 for a consideration equal to the market value of that interest on that date.

(4) “The special fraction” is—

where—

“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the post-commencement ownership period;

“TD” is the total number of days in the post-commencement ownership period.

(5) “The post-commencement ownership period” means the period beginning with 6 April 2015 and ending with the day before the day on which the relevant high value disposal occurs.

Asset acquired after 5 April 2015 or election made under paragraph 2(1)(b) (but no rebasing in 2016 required) U.K.

14 (1) This paragraph applies where—

(a) P makes, or has made, an election under paragraph 2(1)(b) (or paragraph 5 of Schedule 4ZZA) in respect of the asset, or

(b) the disposed of interest was not held by P throughout the period beginning with 5 April 2015 and ending with the disposal.

(2) But this paragraph does not apply if paragraph 15 applies.

(3) The NRCGT gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount of the gain or loss which accrues to P. (For the purpose of determining the amount of that gain or loss, no account need be taken of section 57B or this Schedule (apart from paragraph 23).)

• Step 2 The NRCGT gain or loss accruing on the relevant high value disposal is equal to the special fraction of that gain or loss.

(4) For this purpose “the special fraction” is—

where—

“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the relevant ownership period;

“TD” is the total number of days in the relevant ownership period.

(5) “Relevant ownership period” means the period—

(a) beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982, and

(b) ending with the day before the day on which the relevant high value disposal occurs.

Certain disposals after 5 April 2016 (computation involving additional rebasing in 2016) U.K.

15 (1) This paragraph applies where—

(a) the disposed of interest was held by P on 5 April 2016,

(b) the relevant high value disposal falls within Case 3 for the purposes of Schedule 4ZZA (see paragraph 2(4) of that Schedule), and

(c) no election is or has been made (or treated as made) by P under paragraph 2(1)(b) in respect of the asset.

(2) The NRCGT gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount equal to the special fraction of the notional post-April 2016 gain or loss (as the case may be).

• Step 2 Determine the amount equal to the special fraction of the notional pre-April 2016 gain or loss (as the case may be).

• Step 3 Add—

  (a)

  the amount of any gain or loss determined under Step 1, and

  (b)

  the amount of any gain or loss determined under Step 2,

  (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the NRCGT gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the NRCGT loss on the relevant high value disposal.

(3) “The special fraction” is—

where—

“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the relevant ownership period;

“TD” is the total number of days in the relevant ownership period.

(4) The “relevant ownership period” is—

(a) for the purpose of computing under Step 1 of sub-paragraph (2) the special fraction of the notional post-April 2016 gain or loss, the period beginning with 6 April 2016 and ending with the day before the day on which the relevant high value disposal occurs;

(b) for the purpose of computing under Step 2 of sub-paragraph (2) the special fraction of the notional pre-April 2016 gain or loss, the period beginning with the day on which P acquired the disposed of interest or, if later, 6 April 2015 and ending with 5 April 2016.

(5) “Notional post-April 2016 gain or loss” means the gain or loss which would have accrued on the relevant high value disposal had P acquired the disposed of interest on 5 April 2016 for a consideration equal to its market value on that date.

(6) If the disposed of interest was not held by P on 5 April 2015, “notional pre-April 2016 gain or loss” means the gain or loss which would have accrued on 5 April 2016 had the disposed of interest been disposed of for a consideration equal to the market value of the interest on that date.

(7) If the disposed of interest was held by P on 5 April 2015, “notional pre-April 2016 gain or loss” means the gain or loss which would have accrued to P on the disposal mentioned in paragraph (b), had P—

(a) acquired the disposed of interest on 5 April 2015 for a consideration equal to the market value of that interest on that date, and

(b) disposed of that interest on 5 April 2016 for a consideration equal to the market value of that interest on that date.

Amount of gain or loss that is neither ATED-related nor an NRCGT gain or loss U.K.

16 (1) The gain or loss on the disposal of land (see paragraph 12(1)(b)) which is neither ATED-related nor an NRCGT gain or loss (“the balancing gain or loss”) is computed as follows.

• Step 1 Determine in accordance with paragraphs 17 to 19 the amount of the gain or loss accruing on each relevant high value disposal which is neither ATED-related nor an NRCGT gain or loss. This is the “balancing” gain or loss for each such disposal.

• Step 2 Add together the amounts of any balancing gains or losses determined under Step 1 (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the balancing gain on the disposal of land. If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the disposal of land.

(2) In relation to a relevant high value disposal, “balancing day” means a day which is neither—

(a) a section 14D chargeable day (see paragraph 12(5)), nor

(b) an ATED chargeable day.

(3) In relation to a relevant high value disposal, “non-ATED chargeable day” means a day which is not an ATED chargeable day.

(4) The references in sub-paragraphs (2) and (3) to an “ATED chargeable day” are to be interpreted in accordance with paragraph 3(6) of Schedule 4ZZA.

17 (1) This paragraph applies in relation to a relevant high value disposal to which paragraph 13 applies.

(2) If paragraph 6A of Schedule 4ZZA does not apply, the amount of the balancing gain or loss on the relevant high value disposal is found by adding—

(a) the amount of the balancing gain or loss belonging to the notional post-April 2015 gain or loss, and

(b) the amount of the balancing gain or loss belonging to the notional pre-April 2015 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal.

If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal.

(3) If paragraph 6A of Schedule 4ZZA applies, the amount of the balancing gain or loss on the relevant high value disposal is found by adding—

(a) the amount of the balancing gain or loss belonging to the notional post-April 2015 gain or loss,

(b) the amount of the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, and

(c) if P held the disposed of interest on 5 April 2013, the amount of the notional pre-April 2013 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal.

If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal.

(4) The balancing gain or loss belonging to the notional post-April 2015 gain or loss is equal to the balancing fraction of the notional post-April 2015 gain or loss.

(5) The balancing gain or loss belonging to the notional pre-April 2015 gain or loss is equal to the non-ATED related fraction of the notional pre-April 2015 gain or loss.

(6) “The balancing fraction” is—

where—

“BD” is the number of balancing days (see paragraph 16(2)) in the appropriate ownership period;

“TD” is the total number of days in the appropriate ownership period.

(7) “The non-ATED related fraction” is—

where—

“NAD” is the number of non-ATED chargeable days (see paragraph 16(3)) in the appropriate ownership period;

“TD” is the total number of days in the appropriate ownership period.

(8) “Appropriate ownership period” means—

(a) for the purpose of computing the balancing gain or loss belonging to the notional post-April 2015 gain or loss, the post-commencement ownership period defined in paragraph 13(5);

(b) for the purpose of computing the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, the relevant ownership period defined in paragraph 6A(11) of Schedule 4ZZA.

(9) In this paragraph—

(a) “notional post-April 2015 gain or loss” has the same meaning as in paragraph 13;

(b) “notional pre-April 2015 gain or loss” has the same meaning as in paragraph 6A of Schedule 4ZZA;

(c) “notional pre-April 2013 gain or loss” means the gain or loss which would have accrued on 5 April 2013 had the disposed of interest been disposed of for a consideration equal to the market value of that interest at that date.

18 (1) In the case of a relevant high value disposal to which paragraph 14 applies, the amount of the balancing gain or loss is determined as follows.

(2) Determine the number of balancing days (see paragraph 16(2)) in the relevant ownership period.

(3) The balancing gain or loss on the disposal is equal to the balancing fraction of the amount of the gain or (as the case may be) loss determined under Step 1 of paragraph 14(3).

(4) “The balancing fraction” is—

where—

“BD” is the number of balancing days in the relevant ownership period;

“TD” is the total number of days in the relevant ownership period.

(5) In this paragraph “relevant ownership period” has the same meaning as in paragraph 14.

19 (1) The amount of the balancing gain or loss on a relevant high value disposal to which paragraph 15 applies is found by adding—

(a) the amount of the balancing gain or loss belonging to the notional post-April 2016 gain or loss,

(b) the amount of the balancing gain or loss belonging to the notional pre-April 2016 gain or loss, and

(c) if P held the disposed of interest on 5 April 2015, the amount of the notional pre-April 2015 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal.

If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal.

(2) The balancing gain or loss belonging to the notional post-April 2016 gain or loss is equal to the balancing fraction of the notional post-April 2016 gain or loss.

(3) The balancing gain or loss belonging to the notional pre-April 2016 gain or loss is equal to the balancing fraction of the notional pre-April 2016 gain or loss.

(4) “The balancing fraction” is—

where—

“BD” is the number of balancing days (see paragraph 16(2)) in the appropriate ownership period;

“TD” is the total number of days in the appropriate ownership period.

(5) The appropriate ownership period is—

(a) for the purpose of computing the balancing gain or loss belonging to the notional post-April 2016 gain or loss, the relevant ownership period mentioned in paragraph 15(4)(a);

(b) for the purpose of computing the balancing gain or loss belonging to the notional pre-April 2016 gain or loss, the relevant ownership period mentioned in paragraph 15(4)(b).

(6) In this paragraph—

(a) “notional post-April 2016 gain or loss” and “notional pre-April 2016 gain or loss” mean the same as in paragraph 15;

(b) “notional pre-April 2015 gain or loss” means the gain or loss which would have accrued on 5 April 2015 if the disposed of interest had been disposed of for a consideration equal to the market value of that interest on that date.

Where relevant high value disposal and “other” disposal are comprised in the disposal of land U.K.

20 (1) This paragraph applies where the disposals comprised in the disposal of land (see paragraph 12(3)) include a disposal (the “non-ATED related disposal”) which is not a relevant high value disposal.

(2) This Part of this Schedule (apart from this paragraph) applies in relation to the non-ATED related disposal as if it were a relevant high value disposal.

(3) Sub-paragraph (4) applies if there has, at any time in the relevant ownership period, been mixed use of the subject matter of the disposed of interest.

(4) The amount of any NRCGT gain or loss on the non-ATED related disposal computed under this Part of this Schedule is taken to be the appropriate fraction of the amount that it would otherwise be.

(5) In sub-paragraph (4) “the appropriate fraction” means the fraction that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings.

(6) In this paragraph “the relevant ownership period” means, as applicable—

(a) the post-commencement ownership period, as defined in paragraph 13(5),

(b) the relevant ownership period, as defined in paragraph 14(5), or

(c) the relevant ownership period as defined in paragraph 15(4).

Interest subsisting under contract for off-plan purchase U.K.

21 (1) Sub-paragraph (2) applies where the non-resident CGT disposal made by P as mentioned in paragraph 12(1) is a disposal of a UK residential property interest only because of the second condition in paragraph 1 of Schedule B1 (interest subsisting under a contract for the acquisition of land that consists of, or includes, a building that is to be constructed for use as a dwelling etc).

(2) The land that is the subject of the contract concerned is treated for the purposes of this Part of this Schedule as consisting of (or, as the case requires, including) a dwelling throughout P's period of ownership of the interest in UK land.

PART 5 U.K. Special rules for companies

22 This Part of this Schedule applies where the person making the non-resident CGT disposal is a company.

Indexation U.K.

23 The following amounts are computed as if the computation were for corporation tax purposes—

(a) the notional post-April 2015 gain or loss for the purposes of paragraphs 6 and 7;

(b) the notional pre-April 2015 gain or loss for the purposes of paragraphs 6 and 7;

(c) the gain or loss determined under Step 1 of paragraph 9(2);

(d) the notional post-April 2015 gain or loss for the purposes of paragraph 13;

(e) the gain or loss determined under Step 1 of paragraph 14(3);

(f) the notional post-April 2016 gain or loss for the purposes of paragraph 15;

(g) the notional pre-April 2016 gain or loss for the purposes of paragraph 15;

(h) the notional post-April 2015 gain or loss, the notional pre-April 2015 gain or loss and the notional pre-April 2013 gain or loss for the purposes of paragraph 17;

(i) the notional post-April 2016 gain or loss, the notional pre-April 2016 gain or loss and the notional pre-April 2015 gain or loss for the purposes of paragraph 19.

PART 6 U.K. Miscellaneous provisions

Wasting assets U.K.

24 (1) Sub-paragraph (2) applies where it is necessary, for the purposes of a relevant computation, to determine whether or not the asset which is the subject of the disposal in question is a wasting asset (as defined for the purposes of Chapter 2 of Part 2).

(2) The assumption (which operates for the purposes of that computation) that the asset was acquired on 5 April 2015 or, as the case may be, 5 April 2016 is to be ignored in determining that question.

(3) In sub-paragraph (1) “relevant computation” means a computation of—

(a) the notional post-April 2015 gain or loss accruing to a person on a non-resident CGT disposal in accordance with paragraph 5(2)(a),

(b) the notional post-April 2015 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 13(3),

(c) the notional post-April 2016 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 15(5), or

(d) the notional pre-April 2016 gain or loss accruing to a person on a disposal in accordance with paragraph 15(7).

Capital allowances U.K.

25 (1) Sub-paragraph (2) applies where it is to be assumed for the purpose of computing—

(a) the notional post-April 2015 gain or loss accruing to a person on a non-resident CGT disposal in accordance with paragraph 5(2)(a),

(b) the notional post-April 2015 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 13(3),

(c) the notional post-April 2016 gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 15(5), or

(d) the notional pre-April 2016 gain or loss accruing to a person on a disposal in accordance with paragraph 15(7),

that an asset was acquired by a person on 5 April 2015 or (as the case may be) 5 April 2016 (“the deemed acquisition date”) for a consideration equal to its market value on that date.

(2) For the purposes of that computation, sections 41 (restriction of losses by reference to capital allowances and renewals allowances) and 47 (wasting assets qualifying for capital allowances) are to apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by the person in acquiring or providing the asset as if that allowance were made in respect of the expenditure treated as incurred by the person on the deemed acquisition date as mentioned in sub-paragraph (1).

PART 7 U.K. Interpretation

26 In this Schedule—

• “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act);

• “dwelling” has the meaning given by paragraph 4 of Schedule B1;

• “subject matter”, in relation to an interest in UK land (or a chargeable interest) means the land to which the interest relates.”

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

“(3) Where any of the disposals which the trustees are treated as having made as mentioned in sub-paragraph (2) is a non-resident CGT disposal—

(a) any chargeable gain or allowable loss accruing on that disposal, other than an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D, is to be treated for the purposes of sub-paragraph (2) as if it were a chargeable gain or (as the case requires) allowable loss falling to be taken into account in calculating the chargeable amount, and

(b) that disposal is otherwise to be disregarded for the purpose of calculating the chargeable amount.”

PART 2 U.K. Other amendments

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

42 U.K. After section 7 insert—

“7A Disregard of certain NRCGT gains for purposes of section 7

(1) This section applies where—

(a) a person (“P”) is the taxable person in relation to an NRCGT return relating to a tax year (“year X”) which is made and delivered to an officer of Revenue and Customs before the end of the notification period and contains an advance self-assessment,

(b) the return is in respect of a non-resident CGT disposal on which an NRCGT gain accrues, and

(c) P would (apart from this section) be required to give a notice under section 7 with respect to year X.

(2) For the purpose of determining whether or not P is required to give such a notice (and only for that purpose), P is regarded as not being chargeable to capital gains tax in respect of the NRCGT gain mentioned in subsection (1)(b).

(3) The reference in subsection (1) to the tax year to which an NRCGT return “relates” is to be interpreted in accordance with section 12ZB(7).

(4) In this section—

• “advance self-assessment” has the meaning given by section 12ZE(1);

• “the notification period” has the meaning given by section 7(1C);

• the “taxable person”, in relation to a non-resident CGT disposal, means the person who would be chargeable to capital gains tax in respect of any chargeable NRCGT gain accruing on the disposal (were such a gain to accrue).

(5) See—

• section 14B of the 1992 Act for the meaning of “non-resident CGT disposal”;

• section 57B of, and Schedule 4ZZB to, the 1992 Act for the meaning of “NRCGT gain”.”

43 U.K. Before section 12AA (and the italic heading before it) insert—

“NRCGT returns U.K.

12ZA Interpretation of sections 12ZB to 12ZN

(1) In sections 12ZA to 12ZN—

• “advance self-assessment” is to be interpreted in accordance with section 12ZE(1);

• “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1);

• “filing date”, in relation to an NRCGT return, is to be interpreted in accordance with section 12ZB(8);

• “interest in UK land” has the same meaning as in Schedule B1 to the 1992 Act (see paragraph 2 of that Schedule);

• the “taxable person”, in relation to a non-resident CGT disposal, means the person who would be chargeable to capital gains tax in respect of any chargeable NRCGT gain (see section 57B of, and Schedule 4ZZB to, the 1992 Act) accruing on the disposal (were such a gain to accrue).

(2) In those sections, references to the tax year to which an NRCGT return “relates” are to be interpreted in accordance with section 12ZB(7).

(3) For the purposes of those sections the “completion” of a non-resident CGT disposal is taken to occur—

(a) at the time of the disposal, or

(b) if the disposal is under a contract which is completed by a conveyance, at the time when the asset is conveyed.

(4) For the meaning in those sections of “non-resident CGT disposal” see section 14B of the 1992 Act (and see also section 12ZJ).

(5) For the meaning of “NRCGT group” in those sections see section 288(1) of the 1992 Act.

(6) In this section “conveyance” includes any instrument (and “conveyed” is to be construed accordingly).

12ZB NRCGT return

(1) Where a non-resident CGT disposal is made, the appropriate person must make and deliver to an officer of Revenue and Customs, on or before the filing date, a return in respect of the disposal.

(2) In subsection (1) the “appropriate person” means—

(a) the taxable person in relation to the disposal, or

(b) if the disposal is made by a member of an NRCGT group, the relevant members of the group.

(3) A return under this section is called an “NRCGT return”.

(4) An NRCGT return must—

(a) contain the information prescribed by HMRC, and

(b) include a declaration by the person making it that the return is to the best of the person's knowledge correct and complete.

(5) Subsection (1) does not apply to a non-resident CGT disposal to which section 188C of the 1992 Act applies (transfers within NRCGT group).

(6) For the purposes of subsection (2)(b), the “relevant members” of the NRCGT group are—

(a) the companies which are members of that group when the disposal is made, and

(b) any other companies which are, at any time before the time of the disposal in the tax year to which the return relates, members of that group.

(7) An NRCGT return “relates to” the tax year in which any gains on the non-resident CGT disposal would accrue.

(8) The “filing date” for an NRCGT return is the 30th day following the day of the completion of the disposal to which the return relates.

But see also section 12ZJ(5).

12ZC Single return in respect of two or more non-resident CGT disposals

Where—

(a) a person is required to make and deliver an NRCGT return with respect to two or more non-resident CGT disposals,

(b) the date of the completion of each of the disposals is the same, and

(c) any gains accruing on the disposals would accrue in the same tax year,

the person is to make and deliver a single return with respect to all those disposals.

12ZD NRCGT returns: grant and exercise of options

(1) This section applies where—

(a) by virtue of section 144(2) of the 1992 Act, the grant of an option binding the grantor to sell an interest in UK land is, on the exercise of the option, treated as the same transaction as the sale, and

(b) both the grant of the option and the transaction entered into by the grantor in fulfilment of the grantor's obligations under the option (“the sale”) would be non-resident CGT disposals (were they not treated as a single transaction).

(2) On completion of the sale—

(a) the grantor is to be subject to the same obligations under sections 12ZB, 12ZE and 59AA (duties relating to returns and payments on account) in relation to the grant of the option as the grantor would be subject to were the option never to be exercised, and

(b) the consideration for the option is to be disregarded (despite section 144(2) of the 1992 Act) in calculating under section 12ZF the amount of capital gains tax notionally chargeable at the completion date of the single transaction mentioned in subsection (1)(a).

(3) In this section “sell” is to be interpreted in accordance with section 144(6) of the 1992 Act.

12ZE NRCGT return to include advance self-assessment

(1) An NRCGT return (“the current return”) relating to a tax year (“year Y”) which a person (“P”) is required to make in respect of one or more non-resident CGT disposals (“the current disposals”) must include an assessment (an “advance self-assessment”) of—

(a) the amount notionally chargeable at the filing date for the current return (see section 12ZF), and

(b) if P has made (or is to make) a prior NRCGT return, the amount of any increase in the amount notionally chargeable for year Y.

But see the exceptions in section 12ZG.

(2) In a case falling within subsection (1)(b)—

(a) there is an “increase in the amount notionally chargeable” for year Y if the amount notionally chargeable at the filing date for the current return exceeds the corresponding amount for the prior NRCGT return (or the prior NRCGT return which has the most recent filing date, if there is more than one), and

(b) the amount of that increase is the amount of the excess.

(3) “Prior NRCGT return” means an NRCGT return which—

(a) relates to year Y, and

(b) is in respect of a non-resident CGT disposal (or disposals) the completion date of which is earlier than that of the current disposals.

12ZF The “amount notionally chargeable”

(1) The “amount notionally chargeable” at the filing date for an NRCGT return (“the current return”) is the amount of capital gains tax to which the person whose return it is (“P”) would be chargeable under section 14D or 188D of the 1992 Act for the year to which the return relates (“year Y”), as determined—

(a) on the assumption in subsection (2),

(b) in accordance with subsection (3), and

(c) if P is an individual, on the basis of a reasonable estimate of the matters set out in subsection (4).

(2) The assumption mentioned in subsection (1)(a) is that in year Y no NRCGT gain or loss accrues to P on any disposal the completion of which occurs after the day of the completion of the disposals to which the return relates (“day X”).

(3) In the determination of the amount notionally chargeable—

(a) all allowable losses accruing to P in year Y on disposals of assets the completion of which occurs on or before day X which are available to be deducted under paragraph (a) or (b) of section 14D(2) or (as the case may be) section 188D(2) of the 1992 Act are to be so deducted, and

(b) any other relief or allowance relating to capital gains tax which is required to be given in P's case is to be taken into account, so far as the relief would be available on the assumption in subsection (2).

(4) The matters mentioned in subsection (1)(c) are—

(a) whether or not income tax will be chargeable at the higher rate or the dividend upper rate in respect of P's income for year Y (see section 4(4) of the 1992 Act), and

(b) (if P estimates that income tax will not be chargeable as mentioned in paragraph (a)) what P's Step 3 income will be for year Y.

(5) An advance self-assessment must, in particular, give particulars of any estimate made for the purposes of subsection (1)(c).

(6) A reasonable estimate included in an NRCGT return in accordance with subsection (5) is not regarded as inaccurate for the purposes of Schedule 24 to the Finance Act 2007 (penalties for errors).

(7) Where P is the relevant body of an NRCGT group—

(a) the references to P in subsections (2) and (3)(a) are to be read as references to any member of the NRCGT group;

(b) the reference to P in subsection (3)(b) is to be read as including any member of the NRCGT group.

(8) For the purposes of this section—

• an estimate is “reasonable” if it is made on a basis that is fair and reasonable, having regard to the circumstances in which it is made;

• “Step 3 income”, in relation to an individual, has the same meaning as in section 4 of the 1992 Act.

(9) In this section, references to the “relevant body” of an NRCGT group are to be interpreted in accordance with section 188D(4) of the 1992 Act.

(10) Section 989 of ITA 2007 (the definitions) applies for the purposes of this section as it applies for income tax purposes.

(11) For the meaning of “NRCGT gain” and “NRCGT loss” see section 57B of, and Schedule 4ZZB to, the 1992 Act.

12ZG Cases where advance self-assessment not required

(1) Where a person (“P”) is required to make and deliver an NRCGT return relating to a tax year (“year Y”), section 12ZE(1) (requirement to include advance self-assessment in return) does not apply if condition A, B or C is met.

(2) Condition A is that P (or, if P is the trustees of a settlement, any trustee of the settlement) has been given, on or before the day on which the NRCGT return is required to be delivered, a notice under section 8 or 8A with respect to—

(a) year Y, or

(b) the previous tax year,

and that notice has not been withdrawn.

(3) Condition B is that P has been given, on or before the day on which the NRCGT return is required to be delivered, a notice under paragraph 3 of Schedule 18 to the Finance Act 1998 (notice requiring delivery of a company tax return) specifying a period which includes the whole or part of—

(a) year Y, or

(b) the previous tax year,

and that notice has not been withdrawn.

(4) Condition C is that an annual tax on enveloped dwellings return has been delivered by P (or a representative partner acting instead of P) for the preceding chargeable period.

(5) In subsection (4)—

• “the preceding chargeable period” means the chargeable period (as defined in section 94(8) of the Finance Act 2013) which ends with the 31 March preceding year Y;

• “representative partner” has the meaning given by section 167(6) of the Finance Act 2013.

(6) The Treasury may by regulations prescribe further circumstances in which section 12ZE(1) is not to apply.

(7) Regulations under subsection (6)—

(a) may make different provision for different purposes;

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

12ZH NRCGT returns and annual self-assessment: section 8

(1) This section applies where a person (“P”) (other than the relevant trustees of a settlement)—

(a) is not required to give a notice under section 7 with respect to a tax year (“year X”), and

(b) would be required to give such a notice in the absence of section 7A (which removes that duty in certain cases where the person has made an NRCGT return that includes an advance self-assessment).

(2) In this section, “the relevant NRCGT return” means—

(a) the NRCGT return by virtue of which P is not required to give a notice under section 7 with respect to year X, or

(b) if more than one NRCGT return falls within paragraph (a), the one relating to the disposal which has the latest completion date.

(3) P is treated for the purposes of the Taxes Acts as having been required to make and deliver to an officer of Revenue and Customs a return under section 8 for the purpose of establishing, with respect to year X, the matters mentioned in section 8(1).

(4) For the purposes of subsection (3), section 8 is to be read as if subsections (1E) to (1G) of that section were omitted.

(5) If P does not give a notice under subsection (6) before 31 January in the tax year after year X, the Taxes Acts have effect, from that date, as if the advance self-assessment contained in the relevant NRCGT return were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8 made by P and delivered on that date.

(6) If P gives HMRC a notice under this subsection specifying an NRCGT return which—

(a) relates to year X, and

(b) contains an advance self-assessment,

the Taxes Acts are to have effect, from the effective date of the notice, as if that advance self-assessment were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8 made by P and delivered on that date.

(7) References in the Taxes Acts to a return under section 8 (for example, references to amending, or enquiring into, a return under that section) are to be read in accordance with subsections (5) and (6).

(8) A notice under subsection (6)—

(a) must be given before 31 January in the tax year after year X;

(b) must state that P considers the advance self-assessment in question to be an accurate self-assessment in respect of year X for the purposes of section 9.

(9) The “effective date” of a notice under subsection (6) is—

(a) the day on which the NRCGT return specified in the notice is delivered, or

(b) if later, the day on which the notice is given.

(10) The self-assessment which subsection (5) or (6) treats as having been made by P is referred to in this section as the “section 9 self-assessment”.

(11) If P—

(a) gives a notice under subsection (6), and

(b) makes and delivers a subsequent NRCGT return relating to year X which contains an advance self-assessment,

that advance self-assessment is to be treated as amending the section 9 self-assessment.

(12) For the purposes of subsection (11), an NRCGT return made and delivered by P (“return B”) is “subsequent” to an NRCGT return to which P's notice under subsection (6) relates (“the notified return”) if the day of the completion of the disposal to which return B relates is later than the day of the completion of the disposal to which the notified return relates.

12ZI NRCGT returns and annual self-assessment: section 8A

(1) This section applies where the relevant trustees of a settlement (“the trustees”)—

(a) are not required to give a notice under section 7 with respect to a tax year (“year X”), and

(b) would be required to give such a notice in the absence of section 7A (which removes that duty in certain cases where the person has made an NRCGT return including an advance self-assessment).

(2) In this section, “the relevant NRCGT return” means—

(a) the NRCGT return by virtue of which P is not required to give a notice under section 7 with respect to year X, or

(b) if more than one NRCGT return falls within paragraph (a), the one relating to the disposal which has the latest completion date.

(3) The trustees are treated for the purposes of the Taxes Acts as having been required to make and deliver to an officer of Revenue and Customs a return under section 8A, for the purpose of establishing, with respect to year X, the matters mentioned in section 8A(1).

(4) For the purposes of subsection (3), section 8A is to be read as if—

(a) in subsection (1) of that section, “, and the settlors and beneficiaries,” were omitted, and

(b) subsections (1C) to (1E) of that section were omitted.

(5) If the trustees do not give a notice under subsection (6) before 31 January in the tax year after year X, the Taxes Acts have effect, from that date, as if the advance self-assessment contained in the relevant NRCGT return were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8A made by the trustees and delivered on that date.

(6) If the trustees give HMRC a notice under this subsection specifying an NRCGT return which—

(a) relates to year X, and

(b) contains an advance self-assessment,

the Taxes Acts are to have effect, from the effective date of the notice, as if that advance self-assessment were a self-assessment included, for the purposes set out in section 9(1), in a return under section 8A made by the trustees and delivered on that date.

(7) References in the Taxes Acts to a return under section 8A (for example, references to amending, or enquiring into, a return under that section) are to be read in accordance with subsections (5) and (6).

(8) A notice under subsection (6)—

(a) must be given before 31 January in the tax year after year X;

(b) must state that the trustees consider the advance self-assessment in question to be an accurate self-assessment in respect of year X for the purposes of section 9.

(9) The “effective date” of a notice under subsection (6) is—

(a) the day on which the NRCGT return specified in the notice is delivered, or

(b) if later, the day on which the notice is given.

(10) The self-assessment which subsection (5) or (6) treats as having been made by the trustees is referred to in this section as the “section 9 self-assessment”.

(11) If the trustees—

(a) give a notice under subsection (6), and

(b) make and deliver a subsequent NRCGT return relating to year X which contains an advance self-assessment,

that advance self-assessment is to be treated as amending the section 9 self-assessment.

(12) For the purposes of subsection (11), an NRCGT return made and delivered by the trustees (“return B”) is “subsequent” to an NRCGT return to which the trustees' notice under subsection (6) relates (“the notified return”) if the day of the completion of the disposal to which return B relates is later than the day of the completion of the disposal to which the notified return relates.

12ZJ Sections 12ZA to 12ZI: determination of residence status

(1) For the purposes of sections 12ZA to 12ZI, the question whether or not a disposal of a UK residential property interest is a non-resident CGT disposal is to be determined in accordance with subsections (2) and (3).

(2) A non-residence condition is to be taken to be met in relation to a disposal of a UK residential property interest if, at the time of the completion of the disposal—

(a) it is uncertain whether or not that condition will be met, but

(b) it is reasonable to expect that that condition will be met.

(3) If (in a case within subsection (2)) it later becomes certain that neither of the non-residence conditions is met in relation to the disposal, the disposal is treated as not being, and as never having been, a non-resident CGT disposal (and any necessary repayments or adjustments are to be made accordingly).

(4) Subsection (5) applies if—

(a) at the time of the completion of the disposal of a UK residential property interest it is uncertain whether or not the disposal is a non-resident CGT disposal because it is uncertain whether or not a non-residence condition will be met, but the case does not fall within subsection (2), and

(b) it later becomes certain that a non-residence condition is met in relation to the disposal.

(5) For the purposes of this Act, the filing date for the NRCGT return is taken to be the 30th day following the day on which it becomes certain that a non-residence condition is met in relation to the disposal.

(6) In this section “a non-residence condition” means condition A or B in section 14B of the 1992 Act.

12ZK Amendment of NRCGT return by the taxpayer

(1) A person may, by notice to an officer of Revenue and Customs, amend the person's NRCGT return.

(2) An amendment may not be made more than 12 months after 31 January of the year following the relevant tax year.

(3) In subsection (2) “the relevant tax year” means the tax year in which any gains on the disposal to which the return relates would accrue.

12ZL Correction of NRCGT return by HMRC

(1) An officer of Revenue and Customs may amend an NRCGT return so as to correct—

(a) obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise), and

(b) anything else in the return that the officer has reason to believe is incorrect in the light of information available to the officer.

(2) A correction under this section is made by notice to the person whose return it is.

(3) No such correction may be made more than 9 months after—

(a) the day on which the return was delivered, or

(b) if the correction is required in consequence of an amendment of the return under section 12ZK (amendment by the taxpayer), the day on which that amendment was made.

(4) A correction under this section is of no effect if the person to whom the notice of correction was given gives notice rejecting the correction.

(5) Notice of rejection under subsection (4) must be given—

(a) to the officer of Revenue and Customs by whom the notice of correction was given,

(b) before the end of the period of 30 days beginning with the date of issue of the notice of correction.

12ZM Notice of enquiry

(1) An officer of Revenue and Customs may enquire into an NRCGT return if the officer gives notice of the intention to do so (“notice of enquiry”)—

(a) to the person whose return it is,

(b) within the time allowed.

(2) The time allowed is—

(a) if the return was delivered on or before 31 January in the year following the relevant tax year (the “annual filing date”), up to the end of the period of 12 months after the day on which the return was delivered;

(b) if the return was delivered after the annual filing date, up to and including the quarter day next following the first anniversary of the day on which the return was delivered;

(c) if the return is amended under section 12ZL (correction by HMRC), up to and including the quarter day next following the first anniversary of the day on which the amendment was made.

For this purpose the quarter days are 31 January, 30 April, 31 July and 31 October.

(3) An enquiry extends to anything contained in the return, or required to be contained in the return, including any claim or election included in the return, subject to the following limitation.

(4) If the notice of enquiry is given as a result of an amendment of the return under section 12ZK (amendment by taxpayer)—

(a) at a time when it is no longer possible to give notice of enquiry under subsection (2)(a) or (b), or

(b) after an enquiry into the return has been completed,

the enquiry into the return is limited to matters to which the amendment relates or which are affected by the amendment.

(5) In subsection (2) “the relevant tax year” means the tax year in which any gain on the disposal to which the return relates would accrue.

12ZN Amendment of return by taxpayer during enquiry

(1) This section applies if an NRCGT return is amended under section 12ZK (amendment by taxpayer) at a time when an enquiry is in progress into the return.

(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.

(3) So far as the amendment affects the amount notionally chargeable for the purposes of the return (see section 12ZF(1)), it does not take effect while the enquiry is in progress and—

(a) if the officer states in the closure notice that the officer has taken the amendment into account and that—

(i) the amendment has been taken into account in formulating the amendments contained in the notice, or

(ii) the officer's conclusion is that the amendment is incorrect,

the amendment is not to take effect;

(b) otherwise, the amendment takes effect when the closure notice is issued.

(4) For the purposes of this section the period during which an enquiry is in progress is the whole of the period—

(a) beginning with the day on which the notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.”

44 (1) Section 28A (completion of enquiry into personal or trustee return) is amended as follows. U.K.

(2) In subsection (1), after “9A(1)” insert “ or 12ZM ”.

(3) In the heading, after “return” insert “ or NRCGT return ”.

45 U.K. Before section 29 insert—

“28G Determination of amount notionally chargeable where no NRCGT return delivered

(1) This section applies where it appears to an officer of Revenue and Customs that—

(a) a person is required to make and deliver in respect of a non-resident CGT disposal an NRCGT return containing an advance self-assessment, and

(b) the person has not delivered the required return by the filing date for the return.

(2) The officer may make a determination, to the best of the officer's information and belief, of the amount of capital gains tax which should have been assessed in the required return as the amount notionally chargeable.

(3) Notice of any determination under this section must be served on the person in respect of whom it is made and must state the date on which it is issued.

(4) Until such time (if any) as it is superseded by an advance self-assessment on the basis of information contained in an NRCGT return, a determination under this section is to have effect as if it were an advance self-assessment contained in an NRCGT return made by the person in respect of the disposal concerned.

(5) Where—

(a) proceedings have been commenced for the recovery of an amount payable by virtue of a determination under this section, and

(b) before those proceedings are concluded, the determination is superseded by an advance self-assessment made by the person in respect of the disposal,

those proceedings may be continued as if they were proceedings for the recovery of so much of the amount payable by virtue of the advance self-assessment as is due and payable and has not been paid.

(6) No determination under this section, and no advance self-assessment superseding such a determination may be made—

(a) after the end of the period of 3 years beginning with 31 January of the year following the tax year to which the determination relates, or

(b) in the case of such an advance self-assessment, after the end of the period of 12 months beginning with the date of the determination.

(7) In this section—

• “advance self-assessment” is to be interpreted in accordance with section 12ZE(1);

• “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1);

• “filing date”, in relation to an NRCGT return, is to be interpreted in accordance with section 12ZB(8).

(8) For the meaning in this section of “non-resident CGT disposal” see section 14B of the 1992 Act.”

46 U.K. In section 29 (assessment where loss of tax discovered), in subsection (7)(a), omit the “and” following sub-paragraph (i), and after that sub-paragraph insert—

“(ia) a reference to any NRCGT return made and delivered by the taxpayer which contains an advance self-assessment relating to the relevant year of assessment or either of the two immediately preceding chargeable periods; and”.

47 U.K. After section 29 insert—

“29A Non-resident CGT disposals: determination of amount which should have been assessed

(1) Subsection (2) applies if HMRC discover, as regards a non-resident CGT disposal made by a person (“P”) (or two or more such disposals in a case falling within section 12ZC) and a tax year (“the relevant tax year”) that—

(a) an amount that ought to have been assessed as the amount notionally chargeable in an advance self-assessment under section 12ZE(1) has not been so assessed by the filing date, or

(b) an assessment of the amount notionally chargeable for the purposes of section 12ZF(1) contained in an NRCGT return made and delivered by P has become insufficient.

(2) HMRC may determine that the amount or further amount which in its opinion ought to be assessed under section 12ZE to remedy the failure mentioned in subsection (1)(a) or the insufficiency mentioned in subsection (1)(b) is to be treated for the purposes of this Act as if it were so assessed in—

(a) an NRCGT return made by P in respect of the disposal, or

(b) (if P has made and delivered an NRCGT return in respect of the disposal) that return.

But see subsections (3) to (5).

(3) Where P has made and delivered in respect of the disposal an NRCGT return containing an advance self-assessment, HMRC may not make a determination under subsection (2) in respect of the disposal unless one of the two conditions mentioned below is met.

(4) The first condition is that the situation mentioned in subsection (1) was brought about carelessly or deliberately by P or a person acting on P's behalf.

(5) The second condition is that at the time when an officer of Revenue and Customs—

(a) ceased to be entitled to give notice of the officer's intention to enquire into the NRCGT return, or

(b) informed P of the completion of the officer's enquiries into the return,

the officer could not reasonably have been expected, on the basis of the information made available to the officer before that time, to be aware of the situation mentioned in subsection (1).

(6) For the purposes of subsection (5), information is made available to an officer of Revenue and Customs if—

(a) it is contained in an NRCGT return made and delivered by P which relates to the relevant tax year or either or the two immediately preceding tax years,

(b) it is contained in any return under section 8 or 8A made and delivered by P in respect of either of the two tax years immediately preceding the relevant tax year,

(c) it is contained in any claim made by P which relates to P's capital gains tax position with respect to the relevant tax year or either of the two immediately preceding tax years,

(d) it is contained in any accounts, statements or documents accompanying a return falling within paragraph (a) or (b) or a claim falling within paragraph (c),

(e) it is contained in any documents, accounts or particulars which, for the purposes of any enquiries by an officer of Revenue and Customs into a return falling within paragraph (a) or (b) or a claim falling within paragraph (c) are produced or provided by P to the officer, or

(f) it is information the existence of which, and the relevance of which as regards the situation mentioned in subsection (1)—

(i) could be reasonably expected to be inferred by an officer of Revenue and Customs from information falling within paragraphs (a) to (e), or

(ii) are notified in writing by the taxpayer to an officer of Revenue and Customs.

(7) In subsection (6)—

(a) any reference to a return made and delivered by P under section 8 in respect of a tax year includes, if P carries on a trade, profession or business in partnership, a reference to any partnership return with respect to the partnership for that tax year, and

(b) any reference to P includes a person acting on P's behalf.

(8) An objection to the making of a determination under subsection (2) on the ground that neither of the two conditions mentioned above is fulfilled may not be made otherwise than on an appeal against the assessment.

(9) In this section—

• “advance self-assessment” has the meaning given by section 12ZE(1);

• “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1);

• “filing date”, in relation to an NRCGT return, has the meaning given by section 12ZB(8).

(10) For the meaning in this section of “non-resident CGT disposal” see section 14B of the 1992 Act.”

48 U.K. In section 34 (ordinary time limit of 4 years), after subsection (1) insert—

“(1A) In subsection (1) the reference to an assessment to capital gains tax includes a determination under section 29A (non-resident CGT disposals: determination of amount which should have been assessed).”

49 U.K. In section 42 (procedure for making claims), in subsection (11), after “8A,” insert “ 12ZB ”.

50 U.K. In section 59A (payments on account of income tax), omit subsection (7).

51 U.K. After section 59A insert—

“59AA Non-resident CGT disposals: payments on account of capital gains tax

(1) Subsections (2) and (3) apply where a person (“P”) is required to make, in relation to a tax year, an NRCGT return in respect of one or more non-resident CGT disposals containing an advance self-assessment and the amount in subsection (6)(a) is greater than the amount in subsection (6)(b).

(2) With effect from the filing date for the return, the balancing amount is (or, where applicable, becomes) the amount payable by P on account of P's liability to capital gains tax for the tax year.

(3) Where P is the relevant members of an NRCGT group, P is responsible for discharging the obligation of the taxable person to pay any balancing amounts and such amounts are payable on account of the taxable person's liability to capital gains tax for the tax year.

(4) Subsection (5) applies where a person (“P”) is required to make, in relation to a tax year, an NRCGT return containing an advance self-assessment and the amount in subsection (6)(a) is less than the amount in subsection (6)(b).

(5) The balancing amount is repayable to P on the filing date for the return.

(6) The amounts referred to in subsections (1) and (4) are—

(a) the amount notionally chargeable contained in the self-assessment, and

(b) the total of any amounts previously paid under this section on account of P's liability to capital gains tax for the tax year.

(7) In subsections (2) and (5) “the balancing amount” means the difference between those amounts.

(8) Where, in the case of a repayment, the NRCGT return is enquired into by an officer of Revenue and Customs—

(a) nothing in subsection (5) requires the repayment to be made before the day on which, by virtue of section 28A(1), the enquiry is completed, but

(b) the officer may at any time before that day make the repayment, on a provisional basis, to such extent as the officer thinks fit.

(9) Subsection (10) applies to—

(a) any amount payable on account of capital gains tax as a result of the amendment or correction under section 12ZK, 12ZL or 28A of an advance self-assessment, and

(b) any amount paid on account of capital gains tax which is repayable as a result of such an amendment or correction.

(10) The amount is payable or (as the case may be) repayable on or before the day specified by the relevant provision of Schedule 3ZA.

(11) Subsection (12) applies where a determination under section 28G (determination of amount notionally chargeable where no NRCGT return delivered) which has effect as a person's advance self-assessment is superseded by an advance self-assessment in an NRCGT return made and delivered by the person under section 12ZB.

(12) Any amount which is payable on account of capital gains tax, and any amount paid on account of capital gains tax which is repayable, by virtue of the supersession is to be payable or (as the case may be) repayable on or before the filing date for the return.

(13) In this section—

• “advance self-assessment” has the meaning given by section 12ZE(1);

• “amount notionally chargeable” is to be interpreted in accordance with section 12ZF(1);

• “filing date”, in relation to an NRCGT return, has the meaning given by section 12ZB(8);

• the “taxable person”, in relation to a non-resident CGT disposal, means the person who would be chargeable to capital gains tax in respect of any chargeable NRCGT gain accruing on the disposal (were such a gain to accrue).

(14) For the meaning in this section of “non-resident CGT disposal” see section 14B of the 1992 Act.

(15) For the meaning in this section of “NRCGT group” see section 288(1) of the 1992 Act.

59AB Amounts payable on account: recovery

The provisions of the Taxes Acts as to the recovery of tax shall apply to an amount falling to be paid on account of tax in the same manner as they apply to an amount of tax.”

52 (1) Section 59B (payment of income tax and capital gains tax) is amended as follows. U.K.

(2) In subsection (1)(b), after “59A” insert “ or 59AA ”.

(3) After subsection (2) insert—

“(2A) The reference in subsection (1)(b) to payments on account under section 59AA does not include any amounts already repaid under section 59AA(5).”

53 U.K. In section 107A (relevant trustees), in subsection (2)(b), after “59A” insert “ , 59AA ”.

54 U.K. In section 118 (interpretation), in subsection (1), at the appropriate place insert—

““NRCGT return” has the meaning given by section 12ZB;”.

55 (1) Schedule 3ZA (date by which payment to be made after amendment or correction of self-assessment) is amended as follows. U.K.

(2) In paragraph 1—

(a) in sub-paragraph (1), at the end insert “ or an advance self-assessment (see section 12ZE(1)) ”;

(b) in sub-paragraph (2), after “section” insert “ 59AA(2) or ”.

(3) In paragraph 2—

(a) in sub-paragraph (1), at the end insert “ or an amendment of an advance self-assessment under section 12ZK (amendment of NRCGT return by taxpayer) ”;

(b) in sub-paragraph (3), after “9B(3)” insert “ or 12ZN(3) ” and after “self-assessment” insert “ or advance self-assessment ”.

(4) In paragraph 3(1), after “9ZB” insert “ or 12ZL ” and after “trustee return” insert “ or NRCGT return ”.

(5) In paragraph 5(1)—

(a) after “amount of tax” insert “ or an amount on account of capital gains tax ”;

(b) after “self-assessment” insert “ or advance self-assessment ”;

(c) omit “personal or trustee”.

56 (1) In FA 2007, Schedule 24 (penalties for errors) is amended as follows. U.K.

(2) In paragraph 1, in the table in sub-paragraph (4), after the entry relating to accounts in connection with a partnership return insert—

“Capital gains tax

Return under section 12ZB of TMA 1970 (NRCGT return).”

(3) After paragraph 21B insert—

“Treatment of certain payments on account of tax U.K.

21C In paragraphs 1(2) and 5 references to “tax” are to be interpreted as if amounts payable under section 59AA(2) of TMA 1970 (non-resident CGT disposals: payments on account of capital gains tax) were tax.”

57 U.K. In Schedule 36 to FA 2008 (information and inspection powers), after paragraph 21 insert—

“Taxpayer notices following NRCGT return U.K.

21ZA (1) Where a person has delivered an NRCGT return with respect to a non-resident CGT disposal, a taxpayer notice may not be given for the purpose of checking the person's capital gains tax position as regards the matters dealt with in that return.

(2) Sub-paragraph (1) does not apply where, or to the extent that, any of conditions A to C is met.

(3) Condition A is that notice of enquiry has been given in respect of—

(a) the return, or

(b) a claim (or an amendment of a claim) made by the person in relation to the chargeable period,

and the enquiry has not been completed.

(4) In sub-paragraph (3) “notice of enquiry” means a notice under section 12ZM of TMA 1970.

(5) Condition B is that an officer of Revenue and Customs has reason to suspect that—

(a) an amount that ought to have been assessed under section 12ZE of TMA 1970 as payable on account of the person's liability to capital gains tax for the tax year to which the return relates has not been so assessed by the filing date for the return, or

(b) an assessment under section 12ZE of TMA 1970 of the amount payable on account of P's liability to capital gains tax for the tax year to which the return relates has become insufficient.

(6) Condition C is that the notice is given for the purpose of obtaining any information or document that is also required for the purpose of checking that person's position as regards a tax other than capital gains tax.

(7) In this paragraph—

• “NRCGT return” has the meaning given by section 12ZB of TMA 1970;

• “non-resident CGT disposal” has the meaning given by section 14B of TCGA 1992.”

58 U.K. In CTA 2009, in section 2 (charge to corporation tax), in subsection (2A), for the words from “under” to the end substitute “under—

(a) section 2B of TCGA 1992 (companies etc chargeable to capital gains tax on ATED-related gains on relevant high value disposals), or

(b) section 14D or 188D of that Act (persons chargeable to capital gains tax on NRCGT gains on non-resident CGT disposals).”

59 (1) In Schedule 55 to FA 2009 (penalty for failure to make returns etc), in the Table in paragraph 1, after item 2 insert— U.K.

“2A

Capital gains tax

NRCGT return under section 12ZB of TMA 1970”.

(2) That Schedule, as amended by sub-paragraph (1), is taken to have come into force for the purposes of NRCGT returns on the date on which this Act is passed.

PART 3 U.K. Commencement

60 U.K. The amendments made by this Schedule have effect in relation to disposals made on or after 6 April 2015.

Section 38

SCHEDULE 8 U.K. Relevant high value disposals: gains and losses

Introduction U.K.

1 U.K. The Taxation of Chargeable Gains Act 1992 is amended as follows.

“Relevant high value disposal” U.K.

2 (1) Section 2C (“relevant high value disposal”) is amended as follows. U.K.

(2) In subsection (6), in the definition of “the relevant ownership period” for “6 April 2013” substitute “ 6 April in the relevant year ”.

(3) In that subsection, after that definition insert—

• ““the relevant year” means—

  (a)

  in Case 1 in paragraph 2 of Schedule 4ZZA, 2013;

  (b)

  in Case 2 in that paragraph, 2015;

  (c)

  in Case 3 in that paragraph, 2016;”.

(4) In subsection (7)(b), for “1 April 2013” substitute “ 1 April in the relevant year ”.

Threshold amount for the tax year 2015-16 U.K.

3 (1) Section 2D (CGT on ATED-related gains: the threshold amount) is amended as follows. U.K.

(2) In subsection (2) for “£2 million” substitute “ £1 million ”.

(3) In subsection (3) for “£2 million” substitute “ £1 million ”.

(4) In subsection (5) for “ “£2 million”” substitute “ “£1 million” ”.

(5) The amendments made by this paragraph have effect in relation to disposals occurring in the tax year 2015-16.

Threshold amount from 6 April 2016 U.K.

4 (1) Section 2D (CGT on ATED-related gains: the threshold amount) is amended as follows. U.K.

(2) In subsection (2) for “£1 million” substitute “ £500,000 ”.

(3) In subsection (3) for “£1 million” substitute “ £500,000 ”.

(4) In subsection (5) for “ “£1 million”” substitute “ “£500,000” ”.

(5) The amendments made by this paragraph have effect in relation to disposals occurring on or after 6 April 2016.

Restriction of losses U.K.

5 U.K. In section 2E (restriction of losses), in subsection (3)—

(a) after “5 April 2013” insert “ etc ”, and

(b) for “post-April 2013” substitute “ post-commencement ”.

Calculation of gains and losses U.K.

6 U.K. Schedule 4ZZA (relevant high value disposals: gains and losses) is amended as follows.

7 U.K. For the italic heading before paragraph 2 substitute “ Assets held on 5 April 2013, 5 April 2015 or 5 April 2016: no paragraph 5 election ”.

8 U.K. For paragraph 2 substitute—

“2 (1) In Cases 1 to 3 below—

(a) paragraph 3 applies for the purposes of computing the gain or loss accruing to P which is ATED-related, and

(b) paragraph 4 applies for the purposes of computing the gain or loss accruing to P which is not ATED-related.

(2) Case 1 is that—

(a) the interest disposed of was held by P on 5 April 2013, and

(b) neither Case 2 nor Case 3 applies.

(3) Case 2 is that—

(a) the interest disposed of was held by P on 5 April 2015,

(b) Case 3 does not apply, and

(c) no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2015 during which P held the interest disposed of.

(4) Case 3 is that—

(a) the interest disposed of was held by P on 5 April 2016, and

(b) no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2016 during which P held the interest disposed of.

(5) For the purposes of this paragraph—

(a) “relevant single-dwelling interest” means the single-dwelling interest by reference to which Condition B in section 2C is met in relation to the relevant high value disposal, or, if Condition B is met by reference to more than one such interest, each of them;

(b) a relevant single dwelling interest is “subject to ATED” on a day if P—

(i) was within the charge to annual tax on enveloped dwellings with respect to that interest on that day, or

(ii) would have been within that charge but for the day being “relievable” by virtue of any of the provisions mentioned in section 132 of the Finance Act 2013 (ATED: effect of reliefs).

(6) In paragraphs 3 and 4, “the relevant year” means—

(a) in relation to Case 1, 2013;

(b) in relation to Case 2, 2015;

(c) in relation to Case 3, 2016.”

9 (1) Paragraph 3 is amended as follows. U.K.

(2) In sub-paragraph (1) for “post-April 2013” substitute “ post-commencement ”.

(3) In sub-paragraph (2)—

(a) for “post-April 2013” substitute “ post-commencement ”, and

(b) for “5 April 2013” substitute “ 5 April in the relevant year ”.

(4) In sub-paragraph (5), for “6 April 2013” substitute “ 6 April in the relevant year ”.

10 (1) Paragraph 4 is amended as follows. U.K.

(2) In sub-paragraph (1)—

(a) for “pre-April 2013” substitute “ pre-commencement ”, and

(b) for “post-April 2013”, in both places, substitute “ post-commencement ”.

(3) In sub-paragraph (2)—

(a) for “pre-April 2013” substitute “ pre-commencement ”, and

(b) for “5 April 2013” substitute “ 5 April in the relevant year ”.

(4) In sub-paragraph (4) for “post-April 2013” substitute “ post-commencement ”.

(5) In sub-paragraph (5) for “pre-April 2013” substitute “ pre-commencement ”.

11 (1) Paragraph 5 is amended as follows. U.K.

(2) In sub-paragraph (1) for “5 April 2013” substitute “ 5 April in the relevant year ”.

(3) In sub-paragraph (3) for “6 April 2013” substitute “ 6 April in the relevant year ”.

(4) For sub-paragraph (6) substitute—

“(6) In this paragraph—

• “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act);

• “relevant year” has the meaning given by paragraph 2.”

12 U.K. In the italic heading before paragraph 6, for “assets acquired after 5 April 2013” substitute “ or none of Cases 1 to 3 apply ”.

13 U.K. In paragraph 6, for sub-paragraph (1)(b) substitute—

“(b) none of Cases 1, 2 and 3 in paragraph 2 applies to the disposal.”

Section 39

SCHEDULE 9 U.K. Private residence relief

1 U.K. TCGA 1992 is amended in accordance with this Schedule.

2 U.K. In section 222 (relief on disposal of private residence)—

(a) after subsection (6) insert—

“(6A) Where an individual has determined, by giving notice under subsection (5)(a), that a residence is the individual's main residence, that determination does not cease to be effective at any time by reason only of the fact that, at that time, another of the individual's residences is treated by section 222B(1) as not being occupied as a residence (or, having been so treated, is no longer so treated).”;

(b) in subsection (7), for “223” substitute “ 222A ”.

3 U.K. After section 222 insert—

“222A Determination of main residence: non-resident CGT disposals

(1) This section applies where—

(a) an individual (“P”) makes a disposal of, or of an interest in—

(i) a dwelling-house, or part of a dwelling-house, which was at any time in P's period of ownership occupied by P as a residence, or

(ii) land (as mentioned in section 222(1)(b)) which P had for P's own occupation and enjoyment with that residence as its garden or grounds, and

(b) the disposal is a non-resident CGT disposal (see section 14B).

In the remainder of this section the residence concerned is referred to as “the dwelling-house”.

(2) So far as it is necessary for the purposes of section 222, P may determine, by a notice under this section, which of 2 or more residences (of which one is the dwelling-house) was P's main residence for any period within P's period of ownership of the dwelling-house.

(3) A notice under this section may vary, as respects any period within P's period of ownership of the dwelling-house, a notice previously given under section 222(5)(a).

See also subsections (4) and (7).

(4) A notice under this section may not vary a notice previously given under section 222(5)(a) as respects any period for which the previous notice had the effect of determining whether or not a disposed of residence was P's main residence.

(5) In subsection (4) “disposed of residence” means one of P's residences which was disposed of (in whole or in part) before the date of the disposal mentioned in subsection (1)(a).

(6) A notice under this section—

(a) must be given in the NRCGT return in respect of the disposal mentioned in subsection (1)(a), and

(b) may not subsequently be varied, whether by a notice under this section or section 222(5)(a).

(7) Where a notice under this section affects both P and an individual (“X”) who was, in the period to which the notice relates (“the relevant period”), P's spouse or civil partner living with P—

(a) in a case where each of P and X is required to make an NRCGT return in respect of the disposal of an interest in the dwelling-house, notice given by P under this section is effective as respects any part of the relevant period when P and X were living together as spouses or civil partners only if notice to the same effect is also given under this section by X in respect of that period;

(b) in any other case, notice given by P under this section is effective as respects any part of the relevant period when P and X were living together as spouses or civil partners only if it is accompanied by written notification from X agreeing to the terms of the notice in respect of that period.

(8) Nothing in subsection (2) affects the application of section 222(5) in relation to P.

222B Non-qualifying tax years

(1) For the purposes of sections 222 to 226 the dwelling-house or part of a dwelling-house mentioned in section 222(1) is treated as not being occupied as a residence by the individual so mentioned (“P”) at any time in P's period of ownership which falls within—

(a) a non-qualifying tax year, or

(b) a non-qualifying partial tax year.

In the remainder of this section the dwelling-house or part of a dwelling-house is referred to as “the dwelling-house”.

(2) Except where the disposal mentioned in section 222(1) is a non-resident CGT disposal, subsection (1) does not have effect in respect of any tax year or partial tax year before the tax year 2015-16.

(3) A tax year the whole of which falls within P's period of ownership is “a non-qualifying tax year” in relation to the dwelling-house if—

(a) neither P nor P's spouse or civil partner was resident for that tax year in the territory in which the dwelling-house is situated, and

(b) the day count test was not met by P with respect to the dwelling-house for that tax year (see section 222C).

(4) A partial tax year is “a non-qualifying partial tax year” in relation to the dwelling-house if—

(a) neither P nor P's spouse or civil partner was resident for the tax year in question in the territory in which the dwelling-house is situated, and

(b) the day count test was not met by P with respect to the dwelling-house for that partial tax year.

(5) Where part only of a tax year falls within P's period of ownership, that part is a “partial tax year” for the purposes of this section.

(6) For the purposes of this section an individual is resident in a territory outside the United Kingdom (“the overseas territory”) for a tax year (“year X”) in relation to which condition A or B is met.

(7) Condition A is that the individual is, in respect of a period or periods making up more than half of year X, liable to tax in the overseas territory under the law of that territory by reason of the individual's domicile or residence.

(8) Condition B is that the individual would be resident in the overseas territory for year X in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013, if in Parts 1 and 2 of that Schedule—

(a) any reference to the United Kingdom (however expressed) were read as a reference to the overseas territory,

(b) “overseas” meant anywhere outside that territory, and

(c) in paragraph 26 (meaning of “work”), sub-paragraphs (2) to (4), (6) and (7) were disregarded.

(9) In applying the statutory residence test in accordance with subsection (8), any determination of whether—

(a) the individual was resident in the overseas territory for a tax year preceding year X, or

(b) another individual is resident in the overseas territory for year X,

is to be made in accordance with the statutory residence test, as modified by subsection (8).

(10) Section 11(1)(a) (visiting forces etc) is to be disregarded in determining for the purposes of this section whether or not an individual is resident in the United Kingdom.

(11) Subsection (1) is subject to—

(a) section 222(8) (job-related accommodation), and

(b) section 223(3) (absence reliefs).

222C Day count test

(1) This section explains how P meets the day count test (see section 222B) with respect to the dwelling-house or part of a dwelling-house mentioned in section 222(1) for a full or partial tax year.

In the remainder of this section the dwelling-house or part of a dwelling-house is referred to as “the dwelling-house”.

(2) P meets that test for a tax year with respect to the dwelling-house if, during that year, P spends at least 90 days in one or more qualifying houses.

(3) P meets that test for a partial tax year with respect to the dwelling-house if, during that partial tax year, P spends at least the relevant number of days in one or more qualifying houses.

(4) To find the relevant number of days for the purposes of subsection (3), multiply 90 days by the relevant fraction and round up the result to the nearest whole number of days if necessary.

(5) The relevant fraction is—

where—

“X” is the number of days in the partial tax year;

“Y” is the number of days in the tax year.

(6) For the purposes of subsections (2) and (3) the days need not be consecutive, and days spent in different qualifying houses may be aggregated.

(7) A day spent by P's spouse or civil partner in a dwelling-house or part of a dwelling-house which is a qualifying house in relation to P counts as a day spent by P in the qualifying house (but no day is to be counted twice as a result of this subsection).

(8) For the purposes of this section, a day counts as a day spent by an individual in a qualifying house if—

(a) the individual is present at the house at the end of the day, or

(b) the individual—

(i) is present in the house for some period during the day, and

(ii) the next day, has stayed overnight in the house.

(9) For the purposes of this section—

(a) the dwelling-house is a qualifying house in relation to P, and

(b) any other dwelling-house or part of a dwelling-house which is situated in the same territory as the dwelling-house is a qualifying house in relation to P at any particular time if at that time any of the following has an interest in it—

(i) P,

(ii) an individual who is P's spouse or civil partner at that time, and

(iii) an individual who is P's spouse or civil partner at the time of disposal of the dwelling-house.

(10) In this section “partial tax year” has the meaning given by section 222B(5).”

4 (1) Section 223 (amount of relief) is amended as follows. U.K.

(2) In subsection (3)—

(a) after “the purposes of” insert “ sections 222(5) and 222A and ”;

(b) for “was the individual's only or main residence” substitute “ were occupied by the individual as a residence ”.

(3) For subsection (7) substitute—

“(7) In this section “period of ownership”—

(a) does not include any period before 31 March 1982, and

(b) where the whole or part of the gain to which section 222 applies is an NRCGT gain chargeable to capital gains tax by virtue of section 14D, does not include any period before 6 April 2015 (but see subsection (7A)).

(7A) Paragraph (b) of the definition of “period of ownership” does not apply in a case where paragraph 9 of Schedule 4ZZB applies by virtue of sub-paragraph (1)(b) of that paragraph (the individual has made an election for the retrospective basis of computation to apply).

(7B) In this section “period of absence” means a period during which the dwelling-house or the part of the dwelling-house was not occupied by the individual as a residence.”

5 U.K. After section 223 insert—

“223A Amount of relief: non-resident CGT disposals

(1) This section applies where—

(a) the individual mentioned in section 223(1) (“P”) acquired the asset to which the gain mentioned in section 222(1) is attributable before 6 April 2015, and

(b) P's period of ownership for the purposes of section 223 begins on that date because of section 223(7)(b).

(2) Times before 6 April 2015 are to be ignored in determining whether or not condition A in section 223 is met in relation to a period of absence, unless P elects that this subsection is not to apply in relation to the period.

(3) An election under subsection (2)—

(a) must specify which day before 6 April 2015 P relies on in relation to the period of absence for the purpose of meeting condition A in section 223, and

(b) must be made in the NRCGT return in respect of the disposal.

(4) Where P has made an election under subsection (2), section 223 applies as if relevant prior periods of absence counted against the maximum periods (and maximum aggregate periods) specified in subsection (3)(a), (c) and (d) of that section.

(5) In relation to a maximum period (or maximum aggregate period) specified in paragraph (a), (c) or (d) of section 223(3), “relevant prior period of absence” means a period of absence which would have counted against that maximum period (or maximum aggregate period) if the bridge period were included in the period of ownership.

(6) In subsection (5) “the bridge period” means the period beginning with the day specified in the election and ending with 5 April 2015.

(7) In this section “period of absence” has the same meaning as in section 223.”

6 (1) Section 225 (private residence occupied under terms of settlement) is amended as follows. U.K.

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

(3) In that subsection—

(a) in the words before paragraph (a), after “person” insert “ (“B”) ”;

(b) in paragraph (a), for “the occupation of the dwelling-house or part of the dwelling-house, and” substitute “ the matters dealt with in subsection (2), ”;

(c) in paragraph (b), for “the person entitled to occupy the dwelling-house or part of the dwelling-house;” substitute “ B, and ”;

(d) after paragraph (b) insert—

“(c) the notice which may be given by the trustees under section 222A is effective only if it is accompanied by written notification from B agreeing to the terms of the notice;”.

(4) After that subsection insert—

“(2) In sections 222 to 224, as applied by subsection (1), references to the individual, in relation to—

(a) the occupation of the dwelling-house or part of the dwelling-house,

(b) residence in a territory, or

(c) meeting the day count test,

are to be taken as references to B.”

7 (1) Section 225A (private residence held by personal representatives) is amended as follows. U.K.

(2) In subsection (5)—

(a) in paragraph (a), for the words from “the occupation” to the end substitute “ the matters dealt with in paragraph (aa), ”;

(b) after paragraph (a) insert—

“(aa) in relation to the occupation of the dwelling-house or part of the dwelling-house, residence in a territory, or meeting the day count test, references to the individual are to be taken as references to a qualifying individual,”;

(c) after paragraph (b) insert “and

(c) the notice which may be given by the personal representatives under section 222A is effective only if it is accompanied by written notification from the individual or individuals entitled to occupy the dwelling-house or part of the dwelling-house agreeing to the terms of the notice.”

(3) After subsection (6) insert—

“(7) In subsection (5)(aa) “a qualifying individual” means an individual—

(a) who has a relevant entitlement, and

(b) by virtue of whom the first condition is met.”

8 U.K. In section 225B (disposals in connection with divorce etc), in subsection (4), after “222(5)” insert “ or 222A ”.

9 U.K. In section 225E (disposals by disabled persons or persons in care homes etc), in subsection (6)(b), after “subsection (5) of that section” insert “ or under section 222A ”.

10 U.K. The amendments made by this Schedule have effect in relation to disposals made on or after 6 April 2015.

Section 46

SCHEDULE 10 U.K. Plant and machinery allowances: anti-avoidance

1 U.K. CAA 2001 is amended as follows.

Transfer and long funding leaseback: restrictions on lessee's allowances U.K.

2 (1) Section 70DA is amended as follows. U.K.

(2) After subsection (5) insert—

“(5A) D is nil if—

(a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and

(b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.”

(3) After subsection (8) insert—

“(9) Linked person”, in relation to plant or machinery, means a person—

(a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and

(b) who was connected with S at any time between—

(i) the time when the person became owner of the plant or machinery, and

(ii) the time of the transfer referred to in subsection (1)(a).

(10) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—

(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or

(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.”

(4) The amendments made by this paragraph have effect in relation to cases where the lease referred to in section 70DA(1)(b) of CAA 2001 is entered into on or after 26 February 2015.

Restriction on qualifying expenditure on sale, hire purchase (etc) and assignment U.K.

3 (1) Section 218 is amended as follows. U.K.

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

(3) After subsection (2) insert—

“(2A) D is nil if—

(a) S is not required to bring a disposal value into account under this Part because of the relevant transaction, and

(b) at any time before that transaction S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.”

(4) In subsection (3), for the words from the beginning to “transaction,” substitute “ Otherwise, ”.

(5) After that subsection insert—

“(3A) Linked person”, in relation to plant or machinery, means a person—

(a) who owned the plant or machinery at any time before the relevant transaction, and

(b) who was connected with S at any time between—

(i) the time when the person became owner of the plant or machinery, and

(ii) the time of the relevant transaction.

(3B) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—

(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or

(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.”

(6) The amendments made by this paragraph have effect in relation to expenditure of B's that is incurred on or after 26 February 2015.

Transfer followed by hire-purchase etc: restrictions on hirer's allowances U.K.

4 (1) Section 229A is amended as follows. U.K.

(2) After subsection (5) insert—

“(5A) D is nil if—

(a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and

(b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.”

(3) After subsection (9) insert—

“(10) Linked person”, in relation to plant or machinery, means a person—

(a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and

(b) who was connected with S at any time between—

(i) the time when the person became owner of the plant or machinery, and

(ii) the time of the transfer referred to in subsection (1)(a).

(11) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—

(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or

(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.”

(4) The amendments made by this paragraph have effect in relation to cases where the contract referred to in section 229A(1)(c) of CAA 2001 is entered into on or after 26 February 2015.

Restriction on qualifying expenditure on sale, hire purchase (etc) and assignment: VAT U.K.

5 (1) Section 242 is amended as follows. U.K.

(2) After subsection (4) insert—

“(4A) D is nil if—

(a) S is not required to bring a disposal value into account under this Part because of the relevant transaction, and

(b) at any time before that transaction S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.”

(3) In subsection (5), for the words from the beginning to “transaction,” substitute “ Otherwise, ”.

(4) In subsection (6)—

(a) omit paragraph (a), and

(b) in paragraph (b), for “the smallest amount under subsection (5)” substitute “ subsection (5) applies and the smallest amount under that subsection ”.

(5) After that subsection insert—

“(7) Linked person”, in relation to plant or machinery, means a person—

(a) who owned the plant or machinery at any time before the relevant transaction, and

(b) who was connected with S at any time between—

(i) the time when the person became owner of the plant or machinery, and

(ii) the time of the relevant transaction.

(8) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—

(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or

(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.”

(6) The amendments made by this paragraph have effect in relation to expenditure of B's that is incurred on or after 26 February 2015.

Section 47

SCHEDULE 11 U.K. Extension of ring fence expenditure supplement

Amendments of Chapter 5 of Part 8 of CTA 2010 U.K.

1 U.K. Chapter 5 of Part 8 of CTA 2010 (ring fence expenditure supplement) is amended as follows.

2 U.K. In section 307 (overview of Chapter), in subsection (5) for “6” substitute “ 10 ”.

3 U.K. In section 309 (accounting periods), in subsection (4), for the words from “Chapter” to the end substitute “Chapter—

(a) in relation to straddling periods (see sections 311, 324 and 327(4) to (7)), and

(b) in relation to accounting periods which begin before, but end on or after, 5 December 2013 (see sections 311(1C), 318A and 328A).”

4 (1) Section 311 (limit on number of accounting periods for which supplement may be claimed) is amended as follows. U.K.

(2) In subsection (1) for “6” substitute “ 10 ”.

(3) After subsection (1) insert—

“(1A) In this Chapter—

• “the initial 6 periods” means the first 6 accounting periods (in chronological order) for which the company claims supplement under this Chapter;

• “the additional 4 periods” means the 4 accounting periods after the initial 6 periods for which the company claims supplement under this Chapter.

(1B) None of the additional 4 periods may be accounting periods beginning before 5 December 2013.

(1C) But, where—

(a) a company has an accounting period which begins before 5 December 2013 and ends on or after that date, and

(b) that accounting period falls after the initial 6 accounting periods,

so much of that accounting period as falls before 5 December 2013 and so much of it as falls on or after that date are treated as separate accounting periods for the purposes of this Chapter.”

(4) In the heading of the section after “Limit on number” insert “ etc ”.

5 U.K. In section 316 (the mixed pool of qualifying pre-commencement expenditure and supplement previously allowed), after subsection (5) insert—

“(6) This section is subject to section 318A (adjustment of pool to remove pre-2013 expenditure after the initial 6 periods).”

6 U.K. In section 317 (reduction in respect of disposal receipts under CAA 2001), at the end insert—

“(4) This section is subject to section 318A(5) (exclusion of deductible amounts in respect of pre-2013 expenditure when determining pre-commencement supplement for additional 4 periods).”

7 U.K. After section 318 insert—

“318A Adjustment of pool to remove pre-2013 expenditure after the initial 6 periods

(1) This section applies for the purposes of determining the amount of any pre-commencement supplement on any claim made by a company for supplement under this Chapter in respect of an accounting period which is one of the additional 4 periods.

(2) The pool which (under section 316) the company is to be taken to have had, at all times in the pre-commencement periods of the company, is to be taken to have been reduced at the time specified in subsection (4).

(3) The amount of the reduction is the sum of—

(a) the relevant amount (if any) which the company carries forward under Schedule 19B to ICTA,

(b) the total amount of qualifying pre-commencement expenditure allocated to the pool for pre-commencement periods beginning before 5 December 2013, and

(c) the total amount of the company's pre-commencement supplement allocated to the pool for pre-commencement periods beginning before that date.

(4) The time is—

(a) immediately after the last of the initial 6 periods, or

(b) if later, 5 December 2013.

(5) Subsection (3) of section 317 (reduction in respect of disposal receipts under CAA 2001) has effect as if the reference in paragraph (a) of that subsection to “all such events” did not include events occurring in relation to an asset representing expenditure incurred before 5 December 2013.

(6) Where a company has a pre-commencement period (“the straddling 2013 period”) which begins before 5 December 2013 and ends on or after that date, for the purposes of making a reduction under this section—

(a) so much of the straddling 2013 period as falls before 5 December 2013 (“the pre-2013 period”), and

(b) so much of that period as falls on or after that date (“the post-2013 period”),

are to be treated as separate pre-commencement periods.

(7) Accordingly, any amount of qualifying pre-commencement expenditure, and any amount of the company's pre-commencement supplement, allocated to the pool for the straddling 2013 period is to be—

(a) apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each, and

(b) treated as allocated to the pool in question for the period in question (rather than the straddling 2013 period).

(8) If the basis of the apportionment in subsection (7) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election.”

8 (1) Section 326 (the ring fence pool) is amended as follows. U.K.

(2) In subsection (3), for “the following provisions of this Chapter” substitute “ sections 327 and 328 ”.

(3) In subsection (4), after “made”, in the first place, insert “ under section 327 or 328 ”.

(4) After subsection (5) insert—

“(6) This section is subject to section 328A (adjustment of pool to remove pre-2013 losses after the initial 6 periods).”

9 U.K. In section 327 (reductions in respect of utilised ring fence losses), after subsection (3) insert—

“(3A) Subsection (3) is subject to section 328A(11).”

10 U.K. After section 328 insert—

“328A Adjustment of pool to remove pre-2013 losses after the initial 6 periods

(1) This section applies for the purposes of determining the amount of any post-commencement supplement on any claim in respect of any of the additional 4 periods.

(2) The ring fence pool is to be taken to have been reduced at the time specified in subsection (6).

(3) The amount of the reduction is the amount of the total pre-2013 pool reduced (but not below nil) by the amount of the total pre-2013 reduction.

(4) “The amount of the total pre-2013 pool” means the sum of—

(a) the carried forward qualifying Schedule 19B amount (within the meaning of section 326(5)) which is in the pool at the time specified in subsection (6) (if any),

(b) the total amount of the company's ring fence losses added to the pool in post-commencement periods beginning before 5 December 2013,

(c) if the commencement period begins on or after 5 December 2013, so much of any ring fence loss added to the pool in that period as does not exceed the sum of—

(i) any pre-commencement expenditure added to the pool in a pre-commencement period ending before 5 December 2013, and

(ii) any pre-commencement supplement allowed in respect of such a pre-commencement period, and

(d) the total amount of the company's post-commencement supplement added to the pool in post-commencement periods beginning before that date.

(5) “The amount of the total pre-2013 reduction” means the total amount of the reductions in the ring fence pool falling to be made under section 327 or 328 in post-commencement periods beginning before the time specified in subsection (6).

(6) The time is—

(a) immediately after the last of the 6 initial periods, or

(b) if later, 5 December 2013.

(7) The amount (if any) in the non-qualifying pool under section 325(3) is reduced to nil (and so ceases to exist under section 325(4)).

(8) Section 318A(6) (“the straddling 2013 period”) applies for the purposes of making a reduction under this section as it applies for the purposes of making a reduction under section 318A.

(9) Accordingly—

(a) any ring fence loss of the company added to the pool in the straddling 2013 period is to be apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each and treated as allocated to the pool for the period in question;

(b) any amount of the company's post-commencement supplement allocated to the pool for the straddling period is to be apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each and treated as allocated to the pool for the period in question;

(c) the total amount of reductions in the ring fence pool falling to be made in the straddling period is apportioned between the pre-2013 period and the post-2013 period in proportion to the number of days in each and treated as a reduction falling to be made in the period in question.

(10) If the basis of the apportionment in subsection (9)(a), (b) or (c) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election.

(11) Once a reduction in the pool has been made under this section—

(a) nothing in section 327 applies to require a reduction in the pool in respect of the use under section 45 of a loss if and to the extent that the loss is represented by the reduction made under this section, and

(b) if and to the extent that losses are represented by the reduction they are to be used under section 45 to reduce any profits of a post-commencement period before ring fence losses of the company the use of which would trigger a reduction of the ring fence pool under section 327.”

Abolition of extended ring fence expenditure supplement for onshore activities U.K.

11 U.K. In section 270 of CTA 2010 (overview of Part 8) omit subsection (5A).

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

(2) The following definitions are inserted at the appropriate places—

“the initial 6 periods (in Chapter 5 of Part 8)

section 311(1A)”;

“the additional 4 periods (in Chapter 5 of Part 8)

section 311(1A)”.

(3) The following definitions are omitted—

“the commencement period (in Chapter 5A of Part 8)

section 329D(1)”;

“offshore oil-related activities (in Chapter 5A of Part 8)

section 329C(3)”;

“onshore oil-related activities (in Chapter 5A of Part 8)

section 329C(2)”;

“onshore ring fence loss (in Chapter 5A of Part 8)

section 329P”;

“the onshore ring fence pool (in Chapter 5A of Part 8)

section 329Q”;

“the period of the loss (in Chapter 5A of Part 8)

section 329P”;

“post-commencement additional supplement (in Chapter 5A of Part 8)

section 329N(1)”;

“the post-commencement additional supplement provisions (in Chapter 5A of Part 8)

section 329N(4)”;

“post-commencement period (in Chapter 5A of Part 8)

section 329D(1)”;

“pre-commencement additional supplement (in Chapter 5A of Part 8)

section 329I(1)”;

“pre-commencement period (in Chapter 5A of Part 8)

section 329D(1)”;

“qualifying company (in Chapter 5A of Part 8)

section 329B”;

“qualifying pre-commencement onshore expenditure (in Chapter 5A of Part 8)

section 329G”;

“the relevant percentage (in Chapter 5A of Part 8)

section 329E”;

“straddling period (in Chapter 5A of Part 8)

section 329D(3)”;

“unrelieved group ring fence profits (in Chapter 5A of Part 8)

section 329H”.

13 (1) In Part 8 of CTA 2010, Chapter 5A (extended ring fence expenditure supplement for onshore activities) is repealed. U.K.

(2) Accordingly, section 69 of and Schedule 14 to FA 2014 are also repealed.

Commencement U.K.

14 U.K. The amendments made by this Schedule have effect in relation to accounting periods ending on or after 5 December 2013.

Section 49

SCHEDULE 12 U.K. Supplementary charge: investment allowance

PART 1 U.K. Amendments of Part 8 of CTA 2010

1 U.K. Part 8 of CTA 2010 (oil activities) is amended in accordance with paragraphs 2 and 3.

Investment allowance U.K.

2 U.K. After Chapter 6 insert—

“CHAPTER 6A U.K. Supplementary charge: investment allowance

Introduction U.K.

332A Overview

(1) This Chapter sets out how relief for certain expenditure incurred in relation to a qualifying oil field is given by way of reduction of a company's adjusted ring fence profits.

(2) The Chapter includes provision about—

(a) the oil fields that are qualifying oil fields (section 332B);

(b) the expenditure that is investment expenditure (section 332BA);

(c) the generation of allowance by the incurring of relievable investment expenditure in relation to a qualifying oil field (sections 332C and 332CA);

(d) restrictions on the expenditure that is relievable (sections 332D to 332DC);

(e) how allowance is activated by relevant income from the same oil field (sections 332F to 332FC and 332H to 332HB) in order to be available for reducing adjusted ring fence profits (sections 332E and 332EA);

(f) the division of an accounting period into reference periods where a company has different shares of the equity in a qualifying oil field at different times in the period (section 332G);

(g) the transfer of allowance where shares of the equity in a qualifying oil field are disposed of (sections 332I to 332IB).

(3) For provision about the conversion of field allowance under Chapter 7 (as it had effect before 1 April 2015) into allowance under this Chapter, see paragraphs 7 and 8 of Schedule 12 to FA 2015.

“Qualifying oil field” and “investment expenditure” U.K.

332B Meaning of “qualifying oil field”

In this Chapter “qualifying oil field” means an oil field that is not wholly or partly included in a cluster area (see section 356JD).

332BA Meaning of “investment expenditure”

(1) For the purposes of this Chapter, expenditure incurred by a company is “investment” expenditure only if it is—

(a) capital expenditure, or

(b) expenditure of such other description as may be prescribed by the Treasury by regulations.

(2) Regulations under subsection (1)(b) may provide for any of the provisions of the regulations to have effect in relation to expenditure incurred before the regulations are made.

(3) But subsection (2) does not apply to any provision of amending or revoking regulations which has the effect that expenditure of any description ceases to be investment expenditure.

(4) Regulations under subsection (1)(b) may—

(a) make different provision for different purposes;

(b) make transitional provision and savings.

Investment allowance U.K.

332C Generation of investment allowance

(1) Subsection (2) applies where a company—

(a) is a participator in a qualifying oil field, and

(b) incurs any relievable investment expenditure on or after 1 April 2015 in relation to the oil field.

(2) The company is to hold an amount of allowance equal to 62.5% of the amount of the expenditure.

Allowance held under this Chapter is called “investment allowance”.

(3) For the purposes of this section investment expenditure incurred by a company is “relievable” only if, and so far as, it is incurred for the purposes of oil-related activities (see section 274).

(4) Subsections (1) to (3) are subject to—

(a) section 332D (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances),

(b) section 332DA (which restricts relievable expenditure in relation to an oil field that previously qualified for a field allowance under Chapter 7 as a new oil field),

(c) section 332DB (which restricts relievable expenditure in relation to a project by reference to which an oil field previously qualified for a field allowance under Chapter 7 as an additionally-developed oil field), and

(d) section 332DC (which prevents certain expenditure from being relievable if it relates to an oil field in respect of which onshore allowance may be obtained under Chapter 8).

(5) Investment allowance is said in this Chapter to be “generated” at the time when the investment expenditure is incurred (see section 332K) and is referred to as being generated—

(a) “by” the company concerned;

(b) “in” the qualifying oil field concerned.

(6) Where—

(a) investment expenditure is incurred only partly for the purposes of oil-related activities, or

(b) the oil-related activities for the purposes of which investment expenditure is incurred are carried on only partly in relation to a particular qualifying oil field,

the expenditure is to be attributed to the activities or field concerned on a just and reasonable basis.

332CA Expenditure incurred before field is determined

(1) This section applies to expenditure incurred by a company on or after 1 April 2015 for the purposes of oil-related activities if or to the extent that the following conditions are met.

(2) The conditions are—

(a) that the expenditure was in respect of an area,

(b) that, at the time the expenditure was incurred, the area had not been determined under Schedule 1 to OTA 1975 to be an oil field,

(c) that the area is subsequently determined under that Schedule to be an oil field, and

(d) that the company is a licensee in the oil field.

(3) Where this section applies 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 oil field, and

(b) at the time when the area is determined under Schedule 1 to OTA 1975 to be an oil field.

Restrictions on relievable expenditure U.K.

332D Expenditure on acquisition of asset: disqualifying conditions

(1) Investment expenditure incurred by a company (“the acquiring company”) on the acquisition of an asset is not relievable expenditure for the purposes of section 332C if either of the disqualifying conditions in this section applies to the asset.

(2) The first disqualifying condition is that investment expenditure incurred before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset was relievable under section 332C.

(3) The second disqualifying condition is that—

(a) the asset—

(i) is the whole or part of the equity in a qualifying oil field, or

(ii) is acquired in connection with a transfer to the acquiring company of the whole or part of the equity in a qualifying oil field,

(b) expenditure was incurred before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, and

(c) any of that expenditure—

(i) related to the qualifying oil field, and

(ii) would have been relievable under section 332C if this Chapter had been fully in force and had applied to expenditure incurred at that time.

(4) For the purposes of subsection (3)(a)(ii) it does not matter whether the asset is acquired at the time of the transfer.

332DA Restriction where field qualified for field allowance as new field

(1) This section applies to expenditure which—

(a) is incurred by a company in relation to an oil field that was for the purposes of Chapter 7 a new oil field with an authorisation day before 1 January 2016,

(b) would in the absence of this section be relievable under section 332C, and

(c) is not excluded from this section by—

(i) subsection (5) (material completion),

(ii) subsection (7) (company without share of equity), or

(iii) subsection (8) (additionally-developed oil fields).

In the following provisions of this section, expenditure to which this section applies is referred to as “relevant expenditure”.

(2) Relevant expenditure incurred by a company on any day (“the relevant day”) is not relievable expenditure for the purposes of section 332C except—

(a) if immediately before the relevant day the cumulative total of relevant expenditure attributable to the company's share of the equity in the oil field (see subsection (3)) exceeds the relevant field threshold (see subsection (4)), or

(b) to the extent that, in a case not within paragraph (a), the amount of relevant expenditure incurred on the relevant day, when added to that cumulative total, exceeds the relevant field threshold.

(3) The “cumulative total of relevant expenditure attributable to the company's share of the equity in the oil field” at any time is the total amount of relevant expenditure which is incurred by the company during the period beginning with the start date and ending with that time, but this is subject to sections 332IA(3) and 332IB(4) (which relate to the disposal and acquisition of equity in an oil field).

In this subsection “the start date” means 1 April 2015 or, if later, the authorisation day (within the meaning of Chapter 7) for the field.

(4) The “relevant field threshold” is an amount given by the formula—

where—

F is the total field allowance for the oil field, as originally determined under section 356 for the purposes of Chapter 7;

E is the company's share of the equity in the oil field at the end of the relevant day.

(5) This section does not apply to expenditure which is incurred on or after the day determined by the Secretary of State as that on which the relevant project was materially completed.

(6) “The relevant project” means—

(a) in a case that fell within section 351(1)(a), the development described in the field development plan for the field, and

(b) in a case that fell within section 351(1)(b) or (c), the programme of development for the field.

(7) This section does not apply to expenditure incurred by a company if—

(a) at the time when the expenditure is incurred, the company is not a licensee in the oil field, and

(b) the expenditure is incurred in making an asset available in a way which gives rise to tariff receipts (as defined by section 15(3) of the Oil Taxation Act 1983) or tax-exempt tariffing receipts (as defined by section 6A(2) of that Act).

(8) This section does not apply to expenditure to which section 332DB applies.

332DB Restriction where project in additionally-developed field qualified for field allowance

(1) This section applies to expenditure which—

(a) is incurred by a company in relation to a project by reference to which an oil field was immediately before 1 April 2015 an additionally-developed oil field for the purposes of Chapter 7,

(b) would in the absence of this section be relievable under section 332C, and

(c) is not excluded from this section by subsection (5) (material completion) or subsection (6) (company without share of project-related reserves).

In the following provisions of this section, expenditure to which this section applies is referred to as “relevant expenditure”.

(2) Relevant expenditure incurred by a company in relation to a project on any day (“the relevant day”) is not relievable expenditure for the purposes of section 332C except—

(a) if immediately before the relevant day the cumulative total of relevant expenditure attributable to the company's share of project-related reserves (see subsection (3)) exceeds the relevant project threshold (see subsection (4)), or

(b) to the extent that, in a case not within paragraph (a), the amount of relevant expenditure incurred on the relevant day, when added to that cumulative total, exceeds the relevant project threshold.

(3) The “cumulative total of relevant expenditure attributable to the company's share of project-related reserves” at any time is the total amount of relevant expenditure which is incurred by the company during the period beginning with 1 April 2015 and ending with that time, but this is subject to sections 332IA(5) and 332IB(6) (which relate to the disposal and acquisition of shares in project-related reserves).

(4) The “relevant project threshold” is an amount given by the formula—

where—

F is the total field allowance for the oil field in relation to the project, as originally determined under section 356A for the purposes of Chapter 7;

E is the company's share of project-related reserves at the end of the relevant day.

(5) This section does not apply to expenditure which is incurred on or after the day determined by the Secretary of State as that on which the project was materially completed.

(6) This section does not apply to expenditure incurred by a company if—

(a) the company does not, at the time when the expenditure is incurred, hold a share of project-related reserves, and

(b) the expenditure is incurred in making an asset available in a way which gives rise to tariff receipts (as defined by section 15(3) of the Oil Taxation Act 1983) or tax-exempt tariffing receipts (as defined by section 6A(2) of that Act).

(7) In this section “project-related reserves”, in relation to a project and an oil field, means the additional reserves of oil that the oil field has as a result of the project.

332DC Restriction relating to fields qualifying for onshore allowance

(1) This section applies to investment expenditure which is incurred—

(a) for the purposes of onshore oil-related activities in respect of an oil field which is a qualifying site within the meaning of section 356C (generation of onshore allowance), and

(b) on a day at the beginning of which neither of the disqualifying conditions in section 356CA (disqualifying conditions for section 356C(4)(b)) is met.

(2) Expenditure to which this section applies is not relievable expenditure for the purposes of section 332C.

(3) In this section “onshore oil-related activities” has the same meaning as in Chapter 8 (see section 356BA).

Reduction of adjusted ring fence profits U.K.

332E Reduction 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 qualifying oil fields, for the accounting period (see section 332F(2)) or for reference periods within the accounting period (see section 332H(1)), and

C is any amount carried forward to the period under section 332EA.

332EA Carrying forward of activated allowance

(1) This section applies where, in the case of a company and an accounting period, the cumulative total amount of activated allowance (see section 332E(2)) is greater than the adjusted ring fence profits.

(2) The difference is carried forward to the next accounting period.

Activated and unactivated allowance: basic calculation rules U.K.

332F Activation of allowance: no change of equity share

(1) This section applies where—

(a) for the whole or part of an accounting period, a company is a licensee in a qualifying oil field,

(b) the accounting period is not divided into reference periods (see section 332G),

(c) the company holds, for the accounting period and the qualifying oil field, a closing balance of unactivated allowance (see section 332FA) which is greater than zero, and

(d) the company has relevant income from the qualifying oil field for the accounting period.

(2) The amount of activated allowance the company has for that accounting period and that qualifying oil field is the smallest of—

(a) the closing balance of unactivated allowance held for the accounting period and the oil field;

(b) the company's relevant income from that oil field for that accounting period;

(c) in a case where section 332FB applies, the relevant activation limit for the accounting period and the oil field (see subsection (2) of that section).

(3) In this Chapter “relevant income”, in relation to a qualifying oil field and an accounting period of a company, means production income of the company from any oil extraction activities carried on in that oil field that is taken into account in calculating the company's adjusted ring fence profits for the accounting period.

332FA The 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 qualifying oil field is—

where—

P is the amount of investment allowance generated by the company in the qualifying oil field in the accounting period (including any amount treated under section 332IB(1) as generated by the company in that field in that accounting period);

Q is any amount carried forward from an immediately preceding accounting period under section 332FC(1) or from an immediately preceding reference period under section 332HB(1).

332FB Activation limit for former additionally-developed fields

(1) This section applies to a company for an accounting period in relation to an oil field if—

(a) immediately before 1 April 2015 the oil field was an additionally-developed oil field for the purposes of Chapter 7 as a result of a project that fell within section 349A(1), and

(b) the project is not an excluded project (see subsection (3)).

(2) For the purposes of section 332F(2)(c), the “relevant activation limit” for the accounting period and the oil field is the amount that would be the closing balance of unactivated allowance held by the company for the accounting period if paragraph 7(3) of Schedule 12 to FA 2015 (conversion of unactivated field allowance) had never applied to any allowance attributable to the project.

(3) The project is an “excluded” project if condition A or condition B is met.

(4) Condition A is that—

(a) a substantial amount of work has been done in relation to the project, and

(b) the accounting period begins on or after the first day of the year of expected first production for the project.

(5) The “year of expected first production” for the project is the year that was notified to the Secretary of State, on or before the day on which the project was authorised by the Secretary of State, as the calendar year in which additional reserves of oil were expected to be first won from the field as a result of the project.

(6) Condition B is that the accounting period begins on or after the day determined under section 332DB(5) as that on which the project was materially completed.

332FC Carrying forward of unactivated allowance

(1) If, in the case of an accounting period of a company and a qualifying oil field, the amount given by subsection (2) is greater than zero, that amount is treated as investment allowance held by the company for that oil field for the next period (and is treated as held with effect from the beginning of that period).

(2) The amount is—

where—

U is the closing balance of unactivated allowance held for the accounting period and the qualifying oil field (see section 332FA);

A is the amount of activated allowance that the company has for the accounting period and the qualifying oil field (see section 332F(2));

T is any amount that is required by section 332IA(1) (reduction of allowance if equity disposed of) to be deducted in connection with a disposal or disposals made on the day following the end of the accounting period.

(3) If the accounting period is followed by a reference period of the company belonging to that qualifying oil field (see section 332G), “the next period” means that period.

(4) If subsection (3) does not apply “the next period” means the next accounting period of the company.

Changes in equity share: reference periods U.K.

332G Reference periods

(1) This section applies where—

(a) a company is a licensee in a qualifying oil field for the whole or part of an accounting period, and

(b) the company has different shares of the equity in the field on different days in the accounting period.

(2) For the purposes of this Chapter, the accounting period is to be divided into as many consecutive periods (called “reference periods”) as are necessary to secure that—

(a) a reference period begins with the first day of the accounting period,

(b) a reference period begins with the date of each disposal or acquisition of a share of the equity in the qualifying oil field that is made by the company in that accounting period (not including acquisitions or disposals made on the first day of the accounting period), and

(c) a reference period ends with the last day of the accounting period.

(3) Each such reference period “belongs to” the qualifying oil field concerned.

Changes in equity share: activation of allowance U.K.

332H Activation of allowance: reference periods

(1) The amount (if any) of activated allowance that a company has for a qualifying oil field for a reference period is the smallest of the following—

(a) the total amount of unactivated allowance that is attributable to the reference period and the oil field (see section 332HA);

(b) the company's relevant income from the oil field for the reference period (see subsection (2));

(c) in a case where section 332FB (activation limit applying in case of certain fields) applies, the relevant activation limit for the reference period and the oil field (see subsection (3)).

(2) The company's relevant income from the oil field for the reference period is so much of the company's relevant income from the oil field for the accounting period (see section 332F(3)) as arises in the reference period.

(3) If section 332FB (activation limit applying in case of certain fields) applies in relation to the oil field for the accounting period in which the reference period falls, the “relevant activation limit” for the reference period and the oil field is the amount that would be the total amount of unactivated allowance attributable to the reference period and the oil field if paragraph 7(3) of Schedule 12 to FA 2015 (conversion of unactivated field allowance) had never applied to any allowance attributable to the project in question.

332HA Unactivated amounts attributable to a reference period

(1) For the purposes of section 332H(1)(a), the total amount of unactivated allowance attributable to a reference period and a qualifying oil field is—

where—

P is the amount of allowance generated by the company in the reference period in the oil field (including any amount treated under section 332IB(1) as generated by the company in that oil field in that reference period);

Q is the amount given by subsection (2) or (3).

(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 332FC(1).

(3) Where the reference period is immediately preceded by another reference period, Q is equal to the amount (if any) carried forward under section 332HB(1).

332HB Carry-forward of unactivated allowance from a reference period

(1) If, in the case of a reference period (“RP1”) of a company, the amount given by subsection (2) is greater than zero, that amount is treated as investment allowance held by the company for the qualifying oil field for the next period (and is treated as held with effect from the beginning of that period).

(2) The amount is—

where—

U is the total amount of unactivated allowance attributable to the reference period and the qualifying oil field (see section 332HA(1));

A is the amount of activated allowance that the company has for the qualifying oil field for the reference period (see section 332H(1));

T is any amount that is required by section 332IA(1) (reduction of allowance if equity disposed of) to be deducted in connection with a disposal or disposals made on the day following the end of the reference period.

(3) If RP1 is immediately followed by another reference period of the company (belonging to the same qualifying oil field), “the next period” means that reference period.

(4) If subsection (3) does not apply, “the next period” means the next accounting period of the company.

Transfers of allowance on disposal of equity share U.K.

332I Introduction to sections 332IA and 332IB

(1) Sections 332IA and 332IB apply where—

(a) a company (“the transferor”) disposes of the whole or part of its share of the equity in a qualifying oil field, and

(b) one or more of the following conditions is met.

(2) The “unactivated allowance condition” is that immediately before the disposal the transferor holds unactivated investment allowance for the oil field.

(3) The “section 332DA expenditure condition” is that—

(a) immediately before the disposal the company has for the purposes of section 332DA (restriction where field qualified for field allowance as new field) a cumulative total of relevant expenditure attributable to its share of the equity in the oil field, and

(b) the date of the disposal falls before any date determined under section 332DA(5) (material completion).

(4) The “section 332DB expenditure condition” is that—

(a) immediately before the disposal the company has for the purposes of section 332DB (restriction where project in additionally-developed field qualified for field allowance) a cumulative total of relevant expenditure attributable to its share of project-related reserves in relation to the oil field, and

(b) the date of the disposal falls before any date determined under section 332DB(5) (material completion).

(5) In sections 332IA and 332IB—

(a) each of the companies to which a share of the equity is disposed of is referred to as “a transferee”, and

(b) references to conditions are to be read in accordance with this section.

332IA Reduction of allowance if equity is disposed of

(1) If the unactivated allowance condition is met, the following amount is to be deducted in calculating the total amount of unactivated investment allowance attributable to the qualifying oil field concerned that is to be carried forward under section 332FC or 332HB from an accounting period or reference period of the transferor—

where—

U and A are—

(a)

in the case of a disposal made on the day following the end of an accounting period, the same as in section 332FC(2) (in its application to that period), or

(b)

in the case of a disposal made on the day following the end of a reference period, the same as in section 332HB(2) (in its application to that period);

E1 is the transferor's share of the equity in the qualifying oil field immediately before the disposal;

E2 is the transferor's share of the equity in the qualifying oil field immediately after the disposal.

(2) Subsection (3) applies if the section 332DA expenditure condition is met.

(3) As from the beginning of the accounting period or reference period that begins with the day on which the disposal is made, the following amount is to be deducted in calculating for the purposes of section 332DA the cumulative total of relevant expenditure attributable to the transferor's share of the equity in the oil field—

where—

X is the cumulative total of relevant expenditure attributable to the transferor's share of the equity in the oil field (for the purposes of section 332DA), determined immediately before the disposal;

E1 and E2 have the same meaning as in subsection (1).

(4) Subsection (5) applies if the section 332DB expenditure condition is met.

(5) As from the beginning of the accounting period or reference period that begins with the day on which the disposal is made, the following amount is to be deducted in calculating for the purposes of section 332DB the cumulative total of relevant expenditure attributable to the transferor's share of project-related reserves—

where—

X is the cumulative total of relevant expenditure attributable to the transferor's share of project-related reserves (for the purposes of section 332DB), determined immediately before the disposal;

E1 is the transferor's share, immediately before the disposal, of the additional reserves of oil that the oil field has as a result of the project;

E2 is the transferor's share, immediately after the disposal, of the additional reserves of oil that the oil field has as a result of the project.

332IB Acquisition of allowance if equity acquired

(1) If the unactivated allowance condition is met, a transferee is treated as generating in the qualifying oil field concerned, at the beginning of the reference period or accounting period of the transferee that begins with the day on which the disposal is made, investment 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 332IA(1);

E3 is the share of the equity in the qualifying oil field that the transferee has acquired from the transferor;

E1 and E2 are the same as in section 332IA(1).

(3) Subsection (4) applies if the section 332DA expenditure condition is met.

(4) A transferee is treated for the purposes of section 332DA(3) as having incurred in respect of the qualifying oil field, at the beginning of the reference period or accounting period of the transferee that begins with the day on which the disposal is made, expenditure of the following amount—

where—

R is the amount determined for the purposes of the deduction under section 332IA(3);

E1, E2 and E3 have the same meaning as in subsection (2).

(5) Subsection (6) applies if the section 332DB expenditure condition is met.

(6) A transferee is treated for the purposes of section 332DB(3) as having incurred in respect of the project, at the beginning of the reference period or accounting period of the transferee that begins with the day on which the disposal is made, expenditure of the following amount—

where—

R is the amount determined for the purposes of the deduction under section 332IA(5);

E3 is the share of the project-related reserves that the transferee has acquired from the transferor;

E1 and E2 have the same meaning as in section 332IA(5).

(7) In subsection (6) “project-related reserves” means the additional reserves of oil that the oil field has as a result of the project.

Miscellaneous U.K.

332J Adjustments

(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 332E on the profits or to the calculation of the amount to be carried forward under section 332EA).

332JA Regulations amending specified percentages

(1) The Treasury may by regulations substitute a different percentage for the percentage that is at any time specified in any of the following provisions—

(a) section 332C(2) (calculation of allowance as a percentage of investment expenditure);

(b) section 332DA(4) (calculation of relevant field threshold in relation to former new field);

(c) section 332DB(4) (calculation of relevant project threshold in relation to former additionally-developed field).

(2) Regulations under subsection (1) may include transitional provision.

Interpretation U.K.

332K When expenditure is incurred

(1) Section 5 of CAA 2001 (when capital expenditure is incurred) applies for the purposes of this Chapter as for the purposes of that Act.

(2) Regulations under section 332BA(1)(b) may make provision about when any expenditure that is investment expenditure as a result of the regulations is to be treated for the purposes of this Chapter as incurred.

(3) This section is subject to section 332CA(3).

332KA Other definitions

In this Chapter (except where otherwise specified)—

• “adjusted ring fence profits”, in relation to a company and an accounting period, is to be read in accordance with section 330ZA;

• “cumulative total amount of activated allowance” has the meaning given by section 332E(2);

• “investment allowance” has the meaning given by section 332C(2);

• “licence” has the same meaning as in Part 1 of OTA 1975 (see section 12(1) of that Act);

• “licensee” has the same meaning as in Part 1 of OTA 1975;

• “relevant income”, in relation to a qualifying oil field and an accounting period, has the meaning given by section 332F(3).”

3 U.K. Chapter 7 (reduction of supplementary charge for eligible oil fields) is omitted.

PART 2 U.K. Commencement and transitional provision

Interpretation U.K.

4 U.K. In this Part of this Schedule, the following expressions have the same meaning as in Chapter 7 of Part 8 of CTA 2010—

• “additionally-developed oil field”;

• “authorisation day”;

• “eligible oil field”;

• “new oil field”.

General rules for commencement U.K.

5 U.K. The amendment made by paragraph 2 has effect in relation to accounting periods ending on or after 1 April 2015.

6 (1) The amendment made by paragraph 3 has effect— U.K.

(a) in relation to projects authorised as mentioned in section 349A(1)(a) of CTA 2010 on or after 1 April 2015 in additionally-developed oil fields,

(b) in relation to new oil fields whose authorisation day is on or after 1 January 2016, and

(c) in the case of—

(i) projects authorised as mentioned in section 349A(1)(a) of CTA 2010 before 1 April 2015 in additionally-developed oil fields, or

(ii) new oil fields whose authorisation day is before 1 January 2016,

in relation to accounting periods ending on or after 1 April 2015.

(2) But sub-paragraph (1)(c) is subject to paragraphs 7 and 8 (which relate to field allowance under Chapter 7 of Part 8 of CTA 2010).

Unactivated field allowance to become unactivated investment allowance U.K.

7 (1) This paragraph applies if, in the absence of this Schedule, a company would hold a field allowance for an eligible oil field as a result of section 337 or 347(2) of CTA 2010 immediately before the relevant date. U.K.

(2) “The relevant date” is—

(a) in relation to a new oil field whose authorisation day is on or before 1 April 2015, 1 April 2015;

(b) in relation to an additionally-developed oil field, 1 April 2015;

(c) in relation to a new oil field whose authorisation day is after 1 April 2015 but before 1 January 2016, the authorisation day.

(3) The unactivated amount of field allowance held by the company for the oil field immediately before the relevant date, as determined under section 339 of CTA 2010, is to be treated for the purposes of Chapter 6A of Part 8 of CTA 2010 (inserted by paragraph 2) as an amount of unactivated investment allowance generated by the company in the oil field in the relevant period.

(4) “The relevant period” is—

(a) the accounting period in which the relevant date falls, or

(b) where the company has different shares of the equity in the oil field on different days in that accounting period, the reference period (within the meaning of Chapter 6A of Part 8 of CTA 2010) in which the relevant date falls.

Activated field allowance to become activated investment allowance U.K.

8 (1) This paragraph applies if, in the absence of this Schedule, a company would under section 335 or 336 of CTA 2010 carry all or part of a pool of field allowances into the accounting period in which 1 April 2015 falls (“the commencement period”). U.K.

(2) The amount that would be carried into that accounting period is to be treated for the purposes of Chapter 6A of Part 8 of CTA 2010 (inserted by paragraph 2) as an amount of activated investment allowance carried forward to the commencement period under section 332EA of that Act.

Section 50

SCHEDULE 13 U.K. Supplementary charge: cluster area allowance

PART 1 U.K. Amendments of Part 8 of CTA 2010

1 U.K. Part 8 of CTA 2010 (oil activities) is amended in accordance with paragraphs 2 to 4.

Cluster area allowance U.K.

2 U.K. After Chapter 8 insert—

“CHAPTER 9 U.K. Supplementary charge: cluster area allowance

Introduction U.K.

356JC Overview

(1) This Chapter sets out how relief for certain expenditure incurred in relation to a cluster area is given by way of reduction of a company's adjusted ring fence profits.

(2) The Chapter includes provision about—

(a) the determination of cluster areas (sections 356JD and 356JDA);

(b) the meaning of investment expenditure (section 356JE);

(c) the generation of allowance by the incurring of relievable investment expenditure in relation to a cluster area (section 356JF);

(d) how allowance is activated by relevant income from the same cluster area (sections 356JH to 356JHB and 356JJ to 356JJB) in order to be available for reducing adjusted ring fence profits (sections 356JG and 356JGA);

(e) the division of an accounting period into reference periods where a company has different shares of the equity in a licensed area or sub-area at different times in the period (section 356JI);

(f) the transfer of allowance where shares of the equity in a licensed area or sub-area are disposed of (sections 356JK to 356JKB);

(g) elections to treat allowance attributable to an unlicensed part of a cluster area as if it were attributable to a licensed area or sub-area in the cluster area (section 356JL).

Determination of cluster areas U.K.

356JD Meaning of “cluster area”

(1) In this Part “cluster area” means an offshore area which the Secretary of State determines to be a cluster area.

(2) A cluster area is treated as not including any previously authorised oil field (or any part of such an oil field) (see section 356JDA).

(3) An area is “offshore” for the purposes of this section if the whole of it lies on the seaward side of the baselines from which the territorial sea of the United Kingdom is measured.

(4) Before determining an area to be a cluster area the Secretary of State must—

(a) give written notice of the proposed determination to every person who is a licensee in respect of a licensed area or sub-area which is wholly or partly included in the proposed cluster area and to any other licensee whose interests appear to the Secretary of State to be affected, and

(b) publish a notice of the proposed determination on a website that is, and indicates that it is, kept by or on behalf of the Secretary of State.

(5) The Secretary of State must consider any representations made in writing and within 30 days of the date of the publication of the notice under subsection (4)(b) (or, in the case of representations made by a person to whom notice is given under subsection (4)(a), within 30 days of receipt of the notice, if later).

(6) A determination under this section—

(a) has effect from the day on which it is published,

(b) may be in any form the Secretary of State thinks appropriate, and

(c) must assign to the cluster area an identifying number or other designation.

(7) After making a determination the Secretary of State must—

(a) give written notice of the determination to every person who is a licensee in respect of a licensed area or sub-area which is wholly or partly included in the cluster area and any other person to whom notice of the proposed determination was given;

(b) publish a notice of the determination on a website that is, and indicates that it is, kept by or on behalf of the Secretary of State.

(8) The Secretary of State may vary or revoke a determination made under this section, and subsections (4), (5), (6)(a) and (b) and (7) are to apply as if the variation or revocation were a new determination.

356JDA Meaning of “previously authorised oil field”

(1) In section 356JD “previously authorised oil field”, in relation to a cluster area, means an oil field, other than a decommissioned oil field, whose development (in whole or in part) was authorised for the first time before the relevant day.

(2) An oil field is a “decommissioned oil field” in relation to a cluster area if, immediately before the relevant day, all assets of the oil field which are relevant assets have been decommissioned.

(3) In this section, “relevant day”, in relation to an oil field and a cluster area, means the date of publication of the first determination, or variation of a determination, under section 356JD as a result of which the oil field is (ignoring section 356JD(2)) wholly or partly included in the cluster area.

(4) Sub-paragraphs (2) to (9) of paragraph 7 of Schedule 1 to OTA 1975 apply for the purpose of determining whether relevant assets of an oil field are decommissioned as they apply for the purpose of determining whether qualifying assets of a relevant area are decommissioned.

(5) For the purposes of this section, an asset is a relevant asset of an oil field if—

(a) it has at any time been a qualifying asset (within the meaning of the Oil Taxation Act 1983) in relation to any participator in the field, and

(b) it has at any time been used for the purpose of winning oil from the field.

(6) In this section references to authorisation of development of an oil field are to be interpreted in accordance with section 356IB.

(7) See also paragraph 5 of Schedule 13 to FA 2015, as a result of which certain proposed determinations made before the day on which that Act is passed are treated as made under section 356JD for the purposes of this Chapter.

Meaning of “investment expenditure” U.K.

356JE Meaning of “investment expenditure”

(1) For the purposes of this Chapter, expenditure incurred by a company is “investment” expenditure only if it is—

(a) capital expenditure, or

(b) expenditure of such other description as may be prescribed by the Treasury by regulations.

(2) Regulations under subsection (1)(b) may provide for any of the provisions of the regulations to have effect in relation to expenditure incurred before the regulations are made.

(3) But subsection (2) does not apply to any provision of amending or revoking regulations which has the effect that expenditure of any description ceases to be investment expenditure.

(4) Regulations under subsection (1)(b) may—

(a) make different provision for different purposes;

(b) make transitional provision and savings.

Cluster area allowance U.K.

356JF Generation of cluster area allowance

(1) Subsection (2) applies where a company—

(a) is a licensee in a licensed area or sub-area which is wholly or partly included in a cluster area, and

(b) incurs any relievable investment expenditure on or after 3 December 2014 in relation to the cluster area.

(2) The company is to hold an amount of allowance equal to 62.5% of the amount of the expenditure.

Allowance held under this Chapter is called “cluster area allowance”.

(3) For the purposes of this section investment expenditure incurred by a company is “relievable” only if, and so far as, it is incurred for the purposes of oil-related activities (see section 274).

(4) Subsections (1) to (3) are subject to section 356JFA (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances).

(5) Cluster area allowance is said in this Chapter to be “generated” at the time when the investment expenditure is incurred (see section 356JN) and is referred to as being generated—

(a) “by” the company concerned;

(b) “in” the cluster area concerned.

(6) Where—

(a) investment expenditure is incurred only partly for the purposes of oil-related activities, or

(b) the oil-related activities for the purposes of which investment expenditure is incurred are carried on only partly in relation to a particular cluster area,

the expenditure is to be attributed to the activities or area concerned on a just and reasonable basis.

356JFA Expenditure on acquisition of asset: disqualifying conditions

(1) Investment expenditure incurred by a company (“the acquiring company”) on the acquisition of an asset is not relievable expenditure for the purposes of section 356JF if either of the disqualifying conditions in this section applies to the asset.

(2) The first disqualifying condition is that investment expenditure incurred before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset was relievable under section 356JF.

(3) The second disqualifying condition is that—

(a) the asset—

(i) is the whole or part of the equity in a licensed area or sub-area, or

(ii) is acquired in connection with a transfer to the acquiring company of the whole or part of the equity in a licensed area or sub-area,

(b) expenditure was incurred, at any time before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, and

(c) any of that expenditure—

(i) related to the cluster area, and

(ii) would have been relievable under section 356JF if this Chapter had applied to expenditure incurred at that time.

(4) For the purposes of subsection (3)(a)(ii), it does not matter whether the asset is acquired at the time of the transfer.

Reduction of adjusted ring fence profits U.K.

356JG Reduction 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 cluster areas, for the accounting period (see section 356JH(2)) or for reference periods within the accounting period (see section 356JJ(1)), and

C is any amount carried forward to the period under section 356JGA.

356JGA Carrying forward of activated allowance

(1) This section applies where, in the case of a company and an accounting period, the cumulative total amount of activated allowance (see section 356JG(2)) is greater than the adjusted ring fence profits.

(2) The difference is carried forward to the next accounting period.

Activated and unactivated allowance: basic calculation rules U.K.

356JH Activation of allowance: no change of equity share

(1) This section applies where—

(a) for the whole or part of an accounting period, a company is a licensee in a licensed area or sub-area which is wholly or partly included in a cluster area,

(b) the accounting period is not divided into reference periods (see section 356JI),

(c) the company holds, for the accounting period and the cluster area, a closing balance of unactivated allowance (see section 356JHA) which is greater than zero, and

(d) the company has relevant income from the cluster area for the accounting period.

(2) The amount of activated allowance the company has for that accounting period and that cluster area is the smaller of—

(a) the closing balance of unactivated allowance held for the accounting period and the cluster area;

(b) the company's relevant income for that accounting period from that cluster area.

(3) In this Chapter “relevant income”, in relation to a cluster area and an accounting period of a company, means production income of the company from any oil extraction activities carried on in that area that is taken into account in calculating the company's adjusted ring fence profits for the accounting period.

356JHA The 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 cluster area is—

where—

P is the amount of cluster area allowance generated by the company in the cluster area in the accounting period (including any amount treated under section 356JKB(1) as generated by the company in that cluster area in that accounting period);

Q is any amount carried forward from an immediately preceding accounting period under section 356JHB(1) or from an immediately preceding reference period under section 356JJB(1).

356JHB Carrying forward of unactivated allowance

(1) If, in the case of an accounting period of a company and a cluster area, the amount given by subsection (2) is greater than zero, that amount is treated as cluster area allowance held by the company for that cluster area for the next period (and is treated as held with effect from the beginning of that period).

(2) The amount is—

where—

U is the closing balance of unactivated allowance held for the accounting period and the cluster area;

A is the amount of activated allowance that the company has for the accounting period and the cluster area (see section 356JH(2));

T is the sum of any amounts transferred by the company under section 356JK in connection with a disposal or disposals made on the day following the end of the accounting period.

(3) If the accounting period is followed by a reference period of the company belonging to that cluster area (see section 356JI), “the next period” means that period.

(4) If subsection (3) does not apply “the next period” means the next accounting period of the company.

Changes in equity share: reference periods U.K.

356JI Reference periods

(1) This section applies where—

(a) a company is a licensee for the whole or part of an accounting period in one or more licensed areas or sub-areas (“the relevant areas”) which are wholly or partly included in a cluster area, and

(b) in the case of at least one of the relevant areas, the company has different shares of the equity in the area on different days in the accounting period.

(2) For the purposes of this Chapter, the accounting period is to be divided into as many consecutive periods (called “reference periods”) as are necessary to secure that—

(a) a reference period begins with the first day of the accounting period,

(b) a reference period begins with the date of each disposal or acquisition of a share of the equity in any of the relevant areas that is made by the company in that accounting period (not including acquisitions or disposals made on the first day of the accounting period), and

(c) a reference period ends with the last day of the accounting period.

(3) Each such reference period “belongs to” the cluster area concerned.

Changes in equity share: activation of allowance U.K.

356JJ Activation of allowance: reference periods

(1) The amount (if any) of activated allowance that a company has for a cluster area for a reference period is the smaller of the following—

(a) the company's relevant income from the cluster area for the reference period;

(b) the total amount of unactivated allowance that is attributable to the reference period and the cluster area (see section 356JJA).

(2) The company's relevant income from the cluster area for the reference period is so much of the company's relevant income from the cluster area for the accounting period (see section 356JH(3)) as arises in the reference period.

356JJA Unactivated amounts attributable to a reference period

(1) For the purposes of section 356JJ(1)(b), the total amount of unactivated allowance attributable to a reference period and a cluster area is—

where—

P is the amount of allowance generated by the company in the reference period in the cluster area (including any amount treated under section 356JKB(1) as generated by the company in that area in that reference period);

Q is the amount given by subsection (2) or (3).

(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 356JHB(1).

(3) Where the reference period is immediately preceded by another reference period, Q is equal to the amount (if any) carried forward under section 356JJB(1).

356JJB Carry-forward of unactivated allowance from a reference period

(1) If, in the case of a reference period (“RP1”) of a company, the amount given by subsection (2) is greater than zero, that amount is treated as cluster area allowance held by the company for the cluster area concerned for the next period.

(2) The amount is—

where—

U is the total amount of unactivated allowance attributable to the reference period and the cluster area (see section 356JJA);

A is the amount of activated allowance that the company has for the cluster area for the reference period (see section 356JJ);

T is the sum of any amounts transferred by the company under section 356JK in connection with a disposal or disposals made on the day following the end of the reference period.

(3) If RP1 is immediately followed by another reference period of the company (belonging to the same cluster area), “the next period” means that reference period.

(4) If subsection (3) does not apply, “the next period” means the next accounting period of the company.

Transfers of allowance on disposal of equity share U.K.

356JK Disposal of equity share: transfer of allowance

(1) Subsections (2) and (3) apply where—

(a) a company (“the transferor”) makes a disposal, on the day following the end of an accounting period or reference period, of the whole or part of its share of the equity in a licensed area or sub-area which is wholly or partly included in a cluster area (“the relevant cluster area”), and

(b) the maximum transferable amount is greater than zero.

Each company to which a share of the equity is disposed of is referred to in this section as a “transferee”.

(2) The transferor may, by an election, transfer to the transferee (or transferees) a specified amount of cluster area allowance (greater than zero) which—

(a) is not less than the minimum transferable amount, and

(b) is not more than the maximum transferable amount.

(3) If the transferor does not make an election under subsection (2), the minimum transferable amount of cluster area allowance (if greater than zero) is transferred to the transferee (or transferees).

(4) An election under subsection (2)—

(a) must be made within the 60 days beginning with the date of the disposal,

(b) must—

(i) specify the date of the disposal and the amount of cluster area allowance transferred, and

(ii) identify the transferees, and

(c) is irrevocable.

(5) The minimum transferable amount is—

where—

G is so much of the total generated allowance for the relevant cluster area (see subsection (6)) as is attributable on a just and reasonable basis to the licensed area or sub-area mentioned in subsection (1);

A is the total of any amounts of allowance which have, in relation to any accounting period or reference period of the transferor ending before the date of the disposal, been activated under section 356JH or 356JJ in relation to the relevant cluster area;

E1 is the transferor's share of the equity in the licensed area or sub-area immediately before the disposal;

E2 is the transferor's share of the equity in the licensed area or sub-area immediately after the disposal.

(6) In the definition of “G” in subsection (5), “the total generated allowance for the relevant cluster area” means the total of—

(a) all amounts of cluster area allowance generated by the transferor in that cluster area before the date of the disposal, and

(b) any amounts treated under section 356JKB(1) as so generated on the date of the disposal.

(7) The maximum transferable amount is—

where—

M is the smaller of—

(a)

G (as defined in subsection (5)), and

(b)

the transferor's pre-transfer total of unactivated allowance for the relevant cluster area;

E1 and E2 have the same meaning as in subsection (5).

(8) In subsection (7) the transferor's “pre-transfer total of unactivated allowance for the relevant cluster area” means—

where—

P and Q are—

(a)

if the disposal is made on the day following the end of an accounting period, the same as in section 356JHA (in its application to that period), or

(b)

if the disposal is made on the day following the end of a reference period, the same as in section 356JJA(1) (in its application to that period);

A is—

(a)

if the disposal is made on the day following the end of an accounting period, the same as in section 356JHB(2) (in its application to that period), or

(b)

if the disposal is made on the day following the end of a reference period, the same as in section 356JJB(2) (in its application to that period);

S is the total of any amounts of allowance transferred by the transferor in connection with any prior disposals (see section 356JKA) made in relation to the relevant cluster area on the day on which the disposal is made.

(9) For the effect of a transfer of cluster area allowance in relation to the transferor, see—

(a) for disposals made on the day following the end of an accounting period, section 356JHB (reduction of unactivated allowance carried forward from accounting period), or

(b) for disposals made on the day following the end of a reference period, section 356JJB (reduction of unactivated allowance carried forward from reference period).

356JKA More than one disposal on a single day

(1) Subsections (2) to (4) apply where a company makes, on a single day and in relation to a single cluster area, more than one disposal falling within section 356JK(1)(a).

(2) The company may, by an election, choose the order of priority of the disposals for the purposes of section 356JK(8).

(3) A disposal which is placed higher in the order of priority than another disposal is a “prior disposal” in relation to the other for the purposes of the definition of “S” in section 356JK(8).

(4) An election under subsection (2) is irrevocable.

356JKB Effect of transfer of allowance for transferee

(1) Where a transfer of cluster area allowance is made under section 356JK, each transferee is treated as generating in the cluster area concerned, at the beginning of the accounting period or reference period of the transferee that begins with the day on which the disposal is made, cluster area allowance of the amount given by subsection (2).

(2) The amount is—

where—

T is the total amount of cluster area allowance transferred in connection with the disposal;

E3 is the share of equity in the licensed area or sub-area that the transferee has acquired from the transferor;

E1 and E2 are the same as in section 356JK(5).

(3) In this section references to the transferor and the transferees are to be read in accordance with section 356JK(1).

Use of allowance attributable to unlicensed area U.K.

356JL Use of allowance attributable to unlicensed area

(1) Subsection (2) applies where—

(a) a company (“C”) disposes of the whole or part of its share of the equity in a licensed area or sub-area (“area A”),

(b) that area is wholly or partly included in a cluster area, and

(c) C has generated in the cluster area, on or before the day of the disposal, cluster area allowance which is wholly or partly attributable to an unlicensed area (“area U”) in the cluster area.

(2) C may, by an election, assign to area A, or to any other relevant licensed area or sub-area in the cluster area, so much of the total of generated allowance for the cluster area as is attributable to area U.

(3) The reference in subsection (2) to a “relevant” licensed area or sub-area is to a licensed area or sub-area in which C is a licensee.

(4) In subsection (2), “the total of generated allowance for the cluster area” means the total of all amounts of cluster area allowance generated by C in the cluster area at any time on or before the day of the disposal (including any amounts treated under section 356JKB(1) as so generated).

(5) An election under this section must be made within the 60 days beginning with the date of the disposal and must specify—

(a) the amount of cluster area allowance transferred,

(b) the unlicensed area to which it was attributable, and

(c) the licensed area or sub-area to which it is assigned.

(6) An election under this section is irrevocable.

(7) Where an amount of cluster area allowance is assigned to a licensed area or sub-area by an election under this section, that amount is taken, for the purposes of this Chapter—

(a) to have been attributable to that licensed area or sub-area with effect from the beginning of the day on which the disposal is made, and

(b) never to have been attributable to area U.

(8) In this section—

• “attributable” means attributable on a just and reasonable basis;

• “unlicensed area” means an area which is not (and is not part of) a licensed area or sub-area.

Miscellaneous U.K.

356JM Adjustments

(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 356JG on the profits or to the calculation of the amount to be carried forward under section 356JGA).

356JMA Regulations amending percentage in section 356JF(2)

(1) The Treasury may by regulations substitute a different percentage for the percentage that is at any time specified in section 356JF(2) (calculation of allowance as a percentage of investment expenditure).

(2) Regulations under subsection (1) may include transitional provision.

Interpretation U.K.

356JN When capital expenditure is incurred

(1) Section 5 of CAA 2001 (when capital expenditure is incurred) applies for the purposes of this Chapter as for the purposes of that Act.

(2) Regulations under section 356JE(1)(b) may make provision about when any expenditure that is investment expenditure as a result of the regulations is to be treated for the purposes of this Chapter as incurred.

356JNA Licensed sub-areas

Where any person is entitled to a share of equity in a licensed area which relates to part only of that area—

(a) that part is referred to in this Chapter as a “licensed sub-area”, and

(b) the share of equity is referred to in this Chapter as a share of equity in the licensed sub-area,

and references to a licensee in a licensed sub-area are to be interpreted accordingly.

356JNB Other definitions

In this Chapter (except where otherwise specified)—

• “adjusted ring fence profits”, in relation to a company and an accounting period, is to be read in accordance with section 330ZA;

• “cluster area allowance” has the meaning given by section 356JF(2);

• “cumulative total amount of activated allowance” has the meaning given by section 356JG(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 (but see also section 356JNA);

• “relevant income”, in relation to a cluster area and an accounting period, has the meaning given by section 356JH(3).”

Restriction of field allowances U.K.

3 U.K. Section 349A (meaning of “additionally-developed oil field”), so far as it continues to have effect for certain purposes (in accordance with Part 2 of Schedule 12 to this Act) in the case of projects authorised before 1 April 2015, is to be read as if in subsection (1)—

(a) the “and” at the end of paragraph (aa) were omitted;

(b) after paragraph (b) there were inserted “, and

(c) on the authorisation day the oil field has never been (and is not treated by virtue of paragraph 5 of Schedule 13 to FA 2015 as having been) wholly or partly included in a cluster area.”

4 U.K. Section 350 (meaning of “new oil field”), so far as it continues to have effect for certain purposes (in accordance with Part 2 of Schedule 12 to this Act) in the case of development authorised before 1 January 2016, is to be read as if after subsection (4) there were inserted—

“(5) Any authorisation of development of an oil field is treated as not being an authorisation of development for the purposes of subsection (1)(b) if it is given on a day on which the oil field is (or is treated by virtue of paragraph 5 of Schedule 13 to FA 2015 as having been) wholly or partly included in a cluster area.”

PART 2 U.K. Transitional provision

Proposed determinations of cluster areas U.K.

5 (1) Sub-paragraph (2) applies if the Secretary of State has published, on any day (“the day of publication”) in the period beginning with 3 December 2014 and ending with the day before the day on which this Act is passed, a proposal to determine a specified offshore area to be a cluster area for the purposes of Chapter 9 of Part 8 of CTA 2010. U.K.

(2) The proposal is treated for the purposes of that Chapter—

(a) as a determination validly made under section 356JD of that Act and as having had effect from the day of publication, and

(b) if the Secretary of State has published (before the end of the period mentioned in sub-paragraph (1)) an announcement of the withdrawal of the proposal, as having ceased to have effect on the date of publication of that announcement.

But this sub-paragraph is subject to paragraph 6.

(3) If a proposal published as mentioned in sub-paragraph (1) (and not withdrawn before the day on which this Act is passed) assigns an identifying number or other designation to the proposed cluster area, that number or other designation is treated as having been assigned under section 356JD(6).

(4) An area is “offshore” for the purposes of this paragraph if the whole of it lies on the seaward side of the baselines from which the territorial sea of the United Kingdom is measured.

(5) In this paragraph, references to publication are to publication on a website that is, and indicates that it is, kept by or on behalf of the Secretary of State.

Option to exclude certain fields from cluster area allowance U.K.

6 (1) This paragraph applies where— U.K.

(a) a cluster area has been determined under section 356JD of CTA 2010 on a day before the cut-off date, or is treated under paragraph 5 as having been so determined, and

(b) a particular oil field would (in the absence of this paragraph) be wholly or partly included in the cluster area for the purposes of Chapter 9 of Part 8 of CTA 2010.

(2) The relevant companies may, within 60 days of the day the determination of the cluster area is published, jointly elect that Chapters 6A and 9 of Part 8 of CTA 2010, and Chapter 7 of that Part so far as it continues to have effect, are to have effect as if no part of the oil field were included in the cluster area (and an election made as mentioned in this sub-paragraph is effective whether made before or after the day on which this Act is passed).

(3) An election under sub-paragraph (2) made on or after the day on which this Act is passed is irrevocable.

(4) In this paragraph “the relevant companies” means the companies which are licensees in the oil field at the date of the election.

(5) “The cut-off date” means a day to be specified in regulations made by the Treasury.

(6) Section 1171(4) of CTA 2010 (regulations etc subject to annulment) does not apply to regulations under sub-paragraph (5).

(7) In this paragraph expressions which are used in Chapter 9 of Part 8 of CTA 2010 have the same meaning as in that Chapter.

Section 51

SCHEDULE 14 U.K. Investment allowance and cluster area allowance: further amendments

PART 1 U.K. Amendments of CTA 2010

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

2 (1) Section 270 (overview of Part) is amended as follows. U.K.

(2) After subsection (6) insert—

“(6A) Chapter 6A makes provision about the reduction of supplementary charge by an allowance for certain expenditure incurred in relation to qualifying oil fields for the purposes of oil-related activities.”

(3) Omit subsection (7).

(4) After subsection (7A) insert—

“(7B) Chapter 9 makes provision about the reduction of supplementary charge by an allowance for certain expenditure incurred in relation to a cluster area for the purposes of oil-related activities.”

(5) In subsection (8)—

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

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

3 U.K. In section 330 (supplementary charge in respect of ring fence trades), for subsection (5) substitute—

“(5) This Chapter is subject to—

(a) Chapter 6A (reduction of supplementary charge: investment allowance),

(b) Chapter 8 (reduction of supplementary charge: onshore allowance), and

(c) Chapter 9 (reduction of supplementary charge: cluster area allowance).”

4 U.K. After section 330 insert—

“330ZA Ordering of allowances

(1) In this section “relieving Chapter” means any of the following—

(a) Chapter 6A (reduction of supplementary charge: investment allowance);

(b) Chapter 8 (reduction of supplementary charge: onshore allowance);

(c) Chapter 9 (reduction of supplementary charge: cluster area allowance).

(2) Where a company has allowances under more than one relieving Chapter available for reducing the adjusted ring fence profits that are to be chargeable under section 330(1) for an accounting period, the company may choose the order in which the relieving Chapters in question are to be applied.

(3) In any relieving Chapter, “adjusted ring fence profits”, in relation to a company and an accounting period, means the adjusted ring fence profits which would (ignoring all relieving Chapters except those which the company chooses to apply before that Chapter) be taken into account in calculating the supplementary charge on the company under section 330(1) for the accounting period.”

5 U.K. In section 356C (generation of onshore allowance), in subsection (9)(a), for “section 351” substitute “ section 356IB ”.

6 U.K. Omit section 356DB (companies with both field allowance and onshore allowance).

7 U.K. Before section 356J (but after the heading “Interpretation”) insert—

“356IB Authorisation of development”: oil fields

(1) In this Chapter a reference to authorisation of development of an oil field is a reference to a national authority—

(a) granting a licensee consent for development of the field,

(b) serving on a licensee a programme of development for the field, or

(c) approving a programme of development for the field.

(2) In this section—

• “consent for development”, in relation to an oil field, does not include consent which is limited to the purpose of testing the characteristics of an oil-bearing area,

• “development”, in relation to an oil field, means winning oil from the field otherwise than in the course of searching for oil or drilling wells, and

• “national authority” means—

  (a)

  the Secretary of State, or

  (b)

  a Northern Ireland department.”

8 U.K. In section 356JB (definitions for Chapter 8), in the definition of “adjusted ring fence profits”, for the words from “means” to the end substitute “ is to be read in accordance with section 330ZA ”.

9 (1) Schedule 4 (index of defined expressions) is amended as follows. U.K.

(2) Omit the entries for—

• “additionally-developed oil field (in Chapter 7 of Part 8)”,

• “adjusted ring fence profits (in Chapter 7 of Part 8)”,

• “adjusted ring fence profits (in Chapter 8 of Part 8)”,

• “authorisation day (in Chapter 7 of Part 8)”,

• “authorisation of development of an oil field (in Chapter 7 of Part 8)”,

• “eligible oil field (in Chapter 7 of Part 8)”,

• “licensee (in Chapter 7 of Part 8)”,

• “new oil field (in Chapter 7 of Part 8)”,

• “qualifying oil field (in Chapter 7 of Part 8)”,

• “relevant income (in Chapter 7 of Part 8)”,

• “small oil field (in Chapter 7 of Part 8)”,

• “total field allowance for a new oil field (in Chapter 7 of Part 8)”,

• “total field allowance for an additionally-developed oil field”,

• “ultra heavy oil field (in Chapter 7 of Part 8)”, and

• “ultra high pressure/high temperature oil field (in Chapter 7 of Part 8)”.

(3) At the appropriate places insert—

“adjusted ring fence profits (in Chapters 6A, 8 and 9 of Part 8)

section 330ZA”;”;

“cluster area (in Part 8)

section 356JD”;

“cluster area allowance (in Chapter 9 of Part 8)

section 356JF(2)”;

“cumulative total amount of activated allowance (in Chapter 6A of Part 8)

section 332E(2)”;

“cumulative total amount of activated allowance (in Chapter 9 of Part 8)

section 356JG(2)”;

“investment allowance (in Chapter 6A of Part 8)

section 332C(2)”;

“investment expenditure (in Chapter 6A of Part 8)

section 332BA”;

“investment expenditure (in Chapter 9 of Part 8)

section 356JE”;

“licence (in Chapter 6A of Part 8)

section 332KA”;

“licence (in Chapter 9 of Part 8)

section 356JNB”;

“licensed area (in Chapter 9 of Part 8)

section 356JNB”;

“licensed sub-area (in Chapter 9 of Part 8)

section 356JNA”;

“licensee (in Chapter 6A of Part 8)

section 332KA”;

“licensee (in Chapter 9 of Part 8)

section 356JNB”;

“qualifying oil field (in Chapter 6A of Part 8)

section 332B”;

“reference period (in Chapter 6A of Part 8)

section 332G”;

“reference period (in Chapter 9 of Part 8)

section 356JI”;

“relevant income (in Chapter 6A of Part 8)

section 332F(3)”;

“relevant income (in Chapter 9 of Part 8)

section 356JH(3)”.

PART 2 U.K. Commencement

10 (1) The amendments made by Part 1 of this Schedule have effect in relation to accounting periods ending on or after 1 April 2015. U.K.

(2) Sub-paragraph (1) is subject to sub-paragraphs (3) and (4).

(3) So far as they relate to cluster area allowance under Chapter 9 of Part 8 of CTA 2010 (as inserted by Schedule 13) the amendments made by Part 1 of this Schedule have effect in relation to expenditure incurred on or after 3 December 2014.

(4) So far as they relate to investment allowance under Chapter 6A of Part 8 of CTA 2010 (as inserted by Schedule 12) in respect of oil fields not falling within paragraph 6(1)(a) or (b) of that Schedule, the amendments made by Part 1 of this Schedule have effect subject to paragraphs 7 and 8 of that Schedule.

Section 65

SCHEDULE 15 U.K. Landfill tax: material consisting of fines

1 U.K. Part 3 of FA 1996 (landfill tax) is amended as follows.

2 (1) Section 42 (amount of tax charged on a taxable disposal) is amended as follows. U.K.

(2) In subsection (2), after “qualifying material” insert “ or qualifying fines ”.

(3) After subsection (3) insert—

“(3A) Qualifying fines are a mixture of—

(a) fines that consist of such qualifying material as is prescribed by order, and

(b) fines that consist of material that is not qualifying material,

that satisfies all the requirements prescribed in an order.

(3B) An order under subsection (3A) relating to the mixture of fines may require, in particular—

(a) that fines that consist of material that is not qualifying material do not exceed a prescribed proportion;

(b) that the mixture of fines does not include prescribed materials or prescribed descriptions of materials;

(c) that the mixture of fines is such that, if subjected to a prescribed test, it would give a prescribed result;

(d) that the mixture of fines originates, or does not originate, in a prescribed way.”

(4) In subsection (4)(a), after “listed” insert “ or what fines are to be qualifying fines ”.

(5) In subsection (6), after “listed,” insert “ or what fines are to be qualifying fines, ”.

3 U.K. In section 63 (qualifying material: special provisions), after subsection (4) insert—

“(4A) Subsections (2) to (4) do not apply where the material disposed of consists of qualifying fines.”

4 U.K. After section 63 insert—

“63A Qualifying fines: special provisions

(1) This section applies for the purposes of section 42.

(2) An order may provide that fines must not be treated as qualifying fines unless prescribed conditions are met.

(3) A condition may relate to any matter the Treasury think fit.

(4) The conditions may include conditions making provision about—

(a) the production of a document which includes a statement of the nature of the fines;

(b) carrying out a specified test on fines proposed to be disposed of as qualifying fines;

(c) the frequency with which tests are to be carried out on any fines proposed to be disposed of as qualifying fines;

(d) the frequency with which tests are to be carried out on any fines that come from a particular source and are proposed to be disposed of as qualifying fines;

(e) the steps to be taken by operators of landfill sites in relation to persons sending fines to be disposed of as qualifying fines.

(5) The conditions may enable provision to be made by notices issued by the Commissioners in accordance with such provision as is made in the conditions.

(6) A notice issued as described in subsection (5) may be revoked by a notice issued in the same way.

(7) If an order includes provision falling within subsection (4)(b), the Commissioners may direct a person to carry out such a test in relation to any fines proposed to be disposed of as qualifying fines.

(8) In this section “specified” means specified in—

(a) a condition prescribed under subsection (2), or

(b) a notice issued as described in subsection (5).”

5 U.K. In section 70(1) (interpretation), at the appropriate place insert—

““fines” means particles produced by a waste treatment process that involves an element of mechanical treatment;”.

6 (1) In section 71 (orders and regulations), subsection (7) is amended as follows. U.K.

(2) After paragraph (a) insert—

“(aa) an order under section 42(3A) providing for fines which would otherwise be qualifying fines not to be qualifying fines;”.

(3) After paragraph (c) insert—

“(cza) an order under section 63A(2) other than one which provides only that an earlier order under section 63A(2) is not to apply to fines;”.

7 (1) Schedule 5 (provision about information etc) is amended as follows. U.K.

(2) In the heading to Part 1, after “Information” insert “ and samples ”.

(3) After paragraph 2A insert—

“Information: qualifying fines U.K.

2B (1) Regulations may make provision about giving the Commissioners information about fines proposed to be disposed of, or disposed of, as qualifying fines.

(2) Regulations under this paragraph may require a person to notify the Commissioners if the result of a test carried out on fines indicates that the fines are not qualifying fines.

Samples: qualifying fines U.K.

2C (1) Regulations may require persons—

(a) where a sample is taken from a quantity of fines in order to carry out a test on the fines, to retain a prescribed amount of that sample;

(b) to preserve fines retained under paragraph (a) for such period not exceeding three months as may be specified in the regulations.

(2) A duty under regulations under this paragraph to preserve fines may be discharged by taking such steps to preserve them as the Commissioners may specify in writing.”

(4) In paragraph 10 (power to take samples), after sub-paragraph (1) insert—

“(1A) An authorised person, if it appears to the person necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which the person has reasonable cause to believe is an amount of fines retained under paragraph 2C(1)(a), such samples as the person may require with a view to determining how the fines tested ought to be or to have been treated for the purposes of tax.”

(5) In paragraph 22 (information)—

(a) in sub-paragraph (1)(b), after “2” insert “ or 2A ”;

(b) in sub-paragraph (3), for the words from “who” to “liable” substitute “who—

(a) fails to preserve records in compliance with any provision of regulations made under paragraph 2 (read with that paragraph and any direction given under the regulations), or

(b) fails to preserve records in compliance with any provision of regulations made under paragraph 2A (read with that paragraph and any direction given under the regulations),

is liable ”.

8 U.K. The amendments made by this Schedule have effect in relation to disposals that are—

(a) made in England and Wales or Northern Ireland, and

(b) made (or treated as made) on or after 1 April 2015.

Section 98

SCHEDULE 16 U.K. Recovery of unpaid diverted profits tax due from non-UK resident company

PART 1 U.K. Imposing liability on UK representative of non-UK resident company

1 (1) Chapter 6 of Part 22 of CTA 2010 (collection etc of tax from UK representatives of non-UK resident companies) has effect as if the enactments referred to in section 969(1) of that Act included enactments relating to diverted profits tax so far as they make provision for or in connection with the charging, collection and recovery of diverted profits tax or of interest on that tax. U.K.

(2) In its application in accordance with sub-paragraph (1), that Chapter has effect subject to the following modifications.

(3) In a case where section 86 applies in relation to company, that Chapter applies in relation to the avoided PE in relation to that company as it would apply to a permanent establishment in the United Kingdom through which the company carries on a trade.

(4) In section 969(3) of that Act references to “chargeable profits of the company attributable to that establishment” are to be read as references to “taxable diverted profits arising to the company”.

(5) In section 971 of that Act references to the giving or service of a notice includes a reference to the issuing of a notice.

PART 2 U.K. Recovery of diverted profits tax from related companies

Cases in which this Part applies U.K.

2 (1) This Part of this Schedule applies if— U.K.

(a) an amount of diverted profits tax has been charged on a company for an accounting period,

(b) the whole or any part of that amount is unpaid at the end of the due and payable date, and

(c) the company is non-UK resident.

(2) In this Part of this Schedule “the taxpayer company” means the company mentioned in sub-paragraph (1).

Meaning of “the relevant period” U.K.

3 U.K. In this Part of this Schedule “the relevant period”, in relation to an amount of unpaid diverted profits tax for an accounting period of the taxpayer company, means the period—

(a) beginning 12 months before the start of the accounting period, and

(b) ending when the unpaid tax became payable.

Meaning of “related company” U.K.

4 (1) A company is a “related company”, for the purposes of this Part of this Schedule, if, at any time in the relevant period, it was a member— U.K.

(a) of the same group as the taxpayer company,

(b) of a consortium which at that time owned the taxpayer company, or

(c) of the same group as a company which at that time was a member of a consortium owning the taxpayer company.

(2) For the purposes of sub-paragraph (1)(a) two companies are members of the same group if—

(a) one is the 51% subsidiary of the other, or

(b) both are 51% subsidiaries of a third company.

(3) For the purposes of sub-paragraph (1)(c), two companies are members of the same group if they are members of the same group of companies within the meaning of Part 5 of CTA 2010 (group relief).

(4) For the purposes of this Part of this Schedule—

(a) a company is a member of a consortium if it is a member of a consortium within the meaning of Part 5 of CTA 2010, and

(b) a company is owned by a consortium if it is owned by a consortium within the meaning of that Part.

(5) In this paragraph “51% subsidiary” has the meaning given by section 1154 of CTA 2010.

Notice requiring payment of unpaid tax U.K.

5 (1) An officer of Revenue and Customs may serve a notice on a related company requiring it, within 30 days of the service of the notice, to pay— U.K.

(a) in a case which is not a consortium case, the amount of the unpaid tax, or

(b) in a consortium case, the proportion of that amount found under paragraph 7.

(2) The notice must state—

(a) the amount of diverted profits tax charged on the taxpayer company for the accounting period in question that remains unpaid,

(b) the date when it first became payable, and

(c) the amount which is to be paid by the company on which the notice is served.

(3) The notice has effect—

(a) for the purposes of the recovery from that company of the amount required to be paid and of interest on that amount, and

(b) for the purposes of appeals,

as if it were a charging notice and that amount were an amount of diverted profits tax charged on that company.

(4) In this Part of this Schedule “consortium case” means a case where the related company is not within paragraph 4(1)(a).

Time limit for giving notice U.K.

6 U.K. A notice under this Part of this Schedule must be served before the end of the period of 3 years beginning with the date when the charging notice or supplementary charging notice imposing the charge to tax was issued.

Amount payable in consortium case U.K.

7 (1) In a consortium case, the amount that the related company may be required to pay by notice under this Part of this Schedule is the proportion of the unpaid tax corresponding— U.K.

(a) if the company is only within paragraph 4(1)(b), to the share which the company has had in the consortium for the relevant period,

(b) if the company is only within paragraph 4(1)(c), to the share which companies that have been members of the same group of companies as the company have had in the consortium for the relevant period, or

(c) if the company is within paragraph 4(1)(b) and (c), to whichever is the greater of the amounts given by paragraph (a) and (b).

(2) For the purposes of this paragraph, a member's share in a consortium, in relation to the relevant period, is whichever is the lowest in that period of the percentages specified in sub-paragraph (3).

(3) Those percentages are—

(a) the percentage of the ordinary share capital of the taxpayer company which is beneficially owned by the member,

(b) the percentage to which the member is beneficially entitled of any profits available for distribution to equity holders of the taxpayer company, and

(c) the percentage to which the member would be beneficially entitled of any assets of the taxpayer company available for distribution to its equity holders on a winding up.

(4) If any of the percentages mentioned in sub-paragraph (3) has fluctuated in the relevant period, the average percentage over the period is to be taken.

(5) Chapter 6 of Part 5 of CTA 2010 (equity holders and profits or assets available for distribution) applies for the purposes of sub-paragraph (3) as it applies for the purposes of sections 143(3)(b) and (c) and 144(3)(b) and (c) of that Act.

Part 2: supplementary U.K.

8 (1) A company that has paid an amount in pursuance of a notice under this Part of this Schedule may recover that amount from the taxpayer company. U.K.

(2) A payment in pursuance of a notice under this Part of this Schedule is not allowed as a deduction in calculating income, profits or losses for any tax purposes.

Section 117

SCHEDULE 17 U.K. Disclosure of tax avoidance schemes

Requirement to update DOTAS information U.K.

1 U.K. After section 310B of FA 2004 insert—

“310C Duty of promoters to provide updated information

(1) This section applies where—

(a) information has been provided under section 308 about any notifiable arrangements, or proposed notifiable arrangements, to which a reference number is allocated under section 311, and

(b) after the provision of the information, there is a change in relation to the arrangements of a kind mentioned in subsection (2).

(2) The changes referred to in subsection (1)(b) are—

(a) a change in the name by which the notifiable arrangements, or proposed notifiable arrangements, are known;

(b) a change in the name or address of any person who is a promoter in relation to the notifiable arrangements or, in the case of proposed notifiable arrangements, the notifiable proposal.

(3) A person who is a promoter in relation to the notifiable arrangements or, in the case of proposed notifiable arrangements, the notifiable proposal must inform HMRC of the change mentioned in subsection (1)(b) within 30 days after it is made.

(4) Subsections (5) and (6) apply for the purposes of subsection (3) where there is more than one person who is a promoter in relation to the notifiable arrangements or proposal.

(5) If the change in question is a change in the name or address of a person who is a promoter in relation to the notifiable arrangements or proposal, it is the duty of that person to comply with subsection (3).

(6) If a person provides information in compliance with subsection (3), the duty imposed by that subsection on any other person, so far as relating to the provision of that information, is discharged.”

2 U.K. In section 316 of that Act (information to be provided in form and manner specified by HMRC), in subsection (2), after “310A,” insert “ 310C, ”.

3 U.K. In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), after paragraph (ca) insert—

“(cb) section 310C (duty of promoters to provide updated information),”.

Arrangements to be given reference number U.K.

4 U.K. In section 311(1)(a) of FA 2004 (period for allocation of reference number to arrangements) for “30 days” substitute “ 90 days ”.

Notification of employees U.K.

5 (1) Section 312A of FA 2004 (duty of client to notify parties of number) is amended as follows. U.K.

(2) After subsection (2) insert—

“(2A) Where the client—

(a) is an employer, and

(b) by reason of the arrangements or proposed arrangements, receives or might reasonably be expected to receive an advantage, in relation to any relevant tax, in relation to the employment of one or more of the client's employees,

the client must, within the prescribed period, provide to each of the client's relevant employees prescribed information relating to the reference number.”

(3) For subsection (3) substitute—

“(3) For the purposes of this section—

(a) a tax is a “relevant tax”, in relation to arrangements or arrangements proposed in a proposal of any description, if it is prescribed in relation to arrangements or proposals of that description by regulations under section 306;

(b) “relevant employee” means an employee in relation to whose employment the client receives or might reasonably be expected to receive the advantage mentioned in subsection (2A);

(c) “employee” includes a former employee;

(d) a reference to employment includes holding an office (and references to “employee” and “employer” are to be construed accordingly).”

(4) In subsection (4), for “the duty under subsection (2)” substitute “ one or both of the duties under this section ”.

(5) In subsection (5), after “subsection (2)” insert “ or (2A) ”.

6 U.K. In section 313 of that Act (duty of parties to notifiable arrangements to notify Board of number, etc), after subsection (5) insert—

“(6) The duty under subsection (1) does not apply in prescribed circumstances.”

7 U.K. In section 316 of that Act (information to be provided in form and manner specified by HMRC), in subsection (2), after “312A(2)” insert “ and (2A) ”.

8 U.K. In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), in paragraph (da), after “312A(2)” insert “ and (2A) ”.

Employers' duty of disclosure U.K.

9 U.K. After section 313ZB of FA 2004 insert—

“313ZC Duty of employer to notify HMRC of details of employees etc

(1) This section applies if conditions A, B and C are met.

(2) Condition A is that a person who is a promoter in relation to notifiable arrangements or a notifiable proposal is providing (or has provided) services in connection with the notifiable arrangements or notifiable proposal to a person (“the client”).

(3) Condition B is that the client receives information under section 312(2) or as mentioned in section 312(5).

(4) Condition C is that the client is an employer in circumstances where, as a result of the notifiable arrangement or proposed notifiable arrangement—

(a) one or more of the client's employees receive, or might reasonably be expected to receive, in relation to their employment, an advantage in relation to any relevant tax, or

(b) the client receives or might reasonably be expected to receive such an advantage in relation to the employment of one or more of the client's employees.

(5) Where an employee is within subsection (4)(a), or is an employee mentioned in subsection (4)(b), the client must provide HMRC with prescribed information relating to the employee at the prescribed time or times.

(6) The client need not comply with subsection (5) in relation to any notifiable arrangements at any time after HMRC have given notice under section 312(6) or 313(5) in relation to the notifiable arrangements.

(7) The duty under subsection (5) does not apply in prescribed circumstances.

(8) Section 312A(3) applies for the purposes of this section as it applies for the purposes of that section.”

10 U.K. In section 316 of that Act (information to be provided in form and manner specified by HMRC), in subsection (2), for “and 313ZA(3)” substitute “ , 313ZA(3) and 313ZC(5) ”.

11 U.K. In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), after paragraph (dc) insert—

“(dca) section 313ZC (duty of employer to provide details of employees etc),”.

Identifying scheme users U.K.

12 (1) Section 313C of FA 2004 (information provided to introducers) is amended as follows. U.K.

(2) For subsection (1) substitute—

“(1) This section applies where HMRC suspect—

(a) that a person (“P”) is an introducer in relation to a proposal, and

(b) that the proposal may be notifiable.

(1A) HMRC may by written notice require P to provide HMRC with one or both of the following—

(a) prescribed information in relation to each person who has provided P with any information relating to the proposal;

(b) prescribed information in relation to each person with whom P has made a marketing contact in relation to the proposal.”

(3) In subsection (3), for “or by virtue of subsection (1)” substitute “ subsection (1A) ”.

(4) For the heading substitute “ Provision of information to HMRC by introducers ”.

13 U.K. In section 98C of TMA 1970 (notification under Part 7 of FA 2004: penalties), in subsection (2)(f) after “information” insert “ or have been provided with information ”.

Additional information U.K.

“After section 316 of FA 2004 insert—

316A Duty to provide additional information

(1) This section applies where a person is required to provide information under section 312(2) or 312A(2) or (2A).

(2) HMRC may specify additional information which must be provided by that person to the recipients under section 312(2) or 312A(2) or (2A) at the same time as the information referred to in subsection (1).

(3) HMRC may specify the form and manner in which the additional information is to be provided.

(4) For the purposes of this section “additional information” means information supplied by HMRC which relates to notifiable proposals or notifiable arrangements in general.”

15 U.K. In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), omit the “and” at the end of paragraph (e) and after paragraph (f) insert “, and

(g) section 316A (duty to provide additional information).”

Protection of persons making voluntary disclosures U.K.

“After section 316A of FA 2004 insert—

316B Confidentiality

No duty of confidentiality or other restriction on disclosure (however imposed) prevents the voluntary disclosure by any person to HMRC of information or documents which the person has reasonable grounds for suspecting will assist HMRC in determining whether there has been a breach of any requirement imposed by or under this Part.”

Publication of DOTAS information U.K.

17 U.K. After section 316B of FA 2004 insert—

“316C Publication by HMRC

(1) HMRC may publish information about—

(a) any notifiable arrangements, or proposed notifiable arrangements, to which a reference number is allocated under section 311;

(b) any person who is a promoter in relation to the notifiable arrangements or, in the case of proposed notifiable arrangements, the notifiable proposal.

(2) The information that may be published is (subject to subsection (4))—

(a) any information relating to arrangements within subsection (1)(a), or a person within subsection (1)(b), that is prescribed information for the purposes of section 308, 309 or 310;

(b) any ruling of a court or tribunal relating to any such arrangements or person (in that person's capacity as a promoter in relation to a notifiable proposal or arrangements);

(c) the number of persons in any period who enter into transactions forming part of notifiable arrangements within subsection (1)(a);

(d) whether arrangements within subsection (1)(a) are APN relevant (see subsection (7));

(e) any other information that HMRC considers it appropriate to publish for the purpose of identifying arrangements within subsection (1)(a) or a person within subsection (1)(b).

(3) The information may be published in any manner that HMRC considers appropriate.

(4) No information may be published under this section that identifies a person who enters into a transaction forming part of notifiable arrangements within subsection (1)(a).

(5) But where a person who is a promoter within subsection (1)(b) is also a person mentioned in subsection (4), nothing in subsection (4) is to be taken as preventing the publication under this section of information so far as relating to the person's activities as a promoter.

(6) Before publishing any information under this section that identifies a person as a promoter within subsection (1)(b), HMRC must—

(a) inform the person that they are considering doing so, and

(b) give the person reasonable opportunity to make representations about whether it should be published.

(7) Arrangements are “APN relevant” for the purposes of subsection (2)(d) if HMRC has indicated in a publication that it may exercise (or has exercised) its power under section 219 of the Finance Act 2014 (accelerated payment notices) by virtue of the arrangements being DOTAS arrangements within the meaning of that section.

316D Section 316C: subsequent judicial rulings

(1) This section applies if—

(a) information about notifiable arrangements, or proposed notifiable arrangements, is published under section 316C,

(b) at any time after the information is published, a ruling of a court or tribunal is made in relation to tax arrangements, and

(c) HMRC is of the opinion that the ruling is relevant to the arrangements mentioned in paragraph (a).

(2) A ruling is “relevant” to the arrangements if—

(a) the principles laid down, or reasoning given, in the ruling would, if applied to the arrangements, allow the purported advantage arising from the arrangements in relation to tax, and

(b) the ruling is final.

(3) HMRC must publish information about the ruling.

(4) The information must be published in the same manner as HMRC published the information mentioned in subsection (1)(a) (and may also be published in any other manner that HMRC considers appropriate).

(5) A ruling is “final” if it is—

(a) a ruling of the Supreme Court, or

(b) a ruling of any other court or tribunal in circumstances where—

(i) no appeal may be made against the ruling,

(ii) if an appeal may be made against the ruling with permission, the time limit for applications has expired and either no application has been made or permission has been refused,

(iii) if such permission to appeal against the ruling has been granted or is not required, no appeal has been made within the time limit for appeals, or

(iv) if an appeal was made, it was abandoned or otherwise disposed of before it was determined by the court or tribunal to which it was addressed.

(6) Where a ruling is final by virtue of sub-paragraph (ii), (iii) or (iv) of subsection (5)(b), the ruling is to be treated as made at the time when the sub-paragraph in question is first satisfied.

(7) In this section “tax arrangements” means arrangements in respect of which it would be reasonable to conclude (having regard to all the circumstances) that the obtaining of an advantage in relation to tax was the main purpose, or one of the main purposes.”

Increase in penalties for failure to comply with section 313 of FA 2004 U.K.

18 U.K. In section 98C of TMA 1970 (notification under Part 7 of FA 2004)—

(a) in subsection (3) for “penalty of the relevant sum” substitute “ penalty not exceeding the relevant sum ”, and

(b) in subsection (4)—

(i) in paragraph (a) for “£100” substitute “ £5,000 ”,

(ii) in paragraph (b) for “£500” substitute “ £7,500 ”, and

(iii) in paragraph (c) for “£1,000” substitute “ £10,000 ”.

Transitional provisions U.K.

19 (1) Section 310C of FA 2004 applies in relation to notifiable arrangements, or proposed notifiable arrangements, only if a reference number under section 311 of that Act is allocated to the arrangements on or after the day on which this Act is passed. U.K.

(2) But section 310C of FA 2004 does not apply in relation to notifiable arrangements, or proposed notifiable arrangements, where prescribed information relating to the arrangements was provided to HMRC before that day in compliance with section 308 of that Act.

20 U.K. Any notice given by HMRC under section 312A(4) of FA 2004 (notice that section 312A(2) duty does not apply) before the day on which this Act is passed is treated on and after that day as given also in relation to the duty under section 312A(2A) of that Act.

21 (1) Section 316C of FA 2004 applies in relation to notifiable arrangements, or proposed notifiable arrangements, only if a reference number under section 311 of that Act is allocated to the arrangements on or after the day on which this Act is passed. U.K.

(2) But section 316C of FA 2004 does not apply in relation to notifiable arrangements, or proposed notifiable arrangements, where prescribed information relating to the arrangements was provided to HMRC before that day in compliance with section 308, 309 or 310 of that Act.

(3) Section 316C(2)(b) of FA 2004 applies in relation to a ruling of a court or tribunal only if the ruling is given on or after the day on which this Act is passed.

Section 118

SCHEDULE 18 U.K. Accelerated payments: group relief

Amendments of Part 4 of FA 2014 U.K.

1 U.K. Part 4 of FA 2014 (accelerated payments etc) is amended as follows.

2 U.K. In section 199 (overview of Part 4), in paragraph (c) omit the “and” at the end of sub-paragraph (ii), and after sub-paragraph (iii) insert “, and

(iv) provision restricting the surrender of losses and other amounts for the purposes of group relief.”

3 (1) Section 220 (content of notice given while a tax enquiry is in progress) is amended as follows. U.K.

(2) In subsection (2)—

(a) in paragraph (b), after “the payment” insert “ (if any) ”, and

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

(d) if the denied advantage consists of or includes an asserted surrenderable amount, specify that amount and any action which is required to be taken in respect of it under section 225A.”

(3) After subsection (4) insert—

“(4A) Asserted surrenderable amount” means so much of a surrenderable loss as a designated HMRC officer determines, to the best of that officer's information and belief, to be an amount—

(a) which would not be a surrenderable loss of P if the position were as stated in paragraphs (a), (b) or (c) of subsection (4), and

(b) which is not the subject of a claim by P for relief from corporation tax reflected in the understated tax amount (and hence in the payment required to be made under section 223).

(4B) “Surrenderable loss” means a loss or other amount within section 99(1) of CTA 2010 (or part of such a loss or other amount).”

(4) In subsection (6), for “the payment specified under subsection (2)(b)” substitute “ any payment specified under subsection (2)(b) or amount specified under subsection (2)(d) ”.

4 (1) Section 221 (content of notice given pending an appeal) is amended as follows. U.K.

(2) In subsection (2)—

(a) in paragraph (b), after “the disputed tax” insert “ (if any) ”, and

(b) omit the “and” at the end of paragraph (b) and after paragraph (c) insert “, and

(d) if the denied advantage consists of or includes an asserted surrenderable amount (within the meaning of section 220(4A)), specify that amount and any action which is required to be taken in respect of it under section 225A.”

5 (1) Section 222 (representations about a notice) is amended as follows. U.K.

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

(c) objecting to the amount specified in the notice under section 220(2)(d) or section 221(2)(d).”

(3) In subsection (4)—

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

(b) in paragraph (b), after “different amount” insert “ (or no amount) ”, and

(c) omit the “or” after sub-paragraph (i) of that paragraph and after sub-paragraph (ii) insert “, or

(iii) remove from the notice the provision made under section 220(2)(b) or section 221(2)(b), and

(c) if representations were made under subsection (2)(c) (and the notice is not withdrawn under paragraph (a)), determine whether a different amount (or no amount) ought to have been specified under section 220(2)(d) or 221(2)(d), and then—

(i) confirm the amount specified in the notice,

(ii) amend the notice to specify a different amount, or

(iii) remove from the notice the provision made under section 220(2)(d) or section 221(2)(d),”.

6 (1) Section 223 (effect of notice given while tax enquiry is in progress) is amended as follows. U.K.

(2) For subsection (1) substitute—

“(1) This section applies where—

(a) an accelerated payment notice is given by virtue of section 219(2)(a) (notice given while a tax enquiry is in progress) (and not withdrawn), and

(b) an amount is stated in the notice in accordance with section 220(2)(b).”

(3) In subsection (2), for “the amount specified in the notice in accordance with section 220(2)(b)” substitute “ that amount ”.

(4) Accordingly, in the heading for that section after “progress” insert “ : accelerated payment ”.

7 U.K. After section 225 insert—

“Prevention of surrender of losses U.K.

225A Effect of notice: surrender of losses ineffective, etc

(1) This section applies where—

(a) an accelerated payment notice is given (and not withdrawn), and

(b) an amount is specified in the notice in accordance with section 220(2)(d) or 221(2)(d).

(2) P may not consent to any claim for group relief in respect of the amount so specified.

(3) Subject to subsection (2), paragraph 75 (other than sub-paragraphs (7) and (8)) of Schedule 18 to FA 1998 (reduction in amount available for surrender) has effect as if the amount so specified ceased to be an amount available for surrender at the time the notice was given to P.

(4) For the purposes of subsection (3), paragraph 75 of that Schedule has effect as if, in sub-paragraph (2) of that paragraph for “within 30 days” there were substituted “ before the end of the payment period (within the meaning of section 223(5) of the Finance Act 2014) ”.

(5) The time limits otherwise applicable to amendment of a company tax return do not prevent an amendment being made in accordance with paragraph 75(6) of Schedule 18 to FA 1998 where, pursuant to subsection (3), a claimant company receives—

(a) notice of the withdrawal of consent under paragraph 75(3) of that Schedule, or

(b) a copy of a notice containing directions under paragraph 75(4) of that Schedule.

(6) Subsection (7) applies where—

(a) a company makes such an amendment to its company tax return at a time when an enquiry is in progress into the return, and

(b) paragraph 31(3) of that Schedule prevents the amendment from taking effect until the enquiry is completed.

(7) Section 219 (circumstances in which an accelerated payment notice may be given) has effect, in its application to that company in a case where section 219(2)(a) applies (tax enquiry in progress), as if—

(a) for the purposes of section 219(3), that amendment to the return had not been made,

(b) in section 219(4), after paragraph (c) there were inserted—

“(d) P has amended its company tax return, in accordance with paragraph 75(6) of Schedule 18 to FA 1998, in circumstances where pursuant to section 225A(3), P has received—

(i) notice of the withdrawal of consent under paragraph 75(3) of that Schedule, or

(ii) a copy of a notice containing directions under paragraph 75(4) of that Schedule,

but paragraph 31(3) of that Schedule prevents that amendment having effect.”,

(c) in section 220(4), after paragraph (c) there were inserted—

“(d) in the case of a notice given by virtue of section 219(4)(d) (cases involving withdrawal of consent for losses claimed), it were assumed that P had never made the claim to group relief to which the amendment to its company tax return relates.”, and

(d) in section 227(10), for “or (c)” there were substituted “ , (c) or (d) ”.

(8) Subsections (2) and (3) are subject to—

(a) section 227(14) to (16) (provision about claims for group relief, and consents to claims, following amendment or withdrawal of an accelerated payment notice), and

(b) section 227A (provision about claims for group relief, and consents to claims, once tax position finally determined).”

8 (1) Section 227 (withdrawal, modification or suspension of accelerated payment notice) is amended as follows. U.K.

(2) In subsection (2) omit the “or” after paragraph (b) and after paragraph (c) insert “, or

(d) reduce the amount specified in the accelerated payment notice under section 220(2)(d) or 221(2)(d).”

(3) In subsection (4), after “(2)(c)” insert “ or (d) ”.

(4) In subsection (6)(b), after “advantage” insert “ etc ”.

(5) In subsection (7), omit the “and” after paragraph (a) and after paragraph (b) insert “, and

(c) if the amount of the asserted surrenderable amount is less than the amount specified in the notice, amend the notice under subsection (2)(d) to substitute the lower amount.”

(6) After subsection (12) insert—

“(12A) Where, as a result of an accelerated payment notice specifying an amount under section 220(2)(d) or 221(2)(d), a notice of consent by P to a claim for group relief in respect of the amount specified (or part of it) became ineffective by virtue of section 225A(3), nothing in subsection (12) operates to revive that notice.”

(7) After subsection (13) insert—

“(14) If the accelerated payment notice is amended under subsection (2)(d) or withdrawn—

(a) section 225A(2) and (3) (which prevents consent being given to group relief claims) cease to apply in relation to the released amount, and

(b) a claim for group relief may be made in respect of any part of the released amount within the period of 30 days after the day on which the notice is amended or withdrawn.

(15) The time limits otherwise applicable to amendment of a company tax return do not apply to the extent that it makes a claim for group relief within the time allowed by subsection (14).

(16) “The released amount” means—

(a) in a case where the accelerated payment notice is amended under subsection (2)(d), the amount represented by the reduction, and

(b) in a case where the accelerated payment notice is withdrawn, the amount specified under section 220(2)(d) or 221(2)(d).”

9 U.K. After section 227 insert—

“Group relief claims after accelerated payment notices U.K.

227A Group relief claims after accelerated payment notices

(1) This section applies where as a result of an accelerated payment notice given to P—

(a) P was prevented from consenting to a claim for group relief in respect of an amount under section 225A(2), or

(b) pursuant to section 225A(3), a consent given by P to a claim for group relief in respect of an amount was ineffective.

(2) If a final determination establishes that the amount P has available to surrender consists of or includes the amount referred to in subsection (1)(a) or (b) or a part of it (“the allowed amount”)—

(a) section 225A(2) and (3) (which prevents consent being given to group relief claims) ceases to apply in relation to the allowed amount, and

(b) a claim for group relief in respect of any part of the allowed amount may be made within the period of 30 days after the relevant time.

(3) The time limits otherwise applicable to amendment of a company tax return do not apply to an amendment to the extent that it makes a claim for group relief in respect of any part of the allowed amount within the time limit allowed by subsection (2)(b).

(4) In this section—

• “final determination” means—

  (a)

  a conclusion stated in a closure notice under paragraph 34 of Schedule 18 to FA 1998 against which no appeal is made;

  (b)

  the final determination of a tax appeal within paragraph (d) or (e) of section 203;

• “relevant time” means—

  (a)

  in a case within paragraph (a) above, the end of the period during which the appeal could have been made;

  (b)

  in the case within paragraph (b) above, the end of the day on which the final determination occurs.”

10 (1) Schedule 32 (accelerated payments and partnerships) is amended as follows. U.K.

(2) In paragraph 4 (content of partner payment notice)—

(a) in sub-paragraph (1), in paragraph (b), after “the payment” insert “ (if any) ”,

(b) in that sub-paragraph omit the “and” at the end of paragraph (b) and after paragraph (c) insert “, and

(d) if the denied advantage consists of or includes an asserted surrenderable amount, specify that amount and any action which is required to be taken in respect of it under paragraph 6A.”,

(c) after sub-paragraph (4) insert—

“(4A) Asserted surrenderable amount” means so much of a surrenderable loss which the relevant partner asserts to have as a designated HMRC officer determines, to the best of that officer's information and belief, to be an amount—

(a) which would not be a surrenderable loss of that partner if the position were as stated in paragraphs (a), (b) or (c) of sub-paragraph (3), and

(b) which is not the subject of a claim by the relevant partner to relief from corporation tax which is reflected in the amount of the understated partner tax of that partner (and hence in the payment required to be made under paragraph 6).

(4B) “Surrenderable loss” means a loss or other amount within section 99(1) of CTA 2010 (or part of such a loss or other amount).”, and

(d) in sub-paragraph (5), for “the payment specified under sub-paragraph (1)(b)” substitute “ any payment specified under sub-paragraph (1)(b) or amount specified under sub-paragraph (1)(d) ”.

(3) In paragraph 5 (representations about a partner payment notice)—

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

(c) objecting to the amount specified in the notice under paragraph 4(1)(d).”,

(b) in sub-paragraph (4), omit the “and” at the end of paragraph (a),

(c) in paragraph (b) of that sub-paragraph, after “different amount” insert “ (or no amount) ”,

(d) in that paragraph, omit the “or” at the end of sub-paragraph (i) and after sub-paragraph (ii) insert “, or

(iii) remove from the notice the provision made under paragraph 4(1)(b),”, and

(e) after that paragraph insert “, and

(c) if representations were made under sub-paragraph (2)(c) (and the notice is not withdrawn under paragraph (a)), determine whether a different amount (or no amount) ought to have been specified under paragraph 4(1)(d), and then—

(i) confirm the amount specified in the notice,

(ii) amend the notice to specify a different amount, or

(iii) remove from the notice the provision made under paragraph 4(1)(d),”.

(4) In paragraph 6 (effect of partner payment notice)—

(a) for sub-paragraph (1) substitute—

“(1) This paragraph applies where—

(a) a partner payment notice has been given to a relevant partner (and not withdrawn), and

(b) an amount is stated in the notice in accordance with paragraph 4(1)(b).”, and

(b) in sub-paragraph (2) for “the amount specified in the notice in accordance with paragraph 4(1)(b)” substitute “ that amount ”.

(5) After paragraph 6 insert—

“6A (1) This paragraph applies where—

(a) an accelerated payment notice is given (and not withdrawn), and

(b) an amount is specified in the notice in accordance with paragraph 4(1)(d).

(2) The relevant partner may not at any time when the notice has effect consent to any claim for group relief in respect of the amount so specified.

(3) Subject to sub-paragraph (2), paragraph 75 (other than sub-paragraphs (7) and (8)) of Schedule 18 to FA 1998 (reduction in amount available for surrender) has effect at any time when the notice has effect as if that specified amount ceased to be an amount available for surrender at the time the notice was given to the relevant partner.

(4) For the purposes of sub-paragraph (3), paragraph 75 of that Schedule has effect as if, in sub-paragraph (2) of that paragraph for “within 30 days” there were substituted “ before the end of the payment period (within the meaning of paragraph 6(5) of Schedule 32 to the Finance Act 2014) ”.

(5) The time limits otherwise applicable to amendment of a company tax return do not prevent an amendment being made in accordance with paragraph 75(6) of Schedule 18 to FA 1998 where the relevant partner withdraws consent by virtue of sub-paragraph (3).”

(6) In paragraph 8 (withdrawal, suspension or modification of partner payment notices), in sub-paragraph (2)—

(a) before paragraph (a) insert—

“(za) section 227(2)(d), (12A) and (16) has effect as if the references to section 220(2)(d) or 221(2)(d) were to paragraph 4(1)(d) of this Schedule,”, and

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

(c) section 227(12A) has effect as if the reference to section 225A(3) were to paragraph 6A(3) of this Schedule.”

Consequential amendment U.K.

11 U.K. In section 55 of TMA 1970 (recovery of tax not postponed), in subsection (8C) omit the “or” after paragraph (b) and after paragraph (c) insert “, or

(d) the amount of tax specified in an assessment under paragraph 76 of Schedule 18 to the Finance Act 1998 where—

(i) an asserted surrenderable amount is specified in the notice under section 220(2)(d) of the Finance Act 2014 or under paragraph 4(1)(d) of Schedule 32 to that Act, and

(ii) the claimant company has failed to act in accordance with paragraph 75(6) of Schedule 18 to the Finance Act 1998.”

Transitional provision U.K.

12 (1) Section 225A(3) of FA 2014 (effect of notices: surrender of losses ineffective) (inserted by paragraph 7 of this Schedule) has effect in relation to an amount specified in a notice in accordance with section 220(2)(d) or 221(2)(d) of that Act (inserted by paragraphs 3(2) and 4(2) of this Schedule) whether the consent to a claim for group relief was given, or the claim itself was made, before or on or after the day on which this Act is passed. U.K.

(2) Paragraph 6A(3) of Schedule 32 to FA 2014 (partnerships: effect of notices: surrender of losses ineffective) (inserted by paragraph 10(5) of this Schedule) has effect in relation to an amount specified in a notice in accordance with paragraph 4(1)(d) of that Schedule (inserted by paragraph 10(2) of this Schedule) whether the consent to a claim for group relief was given, or the claim itself was made, before or on or after the day on which this Act is passed.

Section 119

SCHEDULE 19 U.K. Promoters of tax avoidance schemes

1 U.K. Part 5 of FA 2014 (promoters of tax avoidance schemes) is amended as follows.

Treating persons as meeting a threshold condition U.K.

2 (1) Section 237 (duty to give conduct notice) is amended as follows. U.K.

(2) After subsection (1) insert—

“(1A) Subsections (5) to (9) also apply if an authorised officer becomes aware at any time (“the relevant time”) that—

(a) a person has, in the period of 3 years ending with the relevant time, met one or more threshold conditions,

(b) at the relevant time another person (“P”) meets one or more of those conditions by virtue of Part 2 of Schedule 34 (meeting the threshold conditions: bodies corporate and partnerships), and

(c) P is, at the relevant time, carrying on a business as a promoter.”

(3) In subsection (3), for the words from “the” to the end substitute “ when a person is treated as meeting a threshold condition ”.

(4) For subsection (5) substitute—

“(5) The authorised officer must determine—

(a) in a case within subsection (1), whether or not P's meeting of the condition mentioned in subsection (1)(a) (or, if more than one condition is met, the meeting of all of those conditions, taken together) should be regarded as significant in view of the purposes of this Part, or

(b) in a case within subsection (1A), whether or not—

(i) the meeting of the condition by the person as mentioned in subsection (1A)(a) (or, if more than one condition is met, the meeting of all of those conditions, taken together), and

(ii) P's meeting of the condition (or conditions) as mentioned in subsection (1A)(b),

should be regarded as significant in view of those purposes.”

(5) In subsection (7), for “subsection (5)” substitute “ subsection (5)(a) ”.

(6) After subsection (7) insert—

“(7A) If the authorised officer determines under subsection (5)(b) that both—

(a) the meeting of the condition or conditions by the person as mentioned in subsection (1A)(a), and

(b) P's meeting of the condition or conditions as mentioned in subsection (1A)(b),

should be regarded as significant, the officer must give P a conduct notice, unless subsection (8) applies.”

(7) In subsection (9), omit “mentioned in subsection (1)(a)”.

(8) After subsection (9) insert—

“(10) If, as a result of subsection (1A), subsections (5) to (9) apply to a person, this does not prevent the giving of a conduct notice to the person mentioned in subsection (1A)(a).”

3 U.K. In section 283 (interpretation of Part 5), in the definition of “conduct notice”, after “section 237(7)” insert “ or (7A) ”.

4 (1) Part 2 of Schedule 34 (meeting the threshold conditions) is amended as follows. U.K.

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

(3) For paragraph 13 substitute—

“Interpretation U.K.

13A (1) This paragraph contains definitions for the purposes of this Part of this Schedule.

(2) Each of the following is a “relevant body”—

(a) a body corporate, and

(b) a partnership.

(3) “Relevant time” means the time referred to in section 237(1A) (duty to give conduct notice to person treated as meeting threshold condition).

(4) “Relevant threshold condition” means a threshold condition specified in any of the following paragraphs of this Schedule—

(a) paragraph 2 (deliberate tax defaulters);

(b) paragraph 4 (dishonest tax agents);

(c) paragraph 6 (criminal offences);

(d) paragraph 7 (opinion notice of GAAR advisory panel);

(e) paragraph 8 (disciplinary action against a member of a trade or profession);

(f) paragraph 9 (disciplinary action by regulatory authority);

(g) paragraph 10 (failure to comply with information notice).

(5) A person controls a body corporate if the person has power to secure that the affairs of the body corporate are conducted in accordance with the person's wishes—

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

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

(c) by means of controlling a partnership.

(6) A person controls a partnership if the person is a controlling member or the managing partner of the partnership.

(7) “Controlling member” has the same meaning as in Schedule 36 (partnerships).

(8) “Managing partner”, in relation to a partnership, means the member of the partnership who directs, or is on a day-to-day level in control of, the management of the business of the partnership.

Treating persons under another's control as meeting a threshold condition U.K.

13B (1) A relevant body (“RB”) is treated as meeting a threshold condition at the relevant time if—

(a) the threshold condition was met by a person (“C”) at a time when—

(i) C was carrying on a business as a promoter, or

(ii) RB was carrying on a business as a promoter and C controlled RB, and

(b) RB is controlled by C at the relevant time.

(2) Where C is an individual sub-paragraph (1) applies only if the threshold condition mentioned in sub-paragraph (1)(a) is a relevant threshold condition.

(3) For the purposes of determining whether the requirements of sub-paragraph (1) are met by reason of meeting the requirement in sub-paragraph (1)(a)(i), it does not matter whether RB existed at the time when the threshold condition was met by C.

Treating persons in control of others as meeting a threshold condition U.K.

13C (1) A person other than an individual is treated as meeting a threshold condition at the relevant time if—

(a) a relevant body (“A”) met the threshold condition at a time when A was controlled by the person, and

(b) at the time mentioned in paragraph (a) A, or another relevant body (“B”) which was also at that time controlled by the person, carried on a business as a promoter.

(2) For the purposes of determining whether the requirements of sub-paragraph (1) are met it does not matter whether A or B (or neither) exists at the relevant time.

Treating persons controlled by the same person as meeting a threshold condition U.K.

13D (1) A relevant body (“RB”) is treated as meeting a threshold condition at the relevant time if—

(a) RB or another relevant body met the threshold condition at a time (“time T”) when it was controlled by a person (“C”),

(b) at time T, there was a relevant body controlled by C which carried on a business as a promoter, and

(c) RB is controlled by C at the relevant time.

(2) For the purposes of determining whether the requirements of sub-paragraph (1) are met it does not matter whether—

(a) RB existed at time T, or

(b) any relevant body (other than RB) by reason of which the requirements of sub-paragraph (1) are met exists at the relevant time.”

5 U.K. In Schedule 36 (partnerships)—

(a) omit paragraph 4 (threshold conditions: actions of partners in a personal capacity) and the italic heading before it,

(b) omit paragraph 20 (definition of “managing partner”) and the italic heading before it, and

(c) in paragraph 21 (power to amend definitions) omit “or 20”.

Failure to comply with Part 7 of FA 2004 U.K.

6 U.K. In Schedule 34 (threshold conditions), in paragraph 5 (non-compliance with Part 7 of FA 2004), for sub-paragraph (2) substitute—

“(2) For the purposes of sub-paragraph (1), a person (“P”) fails to comply with a provision mentioned in that sub-paragraph if and only if any of conditions A to C are met.

(3) Condition A is met if—

(a) the tribunal has determined that P has failed to comply with the provision concerned,

(b) the appeal period has ended, and

(c) the determination has not been overturned on appeal.

(4) Condition B is met if—

(a) the tribunal has determined for the purposes of section 118(2) of TMA 1970 that P is to be deemed not to have failed to comply with the provision concerned as P had a reasonable excuse for not doing the thing required to be done,

(b) the appeal period has ended, and

(c) the determination has not been overturned on appeal.

(5) Condition C is met if P has admitted in writing to HMRC that P has failed to comply with the provision concerned.

(6) The “appeal period” means—

(a) the period during which an appeal could be brought against the determination of the tribunal, or

(b) where an appeal mentioned in paragraph (a) has been brought, the period during which that appeal has not been finally determined, withdrawn or otherwise disposed of.”

Disciplinary action in relation to professionals etc U.K.

7 (1) In Schedule 34 (threshold conditions), paragraph 8 (disciplinary action: professionals etc) is amended as follows. U.K.

(2) For sub-paragraph (1) substitute—

“(1) A person who carries on a trade or profession that is regulated by a professional body meets this condition if all of the following conditions are met—

(a) the person is found guilty of misconduct of a prescribed kind,

(b) action of a prescribed kind is taken against the person in relation to that misconduct, and

(c) a penalty of a prescribed kind is imposed on the person as a result of that misconduct.”

(3) In the heading, for “by a professional body” substitute “ against a member of a trade or profession ”.

(4) In sub-paragraph (3), in paragraph (h), for “for” substitute “ of ”.

Power to amend Schedule 34 U.K.

8 U.K. In Part 3 of Schedule 34 (power to amend), at the end of paragraph 14(2) insert—

“(c) vary any of the circumstances described in paragraphs 13B to 13D in which a person is treated as meeting a threshold condition (including by amending paragraph 13A);

(d) add new circumstances in which a person will be so treated.”

Commencement U.K.

9 U.K. The amendments made by paragraphs 2 to 7 have effect for the purposes of determining whether a person meets a threshold condition in a period of three years ending on or after the day on which this Act is passed.

Section 120

SCHEDULE 20 U.K. Penalties in connection with offshore matters and offshore transfers

Penalties for errors U.K.

Prospective

1 U.K. Schedule 24 to FA 2007 is amended as follows.

Prospective

2 (1) Paragraph 4 (penalties payable under paragraph 1) is amended as follows. U.K.

(2) After sub-paragraph (1) insert—

“(1A) If the inaccuracy is in category 0, the penalty is—

(a) for careless action, 30% of the potential lost revenue,

(b) for deliberate but not concealed action, 70% of the potential lost revenue, and

(c) for deliberate and concealed action, 100% of the potential lost revenue.”

(3) In sub-paragraph (2)—

(a) in paragraph (a), for “30%” substitute “ 37.5% ”,

(b) in paragraph (b), for “70%” substitute “ 87.5% ”, and

(c) in paragraph (c), for “100%” substitute “ 125% ”.

(4) In sub-paragraph (5), for “3” substitute “ 4 ”.

3 (1) Paragraph 4A (categorisation of inaccuracies) is amended as follows. U.K.

(2) For sub-paragraph (1) substitute—

“(A1) An inaccuracy is in category 0 if—

(a) it involves a domestic matter,

(b) it involves an offshore matter or an offshore transfer, the territory in question is a category 0 territory and the tax at stake is income tax, capital gains tax or inheritance tax, or

(c) it involves an offshore matter and the tax at stake is a tax other than income tax, capital gains tax or inheritance tax.

(1) An inaccuracy is in category 1 if—

(a) it involves an offshore matter or an offshore transfer,

(b) the territory in question is a category 1 territory, and

(c) the tax at stake is income tax, capital gains tax or inheritance tax.”

(3) In sub-paragraph (2)—

(a) in paragraph (a), after “matter” insert “ or an offshore transfer ”, and

(b) in paragraph (c), for “or capital gains tax” substitute “ , capital gains tax or inheritance tax ”.

(4) In sub-paragraph (3)—

(a) in paragraph (a), after “matter” insert “ or an offshore transfer ”, and

(b) in paragraph (c), for “or capital gains tax” substitute “ , capital gains tax or inheritance tax ”.

(5) After sub-paragraph (4) insert—

“(4A) Where the tax at stake is inheritance tax, assets are treated for the purposes of sub-paragraph (4) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.

(4B) An inaccuracy “involves an offshore transfer” if—

(a) it does not involve an offshore matter,

(b) it is deliberate (whether or not concealed) and results in a potential loss of revenue,

(c) the tax at stake is income tax, capital gains tax or inheritance tax, and

(d) the applicable condition in paragraph 4AA is satisfied.”

(6) In sub-paragraph (5), for the words following “revenue” substitute “ and does not involve either an offshore matter or an offshore transfer ”.

(7) In sub-paragraph (6)(a), after “matters” insert “ or transfers ”.

(8) In sub-paragraph (7), for “ “Category 1” substitute “ “Category 0 territory”, “category 1”.

Commencement Information

I1 Sch. 20 para. 3(3)-(7) in force at 1.4.2016 and the amendments therein have effect in accordance with art. 3(2) of the commencing S.I. by S.I. 2016/456, art. 3(1)

4 U.K. After paragraph 4A insert—

“4AA (1) This paragraph makes provision in relation to offshore transfers.

(2) Where the tax at stake is income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—

(a) is received in a territory outside the UK, or

(b) is transferred before the filing date to a territory outside the UK.

(3) Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—

(a) are received in a territory outside the UK, or

(b) are transferred before the filing date to a territory outside the UK.

(4) Where the tax at stake is inheritance tax, the applicable condition is satisfied if—

(a) the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and

(b) after that disposition but before the filing date the assets, or any part of the assets, are transferred to a territory outside the UK.

(5) In the case of a transfer falling within sub-paragraph (2)(b), (3)(b) or (4)(b), references to the income, proceeds or assets transferred are to be read as including references to any assets derived from or representing the income, proceeds or assets.

(6) In relation to an offshore transfer, the territory in question for the purposes of paragraph 4A is the highest category of territory by virtue of which the inaccuracy involves an offshore transfer.

(7) “Filing date” means the date when the document containing the inaccuracy is given to HMRC.

(8) “Assets” has the same meaning as in paragraph 4A.”

Commencement Information

I2 Sch. 20 para. 4 in force at 1.4.2016 and the amendments therein have effect in accordance with art. 3(2) of the commencing S.I. by S.I. 2016/456, art. 3(1)

Prospective

5 U.K. In paragraph 10 (standard percentage reductions for disclosure), in the Table in sub-paragraph (2), at the appropriate places insert—

“37.5%

18.75%

0%”.

“87.5%

43.75%

25%”, and

““125%

62.5%

40%”.

Prospective

6 U.K. In paragraph 12(5) (interaction with other penalties and late payment surcharges: the relevant percentage)—

(a) before paragraph (a) insert—

“(za) if the penalty imposed under paragraph 1 is for an inaccuracy in category 0, 100%,”, and

(b) in paragraph (a), for “100%” substitute “ 125% ”.

Prospective

7 (1) Paragraph 21A (classification of territories) is amended as follows. U.K.

(2) Before sub-paragraph (1) insert—

“(A1) A category 0 territory is a territory designated as a category 0 territory by order made by the Treasury.”

(3) For sub-paragraph (2) substitute—

“(2) A category 2 territory is a territory that is not any of the following—

(a) a category 0 territory;

(b) a category 1 territory;

(c) a category 3 territory.”

(4) For sub-paragraph (7) substitute—

“(7) An instrument containing (whether alone or with other provisions) the first order to be made under sub-paragraph (A1) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.”

8 (1) Paragraph 21B (location of assets etc) is amended as follows. U.K.

(2) After sub-paragraph (1) insert—

“(1A) The Treasury may by regulations make provision for determining for the purposes of paragraph 4AA where—

(a) income is received or transferred,

(b) the proceeds of a disposal are received or transferred, or

(c) assets are transferred.”

(3) In sub-paragraph (2), for “and capital gains tax” substitute “ , capital gains tax and inheritance tax ”.

Commencement Information

I3 Sch. 20 para. 8 in force at 1.4.2016 and the amendments therein have effect in accordance with art. 3(2) of the commencing S.I. by S.I. 2016/456, art. 3(1)

Penalties for failure to notify U.K.

Prospective

9 U.K. Schedule 41 to FA 2008 is amended as follows.

Prospective

10 (1) Paragraph 6 (amount of penalty: standard amount) is amended as follows. U.K.

(2) After sub-paragraph (1) insert—

“(1A) If the failure is in category 0, the penalty is—

(a) for a deliberate and concealed failure, 100% of the potential lost revenue,

(b) for a deliberate but not concealed failure, 70% of the potential lost revenue, and

(c) for any other case, 30% of the potential lost revenue.”

(3) In sub-paragraph (2)—

(a) in paragraph (a), for “100%” substitute “ 125% ”,

(b) in paragraph (b), for “70%” substitute “ 87.5% ”, and

(c) in paragraph (c), for “30%” substitute “ 37.5% ”.

(4) In sub-paragraph (5), for “3” substitute “ 4 ”.

11 (1) Paragraph 6A (categorisation of failures) is amended as follows. U.K.

(2) For sub-paragraph (1) substitute—

“(A1) A failure is in category 0 if—

(a) it involves a domestic matter,

(b) it involves an offshore matter or an offshore transfer, the territory in question is a category 0 territory and the tax at stake is income tax or capital gains tax, or

(c) it involves an offshore matter and the tax at stake is a tax other than income tax or capital gains tax.

(1) A failure is in category 1 if—

(a) it involves an offshore matter or an offshore transfer,

(b) the territory in question is a category 1 territory, and

(c) the tax at stake is income tax or capital gains tax.”

(3) In sub-paragraph (2)(a), after “matter” insert “ or an offshore transfer ”.

(4) In sub-paragraph (3)(a), after “matter” insert “ or an offshore transfer ”.

(5) After sub-paragraph (4) insert—

“(4A) A failure “involves an offshore transfer” if—

(a) it does not involve an offshore matter,

(b) it is deliberate (whether or not concealed) and results in a potential loss of revenue,

(c) the tax at stake is income tax or capital gains tax, and

(d) the applicable condition in paragraph 6AA is satisfied.”

(6) In sub-paragraph (5), for the words following “revenue” substitute “ and does not involve either an offshore matter or an offshore transfer ”.

(7) In sub-paragraph (6)(a), after “matters” insert “ or transfers ”.

(8) Omit sub-paragraph (8).

(9) In sub-paragraph (9), after “paragraph” insert “ and paragraph 6AA ”.

Commencement Information

I4 Sch. 20 para. 11(3)-(9) in force at 1.4.2016 and the amendments therein have effect in accordance with art. 4(2) of the commencing S.I. by S.I. 2016/456, art. 4(1)

12 U.K. After paragraph 6A insert—

“6AA (1) This paragraph makes provision in relation to offshore transfers.

(2) Where the tax at stake is income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—

(a) is received in a territory outside the UK, or

(b) is transferred before the calculation date to a territory outside the UK.

(3) Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—

(a) are received in a territory outside the UK, or

(b) are transferred before the calculation date to a territory outside the UK.

(4) In the case of a transfer falling within sub-paragraph (2)(b) or (3)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.

(5) In relation to an offshore transfer, the territory in question for the purposes of paragraph 6A is the highest category of territory by virtue of which the failure involves an offshore transfer.

(6) In this paragraph “calculation date” means the date by reference to which the potential lost revenue is to be calculated (see paragraph 7).

6AB Regulations under paragraph 21B of Schedule 24 to FA 2007 (location of assets etc) apply for the purposes of paragraphs 6A and 6AA of this Schedule as they apply for the purposes of paragraphs 4A and 4AA of that Schedule.”

Commencement Information

I5 Sch. 20 para. 12 in force at 1.4.2016 and the amendments therein have effect in accordance with art. 4(2) of the commencing S.I. by S.I. 2016/456, art. 4(1)

Prospective

13 U.K. In paragraph 13 (standard percentage reductions for disclosure), in the Table in sub-paragraph (3), at the appropriate places insert—

“37.5%	case A: 12.5%	case A: 0%
	case B: 25%	case B: 12.5%”,

“87.5%

43.75%

25%”, and

“125%

62.5%

40%”.

Penalties for failure to make returns etc U.K.

Prospective

14 U.K. Schedule 55 to FA 2009 is amended as follows.

Prospective

15 (1) Paragraph 6 (penalty for failure continuing 12 months after penalty date) is amended as follows. U.K.

(2) In sub-paragraph (3A)—

(a) before paragraph (a) insert—

“(za) for the withholding of category 0 information, 100%,”, and

(b) in paragraph (a), for “100%” substitute “ 125% ”.

(3) In sub-paragraph (4A)—

(a) before paragraph (a) insert—

“(za) for the withholding of category 0 information, 70%,”, and

(b) in paragraph (a), for “70%” substitute “ 87.5% ”.

(4) In sub-paragraph (6), for “3” substitute “ 4 ”.

16 (1) Paragraph 6A (categorisation of information) is amended as follows. U.K.

(2) For sub-paragraph (1) substitute—

“(A1) Information is category 0 information if—

(a) it involves a domestic matter,

(b) it involves an offshore matter or an offshore transfer, the territory in question is a category 0 territory and it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax, or

(c) it involves an offshore matter and it is information which would enable or assist HMRC to assess P's liability to a tax other than income tax, capital gains tax or inheritance tax.

(1) Information is category 1 information if—

(a) it involves an offshore matter or an offshore transfer,

(b) the territory in question is a category 1 territory, and

(c) it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax.”

(3) In sub-paragraph (2)—

(a) in paragraph (a), after “matter” insert “ or an offshore transfer ”, and

(b) in paragraph (c), for “or capital gains tax” substitute “ , capital gains tax or inheritance tax ”.

(4) In sub-paragraph (3)—

(a) in paragraph (a), after “matter” insert “ or an offshore transfer ”, and

(b) in paragraph (c), for “or capital gains tax” substitute “ , capital gains tax or inheritance tax ”.

(5) After sub-paragraph (4) insert—

“(4A) If the liability to tax which would have been shown in the return is a liability to inheritance tax, assets are treated for the purposes of sub-paragraph (4) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.

(4B) Information “involves an offshore transfer” if—

(a) it does not involve an offshore matter,

(b) it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax,

(c) by failing to make the return, P deliberately withholds the information (whether or not the withholding of the information is also concealed), and

(d) the applicable condition in paragraph 6AA is satisfied.”

(6) In sub-paragraph (5), for the words following “if” substitute “ it does not involve an offshore matter or an offshore transfer ”.

(7) In sub-paragraph (6)(a), after “matters” insert “ or transfers ”.

(8) Omit sub-paragraph (8).

(9) In sub-paragraph (9), after “paragraph” insert “ and paragraph 6AA ”.

Commencement Information

I6 Sch. 20 para. 16(3)-(9) in force at 1.4.2016 and the amendments therein have effect in accordance with art. 5(2) of the commencing S.I. by S.I. 2016/456, art. 5(1)

17 U.K. After paragraph 6A insert—

“6AA (1) This paragraph makes provision in relation to offshore transfers.

(2) Where the liability to tax which would have been shown in the return is a liability to income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—

(a) is received in a territory outside the UK, or

(b) is transferred before the relevant date to a territory outside the UK.

(3) Where the liability to tax which would have been shown in the return is a liability to capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—

(a) are received in a territory outside the UK, or

(b) are transferred before the relevant date to a territory outside the UK.

(4) Where the liability to tax which would have been shown in the return is a liability to inheritance tax, the applicable condition is satisfied if—

(a) the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and

(b) after that disposition but before the relevant date the assets, or any part of the assets, are transferred to a territory outside the UK.

(5) In the case of a transfer falling within sub-paragraph (2)(b), (3)(b) or (4)(b), references to the income, proceeds or assets transferred are to be read as including references to any assets derived from or representing the income, proceeds or assets.

(6) In relation to an offshore transfer, the territory in question for the purposes of paragraph 6A is the highest category of territory by virtue of which the information involves an offshore transfer.

(7) “Relevant date” means the date on which P becomes liable to a penalty under paragraph 6.

6AB Regulations under paragraph 21B of Schedule 24 to FA 2007 (location of assets etc) apply for the purposes of paragraphs 6A and 6AA of this Schedule as they apply for the purposes of paragraphs 4A and 4AA of that Schedule.”

Commencement Information

I7 Sch. 20 para. 17 in force at 1.4.2016 and the amendments therein have effect in accordance with art. 5(2) of the commencing S.I. by S.I. 2016/456, art. 5(1)

Prospective

18 U.K. In paragraph 15 (standard percentage reductions for disclosure), in the Table in sub-paragraph (2), at the appropriate places insert—

“87.5%

43.75%

25%”, and

“125%

62.5%

40%”.

Prospective

19 U.K. In paragraph 17(4) (interaction with other penalties and late payment surcharges), omit the “and” at the end of paragraph (b) and after that paragraph insert—

“(ba) if one of the penalties is a penalty under paragraph 6(3) or (4) and the information withheld is category 1 information, 125%, and”.

[F3 General anti-abuse rule: aggregate penalties U.K.

Textual Amendments

F3 Sch. 20 para. 20 and cross-heading inserted (with effect in accordance with s. 158(15) of the amending Act) by Finance Act 2016 (c. 24), s. 158(14)

20 (1) In Schedule 43C to FA 2013 (general anti-abuse rule: supplementary provision about penalty), sub-paragraph (6) of paragraph 8 is amended as follows. U.K.

(2) After paragraph (b) insert—

“(ba) 125% in a case where neither paragraph (a) nor paragraph (b) applies and at least one of the penalties is determined by reference to the percentage in—

(i) paragraph 4(2)(c) of Schedule 24 to FA 2007 ,

(ii) paragraph 6(2)(a) of Schedule 41 to FA 2008 ,

(iii) paragraph 6(3A)(a) of Schedule 55 to FA 2009 , ”.

(3) In sub-paragraph (c) for “neither paragraph (a) nor paragraph (b) applies” substitute “none of paragraphs (a) to (ba) applies.

(4) In sub-paragraph (d) for “none of paragraphs (a), (b) and (c) applies” substitute “none of paragraphs (a) to (c) applies.]

Section 121

SCHEDULE 21 U.K. Penalties in connection with offshore asset moves

Penalty linked to offshore asset moves U.K.

1 (1) A penalty is payable by a person (“P”) where Conditions A, B and C are met. U.K.

(2) Condition A is that—

(a) P is liable for a penalty specified in paragraph 2 (“the original penalty”), and

(b) the original penalty is for a deliberate failure (see paragraph 3).

(3) Condition B is that there is a relevant offshore asset move (see paragraph 4) which occurs after the relevant time (see paragraph 5).

(4) Condition C is that—

(a) the main purpose, or one of the main purposes, of the relevant offshore asset move is to prevent or delay the discovery by Her Majesty's Revenue and Customs (“HMRC”) of a potential loss of revenue, and

(b) the original penalty relates to an inaccuracy or failure which relates to the same potential loss of revenue.

Original penalties triggering penalties under this Schedule U.K.

2 U.K. The penalties referred to in paragraph 1(2) are—

(a) a penalty under paragraph 1 of Schedule 24 to FA 2007 (penalty for error in taxpayer's document) in relation to an inaccuracy in a document of a kind listed in the Table in paragraph 1 of that Schedule, where the tax at stake is income tax, capital gains tax or inheritance tax,

(b) a penalty under paragraph 1 of Schedule 41 to FA 2008 (penalty for failure to notify etc) in relation to the obligation under section 7 of TMA 1970 (obligation to give notice of liability to income tax or capital gains tax), and

(c) a penalty under paragraph 6 of Schedule 55 to FA 2009 (penalty for failures to make return etc where failure continues after 12 months), where the tax at stake is income tax, capital gains tax or inheritance tax.

“Deliberate failure” U.K.

3 U.K. The original penalty is for a “deliberate failure” if—

(a) in the case of a penalty within paragraph 2(a), the inaccuracy to which it relates was deliberate on P's part (whether or not concealed);

(b) in the case of a penalty within paragraph 2(b), the failure by P was deliberate (whether or not concealed);

(c) in the case of a penalty within paragraph 2(c), the withholding of the information, resulting from the failure to make the return, is deliberate (whether or not concealed).

“Relevant offshore asset move” U.K.

4 (1) There is a “relevant offshore asset move” if, at a time when P is the beneficial owner of an asset (“the qualifying time”)— U.K.

(a) the asset ceases to be situated or held in a specified territory and becomes situated or held in a non-specified territory,

(b) the person who holds the asset ceases to be resident in a specified territory and becomes resident in a non-specified territory, or

(c) there is a change in the arrangements for the ownership of the asset,

and P remains the beneficial owner of the asset, or any part of it, immediately after the qualifying time.

(2) Whether a territory is a “specified territory” or “non-specified territory” is to be determined, for the purposes of sub-paragraph (1), as at the qualifying time.

(3) Where—

(a) an asset of which P is the beneficial owner (“the original asset”) is disposed of, and

(b) all or part of any proceeds from the sale of the asset are (directly or indirectly) reinvested in another asset of which P is also the beneficial owner (“the new asset”),

the original asset and the new asset are to be treated as the same asset for the purposes of determining whether there is a relevant offshore asset move.

(4) “Asset” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling.

(5) “Specified territory” means a territory specified in regulations made by the Treasury by statutory instrument; and references to “non-specified territory” are to be construed accordingly.

(6) Regulations under sub-paragraph (5) are subject to annulment in pursuance of a resolution of the House of Commons.

“Relevant time” U.K.

5 (1) “The relevant time” has the meaning given by this paragraph. U.K.

(2) Where the original penalty is under Schedule 24 to FA 2007, the relevant time is—

(a) if the tax at stake as a result of the inaccuracy is income tax or capital gains tax, the beginning of the tax year to which the document containing the inaccuracy relates, and

(b) if the tax at stake as a result of the inaccuracy is inheritance tax, the time when liability to the tax first arises.

(3) Where the original penalty is for a failure to comply with an obligation specified in the table in paragraph 1 of Schedule 41 of FA 2008, the relevant time is the beginning of the tax year to which that obligation relates.

(4) Where the original penalty is for a failure to make a return or deliver a document specified in the table in paragraph 1 of Schedule 55 to FA 2009, the relevant time is—

(a) if the tax at stake is income tax or capital gains tax, the beginning of the tax year to which the return or document relates, and

(b) if the tax at stake is inheritance tax, the time when liability to the tax first arises.

Amount of the penalty U.K.

6 (1) The penalty payable under paragraph 1(1) is 50% of the amount of the original penalty payable by P. U.K.

(2) The penalty payable under paragraph 1(1) is not a penalty determined by reference to a liability to tax (despite the fact that the original penalty by reference to which it is calculated may be such a penalty).

Assessment U.K.

7 (1) Where a person becomes liable for a penalty under paragraph 1(1), HMRC must— U.K.

(a) assess the penalty,

(b) notify the person, and

(c) state in the notice the tax period in respect of which the penalty is assessed.

(2) A penalty under paragraph 1(1) must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(3) An assessment—

(a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),

(b) may be enforced as if it were an assessment to tax, and

(c) may be combined with an assessment to tax.

(4) An assessment of a penalty under paragraph 1(1) must be made within the same period as that allowed for the assessment of the original penalty.

(5) If, after an assessment of a penalty is made under this paragraph, HMRC amends the assessment, or makes a supplementary assessment, in respect of the original penalty, it must also at the same time amend the assessment, or make a supplementary assessment, in respect of the penalty under paragraph 1(1) to ensure that it is based on the correct amount of the original penalty.

(6) In this paragraph—

(a) a reference to an assessment to tax, in relation to inheritance tax, is to a determination, and

(b) “tax period” means a tax year, accounting period or other period in respect of which tax is charged.

Appeal U.K.

8 (1) A person may appeal against a decision of HMRC that a penalty is payable by the person. U.K.

(2) An appeal under this paragraph is to be treated in the same way as an appeal against an assessment to, or determination of, the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).

(3) Sub-paragraph (2) does not apply in respect of a matter expressly provided for by this Schedule.

(4) On an appeal under this paragraph, the tribunal may affirm or cancel HMRC's decision.

Commencement and transitionals U.K.

9 (1) This Schedule has effect in relation to relevant offshore asset moves occurring after the day on which this Act is passed. U.K.

(2) For the purposes of this Schedule, it does not matter if liability for the original penalty first arose on or before that day, unless the case is one to which sub-paragraph (3) applies.

(3) The original penalty is to be ignored if P's liability for it for arose before the day on which this Act is passed and before that day—

(a) if the original penalty was under Schedule 24 to FA 2007, any tax which was unpaid as a result of the inaccuracy has been assessed or determined;

(b) if the original penalty was under Schedule 41 to FA 2008 or Schedule 55 to FA 2009, the failure to which it related was remedied and any tax which was unpaid as a result of the failure has been assessed or determined.