Finance Act 2020

SCHEDULES

Section 7

SCHEDULE 1 U.K. Workers' services provided through intermediaries

PART 1 U.K. Amendments to Chapter 8 of Part 2 of ITEPA 2003

1 U.K. Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers under arrangements made by intermediaries) is amended as follows.

2 U.K. For the heading of the Chapter substitute “Workers' services provided through intermediaries to small clients”.

3 (1) Section 48 (scope of Chapter) is amended as follows. U.K.

(2) In subsection (1) for the words from “, but” to the end substitute “in a case where the services are provided to a person who is not a public authority and who either—

(a) qualifies as small for a tax year, or

(b) does not have a UK connection for a tax year.”

(3) After subsection (3) insert—

“(4) For provisions determining when a person qualifies as small for a tax year, see sections 60A to 60G.

(5) For provision determining when a person has a UK connection for a tax year, see section 60I.”

4 (1) Section 50 (worker treated as receiving earnings from employment) is amended as follows. U.K.

(2) In subsection (1) before paragraph (a) insert—

“(za) the client qualifies as small or does not have a UK connection,”.

(3) After subsection (4) insert—

“(5) The condition in paragraph (za) of subsection (1) is to be ignored if—

(a) the client concerned is an individual, and

(b) the services concerned are performed otherwise than for the purposes of the client's business.

(6) For the purposes of paragraph (za) of subsection (1) the client is to be treated as not qualifying as small for the tax year concerned if the client is treated as medium or large for that tax year by reason of section 61TA(3)(a).”

5 U.K. After section 60 insert—

“When a person qualifies as small for a tax year U.K.

60A When a company qualifies as small for a tax year

(1) For the purposes of this Chapter, a company qualifies as small for a tax year if one of the following conditions is met (but this is subject to section 60C).

(2) The first condition is that the company's first financial year is not relevant to the tax year.

(3) The second condition is that the small companies regime applies to the company for its last financial year that is relevant to the tax year.

(4) For the purposes of this section, a financial year of a company is “relevant to” a tax year if the period for filing the company's accounts and reports for the financial year ends before the beginning of the tax year.

(5) Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60B When a company qualifies as small for a tax year: joint ventures

(1) This section applies when determining for the purposes of section 60A(3) whether the small companies regime applies to a company for a financial year in a case where—

(a) at the end of the financial year the company is jointly controlled by two or more other persons, and

(b) one or more of those other persons are undertakings (“the joint venturer undertakings”).

(2) If the company is a parent company, the joint venturer undertakings are to be treated as members of the group headed by the company.

(3) If the company is not a parent company, the company and the joint venturer undertakings are to be treated as constituting a group of which the company is the parent company.

(4) In this section the expression “jointly controlled” is to be read in accordance with those provisions of international accounting standards which relate to joint ventures.

(5) Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60C When a company qualifies as small for a tax year: subsidiaries

(1) A company does not qualify as small for a tax year by reason of the condition in section 60A(3) being met if—

(a) the company is a member of a group at the end of its last financial year that is relevant to the tax year,

(b) the company is not the parent undertaking of that group at the end of that financial year, and

(c) the undertaking that is the parent undertaking of that group at that time does not qualify as small in relation to its last financial year that is relevant to the tax year.

(2) Where the parent undertaking mentioned in subsection (1)(c) is not a company, sections 382 and 383 of the Companies Act 2006 have effect for determining whether the parent undertaking qualifies as small in relation to its last financial year that is relevant to the tax year as if references in those sections to a company and a parent company included references to an undertaking and a parent undertaking.

(3) For the purposes of subsections (1)(c) and (2) a financial year of an undertaking that is not a company is “relevant to” a tax year if it ends at least 9 months before the beginning of the tax year.

(4) For the purposes of this section, a financial year of a company is “relevant to” a tax year if the period for filing the company's accounts and reports for the financial year ends before the beginning of the tax year.

(5) Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60D When a relevant undertaking qualifies as small for a tax year

(1) Sections 60A to 60C apply in relation to a relevant undertaking as they apply in relation to a company, subject to any necessary modifications.

(2) In this section “relevant undertaking” means an undertaking in respect of which regulations have effect under—

(a) section 15(a) of the Limited Liability Partnerships Act 2000,

(b) section 1043 of the Companies Act 2006 (unregistered companies), or

(c) section 1049 of the Companies Act 2006 (overseas companies).

(3) Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60E When other undertakings qualify as small for a tax year

(1) An undertaking that is not a company or a relevant undertaking qualifies as small for a tax year if one of the following conditions is met.

(2) The first condition is that the undertaking's first financial year is not relevant to the tax year.

(3) The second condition is that the undertaking's turnover for its last financial year that is relevant to the tax year is not more than the amount for the time being specified in the second column of item 1 of the Table in section 382(3) of the Companies Act 2006.

(4) For the purposes of this section a financial year of an undertaking is “relevant to” a tax year if it ends at least 9 months before the beginning of the tax year.

(5) In this section—

• “relevant undertaking” has the meaning given by section 60D, and

• “turnover”, in relation to an undertaking, means the amounts derived from the provision of goods or services after the deduction of trade discounts, value added tax and any other taxes based on the amounts so derived.

(6) Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60F When other persons qualify as small for a tax year

(1) For the purposes of this Chapter, a person who is not a company, relevant undertaking or other undertaking qualifies as small for a tax year if the person's turnover for the last calendar year before the tax year is not more than the amount for the time being specified in the second column of item 1 of the Table in section 382(3) of the Companies Act 2006.

(2) In this section—

• “company” and “undertaking” have the same meaning as in the Companies Act 2006,

• “relevant undertaking” has the meaning given by section 60D, and

• “turnover”, in relation to a person, means the amounts derived from the provision of goods or services after the deduction of trade discounts, value added tax and any other taxes based on the amounts so derived.

60G Sections 60A to 60F: connected persons

(1) This section applies where—

(a) it is necessary for the purposes of determining whether a person qualifies as small for a tax year (“the tax year concerned”) to first determine the person's turnover for a financial year or calendar year (“the assessment year”), and

(b) at the end of the assessment year the person is connected with one or more other persons (“the connected persons”).

(2) For the purposes of determining whether the person qualifies as small for the tax year concerned the person's turnover for the assessment year is to be taken to be the sum of—

(a) the person's turnover for the assessment year, and

(b) the relevant turnover of each of the connected persons.

(3) In subsection (2)(b) “the relevant turnover” of a connected person means—

(a) in a case where the connected person is a company, relevant undertaking or other undertaking, its turnover for its last financial year that is relevant to the tax year concerned, and

(b) in a case where the connected person is not a company, relevant undertaking or other undertaking, the turnover of the connected person for the last calendar year ending before the tax year concerned.

(4) For the purposes of subsection (3)(a)—

(a) a financial year of a company or relevant undertaking is relevant to the tax year concerned if the period for filing accounts and reports for the financial year ends before the beginning of the tax year concerned, and

(b) a financial year of any other undertaking is relevant to the tax year concerned if it ends more than 9 months before the beginning of the tax year concerned.

(5) In a case where—

(a) the person mentioned in subsection (1)(a) is a company or relevant undertaking, and

(b) at the end of the assessment period the person is a member of a group,

the person is to be treated for the purposes of this section as not being connected with any person that is a member of that group.

(6) In this section—

• “turnover”, in relation to a person, means the amounts derived from the provision of goods or services after the deduction of trade discounts, value added tax and any other taxes based on the amounts so derived, and

• “relevant undertaking” has the meaning given by section 60D.

(7) For provision determining whether one person is connected with another, see section 718 (connected persons).

(8) Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60H Duty on client to state whether it qualifies as small for a tax year

(1) This section applies if, in the case of an engagement that meets conditions (a) to (b) in section 49(1), the client receives from the client's agent or the worker a request to state whether in the client's opinion the client qualifies as small for a tax year specified in the request.

(2) The client must provide to the person who made the request a statement as to whether in the client's opinion the client qualifies as small for the tax year specified in the request.

(3) If the client fails to provide the statement by the time mentioned in subsection (4) the duty to do so is enforceable by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(4) The time is whichever is the later of—

(a) the end of the period of 45 days beginning with the date the client receives the request, and

(b) the beginning of the period of 45 days ending with the start of the tax year specified in the request.

(5) In this section “the client's agent” means a person with whom the client entered into a contract as part of the arrangements mentioned in paragraph (b) of section 49(1).

When a person has a UK connection U.K.

60I When a person has a UK connection for a tax year

(1) For the purposes of this Chapter, a person has a UK connection for a tax year if (and only if) immediately before the beginning of that tax year the person—

(a) is resident in the United Kingdom, or

(b) has a permanent establishment in the United Kingdom.

(2) In this section “permanent establishment”—

(a) in relation to a company, is to be read (by virtue of section 1007A of ITA 2007) in accordance with Chapter 2 of Part 24 of CTA 2010, and

(b) in relation to any other person, is to be read in accordance with that Chapter but as if references in that Chapter to a company were references to that person.

Interpretation ”

6 U.K. In section 61(1) (interpretation), in the definition of company, before “means” insert “ (except in sections 60A to 60G) ”.

PART 2 U.K. Amendments to Chapter 10 of Part 2 of ITEPA 2003

7 U.K. Chapter 10 of Part 2 of ITEPA 2003 (workers' services provided to public sector through intermediaries) is amended as follows.

8 U.K. For the heading of the Chapter substitute “Workers' services provided through intermediaries to public authorities or medium or large clients”.

9 (1) Section 61K (scope of Chapter) is amended as follows. U.K.

(2) In subsection (1) for the words “to a public authority through an intermediary” substitute “through an intermediary in a case where the services are provided to a person who—

(a) is a public authority, or

(b) qualifies as medium or large and has a UK connection for a tax year”.

(3) After subsection (2) insert—

“(3) For the purposes of this Chapter a person qualifies as medium or large for a tax year if the person does not qualify as small for the tax year for the purposes of Chapter 8 of this Part (see sections 60A to 60G).

(4) Section 60I (when a person has a UK connection for a tax year) applies for the purposes of this Chapter.”

10 U.K. In section 61L (meaning of “public authority”) in subsection (1)—

(a) after paragraph (a) insert—

“(aa) a body specified in section 23(3) of the Freedom of Information Act 2000,”,

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

(c) after paragraph (f) insert “, or

(g) a company connected with any person mentioned in paragraphs (a) to (f).”

11 (1) Section 61M (engagements to which the Chapter applies) is amended as follows. U.K.

(2) In subsection (1)—

(a) omit paragraph (b),

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

(c) after paragraph (c) insert—

“(ca) the client—

(i) is a public authority, or

(ii) is a person who qualifies as medium or large and has a UK connection for one or more tax years during which the arrangements mentioned in paragraph (c) have effect, and”.

(3) After subsection (1) insert—

“(1A) But sections 61N to 61R do not apply if—

(a) the client is an individual, and

(b) the services are provided otherwise than for the purposes of the client's trade or business.”

12 (1) Section 61N (worker treated as receiving earnings from employment) is amended as follows. U.K.

(2) In subsection (3)—

(a) after “subsections (5) to (7)” insert “ and (8A) ”, and

(b) after “61T” insert “ , 61TA ”.

(3) For subsection (5) substitute—

“(5) Unless and until the client gives a status determination statement to the worker (see section 61NA), subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client; but this is subject to section 61V.

(5A) Subsections (6) and (7) apply, subject to sections 61T, 61TA and 61V, if—

(a) the client has given a status determination statement to the worker,

(b) the client is not the fee-payer, and

(c) the fee-payer is not a qualifying person.”

(4) In subsection (8) (meaning of “qualifying person”) before paragraph (a) insert—

“(za) has been given by the person immediately above them in the chain the status determination statement given by the client to the worker,”.

(5) After subsection (8) insert—

“(8A) If the client is not a public authority, a person is to be treated by subsection (3) as making a deemed direct payment to the worker only if the chain payment made by the person is made in a tax year for which the client qualifies as medium or large and has a UK connection.”

13 U.K. After section 61N insert—

“61NA Meaning of status determination statement

(1) For the purposes of section 61N “status determination statement” means a statement by the client that—

(a) states that the client has concluded that the condition in section 61M(1)(d) is met in the case of the engagement and explains the reasons for that conclusion, or

(b) states (albeit incorrectly) that the client has concluded that the condition in section 61M(1)(d) is not met in the case of the engagement and explains the reasons for that conclusion.

(2) But a statement is not a status determination statement if the client fails to take reasonable care in coming to the conclusion mentioned in it.

(3) For further provisions concerning status determination statements, see section 61T (client-led status disagreement process) and section 61TA (duty for client to withdraw status determination statement if it ceases to be medium or large).”

14 U.K. In section 61O(1) (conditions where intermediary is a company) for paragraph (b) substitute—

“(b) it is the case that—

(i) the worker has a material interest in the intermediary,

(ii) the worker has received a chain payment from the intermediary, or

(iii) the worker has rights which entitle, or which in any circumstances would entitle, the worker to receive a chain payment from the intermediary.”

15 U.K. In section 61R (application of Income Tax Acts in relation to deemed employment) omit subsection (7).

16 U.K. For section 61T substitute—

“61T Client-led status disagreement process

(1) This section applies if, before the final chain payment is made in the case of an engagement to which this Chapter applies, the worker or the deemed employer makes representations to the client that the conclusion contained in a status determination statement is incorrect.

(2) The client must either—

(a) give a statement to the worker or (as the case may be) the deemed employer that—

(i) states that the client has considered the representations and has decided that the conclusion contained in the status determination statement is correct, and

(ii) states the reasons for that decision, or

(b) give a new status determination statement to the worker and the deemed employer that—

(i) contains a different conclusion from the conclusion contained in the previous status determination statement,

(ii) states the date from which the client considers that the conclusion contained in the new status determination statement became correct, and

(iii) states that the previous status determination statement is withdrawn.

(3) If the client fails to comply with the duty in subsection (2) before the end of the period of 45 days beginning with the date the client receives the representations, section 61N(3) and (4) has effect from the end of that period until the duty is complied with as if for any reference to the fee-payer there were substituted a reference to the client; but this is subject to section 61V.

(4) A new status determination statement given to the deemed employer under subsection (2)(b) is to be treated for the purposes of section 61N(8)(za) as having been given to the deemed employer by the person immediately above the deemed employer in the chain.

(5) In this section—

• “the deemed employer” means the person who, assuming one of conditions A to C in section 61N were met, would be treated as making a deemed direct payment to the worker under section 61N(3) on the making of a chain payment;

• “status determination statement” has the meaning given by section 61NA.

61TA Duty for client to withdraw status determination statement if it ceases to be medium or large

(1) This section applies if in the case of an engagement to which this Chapter applies—

(a) the client is not a public authority,

(b) the client gives a status determination statement to the worker, the client's agent or both, and

(c) the client does not (but for this section) qualify as medium or large for a tax year beginning after the status determination statement is given.

(2) Before the beginning of the tax year the client must give a statement to the relevant person, or (as the case may be) to both of the relevant persons, stating—

(a) that the client does not qualify as medium or large for the tax year, and

(b) that the status determination statement is withdrawn with effect from the beginning of the tax year.

(3) If the client fails to comply with that duty the following rules apply in relation to the engagement for the tax year—

(a) the client is to be treated as medium or large for the tax year, and

(b) section 61N(3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client.

(4) For the purposes of subsection (2)—

(a) the worker is a relevant person if the status determination statement was given to the worker, and

(b) the deemed employer is a relevant person if the status determination statement was given to the client's agent.

(5) In this section—

• “client's agent” means a person with whom the client entered into a contract as part of the arrangements mentioned in section 61M(1)(c);

• “the deemed employer” means the person who, assuming one of conditions A to C in section 61N were met, would be treated as making a deemed direct payment to the worker under section 61N(3) on the making of a chain payment;

• “status determination statement” has the meaning given by section 61NA.”

17 (1) Section 61W (prevention of double charge to tax and allowance of certain deductions) is amended as follows. U.K.

(2) In subsection (1)—

(a) in paragraph (b) for “a public authority” substitute “ another person (“the client”) ”, and

(b) in paragraph (d) for “that public authority” substitute “ the client ”.

(3) In subsection (2)(b) for “public authority” substitute “ client ”.

PART 3 U.K. Consequential and miscellaneous amendments

18 U.K. In section 61D of ITEPA 2003 (managed service companies: worker treated as receiving earnings from employment) for subsection (4A) substitute—

“(4A) This section does not apply where the provision of the relevant services gives rise (directly or indirectly) to an engagement to which Chapter 10 applies and either—

(a) the client for the purposes of section 61M(1) is a public authority, or

(b) the client for the purposes of section 61M(1)—

(i) qualifies as medium or large for the tax year in which the payment or benefit mentioned in subsection (1)(b) is received, and

(ii) has a UK connection for the tax year in which the payment or benefit mentioned in subsection (1)(b) is received.

(4B) Sections 60I (when a person has a UK connection for a tax year), 61K(3) (when a person qualifies as medium or large for a tax year) and 61L (meaning of public authority) apply for the purposes of subsection (4A).

(4C) It does not matter for the purposes of subsection (4A) whether the client for the purposes of this Chapter is also “the client” for the purposes of section 61M(1).”

19 U.K. After section 688A of ITEPA 2003 insert—

“688AA Workers' services provided through intermediaries: recovery of PAYE

(1) PAYE Regulations may make provision for, or in connection with, the recovery of a deemed employer PAYE debt from a relevant person.

(2) “A deemed employer PAYE debt” means an amount—

(a) that a person (“the deemed employer”) is liable to pay under PAYE regulations in consequence of being treated under section 61N(3) as having made a deemed direct payment to a worker, and

(b) that an officer of Revenue and Customs considers there is no realistic prospect of recovering from the deemed employer within a reasonable period.

(3) “Relevant person”, in relation to a deemed employer PAYE debt, means a person who is not the deemed employer and who—

(a) is the highest person in the chain identified under section 61N(1) in determining that the deemed employer is to be treated as having made the deemed direct payment, or

(b) is the second highest person in that chain and is a qualifying person (within the meaning given by section 61N(8)) at the time the deemed employer is treated as having made that deemed direct payment.”

20 U.K. In section 60 of FA 2004 (construction industry scheme: meaning of contract payments) after subsection (3) insert—

“(3A) This exception applies in so far as—

(a) the payment can reasonably be taken to be for the services of an individual, and

(b) the provision of those services gives rise to an engagement to which Chapter 10 of Part 2 of ITEPA 2003 applies (workers' services provided through intermediaries to public authorities or medium or large clients).

(3B) But the exception in subsection (3A) does not apply if, in the case of the engagement mentioned in paragraph (b) of that subsection, the client for the purposes of section 61M(1) of ITEPA 2003—

(a) is not a public authority, and

(b) either—

(i) does not qualify as medium or large for the tax year in which the payment concerned is made, or

(ii) does not have a UK connection for the tax year in which the payment concerned is made.

(3C) Sections 60I (when a person has a UK connection for a tax year), 61K(3) (when a person qualifies as medium or large for a tax year) and 61L (meaning of public authority) of ITEPA 2003 apply for the purposes of subsection (3B).”

21 U.K. For the italic heading before section 141A of CTA 2009 substitute “ Worker's services provided through intermediary to public authority or medium or large client ”.

22 U.K. In the heading of section 141A of CTA 2009 for “public sector” substitute “ public authority or medium or large client ”.

23 (1) Part 13 of CTA 2009 (additional relief for expenditure on research and development) is amended as follows. U.K.

(2) In section 1129 (qualifying expenditure on externally provided workers: connected persons) after subsection (4) insert—

“(4A) In subsection (2) the reference to the staff provision payment is to that payment before any deduction is made from the payment under—

(a) section 61S of ITEPA 2003,

(b) regulation 19 of the Social Security Contributions (Intermediaries) Regulations 2000, or

(c) regulation 19 of the Social Security Contributions (Intermediaries) (Northern Ireland) Regulations 2000.”

(3) In section 1131 (qualifying expenditure on externally provided workers: other cases) after subsection (2) insert—

“(3) In subsection (2) the reference to the staff provision payment is to that payment before any deduction is made from the payment under—

(a) section 61S of ITEPA 2003,

(b) regulation 19 of the Social Security Contributions (Intermediaries) Regulations 2000, or

(c) regulation 19 of the Social Security Contributions (Intermediaries) (Northern Ireland) Regulations 2000.”

(4) After section 1131 insert—

“1131A Sections 1129 and 1131: secondary Class 1 NICS paid by company

(1) This section applies if—

(a) a company makes a staff provision payment,

(b) the company is treated as making a payment of deemed direct earnings the amount of which is calculated by reference to the amount of the staff provision payment, and

(c) the company pays a secondary Class 1 national insurance contribution in respect of the payment of deemed direct earnings.

(2) In determining the company's qualifying expenditure on externally provided workers in accordance with section 1129(2) or section 1131(2) the amount of the staff payment provision is to be treated as increased by the amount of the contribution.

(3) In determining the company's qualifying expenditure on externally provided workers in accordance with section 1129(2) the aggregate of the relevant expenditure of each staff controller is to be treated as increased by the amount of the contribution.

(4) But subsection (2) does not apply to the extent that the expenditure incurred by the company in paying the contribution is met directly or indirectly by a staff controller.

(5) “A payment of deemed direct earning” means a payment the company is treated as making by reason of regulation 14 of the Social Security Contributions (Intermediaries) Regulations 2000 or regulation 14 of the Social Security Contributions (Intermediaries) (Northern Ireland) Regulations 2000.”

PART 4 U.K. Commencement and transitional provisions

Commencement U.K.

24 U.K. The amendments made by Part 1 of this Schedule have effect for the tax year 2021-22 and subsequent tax years.

25 U.K. The amendments made by Part 2 of this Schedule have effect in relation to deemed direct payments treated as made on or after 6 April 2021.

26 U.K. The amendment made by paragraph 18 of this Schedule has effect for the purposes of determining whether section 61D of ITEPA 2003 applies in a case where the payment or benefit mentioned in subsection (1)(b) of that section is received on or after 6 April 2021.

27 U.K. The amendment made by paragraph 20 of this Schedule has effect in relation to payments made under a construction contract on or after 6 April 2021.

28 U.K. The amendments made by paragraph 23 of this Schedule have effect in relation to expenditure incurred on or after 6 April 2021.

29 U.K. Sections 101 to 103 of FA 2009 (interest) come into force on 6 April 2021 in relation to amounts payable or paid to Her Majesty's Revenue and Customs under regulations made by virtue of section 688AA of ITEPA 2003 (as inserted by paragraph 19 of this Schedule).

Transitional provisions U.K.

30 (1) This paragraph applies where— U.K.

(a) the client in the case of an engagement to which Chapter 10 of Part 2 of ITEPA 2003 applies is not a public authority within the meaning given by section 61L of ITEPA 2003 (as that section had effect before the amendments made by paragraph 10 of this Schedule), and

(b) a chain payment is made on or after 6 April 2021 that can reasonably be taken to be for services performed by the worker before 6 April 2021.

(2) The chain payment is to be disregarded for the purposes of Chapter 10 of Part 2 of ITEPA 2003.

31 (1) This paragraph applies where— U.K.

(a) the client in the case of an engagement to which Chapter 10 of Part 2 of ITEPA 2003 applies is not a public authority within the meaning given by section 61L of ITEPA 2003 (as that section had effect before the amendments made by paragraph 10 of this Schedule), and

(b) one or more qualifying chain payments are made in the tax year 2021-22 or a subsequent tax year (“the tax year concerned”) to the intermediary.

(2) A chain payment made to the intermediary is a qualifying chain payment if it can reasonably be taken to be for services performed by the worker before 6 April 2021.

(3) A chain payment made to the intermediary is also a qualifying chain payment if—

(a) another chain payment (“the earlier payment”) was made before 6 April 2021 to a person other than the intermediary,

(b) the earlier payment can reasonably be taken to be for the same services as the chain payment made to the intermediary, and

(c) the person who made the earlier payment would, but for paragraph 25 of this Schedule, have been treated by section 61N(3) and (4) of ITEPA 2003 as making a deemed direct payment to the worker at the same time as they made the earlier payment.

(4) Chapter 8 of Part 2 of ITEPA 2003 applies in relation to the engagement for the tax year concerned (in addition to Chapter 10 of Part 2 of ITEPA 2003), but as if—

(a) the amendments made by Part 1 of this Schedule had not been made, and

(b) the qualifying chain payments received by the intermediary in the tax year concerned are the only payments and benefits received by the intermediary in that year in respect of the engagement.

32 (1) This paragraph applies for the purposes of paragraphs 30 and 31 where a chain payment (“the actual payment”) is made that can reasonably be taken to be for services of the worker performed during a period that begins before and ends on or after 6 April 2021. U.K.

(2) The actual payment is to be treated as two separate chain payments—

(a) one consisting of so much of the amount or value of the actual payment as can on a just and reasonable apportionment be taken to be for services performed before 6 April 2021, and

(b) another consisting of so much of the amount or value of the actual payment as can on a just and reasonable apportionment be taken to be for services performed on or after 6 April 2021.

33 U.K. For the purposes of section 61N(5), (5A)(a) and (8)(za) of ITEPA 2003 it does not matter whether the status determination statement concerned is given before 6 April 2021 or on or after that date.

34 U.K. For the purposes of section 61T of ITEPA 2003—

(a) it does not matter whether the representations to the client mentioned in subsection (1) of that section were made before 6 April 2021 or on or after that date, but

(b) in a case where the representations were made before 6 April 2021 that section has effect as if the reference in subsection (3) to the date the client receives the representations were to 6 April 2021.

Sections 15 and 16

SCHEDULE 2 U.K. The loan charge: consequential amendments

PART 1 U.K. Amendments to F(No.2)A 2017 in consequence of section 15

1 U.K. Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

2 U.K. In paragraph 1 (application of Part 7A of ITEPA 2003: relevant step) in sub-paragraph (2) for the words from “before” to the end substitute “ before the end of 5 April 2019. ”

3 U.K. For the italic heading before paragraph 2 substitute “Meaning of “ loan ” and “quasi loan” ”.

4 U.K. In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment date”) omit sub-paragraph (6).

5 (1) Paragraph 4 (when an amount of a loan is outstanding: certain repayments to be disregarded) is amended as follows. U.K.

(2) In sub-paragraph (1)(b)(ii) for “the relevant date” substitute “ 5 April 2019 ”.

(3) In sub-paragraph (2) for “the relevant date” substitute “ 5 April 2019 ”.

(4) Omit sub-paragraph (4).

6 U.K. In paragraph 5 (meaning of “outstanding”: loans where A or B acquires a right to payment of the loan) in sub-paragraph (1)(b) for “6 April 1999” substitute “ 9 December 2010 ”.

7 U.K. In paragraph 13 (meaning of “outstanding”: quasi-loans where A or B acquires a right to the payment or transfer of assets) in sub-paragraph (1)(b) for “6 April 1999” substitute “ 9 December 2010 ”.

8 U.K. Omit paragraph 19 (meaning of “approved fixed term loan”) and the italic heading before that paragraph.

9 U.K. For the heading of Part 2 substitute “ Accelerated payments ”.

10 U.K. Omit paragraphs 20 to 22 and the italic headings before each of those paragraphs.

11 U.K. Omit the italic heading before paragraph 23.

12 (1) Paragraph 23 (accelerated payments) is amended as follows. U.K.

(2) In sub-paragraph (1)—

(a) in paragraph (d) for “the relevant date” substitute “ 5 April 2019 ”, and

(b) in paragraph (e) for “the relevant date” substitute “ 5 April 2019 ”.

(3) Omit sub-paragraph (4).

13 (1) Paragraph 35A (when the duty to provide loan charge information arises) is amended as follows. U.K.

(2) Omit sub-paragraph (3).

(3) In sub-paragraph (4) in the words before paragraph (a) for “third” substitute “ second ”.

(4) In sub-paragraph (5)—

(a) in the words before paragraph (a) for “fourth” substitute “ third ”,

(b) in paragraph (a) for the words from the beginning to “conditions” substitute “ neither the first nor the second condition ”, and

(c) in paragraph (b)—

(i) for “and (2)(b)” substitute “ and (2) ”, and

(ii) omit the words from “(and if paragraph” to “omitted)”.

(5) In sub-paragraph (6) in the words before paragraph (a) for “fourth” substitute “ third ”.

(6) In sub-paragraph (7) omit paragraph (b).

14 U.K. In paragraph 35B (duty of appropriate third party to provide information to A) in sub-paragraph (1) omit “Q,”.

15 (1) Paragraph 35D (meaning of “loan charge information”) is amended as follows. U.K.

(2) In sub-paragraph (1)—

(a) in paragraph (e) omit “, or the loan mentioned in paragraph 35A(3)(a),”,

(b) in paragraph (j) omit “, Q”, and

(c) in paragraph (k) omit “, or in a case within paragraph 35A(3)(a),”.

(3) In sub-paragraph (2) omit paragraph (a).

16 (1) Paragraph 36 (duty to provide loan charge information to B) is amended as follows. U.K.

(2) In sub-paragraph (1)(b) for “6 April 1999” substitute “ 9 December 2010 ”.

(3) In sub-paragraph (2) for the words from “the period” to the end substitute “ 15 April 2019 ”.

(4) Omit sub-paragraph (4).

17 U.K. Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

18 U.K. For the italic heading before paragraph 2 substitute “Meaning of “ loan ” and “quasi loan” ”.

19 U.K. In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment date”) omit sub-paragraph (6).

20 U.K. Omit paragraphs 15 to 18 and the italic heading before each of those paragraphs.

21 (1) Paragraph 19 (accelerated payments: application of paragraph 20) is amended as follows. U.K.

(2) In sub-paragraph (1)—

(a) in paragraph (e) for “the relevant date” substitute “ 5 April 2019 ”, and

(b) in paragraph (f) for “the relevant date” substitute “ 5 April 2019 ”.

(3) Omit sub-paragraph (3).

22 U.K. In paragraph 23 (meaning of “loan charge information”) in sub-paragraph (2) omit paragraph (a).

PART 2 U.K. Amendments in consequence of section 16

ITEPA 2003 U.K.

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

24 (1) Section 554A (application of Chapter 2 of Part 7A: the main case) is amended as follows. U.K.

(2) In subsection (2) after “paragraph 1” insert “ or 1A ”.

(3) For subsection (4) substitute—

“(4) Chapter 2 does not apply by reason of—

(a) a relevant step taken on or after A's death if—

(i) the relevant step is within section 554B, or

(ii) the relevant step is within section 554C by virtue of subsection (1)(ab) of that section,

(b) a relevant step within paragraph 1 of Schedule 11 to F(No.2)A 2017 which is treated as being taken on or after A's death, or

(c) a relevant step within paragraph 1A of Schedule 11 to F(No.2)A 2017 in a case where the initial step (within the meaning given by sub-paragraph (1)(a) of that paragraph) is treated as being taken on or after A's death.”

25 U.K. In section 554Z (interpretation: general) in subsection (10)(d) after “paragraph 1” insert “ or 1A ”.

F(No.2)A 2017 U.K.

26 U.K. Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

27 U.K. In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment date”)—

(a) in sub-paragraph (2), in the words before paragraph (a), for “paragraph 1” substitute “ paragraphs 1 and 1A ”,

(b) in sub-paragraph (4) for “paragraph 1” substitute “ paragraphs 1 and 1A ”, and

(c) in sub-paragraph (5) for “paragraph 1” substitute “ paragraphs 1 and 1A ”.

28 U.K. In paragraph 3(1) (meaning of “outstanding”: loans) for “paragraph 1” substitute “ paragraphs 1 and 1A ”.

29 U.K. In paragraph 4 (when an amount of a loan is outstanding: certain repayments to be disregarded) in sub-paragraph (6) for “the relevant step treated as taken by paragraph 1” substitute “ a relevant step treated as taken by paragraph 1 or 1A ”.

30 U.K. In paragraph 5 (meaning of “outstanding”: loans where A or B acquires a right to payment of the loan) in sub-paragraph (2)(b) for “paragraph 1(4)” substitute “ paragraphs 1(4) and 1A(5) ”.

31 U.K. In paragraph 7 (meaning of “outstanding”: loans in currencies other than stirling) in sub-paragraph (3) after “relevant step” insert “ within paragraph 1 ”.

32 U.K. In paragraph 10 (meaning of “outstanding”: loans made in a depreciating currency) in sub-paragraph (1)(b) after “relevant step” insert “ within paragraph 1 ”.

33 U.K. In paragraph 11(1) (meaning of “outstanding”: quasi-loans) for “paragraph 1” substitute “ paragraphs 1 and 1A ”.

34 U.K. In paragraph 12 (certain payments or transfers to be disregarded for the purposes of paragraph 11) in sub-paragraph (5) for “the relevant step treated as taken by paragraph 1” substitute “ a relevant step treated as taken by paragraph 1 or 1A ”.

35 U.K. In paragraph 13 (meaning of “outstanding”: quasi-loans where A or B acquires a right to the payment or transfer of assets) in sub-paragraph (2)(b) for “paragraph 1(4)” substitute “ paragraphs 1(4) and 1A(5) ”.

36 U.K. In paragraph 15 (meaning of “outstanding”: quasi-loans in currencies other than sterling) in sub-paragraph (3) after “relevant step” insert “ within paragraph 1 ”.

37 U.K. In paragraph 18 (meaning of “outstanding”: quasi-loans made in a depreciating currency) in sub-paragraph (1)(b) after “relevant step” insert “ within paragraph 1 ”.

38 U.K. After paragraph 35 insert—

“Exclusion for relevant step within paragraph 1A where initial step excluded U.K.

35ZA Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1A if that Chapter does not apply by reason of the initial step (within the meaning given by sub-paragraph (1)(a) of paragraph 1A).”

Social Security (Contributions) Regulations 2001 U.K.

39 (1) The Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) are amended as follows. U.K.

(2) In regulation 22B (amounts to be treated as earnings: Part 7A of ITEPA 2003) in paragraph (3A)(a) after “paragraph 1” insert “ or 1A ”.

(3) In regulation 22C (amounts to be treated as earnings paid to or for the benefit of the earner: Schedule 11 to F(No.2)A 2017) in paragraph (1)—

(a) after “paragraph 1” insert “ or 1A ”, and

(b) after “paragraph 1(2)” insert “ or 1A(3) or (4) ”.

Section 23

SCHEDULE 3 U.K. Entrepreneurs' relief

PART 1 U.K. Reduction in lifetime limit

Reduction in lifetime limit U.K.

1 U.K. In section 169N of TCGA 1992 (entrepreneurs' relief: amount of relief)—

(a) in subsection (4), for “£10 million” substitute “ £1 million ”;

(b) in subsection (4A), for “£10 million” substitute “ £1 million ”.

Commencement U.K.

2 U.K. The amendments made by paragraph 1 have effect in relation to disposals made on or after 11 March 2020.

Anti-forestalling: unconditional contracts U.K.

3 (1) This paragraph applies where an asset is conveyed or transferred on or after 11 March 2020 under a contract made before that date that is not conditional. U.K.

(2) Despite section 28(1) of TCGA 1992 (disposal under unconditional contract made at time of contract and not at time of later conveyance or transfer), the disposal is to be treated for the purposes of paragraph 2 as taking place at the time the asset is conveyed or transferred, and not at the time the contract is made, unless the condition in sub-paragraph (3) or (4) is met.

(3) The condition in this sub-paragraph is that—

(a) the parties to the contract are not connected persons,

(b) no purpose of entering into the contract was obtaining an advantage by reason of the application of section 28(1) of TCGA 1992, and

(c) the person making the conveyance or transfer makes a claim which includes a statement that the condition in paragraph (b) is met.

(4) The condition in this sub-paragraph is that—

(a) the parties to the contract are connected persons,

(b) the contract was entered into wholly for commercial reasons,

(c) no purpose of entering into the contract was obtaining an advantage by reason of the application of section 28(1) of TCGA 1992, and

(d) the person making the conveyance or transfer makes a claim which includes a statement that the conditions in paragraphs (b) and (c) are met.

(5) Section 169M(2) and (3) of TCGA 1992 apply to a claim under sub-paragraph (3)(c) or (4)(d) as if it were a claim under that section.

Anti-forestalling: reorganisations of share capital U.K.

4 (1) This paragraph applies where— U.K.

(a) on or after 6 April 2019 but before 11 March 2020, there is a reorganisation, and

(b) on 11 March 2020—

(i) the company is the relevant individual's personal company and is either a trading company or the holding company of a trading group, and

(ii) the relevant individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more companies which are members of the trading group.

(2) In sub-paragraph (1) “the relevant individual” means—

(a) where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary;

(b) where a claim under that section is made by an individual, the individual.

(3) Where an election in respect of the reorganisation is made under section 169Q of TCGA 1992 (reorganisations: disapplication of section 127) on or after 11 March 2020, the disposal of the original shares is to be treated for the purposes of paragraph 2 as taking place at the time of the election and not at the time of the reorganisation.

(4) References in this paragraph to a reorganisation do not include an exchange of shares or securities which is treated as a reorganisation by virtue of section 135 or 136 of TCGA 1992 (but see paragraph 5).

Anti-forestalling: exchanges of securities etc U.K.

5 (1) This paragraph applies where— U.K.

(a) on or after 6 April 2019 but before 11 March 2020, there is an exchange of shares or securities within section 135(1) of TCGA 1992, and

(b) the condition in sub-paragraph (2) or (3) is met.

(2) The condition in this sub-paragraph is that—

(a) the persons who hold shares or securities in company B immediately after the exchange are substantially the same as those who held shares or securities in company A immediately before the exchange, or

(b) the persons who have control of company B immediately after the exchange are substantially the same as those who had control of company A immediately before the exchange.

(3) The condition in this sub-paragraph is that—

(a) the relevant shareholders, taken together, hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and

(b) on 11 March 2020—

(i) company B is the relevant individual's personal company and is either a trading company or the holding company of a trading group, and

(ii) the relevant individual is an officer or employee of company B or (if company B is a member of a trading group) of one or more companies which are members of the trading group.

(4) In sub-paragraph (3)—

• “the relevant individual” means—

  (a)

  where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary;

  (b)

  where a claim under that section is made by an individual, the individual;

• “the relevant shareholders” means the persons who—

  (a)

  immediately after the exchange, hold shares or securities in company B, and

  (b)

  immediately before the exchange, also held shares or securities in company A.

(5) For the purposes of sub-paragraph (2)(a), connected persons are to be treated as the same person.

(6) Where an election in respect of the exchange is made under section 169Q of TCGA 1992 (reorganisations: disapplication of section 127) on or after 11 March 2020, the disposal of the original shares is to be treated for the purposes of paragraph 2 as taking place at the time of the election and not at the time of the exchange.

(7) Where, before the exchange, the Commissioners for Her Majesty's Revenue and Customs have issued a notification in respect of it under section 138(1) of TCGA 1992 (advance clearance procedure)—

(a) sections 127 to 131 of that Act apply with the necessary adaptations as if—

(i) company A and company B were the same company, and

(ii) the exchange were a reorganisation;

(b) section 169Q of that Act applies as if the exchange were treated as a reorganisation by virtue of section 135 of that Act.

Interpretation U.K.

6 (1) Paragraphs 2 to 5 are to be construed as if they were contained in Chapter 3 of Part 5 of TCGA 1992, subject to sub-paragraph (2). U.K.

(2) In those paragraphs—

• “company A” and “company B” have the same meanings as in section 135 of TCGA 1992;

• “original shares” has the meaning given by section 126 of TCGA 1992;

• “reorganisation” has the meaning given by that section;

• “trading company” and “trading group” have the meanings given by paragraph 1 of Schedule 7ZA to TCGA 1992.

PART 2 U.K. Re-naming the relief

7 (1) In section 169H(1) of TCGA 1992 (relief under Chapter 3 of Part 5: introduction), for “to be known as “entrepreneurs' relief”” substitute “ to be known as “business asset disposal relief” ”. U.K.

(2) In consequence of that amendment—

(a) in the rest of TCGA 1992, for “entrepreneurs' relief”, wherever occurring, substitute “ business asset disposal relief ”;

(b) in section 169V of TCGA 1992 (operation of deferred entrepreneurs' relief), for “ER purposes”, wherever occurring, substitute “ relevant purposes ”.

(3) Nothing in this paragraph affects the operation of Chapter 3 of Part 5 of TCGA 1992.

8 U.K. This Part of this Schedule has effect for the tax year 2020-21 and subsequent tax years.

Section 25

SCHEDULE 4 U.K. Corporate capital losses

PART 1 U.K. Corporate capital loss restriction

Restriction on deduction from chargeable gains: main provisions U.K.

1 U.K. Part 7ZA of CTA 2010 (restrictions on obtaining certain deductions) is amended as follows.

2 U.K. After section 269ZB insert—

“269ZBA Restriction on deductions from chargeable gains

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

(2) The sum of any deductions made by the company for the accounting period under section 2A(1)(b) of TCGA 1992 (allowable losses accruing in earlier accounting periods) may not exceed the relevant maximum.

But this is subject to subsection (7).

(3) In this section the “relevant maximum” means the sum of—

(a) 50% of the company's relevant chargeable gains for the accounting period, and

(b) the amount of the company's chargeable gains deductions allowance for the accounting period.

(4) Section 269ZF contains provision for determining a company's relevant chargeable gains for an accounting period.

(5) A company's “chargeable gains deductions allowance” for an accounting period—

(a) is so much of the company's deductions allowance for the period as is specified in the company's tax return as its chargeable gains deductions allowance for the period, and

(b) accordingly, is nil if no amount of the company's deductions allowance for the period is so specified.

(6) An amount specified under subsection (5)(a) as a company's chargeable gains deductions allowance for an accounting period may not exceed the difference between—

(a) the amount of the company's deductions allowance for the period, and

(b) the total of any amounts specified for the period under—

(i) section 269ZB(7)(a) (trading profits deductions allowance),

(ii) section 269ZC(5)(a) (non-trading income profits deductions allowance), and

(iii) in the case of an insurance company, section 269ZFC(5)(a) (BLAGAB deductions allowance).

(7) Subsection (2) does not apply in relation to a company for an accounting period where, in determining the company's qualifying chargeable gains for the period, the amount given by step 1 in section 269ZF(3) is not greater than nil.”

3 (1) Section 269ZC (restriction on deductions from non-trading profits) is amended in accordance with this paragraph. U.K.

(2) In subsection (2), for “the relevant maximum” substitute “the difference between—

(a) the relevant maximum, and

(b) the amount of any deductions made by the company for the accounting period under section 2A(1)(b) of TCGA 1992 (allowable losses accruing in earlier accounting periods).”

(3) For subsection (3) substitute—

“(3) In this section the “relevant maximum” means the sum of—

(a) 50% of the company's total relevant non-trading profits for the accounting period, and

(b) the amount of the company's total non-trading profits deductions allowance for the accounting period.

(3A) A company's “total non-trading profits deductions allowance” for the accounting period is the sum of—

(a) the company's non-trading income profits deductions allowance (see subsection (5)), and

(b) the company's chargeable gains deductions allowance (see section 269ZBA(5)).”

(4) In subsection (4), for “relevant non-trading profits” substitute “ total relevant non-trading profits ”.

(5) In subsection (5) for “ “non-trading profits deductions allowance””, in both places it occurs, substitute “ “non-trading income profits deductions allowance” ”.

(6) In subsection (6)—

(a) in the words before paragraph (a), for “ “non-trading profits deductions allowance”” substitute “ “non-trading income profits deductions allowance” ”, and

(b) for paragraph (b) substitute—

“(b) the total of any amounts specified for the period under—

(i) section 269ZB(7)(a) (trading profits deductions allowance),

(ii) section 269ZBA(5)(a) (chargeable gains deductions allowance), and

(iii) in the case of an insurance company, section 269ZFC(5)(a) (BLAGAB deductions allowance).”

(7) In subsection (8), for “relevant non-trading profits” substitute “ qualifying non-trading income profits and qualifying chargeable gains ”.

4 U.K. In section 269ZD (restriction on deductions from total profits), in subsection (2)(b), after sub-paragraph (i) (before the “and”) insert—

“(ia) any deductions made by the company for the accounting period under section 2A(1)(b) of TCGA 1992 (allowable losses accruing in earlier accounting periods),”.

5 U.K. In section 269ZF (relevant profits), after subsection (2) insert—

“(2A) A company's “relevant chargeable gains” for an accounting period are—

(a) the company's qualifying chargeable gains for the accounting period (see subsection (3)), less

(b) the company's chargeable gains deductions allowance for the accounting period (see section 269ZBA(5)).

But if the allowance mentioned in paragraph (b) exceeds the qualifying chargeable gains mentioned in paragraph (a), the company's “relevant chargeable gains” for the accounting period are nil.

(2B) A company's “total relevant non-trading profits” for an accounting period are—

(a) the sum of—

(i) the company's qualifying non-trading income profits for the period, and

(ii) the company's qualifying chargeable gains for the period, less

(b) the company's total non-trading profits deductions allowance for the period (see section 269ZC(3A)).”

6 U.K. In section 269ZF, in subsection (3), for steps 3 to 5 substitute—

“Step 3 - trading profits, non-trading income profits and chargeable gains Divide the company's total profits for the accounting period (as modified under step 1(2)) into—

(a) profits of a trade of the company (the company's “trading profits”),

(b) profits, other than chargeable gains, that are not profits of a trade of the company (the company's “non-trading income profits”), and

(c) chargeable gains included in the total profits (the company's “chargeable gains”).

Step 4 - apportionment of the step 2 amount

(1) Allocate the whole of the step 2 amount to one of, or between two or all of, the following—

(a) the company's trading profits,

(b) the company's non-trading income profits, and

(c) the company's chargeable gains.

(2) Reduce, but not below nil, each of the company's trading profits, non-trading income profits and chargeable gains by the amount (if any) allocated to it under paragraph (1).

Step 5 - amount of qualifying trading profits, qualifying non-trading income profits and qualifying chargeable gains The amounts resulting from step 3, after any reduction under step 4, are—

(a) in the case of the amount in step 3(a), the company's qualifying trading profits,

(b) in the case of the amount in step 3(b), the company's qualifying nontrading income profits, and

(c) in the case of the amount in step 3(c), the company's qualifying chargeable gains.”

7 U.K. In section 269ZF(4) (calculation of modified total profits)—

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

(b) after paragraph (g) insert “; and

(h) make no deductions under section 2A(1)(b) of TCGA 1992 (allowable losses accruing in earlier accounting periods).”

Insolvent companies U.K.

8 U.K. After section 269ZW insert—

“269ZWA Increase of deductions allowance for insolvent companies

(1) This section applies in relation to a company if—

(a) the company has gone into insolvent liquidation (see subsection (4)), or

(b) a corresponding situation exists in relation to the company in a country or territory outside the United Kingdom.

(2) The company's deductions allowance for a winding up accounting period (as determined in accordance with section 269ZR or 269ZW) is to be treated (for all purposes) as increased by—

(a) the amount of chargeable gains accruing to the company in the accounting period after deducting any allowable losses accruing to the company in the period, or

(b) if lower, the amount of any allowable losses previously accruing to the company, so far as not previously deducted under section 2A(1) of TCGA 1992.

(3) In determining the amount of chargeable gains accruing to the company in a winding up accounting period for the purposes of subsection (2), ignore—

(a) any chargeable gains (but not any allowable losses) accruing to the company on the disposal of an asset if—

(i) section 171(1) of TCGA 1992 (transfers within a group: no gain no loss) applied in relation to the disposal by which the company acquired the asset (the “no gain/no loss disposal”),

(ii) the asset was acquired by the company, by virtue of the no gain/no loss disposal, in a winding up accounting period, and

(iii) the company making the no gain/no loss disposal has not, at that time, gone into insolvent liquidation, and

(b) any chargeable gains (but not any allowable losses) transferred to the company in accordance with an election made under section 171A of TCGA 1992 (election to reallocate gain or loss to another member of the group) if—

(i) the election is made in a winding up accounting period, and

(ii) the company from which the chargeable gain is transferred has not, at the time the election is made, gone into insolvent liquidation.

(4) For the purposes of this section, a company has gone into insolvent liquidation if—

(a) it has gone into liquidation, within the meaning of section 247(2) of the Insolvency Act 1986 or article 6(2) of the Insolvency (Northern Ireland) Order 1989 (SI 1989/2405 (NI 19), and

(b) at the time it goes into liquidation, its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

(5) In this section a “winding up accounting period” means—

(a) the accounting period of the company that begins when the winding up starts (within the meaning of section 12(7) of CTA 2009), and

(b) each subsequent accounting period.”

9 U.K. In section 269ZZ (company tax return to specify amount of deductions allowance), in subsection (1), after paragraph (a) (but before the “and”) insert—

“(aa) if section 269ZWA (increase of deductions allowance for insolvent companies) applies, what that amount would be without the increase provided for by subsection (2) of that section,”.

Companies without a source of chargeable income U.K.

10 U.K. After section 269ZY of CTA 2010 insert—

“269ZYA Deductions allowance for company without a source of chargeable income

(1) This section applies in relation to a company and a financial year (“the relevant financial year”) if—

(a) the company has no source of chargeable income (see subsection (2)) throughout the relevant financial year, and

(b) if the company is a member of a group (see section 269ZZB) at any time during the relevant financial year, each other company that is, at any time during the relevant financial year, a member of the group has no source of chargeable income throughout the relevant financial year.

(2) For the purposes of this section and section 269ZYB, a company “has no source of chargeable income” if the company is either—

(a) not within the charge to corporation tax, or

(b) chargeable to corporation tax only because of a chargeable gain accruing to the company on the disposal of an asset.

(3) A company may make a claim under this section in respect of an accounting period if—

(a) the accounting period falls wholly within the relevant financial year, and

(b) the company is chargeable to corporation tax for the accounting period only because of a chargeable gain accruing to the company on the disposal of an asset.

(4) If a claim is made by a company under this section in respect of an accounting period (a “claim AP”), the company's deductions allowance for the claim AP is the lower of—

(a) the available deductions allowance amount (see subsection (9)),

(b) the total amount of allowable losses accruing to the company in any previous accounting period, so far as not previously deducted under section 2A(1)(a) or (b) of TCGA 1992, and

(c) the chargeable gains accruing to the company in the claim AP.

(5) A claim under this section in respect of an accounting period—

(a) must be made within the period of two years after the end of the accounting period, but

(b) may not be made before the end of the relevant financial year.

(6) Sections 269ZR to 269ZY (deductions allowances) do not apply to a claim AP.

(7) Subsection (8) applies if—

(a) there is at least one claim AP falling wholly within the relevant financial year, and

(b) there is at least one accounting period falling wholly within the relevant financial year in respect of which no claim is made under this section (an “alternative AP”).

(8) The company's deductions allowance for an alternative AP is the lower of—

(a) the deductions allowance that would be available, ignoring the effect of this section (see sections 269ZR to 269ZY), and

(b) the available deductions allowance amount (see subsection (9)).

(9) For the purposes of this section, the “available deductions allowance amount” is—

(a) £5,000,000, less

(b) the total of the deductions allowance amounts (if any) already claimed by—

(i) the company, and

(ii) if the company is a member of a group at any time during the relevant financial year, each other company that is, at any time during the relevant financial year, a member of the group,

in respect of each claim AP and alternative AP that falls wholly within the relevant financial year.

(10) In this section, references to the deductions allowance amounts claimed by a company in respect of an accounting period—

(a) for a claim AP, are references to any deductions allowance claimed by the company under this section in respect of the period, and

(b) for an alternative AP, are references to any other amount specified in the company's tax return as its chargeable gains deductions allowance for the period.

(11) For the purposes of subsection (9)(b), in the cases listed in the first column of the table below, the rules in the second column apply to determine the order in which deductions allowance amounts are to be treated as claimed in respect of the accounting periods—

Case	Rule
1. There is a claim AP and another claim AP starting on the same day or a different day.	The order in which the claims under this section are made.
2. There is an alternative AP (“AP1”) and another alternative AP (“AP2”) starting on a later day.	AP1 before AP2.
3. There is an alternative AP and another alternative AP starting on the same day.	The order in which the tax returns for the alternative APs are delivered.
4. There is a claim AP and an alternative AP starting on the same day, an earlier day or a later day.	The claim AP before the alternative AP.

269ZYB Provisional application of section 269ZYA

(1) This section applies in relation to a company and an accounting period if—

(a) the conditions in section 269ZYA(3)(a) and (b) are met in relation to the accounting period, and

(b) the company's tax return for the accounting period is delivered before the end of the financial year in which the accounting period falls (“the relevant financial year”).

(2) The company may make a declaration in the return for the accounting period that—

(a) at all earlier times in the relevant financial year—

(i) the company had no source of chargeable income (see section 269ZYA(2)), and

(ii) if the company is a member of a group, each other member of the group had no source of chargeable income, and

(b) the person intends to make a claim under section 269ZYA(3) in respect of the accounting period.

(3) Until the declaration ceases to have effect, section 269ZYA has effect as if the company had made a claim under that section.

(4) The declaration ceases to have effect if—

(a) it is withdrawn,

(b) it is superseded by a claim made under section 269ZYA, or

(c) the company or, if the company is a member of a group, another member of the group, acquires a source of chargeable income before the end of the relevant financial year.

(5) So far as not previously ceasing to have effect under subsection (4), the declaration ceases to have effect two years after the end of the accounting period in respect of which it is made.

(6) If the declaration ceases to have effect, all necessary adjustments must be made, by assessment, amendment of returns or otherwise.

(7) Subsection (6) applies despite any limitation on the time within which assessments or amendments may be made.”

Offshore collective investment vehicles U.K.

11 U.K. In section 269ZZB of CTA 2010 (meaning of “group”), at the end insert—

“(9) For the purposes of the application of this Part in relation to a collective investment vehicle to which paragraph 4 of Schedule 5AAA to TCGA 1992 applies, the reference in paragraph 4(2) of that Schedule to “relevant purposes” is to be treated as including a reference to the purposes of this section.”

Insurance companies: ring fence U.K.

12 (1) Section 210A of TCGA 1992 (insurance: ring-fencing of losses) is amended as follows. U.K.

(2) In subsection (2), after “to the company”, in the first place it occurs, insert “ as permitted by subsection (2A) ”.

(3) After subsection (2) insert—

“(2A) The following deductions may be made from the shareholders' share of the BLAGAB chargeable gains accruing to the company in an accounting period—

(a) any available non-BLAGAB allowable losses accruing to the company in the period may be deducted under section 2A(1)(a), and

(b) after making any deductions within paragraph (a), any available non-BLAGAB allowable losses previously accruing to the company, which have not been allowed as a deduction from chargeable gains accruing in the period or in any previous accounting period, may (subject to section 269ZFC of CTA 2010) be deducted under section 2A(1)(b).

(2B) But those deductions may not reduce the shareholders' share of BLAGAB chargeable gains below nil.

(2C) The amount of “available non-BLAGAB allowable losses” accruing to a company in an accounting period is the amount by which the non-BLAGAB allowable losses accruing to the company in the accounting period exceed the non-BLAGAB chargeable gains so accruing.”

(4) In subsection (6)(a)—

(a) omit “amount by which”, and

(b) omit “exceeds the shareholders' share of BLAGAB chargeable gains so accruing”.

(5) In subsection (8), in the words before paragraph (a)—

(a) for “If the” substitute “ If there are ”, and

(b) omit “exceed the BLAGAB allowable losses so accruing”.

(6) In subsection (8)(b), after “deduction” insert “ , under step 2 of section 75(1) of FA 2012, ”.

(7) For subsection (9) substitute—

“(9) If there are BLAGAB allowable losses accruing to the company in the subsequent accounting period, the amount arrived at under subsection (7)(a) is increased by the shareholders' share of the amount of those allowable losses.”

(8) In subsection (13)—

(a) in the definition of “BLAGAB allowable losses”, at the end insert “ but excluding any allowable losses deducted under step 2 of section 75(1) of FA 2012 in determining the BLAGAB chargeable gains of the company for an accounting period, ”;

(b) in the definition of “BLAGAB chargeable gains”, after “means chargeable gains” insert “ (as adjusted for allowable losses in accordance with section 75 of FA 2012) ”.

13 U.K. After section 269ZFB of CTA 2010 insert—

“269ZFC Restriction on deductions of non-BLAGAB allowable losses from BLAGAB chargeable gains

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

(2) The sum of any deductions of non-BLAGAB allowable losses from the shareholders' share of BLAGAB chargeable gains made by an insurance company for an accounting period under section 2A(1)(b) of TCGA 1992, as permitted by section 210A(2A)(b) of that Act, may not exceed the relevant maximum.

(3) In this section, the “relevant maximum” means the sum of—

(a) 50% of the company's relevant BLAGAB chargeable gains for the accounting period, and

(b) the amount of the company's BLAGAB deductions allowance for the accounting period.

(4) A company's “relevant BLAGAB chargeable gains” for an accounting period are—

(a) the shareholders' share of the BLAGAB chargeable gains for the accounting period, after any reduction under section 210A(2A)(a) of TCGA 1992, less

(b) the amount of the company's BLAGAB deductions allowance for the accounting period.

But if the allowance mentioned in paragraph (b) exceeds the shareholders' share of the BLAGAB chargeable gains mentioned in paragraph (a), the company's “relevant BLAGAB chargeable gains” for the accounting period are nil.

(5) A company's “BLAGAB deductions allowance” for an accounting period—

(a) is so much of the company's deductions allowance for the period as is specified in the company's tax return as its BLAGAB deductions allowance for the period, and

(b) accordingly, is nil if no amount of the company's deductions allowance for the period is so specified.

(6) An amount specified under subsection (5)(a) as the company's BLAGAB deductions allowance for an accounting period may not exceed the difference between—

(a) the amount of the company's deductions allowance for the period, and

(b) the total of any amounts specified for the period under section 269ZB(7)(a) (trading profits deductions allowance), section 269ZBA(5)(a) (chargeable gains deductions allowance) and section 269ZC(5)(a) (non-trading income profits deductions allowance).

(7) In this section, “BLAGAB chargeable gains”, “insurance company” and “the shareholders' share of BLAGAB chargeable gains” have the same meaning as in section 210A of TCGA 1992.”

14 (1) Part 7ZA of CTA 2010 is amended in accordance with this paragraph. U.K.

(2) In section 269ZD(2)(b)—

(a) omit the “and” after sub-paragraph (ia) (inserted by paragraph 4 of this Schedule), and

(b) after sub-paragraph (ii) insert “and

(iia) any deductions of non-BLAGAB allowable losses from the shareholders' share of BLAGAB chargeable gains made for the accounting period under section 2A(1)(b) of TCGA 1992, as permitted by section 210A(2A)(b) of that Act.”

(3) In section 269ZFB(2), at the end of paragraph (b) insert “and provided that no deductions of non-BLAGAB allowable losses from the shareholders' share of BLAGAB chargeable gains are to be made under section 2A(1)(b) of TCGA 1992, as permitted by section 210A(2A)(b) of that Act.”

15 U.K. In section 95 of FA 2012 (use of non-BLAGAB allowable losses to reduce I-E profit) for “in accordance with section 210A(2) of TCGA 1992” substitute “ under section 2A(1) of TCGA 1992, as permitted by section 210A(2) and (2A) of that Act, ”.

Oil activities: ring fence U.K.

16 U.K. In section 197 of TCGA 1992 (disposals of interests in oil fields etc: ring fence provisions), after subsection (4) insert—

“(4A) A deduction in respect of an aggregate loss accruing in a chargeable period that is (in accordance with subsection (4)(b) and (c)) allowable as a deduction against an aggregate gain treated as accruing in a later period is to be ignored for the purposes of section 269ZBA of CTA 2010 (corporate capital loss restriction: restriction on deductions from chargeable gains).”

Clogged losses U.K.

17 U.K. In section 18 of TCGA 1992 (transactions between connected persons) at the end insert—

“(9) If deductible clogged losses have accrued to a company, the company may make a claim in respect of an accounting period for—

(a) an amount of the deductible clogged losses to be treated, for the purposes of section 2A(1)(a), as allowable losses accruing in the accounting period, and

(b) the same amount of allowable losses accruing to the company in the period to be treated, for the purposes of section 2A(1)(b), as allowable losses previously accruing to the company while it was within the charge to corporation tax.

(10) The amount in respect of which the claim is made may not exceed the total amount of any allowable losses accruing to the company in the accounting period for which the claim is made.

(11) In subsection (9), “deductible clogged losses” means losses which would, apart from Part 7ZA of CTA 2010, be deductible under subsection (3) from chargeable gains accruing to the company in an accounting period.

(12) A claim under subsection (9) must be made by being included in the company's tax return for the accounting period for which the claim is made.”

Pre-entry losses U.K.

18 (1) Schedule 7A to TCGA 1992 (restriction on set-off of pre-entry losses) is amended in accordance with this paragraph. U.K.

(2) In paragraph 6(1)(b), after “from that gain” insert “ (subject to sub-paragraphs (1A) to (1C)) ”.

(3) In paragraph 6(1)(c), after “section 2A(1)” insert “ (subject to sub-paragraphs (1A) to (1C)) ”.

(4) After sub-paragraph (1) insert—

“(1A) Sub-paragraph (1B) applies, in respect of an accounting period, if the amount of chargeable gains accruing to the company in the period exceeds the total of—

(a) the amount of pre-entry losses accruing to the company in the period that are deductible under sub-paragraph (1)(a), and

(b) the amount of allowable losses, other than pre-entry losses, accruing to the company in the period.

(1B) Where this sub-paragraph applies in respect of an accounting period—

(a) the sum of any deductions under sub-paragraph (1)(b) may not exceed the total of—

(i) the amount of pre-entry losses that, on the assumption in sub-paragraph (1C), would be deductible under sub-paragraph (1)(b), and

(ii) the amount of allowable losses (other than pre-entry losses) that, on the assumption in sub-paragraph (1C), would be deductible under section 2A(1), and

(b) for the purposes of sub-paragraph (1)(c), the deductions made under section 2A(1) may not exceed the difference between—

(i) the total of the amounts mentioned in paragraph (a)(i) and (ii), and

(ii) the amount of pre-entry losses deducted under sub-paragraph (1)(b).

(1C) The assumption is that deductions under sub-paragraph (1)(b) are treated for the purposes of Part 7ZA of CTA 2010 (restrictions on obtaining certain deductions) as if they were made under section 2A(1)(b) of this Act.”

Real estate investment trusts U.K.

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

20 U.K. In section 535B (use of pre-April 2019 residual business losses or deficits) at the end insert—

“(4) In determining, for the purposes of subsection (2)(a), the amount of allowable losses accruing on disposals made before 6 April 2019 which would otherwise have been deducted from gains accruing to residual business of the company, section 269ZBA (restriction on deductions) is to be ignored.”

21 U.K. In section 550 (attribution of distributions) at the end insert—

“(4) In determining the amount of relevant non-chargeable gains for the purposes of this section, section 269ZBA (restriction on deductions) is to be ignored.”

22 U.K. In section 556 (disposal of assets) in subsection (7), for “and 535A” substitute “ , 535A and 535B ”.

Counteraction of avoidance arrangements U.K.

23 (1) Section 19 of F(No.2)A 2017 (losses: counteraction of avoidance arrangements) is amended in accordance with this paragraph. U.K.

(2) In subsection (8), before paragraph (a) insert—

“(za) section 2A(1) of TCGA 1992 (allowable capital losses);”.

(3) At the end insert—

“(13) In the case of a tax advantage as a result of a deduction (or increased deduction) under section 2A(1) of TCGA 1992, subsections (10) and (11) have effect as if the references to 1 April 2017 were to 1 April 2020.”

Minor and consequential amendments to Part 7ZA of CTA 2010 U.K.

24 U.K. Part 7ZA of CTA 2010 is amended as follows.

25 (1) Section 269ZB (restriction on deductions from trading profits) is amended in accordance with this paragraph. U.K.

(2) In subsection (8), for paragraph (b) substitute—

“(b) the total of—

(i) the amount of the company's total non-trading profits deductions allowance for the period (see section 269ZC(3A)), and

(ii) in the case of an insurance company, any amount specified for the period under section 269ZFC(5)(a) (BLAGAB deductions allowance).”

(3) Omit subsection (9) (meaning of a company's “deductions allowance”).

26 U.K. In section 269ZC (restriction on deductions from non-trading profits) omit subsection (7) (meaning of a company's “deductions allowance”).

27 U.K. In section 269ZD (restriction on deductions from total profits) omit subsection (6) (meaning of a company's “deductions allowance”).

28 U.K. After section 269ZD insert—

“269ZDA References to a company's “deductions allowance”

(1) This section applies for the purposes of sections 269ZB to 269ZD and 269ZFC.

(2) A company's “deductions allowance” for an accounting period is to be determined in accordance with section 269ZR where, at any time in that period—

(a) the company is a member of a group (see section 269ZZB), and

(b) one or more other companies within the charge to corporation tax are members of that group.

(3) Otherwise, a company's “deductions allowance” for an accounting period is to be determined in accordance with section 269ZW.

(4) But subsections (2) and (3) are subject to section 269ZYA (deductions allowance for company without a source of chargeable income).”

29 (1) Section 269ZF (“relevant trading profits” and “relevant non-trading profits”) is amended in accordance with this paragraph. U.K.

(2) In subsection (2)—

(a) for “ “relevant non-trading profits””, in both places it occurs, substitute “ “relevant non-trading income profits” ”,

(b) in paragraph (a), for “qualifying non-trading profits” substitute “ qualifying non-trading income profits ”, and

(c) in paragraph (b) for “non-trading profits deductions allowance” substitute “ non-trading income profits deductions allowance ”.

(3) In subsection (3), in the words before step 1, for “and qualifying non-trading profits” substitute “ , qualifying non-trading income profits and qualifying chargeable gains ”.

(4) In subsection (3), in paragraph (3) of step 1—

(a) for “and relevant non-trading profits” substitute “ , qualifying non-trading income profits and qualifying chargeable gains ”, and

(b) for “both” substitute “ each ”.

(5) In subsection (3), in paragraph (3) of step 2—

(a) for “and the qualifying non-trading profits” substitute “ , qualifying non-trading income profits and qualifying chargeable gains ”, and

(b) for “both” substitute “ each ”.

(6) In the heading, for “and “relevant non-trading profits”” substitute “ , “total relevant non-trading profits” etc ”.

30 (1) Section 269ZFA (“relevant profits”) is amended as follows. U.K.

(2) In subsection (1)(b), for “section 269ZD(6)” substitute “ section 269ZDA ”.

(3) In subsection (2)—

(a) in paragraph (a), for “qualifying trading profits and qualifying non-trading profits” substitute “ modified total profits ”, and

(b) in paragraph (b), for “in determining” substitute “ which could be relieved against ”.

31 U.K. In section 269ZG (general insurance companies: excluded accounting periods), in subsection (1), for “269ZE” substitute “ 269ZD ”.

32 U.K. In section 269ZR (deductions allowance for company in a group), at the end insert—

“(5) See section 269ZYA for further provision about the deductions allowance for a company without a source of chargeable income which is a member of a group.”

33 U.K. In section 269ZW (deductions allowance for company not in a group), at the end insert—

“(4) See section 269ZYA for further provision about the deductions allowance for a company without a source of chargeable income.”

34 U.K. In section 269ZZ (company tax return to specify amount of deductions allowance), in subsection (2)—

(a) after “section 269ZB(2),” insert “ 269ZBA(2), ”, and

(b) for “or 269ZD(2) or section 124D(1) of FA 2012” substitute “ , 269ZD(2) or 269ZFC(2) ”.

35 (1) Section 269ZZA(1) (excessive specification of deductions allowance: application of section) is amended in accordance with this paragraph. U.K.

(2) After paragraph (b) insert—

“(ba) the company's chargeable gains deductions allowance for the period,”.

(3) In paragraph (c) for “non-trading profits deductions allowance” substitute “ non-trading income profits deductions allowance ”.

(4) After paragraph (d) insert—

“(da) the company's BLAGAB deductions allowance for the period.”

(5) Omit paragraph (e).

Minor and consequential amendments to Part 7A of CTA 2010 U.K.

36 U.K. Part 7A of CTA 2010 (banking companies: restrictions on obtaining certain deductions) is amended as follows.

37 (1) Section 269CB (restriction on deductions for non-trading deficits from loan relationships) is amended as follows. U.K.

(2) In subsection (2)—

(a) for “relevant non-trading profits”, in both places it occurs, substitute “ total relevant non-trading profits ”, and

(b) for “subsection (2)” substitute “ subsection (2B) ”.

(3) In subsection (3), for “relevant non-trading profits”, in both places it occurs, substitute “ total relevant non-trading profits ”.

38 U.K. In section 269CN (definitions)—

(a) omit the definition of “relevant non-trading profits”, and

(b) at the end insert—

““total relevant non-trading profits”, in relation to a company, has the meaning given by section 269ZF(2B).”

PART 2 U.K. Corporate capital loss deductions: miscellaneous provision

Companies without a source of chargeable income: carry back of losses U.K.

39 U.K. In section 2A of TCGA 1992 (company's total profits to include chargeable gains), after subsection (2) insert—

“(3) Subsection (4) applies if—

(a) a company has two or more accounting periods that fall wholly within the same financial year,

(b) the company is chargeable to corporation tax for each of those accounting periods only because of a chargeable gain accruing to the company on the disposal of asset, and

(c) in the period (if any) between each of those accounting periods, the company is not within the charge to corporation tax.

(4) For the purposes of determining the amount of chargeable gains to be included in the company's total profits for each of the accounting periods by reference to which this subsection applies, subsection (1) has effect as if after paragraph (a) (before the “and”) there were inserted—

“(aa) so far as not otherwise deducted under this section, any allowable losses accruing to the company in another accounting period that falls wholly within the same financial year as the period mentioned in paragraph (a),”.”

Insurance companies: minor amendments to TCGA 1992 and FA 2012 U.K.

40 U.K. In section 210A of TCGA 1992, in subsection (10C), for the words from “In determining” to “an accounting period” substitute “ For the purposes of subsections (10A) and (10B) ”.

41 U.K. In section 93 of FA 2012 (minimum profits test), at the end insert—

“(6) For the purposes of this section, assume that non-BLAGAB allowable losses cannot be deducted to any extent from BLAGAB chargeable gains (and, accordingly, assume that section 95 is not included in this Act).”

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

Commencement U.K.

42 U.K. The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 April 2020.

43 (1) Paragraph 44 applies where a company has an accounting period beginning before 1 April 2020 and ending on or after that date (the “straddling period”). U.K.

(2) For the purposes of paragraph 44—

(a) the “pre-commencement period” means the part of the straddling period falling before 1 April 2020, and

(b) the “post-commencement period” means the part of the straddling period falling on or after that date.

44 (1) The amount of chargeable gains to be included in the company's total profits for the straddling period is the total of— U.K.

(a) the chargeable gains accruing to the company in the pre-commencement period, after making any deductions under section 2A(1) of TCGA 1992, and

(b) the chargeable gains accruing to the company in the post-commencement period, after making any deductions under that section.

(2) For the purposes of sub-paragraph (1)(a) and (b), section 2A of TCGA 1992 applies as if the pre-commencement period and the post-commencement period were separate accounting periods, subject to the modification in sub-paragraph (3).

(3) For the purposes of determining the amount to be included in the company's total profits in respect of chargeable gains for a period, the reference in section 2A(1)(a) of TCGA 1992 to any allowable losses accruing to the company in the period is to be treated as including—

(a) for the purposes of the pre-commencement period, a reference to any allowable losses accruing to the company in the post-commencement period so far as they exceed the chargeable gains accruing to the company in the post-commencement period, and

(b) for the purposes of the post-commencement period, a reference to any available allowable losses accruing to the company in the pre-commencement period so far as they exceed the chargeable gains accruing to the company in the pre-commencement period.

(4) For the purposes of applying Part 7ZA of CTA 2010 in relation to the straddling period—

(a) section 269ZBA of that Act applies in relation to the post-commencement period as if it were a separate accounting period,

(b) the reference in section 269ZF(4)(h) to deductions under section 2A(1)(b) of TCGA 1992 is to be treated as if it were a reference only to deductions under that provision from the chargeable gains of the post-commencement period, and

(c) the reference in step 3(c) of section 269ZF to the chargeable gains included in the company's total profits is to be treated as if it were a reference to the total of—

(i) the chargeable gains accruing to the company in the pre-commencement period, after making any deductions under section 2A(1)(a) or (b) of TCGA 1992, and

(ii) the chargeable gains accruing to the company in the post-commencement period, after making any deductions under section 2A(1)(a) of that Act.

45 (1) This paragraph applies in relation to a non-UK resident company which carries on a UK property business or has other UK property income— U.K.

(a) if the conditions in sub-paragraph (2) are met, and

(b) unless the company has elected that this paragraph is not to apply.

(2) The conditions are met if the company—

(a) is within the charge to income tax for the tax year 2019-20,

(b) is chargeable to corporation tax for an accounting period falling wholly within the period beginning with 1 April 2020 and ending with 5 April 2020 because of a chargeable gain accruing to the company on the disposal of an asset, and

(c) is within the charge to corporation tax on income for an accounting period beginning on 6 April 2020.

(3) For the purposes of determining the amount to be included in the company's total profits in respect of chargeable gains for an accounting period mentioned in sub-paragraph (2)(b) or (2)(c), the reference in section 2A(1)(a) of TCGA 1992 to any allowable losses accruing to the company in the period is to be treated as including—

(a) for the purposes of an accounting period mentioned in sub-paragraph (2)(b), a reference to any allowable losses accruing to the company in the accounting period mentioned in sub-paragraph (2)(c) (so far as those losses are not otherwise deducted under section 2A(1) of TCGA 1992), and

(b) for the purposes of the accounting period mentioned in sub-paragraph (2)(c), a reference to any allowable losses accruing to the company in an accounting period mentioned in sub-paragraph (2)(b) (so far as those losses are not otherwise deducted under section 2A(1) of TCGA 1992).

(4) For the purposes of the application of Part 7ZA of CTA 2010 in relation to the accounting periods mentioned in sub-paragraphs (2)(b) and (2)(c)—

(a) section 269ZYA of CTA 2010 (deductions allowance for company without a source of chargeable income) applies as if the company had made a claim under that section in respect of each accounting period mentioned in sub-paragraph (2)(b), and

(b) the company's deductions allowance for the accounting period mentioned in sub-paragraph (2)(c) is treated as being reduced by the amount of the company's deductions allowance for each accounting period mentioned in sub-paragraph (2)(b).

Anti-forestalling provision U.K.

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

(a) a company has an accounting period ending before 1 April 2020,

(b) the company would, apart from this paragraph, obtain a tax advantage as a result of a deduction, or an increased deduction, under section 2A(1)(b) of TCGA 1992,

(c) the tax advantage arises as a result of arrangements entered into on or after 29 October 2018, and

(d) the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage as a result of the fact that section 269ZBA 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 deductions made by the company for the accounting period under section 2A(1)(b) of TCGA 1992 may not exceed 50% of the company's qualifying chargeable gains for the period.

(3) So far as necessary for the purposes of this paragraph, Part 7ZA of CTA 2010 is treated as having come into force on the same day as this paragraph.

(4) This paragraph is treated as having come into force on 29 October 2018.

(5) Where a company has a straddling period, the pre-commencement period and the post-commencement period are treated for the purposes of this paragraph as separate accounting periods.

(6) In this paragraph—

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

(b) “straddling period”, “pre-commencement period” and “post-commencement period” have the same meaning as they have for the purposes of paragraph 44, and

(c) “tax advantage” has the meaning given by section 1139 of CTA 2010.

Section 30

SCHEDULE 5 U.K. Structures and buildings allowances

Introduction U.K.

1 U.K. CAA 2001 is amended as follows.

Research and development allowances U.K.

2 U.K. In Part 2A (structures and buildings allowances), for section 270EC substitute—

“270EC Research and development

(1) This section applies if, at any time, a person sells the relevant interest in a building or structure to another.

(2) The total amount of the allowances under this Part by reference to the building or structure that is available to the person buying the relevant interest is reduced (but not below nil) by the amount of any Part 6 allowance to which the person is entitled by reference to the building or structure.

(3) There is another restriction on the total amount of those allowances which applies if—

(a) the sale in question, or a sale of the relevant interest at an earlier time, is by a person entitled to a Part 6 allowance by reference to the building or structure, and

(b) the amount paid for the relevant interest on any of those sales is less than the ordinary Part 2A amount (see subsection (6)).

(4) The other restriction is that the total amount of the allowances under this Part by reference to the building or structure that is available to the person buying the relevant interest may not exceed the permitted maximum.

(5) For this purpose “the permitted maximum” is—

(a) the lowest sum paid for the relevant interest on the sale in question or any earlier sale within subsection (3)(a), less

(b) the total amount of the allowances under this Part arising by reference to the building or structure since the earliest sale identified for the purposes of paragraph (a) of this subsection.

(6) In this section “the ordinary Part 2A amount” means—

(a) the amount of the qualifying expenditure, by reference to which an allowance can be made under this Part, incurred in relation to the building or structure before the time of the sale in question, less

(b) the total amount of the allowances under this Part arising before that time by reference to the building or structure.

(7) In this section any reference to allowances under this Part is to allowances to which an entitlement has arisen under this Part or would have arisen under this Part if the building or structure had been in continuous qualifying use since it was first brought into non-residential use.

(8) In this section “Part 6 allowance”, in relation to a person and a building or structure, means an allowance under Part 6 in respect of expenditure incurred by the person on its construction or acquisition.”

Contribution allowances U.K.

3 (1) Section 538A (contributions: buildings and structures) is amended as follows. U.K.

(2) For subsection (3)(b) substitute—

“(b) the building or structure were brought into qualifying use, for the purposes of the allowance in relation to the contribution, on—

(i) the day on which R first brought the building or structure into qualifying use, or

(ii) if R is a public body, the earlier of the day mentioned in sub-paragraph (i) and the day on which R first brought the building or structure into non-residential use.”

(3) For subsection (4) substitute—

“(4) If, at any time in the period beginning with the day on which C made the contribution and ending with the day on which R first brought the building or structure into non-residential use, C did not have a relevant interest in the building or structure—

(a) C is to be treated for the purposes of allowances under Part 2A as having had a relevant interest in the building or structure when that period begins, and

(b) C is not to be treated for those purposes as ceasing to have that interest on any subsequent sale of R's relevant interest in the building or structure.”

(4) After subsection (6) insert—

“(7) In determining, for the purposes of this section, the day on which R first brings a building or structure into non-residential use, ignore any use of the building or structure which is insignificant.”

Minor amendments U.K.

4 U.K. In section 270AA(2) (entitlement to structures and buildings allowances), at the beginning of paragraph (b)(i) insert “ on or ”.

5 U.K. In section 270BB (capital expenditure incurred on construction), in subsection (2)(a), for “qualifying use” substitute “ non-residential use ”.

6 U.K. In section 270BL (apportionment of sums partly referable to non-qualifying assets), for “qualifying expenditure” substitute “ expenditure for which an allowance can be made under this Part ”.

7 U.K. In section 270IA (evidence of qualifying expenditure etc), in subsection (4)(a), omit “written”.

Commencement U.K.

8 U.K. The amendment made by paragraph 2 has effect in the case of any sale within subsection (1) of the substituted section 270EC(1) of CAA 2001 that takes place on or after 11 March 2020.

9 U.K. The amendments made by paragraph 3 have effect in relation to contributions made on or after 11 March 2020.

10 U.K. Part 2A of CAA 2001 has effect, and is to be deemed always to have had effect, with the amendments made by paragraphs 4 to 7.

Section 32

SCHEDULE 6 U.K. Non-UK resident companies carrying on UK property businesses etc

Calculation of non-trading profits and deficits from loan relationships or derivative contracts U.K.

1 U.K. In section 301 of CTA 2009 (calculation of non-trading profits and deficits from loan relationships), for the subsection (1A) inserted into that section by paragraph 15(3) of Schedule 5 to FA 2019 substitute—

“(1A) In the case of a non-UK resident company, subsections (4) to (7) need to be read with section 5(3), (3A)(b) and (3B)(b) (territorial scope of charge to corporation tax).”

2 U.K. In section 574 of CTA 2009 (derivative contracts: non-trading credits and debits to be brought into account), for the subsection (2A) inserted into that section by paragraph 18 of Schedule 5 to FA 2019 substitute—

“(2A) In the case of a non-UK resident company, subsection (2) needs to be read with section 5(3), (3A)(b) and (3B)(b) (territorial scope of charge to corporation tax).”

Debits referable to times before UK property business etc is carried on U.K.

3 U.K. After section 330 of CTA 2009 insert—

“Pre-commencement debits of property businesses etc of non-UK resident companies U.K.

330ZA Debits referable to times before UK property business etc carried on

(1) This section applies if—

(a) a non-UK resident company has debits in respect of a loan relationship to which it is a party for the purposes of its UK property business,

(b) the debits are referable to times (“the pre-rental times”) before (but not more than 7 years before) the date on which it starts to carry on the business, and

(c) the debits are not otherwise brought into account for tax purposes.

(2) If, on the assumption that the company had been carrying on the business at the pre-rental times, the debits—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times, and

(b) would have been brought into account for the purposes of this Part,

the debits are (so far as they exceed relevant credits) treated for the purposes of this Part as if they were debits for the accounting period in which it started to carry on the business.

(3) For this purpose “relevant credits” means credits of the company in respect of the loan relationship which, on the assumption that the company had been carrying on the business at the pre-rental times—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times,

(b) would have been brought into account for the purposes of this Part, and

(c) would not otherwise have been brought into account for tax purposes.

(4) This section is subject to section 327 (disallowance of imported losses etc).

(5) This section also applies in relation to a non-UK resident company which is a party to a loan relationship for the purpose of enabling it to generate other UK property income (within the meaning given by section 5(6)).”

4 U.K. After section 607 of CTA 2009 insert—

“607ZA Debits referable to times before UK property business etc carried on

(1) This section applies if—

(a) a non-UK resident company has debits in respect of a derivative contract to which it is a party for the purposes of its UK property business,

(b) the debits are referable to times (“the pre-rental times”) before (but not more than 7 years before) the date on which it starts to carry on the business, and

(c) the debits are not otherwise brought into account for tax purposes.

(2) If, on the assumption that the company had been carrying on the business at the pre-rental times, the debits—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times, and

(b) would have been brought into account for the purposes of this Part,

the debits are (so far as they exceed relevant credits) treated for the purposes of this Part as if they were debits for the accounting period in which it started to carry on the business.

(3) For this purpose “relevant credits” means credits of the company in respect of the derivative contract which, on the assumption that the company had been carrying on the business at the pre-rental times—

(a) would have been recognised in determining its profit or loss for a period consisting of or including those times,

(b) would have been brought into account for the purposes of this Part, and

(c) would not otherwise have been brought into account for tax purposes.

(4) This section also applies in relation to a non-UK resident company which is a party to a derivative contract for the purpose of enabling it to generate other UK property income (within the meaning given by section 5(6)).”

5 U.K. In paragraph 40 of Schedule 5 to FA 2019 (transitional provision: imported losses in respect of derivative contracts), at the end insert—

“(7) Section 607ZA of CTA 2009 (debits referable to times before UK property business carried on) has effect subject to this paragraph.”

Duty to notify chargeability to corporation tax: exceptions U.K.

6 U.K. In paragraph 2 of Schedule 18 to FA 1998 (duty of company to notify HMRC that it is chargeable for an accounting period if it has not received a notice requiring a company tax return), in sub-paragraph (1A) (which provides an exception to that duty), as inserted into that paragraph by paragraph 6(2) of Schedule 5 to FA 2019—

(a) omit the “and” before paragraph (b), and

(b) after that paragraph insert “, and

(c) having deducted the income tax mentioned in paragraph (a) at the fourth step in paragraph 8 (calculation of tax payable), the amount of tax payable for the period is nil.”

7 U.K. In section 55A(1) of FA 2004 (exception to duty of company to give notice of coming within the charge to corporation tax), as inserted by paragraph 7 of Schedule 5 to FA 2019—

(a) omit the “and” before paragraph (b), and

(b) after that paragraph insert “, and

(c) in consequence of the deduction of the income tax mentioned in paragraph (a) at the fourth step in paragraph 8 of Schedule 18 to the Finance Act 1998 (calculation of tax payable), the amount of tax payable for the period will be nil.”

Period for making election under regulation 6A of the Disregard Regulations U.K.

8 U.K. In regulation 6A of the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004—

(a) in paragraph (5)(b), after “fair value” insert “ (but see paragraph (6)) ”, and

(b) at the end insert—

“(6) For the purposes of the definition of “the first relevant period” an accounting period of a company is to be ignored if—

(a) the accounting period begins solely as a result of a disposal of an asset by the company, and

(b) any gain accruing to the company on the disposal would be chargeable to corporation tax as a result of section 2B(4) of the Taxation of Chargeable Gains Act 1992.”

9 U.K. In paragraph 44 of Schedule 5 to FA 2019, at the end insert—

“(4) In determining for the purposes of this paragraph whether, on the commencement date, a company comes within the charge to corporation tax by reason of this Schedule, no account is to be taken of any disposal made by the company before that date where any gain accruing to the company on the disposal would be chargeable to corporation tax as a result of section 2B(4) of TCGA 1992.”

Commencement U.K.

10 U.K. Schedule 5 to FA 2019 has effect as if the amendments made by paragraphs 1 to 7 had at all times been incorporated into the provision made by that Schedule.

11 U.K. The amendments made by paragraphs 8 and 9 have effect in relation to disposals made on or after 6 April 2019.

Section 34

SCHEDULE 7 U.K. CT payment plans for tax on certain transactions with EEA residents

CT payment plans U.K.

1 U.K. In TMA 1970, after section 59FA insert—

“59FB CT payment plans for tax on certain transactions with EEA residents

Schedule 3ZC makes provision enabling a company that is liable to pay corporation tax arising in connection with certain transactions to defer payment of the tax by entering into a CT payment plan.”

2 U.K. After Schedule 3ZB to TMA 1970 insert—

Section 59FB

“SCHEDULE 3ZC U.K. CT Payment plans for tax on certain transactions with EEA residents

Introduction U.K.

1 This Schedule makes provision enabling a company that is liable to pay qualifying corporation tax for an accounting period to defer payment of the tax by entering into a CT payment plan.

Qualifying corporation tax U.K.

2 (1) For the purposes of this Schedule a company is liable to pay qualifying corporation tax for an accounting period if CT1 is greater than CT2 where—

• CT1 is the corporation tax which the company is liable to pay for the accounting period, and

• CT2 is the corporation tax which the company would be liable to pay for the accounting period if any gains, credits, losses or debits arising in respect of qualifying transactions of the company were ignored.

(CT2 will be zero if the company would not be liable to pay any corporation tax for the period).

(2) The amount of qualifying corporation tax which the company is liable to pay is the difference between CT1 and CT2.

Qualifying transactions U.K.

3 (1) For the purposes of this Schedule each of the following is a qualifying transaction of a company (“the company concerned”)—

(a) a disposal within sub-paragraph (2),

(b) a transaction within sub-paragraph (3),

(c) a transaction within sub-paragraph (4), and

(d) a transfer within sub-paragraph (5).

(2) A disposal is within this sub-paragraph if—

(a) it is a disposal by the company concerned of an asset,

(b) it is a disposal to a company (“the transferee”) that at the time of the disposal is resident outside the United Kingdom in an EEA state, and

(c) it is a disposal to which section 139 or 171 of TCGA 1992 would apply were the transferee resident at the time of the disposal in the United Kingdom instead.

(3) A transaction is within this sub-paragraph if—

(a) it is a transaction, or the first in a series of transactions, as a result of which the company concerned is directly or indirectly replaced as a party to a loan relationship by another company (“the transferee”),

(b) at the time of the transaction the transferee is resident outside the United Kingdom in an EEA state, and

(c) it is a transaction to which section 340(3) of CTA 2009 would apply were the transferee resident at the time of the transaction in the United Kingdom instead.

(4) A transaction is within this sub-paragraph if—

(a) it is a transaction, or the first in a series of transactions, as a result of which the company concerned is directly or indirectly replaced as a party to a derivative contract by another company (“the transferee”),

(b) at the time of the transaction the transferee is resident outside the United Kingdom in an EEA state, and

(c) it is a transaction to which section 625(3) of CTA 2009 would apply were the transferee resident at the time of the transaction in the United Kingdom instead.

(5) A transfer is within this sub-paragraph if—

(a) it is a transfer from the company concerned of an intangible fixed asset,

(b) it is a transfer to a company (“the transferee”) that immediately after the transfer is resident outside the United Kingdom in an EEA state, and

(c) it is a transfer to which section 775(1) of CTA 2009 would apply were the transferee resident immediately after the transfer in the United Kingdom instead.

(6) In this Schedule “transferee”, in relation to a qualifying transaction of a company, means the transferee referred to in sub-paragraph (2), (3), (4) or (5) (as the case may be).

Eligibility to enter a CT payment plan U.K.

4 (1) A company that is liable to pay qualifying corporation tax for an accounting period may enter into a CT payment plan in respect of the tax in accordance with this Schedule.

(2) The CT payment plan may relate to—

(a) all of the qualifying corporation tax that the company is liable to pay for the accounting period, or

(b) only part of the qualifying corporation tax that the company is liable to pay for the accounting period.

(3) In this Schedule “deferred tax”, in relation to a CT payment plan, means the qualifying corporation tax to which the plan relates.

Application to enter a CT payment plan U.K.

5 A company that is liable to pay qualifying corporation tax for an accounting period may enter into a CT payment plan in respect of the tax only if—

(a) an application to enter into the plan is made to HMRC before the end of the period of 9 months beginning immediately after the accounting period, and

(b) the application contains details of all the matters which are required by paragraph 7 to be specified in the plan.

Entering into a CT payment plan U.K.

6 (1) A company enters into a CT payment plan if—

(a) the company agrees to pay, and an officer of Revenue and Customs agrees to accept payment of, the deferred tax in accordance with paragraphs 9 to 12,

(b) the company agrees to pay interest on the deferred tax in accordance with paragraph 8(3) and (5), and

(c) the plan meets the requirements of paragraph 7 as to the matters that must be specified in it.

(2) The CT payment plan may, in the circumstances mentioned in sub-paragraph (3), contain appropriate provision regarding security for HMRC in respect of the payment of the deferred tax.

(3) Those circumstances are where an officer of Revenue and Customs considers that agreeing to accept payment of the deferred tax in accordance with paragraphs 9 to 12 would present a serious risk as to collection of the tax in the absence of provision regarding security in respect of its payment.

(4) A CT payment plan is void if any information furnished by the company in connection with the plan does not fully and accurately disclose all facts and considerations material to the decision of the officer of Revenue and Customs to accept payment of the deferred tax in accordance with paragraphs 9 to 12.

Content of CT payment plan U.K.

7 (1) A CT payment plan entered into by a company must—

(a) specify the accounting period to which the plan relates (“the accounting period concerned”),

(b) specify the amount of qualifying corporation tax which, in the company's opinion, is payable by it in respect of the accounting period concerned,

(c) specify the amount of the deferred tax,

(d) identify each qualifying transaction of the company in respect of which gains or credits arose in the accounting period concerned, and

(e) specify in relation to each of those qualifying transactions—

(i) the name of the transferee,

(ii) the EEA state in which the transferee was resident at the time of the transaction, and

(iii) the amount of the deferred tax that is attributable to the transaction.

(2) The amount of the deferred tax that is attributable to a qualifying transaction of the company in respect of which a gain or credit arose in the accounting period concerned is—

where—

A is the gain or credit that arose in the accounting period concerned in respect of the qualifying transaction,

B is the total gains or credits that arose in the accounting period concerned in respect of all qualifying transactions of the company,

T is the amount of the deferred tax.

Effect of CT payment plan U.K.

8 (1) This paragraph applies where a CT payment plan is entered into by a company in accordance with this Schedule.

(2) As regards when the deferred tax is payable—

(a) the CT payment plan does not prevent the deferred tax becoming due and payable under section 59D or 59E, but

(b) the Commissioners for Her Majesty's Revenue and Customs—

(i) may not seek payment of the deferred tax otherwise than in accordance with paragraphs 9 to 12;

(ii) may make repayments in respect of any amount of the deferred tax paid, or any amount paid on account of the deferred tax, before the CT payment plan is entered into.

(3) As regards interest—

(a) the deferred tax carries interest in accordance with Part 9 as if the CT payment plan had not been entered into, and

(b) each time a payment is made in accordance with paragraphs 9 to 12, it is to be paid together with any interest payable on it.

(4) As regards penalties, the company will be liable to penalties for late payment of the deferred tax only if it fails to make payments in accordance with paragraphs 9 to 12 (see item 6ZAA of the Table at the end of paragraph 1 of Schedule 56 to the Finance Act 2009).

(5) Any of the deferred tax which is for the time being unpaid may be paid at any time before it becomes payable under paragraphs 9 to 12 together with interest payable on it to the date of payment.

The payment method: instalments U.K.

9 (1) Where a CT payment plan is entered into by a company, the deferred tax is due in 6 instalments of equal amounts as follows—

(a) the first instalment is due on the first day after the period of 9 months beginning immediately after the end of the accounting period to which the plan relates, and

(b) the other 5 instalments are due one on each of the first 5 anniversaries of that day.

(2) But see paragraphs 10 to 12 for circumstances in which all or part of the outstanding balance of the deferred tax becomes due otherwise than by those instalments.

The payment method: all of outstanding balance due U.K.

10 (1) Where at any time after a CT payment plan is entered into by a company an event mentioned in sub-paragraph (2) occurs the outstanding balance of the deferred tax is due on the date on which the next instalment of that tax would otherwise be due.

(2) The events are—

(a) the company becoming insolvent or entering administration;

(b) the appointment of a liquidator in respect of the company;

(c) an event under the law of a country or territory outside the United Kingdom corresponding to an event in paragraph (a) or (b);

(d) the company failing to pay any amount of the deferred tax for a period of 12 months after the date on which the amount becomes due;

(e) the company ceasing to be within the charge to corporation tax.

All of outstanding balance attributable to particular qualifying transaction due U.K.

11 (1) This paragraph applies where—

(a) a CT payment plan is entered into by a company,

(b) during the instalments period a trigger event occurs in relation to a qualifying transaction identified in the plan, and

(c) a trigger event has not previously occurred in relation to that qualifying transaction during the instalments period.

(2) A trigger event occurs in relation to a qualifying transaction if the transferee ceases to be resident in an EEA state and, on so ceasing, does not become resident another EEA state.

(3) A trigger event occurs in relation to a qualifying transaction if the company and the transferee cease to be members of the same group as one another.

(4) A trigger event occurs in relation to a qualifying transaction within sub-paragraph (2) or (5) of paragraph 3 if the transferee disposes of the asset that is the subject of the transaction.

(5) A trigger event occurs in relation to a qualifying transaction within sub-paragraph (3) or (4) of paragraph 3 if the transferee ceases to be a party to the loan relationship or derivative contract concerned.

(6) On the occurrence of the trigger event an amount of the deferred tax is due.

(7) The amount due is—

where—

“A” is the amount of the deferred tax that is attributable to the qualifying transaction (see paragraph 7(2)),

“B” is the amount of the deferred tax that has previously become due under paragraph 12 by reason of a partial trigger event occurring in relation to the qualifying transaction,

“O” is the amount of the deferred tax that is outstanding at the time of the trigger event, and

“T” is the amount of the deferred tax.

(8) In this paragraph “the instalments period” means the period—

(a) beginning with the time the CT payment plan is entered into, and

(b) ending with the day on which the final instalment of the deferred tax is due under paragraph 9.

Part of outstanding balance attributable to particular qualifying transaction due U.K.

12 (1) This paragraph applies where—

(a) a CT payment plan is entered into by a company,

(b) during the instalments period a partial trigger event occurs in relation to a qualifying transaction listed in the plan, and

(c) a trigger event has not previously occurred in relation to that qualifying transaction during the instalments period.

(2) A partial trigger event occurs in relation to a qualifying transaction within sub-paragraph (2) of paragraph 3 if the transferee disposes of part (but not all) of the asset that is the subject of the transaction.

Section 21(2)(b) of TCGA 1992 (meaning of part disposal of an asset) applies for the purposes of this sub-paragraph as it applies for the purposes of that Act.

(3) A partial trigger event occurs in relation to a qualifying transaction within sub-paragraph (3) or (4) of paragraph 3 if there is a disposal by the transferee of a right or liability under the loan relationship or derivative contract concerned which amounts to a related transaction (as defined in section 304 or 596 of CTA 2009 as the case may be).

(4) A partial trigger event occurs in relation to a qualifying transaction within sub-paragraph (5) of paragraph 3 if the transferee enters into a subsequent transaction which results in a reduction in the accounting value of the intangible fixed asset that is the subject of the qualifying transaction but does not result in the intangible fixed asset ceasing to be recognised in the transferee's balance sheet.

(5) In relation to an intangible fixed asset that has no balance sheet value (or no longer has a balance sheet value) sub-paragraph (4) applies as if, immediately before the subsequent transaction, it did have a balance sheet value.

(6) On the occurrence of the partial trigger event an amount of the deferred tax is due.

(7) The amount due is the amount that is just and reasonable having regard to the amount that would have been due had a trigger event occurred in relation to the qualifying transaction instead.

(8) In this paragraph “the instalments period” and “trigger event” have the same meaning as in paragraph 11.”

Penalties U.K.

3 (1) Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended as follows. U.K.

(2) In the Table at the end of paragraph 1, after entry 6ZA insert—

“6ZAA

Corporation tax

Amount payable under a CT payment plan entered into in accordance with Schedule 3ZC to TMA 1970

The later of— (a) the first day after the period of 12 months beginning immediately after the accounting period to which the CT payment plan relates, and (b) the date on which the amount is payable under the plan.”

(3) In paragraph 4 (amount of penalty in respect of certain late payments) in sub-paragraph (1) for “6ZA” substitute “ 6ZAA ”.

Commencement U.K.

4 (1) The amendments made by this Schedule— U.K.

(a) have effect in relation to accounting periods ending on or after 10 October 2018, and

(b) are to be treated as having come into force on 11 July 2019.

(2) The condition for entering into a CT payment plan that is specified in paragraph (a) of paragraph 5 of Schedule 3ZC to TMA 1970 is to be treated as met if an application to enter into the plan is made to HMRC on or before 30 June 2020.

Power of repeal U.K.

5 (1) The Treasury may by regulations— U.K.

(a) repeal section 59FB of TMA 1970,

(b) repeal Schedule 3ZC to TMA 1970, and

(c) amend Schedule 56 to FA 2009 in consequence of those repeals.

(2) Regulations under this paragraph may contain savings and transitional provisions.

(3) Regulations under this paragraph are to be made by statutory instrument.

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

Section 56

SCHEDULE 8 U.K. Digital services tax: returns, enquiries, assessments and appeals

PART 1 U.K. Introduction

1 (1) References in this Schedule— U.K.

(a) to the delivery of a DST return are to the delivery of a return by the responsible member for an accounting period where the return complies with the requirements of paragraph 2(2);

(b) to the filing date, in relation to a DST return, are to the last day of the period within which the return must be delivered.

(2) In this Schedule—

• “relevant person” has the same meaning as in section 47;

• “tax” means digital services tax;

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

PART 2 U.K. DST returns

DST returns U.K.

2 (1) A DST return for an accounting period must be delivered before the end of one year from the end of the accounting period. U.K.

(2) A DST return must—

(a) be in the specified form,

(b) contain specified information,

(c) contain an assessment (“a self-assessment”) of the amount of tax payable by the group for the accounting period (including a breakdown showing the amount of tax payable by each relevant person), and

(d) contain a declaration by the person making the return that the return is, to the best of the person's knowledge, correct and complete.

(3) In this paragraph “specified” means specified in a notice published by HMRC.

Amendment of return by responsible member U.K.

3 (1) This paragraph applies where a DST return has been delivered. U.K.

(2) The responsible member may amend the DST return by notice to HMRC.

(3) The notice must—

(a) be in the specified form, and

(b) contain specified information.

(4) In this paragraph “specified” means specified in a notice published by HMRC.

(5) No amendment may be made under this paragraph more than 12 months after the filing date.

PART 3 U.K. Duty to keep and preserve records

Duty to keep and preserve records U.K.

4 (1) This paragraph applies in relation to a group for an accounting period if the responsible member is required by section 56 to deliver a DST return for that period. U.K.

(2) The responsible member must—

(a) keep such records as may be needed to enable it to deliver a correct and complete DST return, and

(b) preserve those records in accordance with this paragraph.

(3) The records must be preserved until the end of the relevant day.

(4) In this paragraph “the relevant day” means—

(a) the sixth anniversary of the last day of the accounting period, or

(b) such earlier day as may be specified (and different days may be specified for different cases).

(5) In this paragraph “specified” means specified in a notice published by HMRC.

Preservation of information etc U.K.

5 U.K. The duty under paragraph 4 to preserve records may be satisfied—

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

(b) by preserving the information contained in them in any form and by any means,

subject to any conditions or exceptions specified in a notice published by HMRC.

PART 4 U.K. Enquiry into return

Notice of enquiry U.K.

6 (1) An officer of Revenue and Customs may enquire into a DST return if, within the time allowed, the officer gives notice to the responsible member of the officer's intention to do so. U.K.

(2) The time allowed is—

(a) if the return was delivered on or before the filing date, up to the end of the period of 12 months after the filing date;

(b) if the return was delivered after the 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 paragraph 3, up to and including the quarter day next following the first anniversary of the day on which the return was amended.

The quarter days are 31 January, 30 April, 31 July and 31 October.

(3) A return that has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) of the return under paragraph 3.

(4) A notice under this paragraph is referred to as a “notice of enquiry”.

Scope of enquiry U.K.

7 (1) An enquiry extends to anything contained in the return, or required to be contained in the return, including anything that relates— U.K.

(a) to the question of whether tax is chargeable in respect of the accounting period, or

(b) to the amount of tax so chargeable.

This is subject to the following exception.

(2) If the notice of enquiry is given as a result of an amendment of the return under paragraph 3—

(a) at a time when it is no longer possible to give notice of enquiry under paragraph 6(2)(a) or (b), or

(b) after an enquiry into a return has been completed,

the enquiry into the return is limited to matters to which the amendment relates or that are affected by the amendment.

Amendment of self-assessment during enquiry to prevent loss of tax U.K.

8 (1) If at a time when an enquiry is in progress into a DST return an officer of Revenue and Customs forms the opinion— U.K.

(a) that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and

(b) that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

the officer may by notice in writing to the responsible member amend the assessment to make good the deficiency.

(2) In the case of an enquiry that under paragraph 7(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) applies only so far as the deficiency is attributable to the amendment.

(3) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—

(a) beginning with the day on which notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.

Amendment of return by responsible member during enquiry U.K.

9 (1) This paragraph applies if a DST return is amended under paragraph 3 at a time when an enquiry is in progress into the return. U.K.

(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) While the enquiry is in progress, so far as the amendment affects the amount stated in the self-assessment as the amount of tax payable, the amendment does not take effect in relation to any matter to which it relates or which is affected by it.

(4) An amendment whose effect is deferred under sub-paragraph (3) takes effect as follows—

(a) if the conclusions in a closure notice state either—

(i) that the amendment was not taken into account in the enquiry, or

(ii) that no amendment of the return is required arising from the enquiry,

the amendment takes effect when the closure notice is issued (see paragraph 14);

(b) in any other case, the amendment takes effect as part of the amendments made by the closure notice.

(5) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—

(a) beginning with the day on which notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.

Referral of questions to the tribunal during enquiry U.K.

10 (1) At any time when an enquiry is in progress into a DST return any question arising in connection with the subject-matter of the enquiry may be referred to the tribunal for determination. U.K.

(2) Notice of referral must be given to the tribunal, jointly by the responsible member and an officer of Revenue and Customs.

(3) More than one notice of referral may be given under this paragraph in relation to an enquiry.

(4) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—

(a) beginning with the day on which notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.

Withdrawal of notice of referral U.K.

11 U.K. An officer of Revenue and Customs or the responsible member may withdraw a notice of referral under paragraph 10.

Effect of referral on enquiry U.K.

12 (1) While proceedings on a referral under paragraph 10 are in progress in relation to an enquiry— U.K.

(a) no closure notice may be given in relation to the enquiry (see paragraph 14), and

(b) no application may be made for a direction to give such a notice.

(2) For the purposes of this paragraph proceedings on a referral are in progress where—

(a) notice of referral has been given,

(b) the notice has not been withdrawn, and

(c) the questions referred have not been finally determined.

(3) For the purposes of sub-paragraph (2)(c) a question referred is finally determined when—

(a) it has been determined by the tribunal, and

(b) there is no further possibility of the determination being varied or set aside (disregarding any power to grant permission to appeal out of time).

Effect of determination U.K.

13 (1) The determination of a question referred to the tribunal under paragraph 10 is binding on the parties to the referral in the same way, and to the same extent, as a decision on a preliminary issue in an appeal. U.K.

(2) The determination must be taken into account by an officer of Revenue and Customs—

(a) in reaching the officer's conclusions on the enquiry, and

(b) in formulating any amendments of the return required to give effect to those conclusions.

(3) The question determined may not be reopened on an appeal, except to the extent that it could be reopened if it had been determined as a preliminary issue in that appeal.

Completion of enquiry U.K.

14 (1) An enquiry is completed when an officer of Revenue and Customs by notice (a “closure notice”) informs the responsible member that the enquiry is complete and states the conclusions reached in the enquiry. U.K.

(2) A closure notice must either—

(a) state that in the opinion of an officer of Revenue and Customs no amendment of the return is required, or

(b) make the amendments of the return required to give effect to the conclusions stated in the notice.

(3) A closure notice takes effect when it is issued.

Direction to complete enquiry U.K.

15 (1) The responsible member may apply to the tribunal for a direction that an officer of Revenue and Customs give a closure notice under paragraph 14 within a specified period. U.K.

(2) The tribunal hearing the application must give a direction unless satisfied that HMRC have reasonable grounds for not giving an enquiry closure notice within a specified period.

(3) Paragraphs 44 (settling of appeals by agreement) and 51 (tribunal determinations) apply to an application under sub-paragraph (1) as they apply to an appeal under paragraph 33, subject to any necessary modifications.

PART 5 U.K. HMRC determinations

Determination of tax chargeable if no return delivered U.K.

16 (1) An officer of Revenue and Customs may determine to the best of the officer's information and belief the total amount of tax payable by relevant persons for an accounting period (“an HMRC determination”) if the conditions in sub-paragraph (2) are met. U.K.

(2) The conditions in this sub-paragraph are met if—

(a) no DST return for the accounting period has been delivered by the end of the filing date, and

(b) the officer has reasonable grounds for believing the responsible member is under a duty to deliver a DST return for the accounting period.

(3) Notice of an HMRC determination—

(a) must state the date on which it is issued, and

(b) must be served on the responsible member.

(4) No HMRC determination may be made more than 3 years after the filing date.

Determination to have effect as a self-assessment U.K.

17 (1) An HMRC determination has effect for enforcement purposes as if it were a self-assessment (within the meaning of paragraph 2(2)). U.K.

(2) In sub-paragraph (1) “for enforcement purposes” means for the purposes of provisions providing for—

(a) tax-related penalties,

(b) collection and recovery of tax, and

(c) interest on overdue tax.

(3) Nothing in this paragraph affects any liability to a penalty for failure to deliver a return.

Determination superseded by actual self-assessment U.K.

18 (1) If, after an HMRC determination has been made, a DST return is delivered for the accounting period, the self-assessment included in the return supersedes the determination. U.K.

(2) Sub-paragraph (1) does not apply to a return delivered—

(a) more than 3 years after the day on which the power to make the determination first became exercisable, or

(b) more than 12 months after the date of the determination,

whichever is the later.

(3) Where—

(a) proceedings have been begun for the recovery of any tax charged by an HMRC determination, and

(b) before the proceedings are concluded the determination is superseded by a self-assessment,

the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.

(4) Where—

(a) action is being taken under Part 1 of Schedule 8 to F(No.2)A 2015 (enforcement of deduction from accounts) for the recovery of an amount (“the original amount”) of tax charged by an HMRC determination, and

(b) before that action is concluded, the determination is superseded by a self-assessment,

that action may be continued as if it were an action for the recovery of so much of the tax charged by the self-assessment as is due and payable, has not been paid and does not exceed the original amount.

PART 6 U.K. HMRC assessments

Assessments where loss of tax discovered U.K.

19 (1) If, in respect of an accounting period of a group, an officer of Revenue and Customs discovers that— U.K.

(a) an amount of tax that ought to have been assessed has not been assessed, or

(b) an assessment to tax is or has become insufficient,

the officer may make an assessment (a “discovery assessment”) in the amount or further amount which ought in the officer's opinion to be charged in order to make good to the Crown the loss of tax.

(2) This is subject to the restrictions in paragraph 20.

Restrictions on assessments U.K.

20 (1) If a DST return has been delivered in respect of the accounting period, the power to make a discovery assessment— U.K.

(a) may only be made in the two cases specified in sub-paragraphs (2) and (3), and

(b) may not be made in the circumstances specified in sub-paragraph (5).

(2) The first case is where the situation mentioned in paragraph 19(1) was brought about carelessly or deliberately on the part of—

(a) a relevant person, or

(b) a person acting on behalf of a relevant person.

(3) The second case is where an officer of Revenue and Customs, at the time the officer—

(a) ceased to be entitled to give a notice of enquiry into the return, or

(b) completed an enquiry into the return,

could not have been reasonably expected, on the basis of the information made available to the officer before that time, to be aware of the situation mentioned in paragraph 19(1).

(4) For this purpose information is regarded as made available to the officer of Revenue and Customs if—

(a) it is contained in the DST return for the accounting period in question or either of the two immediately preceding accounting periods,

(b) it is contained in any documents produced or information provided by the responsible member for the purposes of an enquiry into any such return, or

(c) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 19(1)—

(i) could reasonably be expected to be inferred by the officer of Revenue and Customs from information falling within paragraph (a) or (b), or

(ii) are notified in writing to an officer of Revenue and Customs by the responsible member or another person acting on the responsible member's behalf.

(5) No discovery assessment may be made if—

(a) the situation mentioned in paragraph 19(1) is attributable to a mistake in the return as to the basis on which the tax liability ought to have been calculated, and

(b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time it was made.

Time limits for discovery assessments U.K.

21 (1) The general rule is that no discovery assessment may be made more than 4 years after the end of the accounting period to which it relates. U.K.

(2) An assessment in a case involving a loss of tax brought about carelessly by a relevant person (or a person acting on their behalf) may be made at any time not more than 6 years after the end of the accounting period to which it relates.

(3) An assessment in a case involving a loss of tax—

(a) brought about deliberately by a relevant person (or a person acting on their behalf), or

(b) attributable to a failure by the responsible member to comply with an obligation under section 54,

may be made at any time not more than 20 years after the end of the accounting period to which it relates.

Assessment procedure etc U.K.

22 (1) Where notice of a discovery assessment is issued, the notice must be served on the responsible member. U.K.

(2) The notice must state—

(a) the tax due,

(b) the date on which the notice is issued, and

(c) the time within which any appeal against the assessment must be made.

(3) After notice of the assessment has been served under this paragraph, the assessment may not be altered except as provided for by or under this Part of this Act.

(4) Where an officer of Revenue and Customs has—

(a) decided to make an assessment to tax, and

(b) taken all other decisions needed for arriving at the amount of the assessment,

the officer may entrust to some other officer of Revenue and Customs the responsibility for completing the assessing procedure, whether by means involving the use of a computer or otherwise, including responsibility for serving notice of the assessment.

Liability to amounts charged by way of discovery assessment U.K.

23 (1) This paragraph applies where— U.K.

(a) notice of a discovery assessment has been issued under paragraph 22, and

(b) no appeal has been brought against the assessment under paragraph 33(1)(c).

(2) The responsible member is liable to the tax due, subject as follows.

(3) The responsible member may make a request to an officer of Revenue and Customs for one or more other relevant persons to be liable to the tax due (or any part of it).

(4) The request must be made within 30 days of the date of issue of the notice of assessment.

(5) Within 30 days of receiving the request, the officer must—

(a) either agree to the request or refuse it,

(b) notify the responsible member of the decision, and

(c) if the officer agrees to the request, give effect to it by making all necessary adjustments.

(6) An officer may not agree to the request unless satisfied it is reasonable in all the circumstances.

(7) A request or notification under this paragraph must be in writing.

PART 7 U.K. Relief in case of overpaid tax

Claim for relief for overpaid tax U.K.

24 (1) This paragraph applies where, in relation to a group, an amount has been paid by way of tax for an accounting period which was not tax due. U.K.

(2) The responsible member may make a claim to the Commissioners for repayment of the amount.

(3) The Commissioners must give effect to such a claim; but this is subject to—

(a) paragraph 26 (cases where no liability to give effect to claim), and

(b) paragraph 27 (power to enquire into claims).

(4) Except as provided for by or under this Part of this Act, the Commissioners are not liable to repay any amount paid by way of tax by reason of the fact it was not tax due.

(5) This paragraph is to be read with paragraph 25.

Making a claim U.K.

25 (1) A claim under paragraph 24 may not be made— U.K.

(a) if the amount paid is excessive by reason of a mistake in a DST return or returns, more than 4 years after the end of the accounting period to which the return (or, if more than one, the first return) relates, and

(b) otherwise, more than 4 years after the end of the accounting period in respect of which the amount was paid.

(2) A claim must—

(a) be in the specified form, and

(b) contain specified information.

(3) A claim may not be made by being included in a DST return.

(4) In this paragraph “specified” means specified in a notice published by HMRC.

Cases in which Commissioners not liable to give effect to claim U.K.

26 (1) If, or to the extent that, a claim under paragraph 24 falls within any of Cases A to D, the Commissioners are not liable to give effect to the claim. U.K.

(2) Case A is where, in relation to the group, there is unpaid DST liability for the accounting period.

(3) Case B is where the responsible member is or will be able to seek relief by taking other steps under this Part of this Act.

(4) Case C is where the responsible member—

(a) could have sought relief by taking such steps within a period that has now expired, and

(b) knew, or ought reasonably to have known, before the end of that period that such relief was available.

(5) Case D is where—

(a) the amount paid is excessive by reason of a mistake in calculating the amount of tax payable by the group for the accounting period, and

(b) the amount was calculated in accordance with the practice generally prevailing at the time.

(6) In this paragraph “DST liability” has the same meaning as in section 66.

Power to enquire into claims U.K.

27 (1) An officer of Revenue and Customs may enquire into a claim under paragraph 24 if the officer gives notice to the responsible member of the officer's intention to do within the time allowed. U.K.

(2) The time allowed is the period ending with the quarter day next following the first anniversary of the day on which the claim was made.

The quarter days are 31 January, 30 April, 31 July and 31 October.

(3) A claim enquired into under sub-paragraph (1) may not be the subject of a further notice under that sub-paragraph.

Completion of enquiry into claim etc U.K.

28 (1) An enquiry under paragraph 27 is completed when the officer by notice (a “closure notice”) informs the responsible member that the enquiry is complete and states the conclusions reached in the enquiry. U.K.

(2) A closure notice must either—

(a) state that in the opinion of an officer of Revenue and Customs no amendment of the claim is required, or

(b) make the amendments of the claim required to give effect to the conclusions stated in the notice.

(3) A closure notice takes effect when it is issued.

(4) The officer must give effect to any amendments made by the closure notice by making such adjustments as may be necessary whether—

(a) by way of assessment, or

(b) by discharge or repayment of tax.

(5) The adjustments must be made within 30 days of the date of issue of the closure notice.

(6) Paragraph 15 (direction to complete enquiry) applies in relation to an enquiry under paragraph 27 as it applies in relation to an enquiry under paragraph 6.

Assessment for excessive repayment etc U.K.

29 (1) This paragraph applies where— U.K.

(a) an amount has been paid by way of a repayment of tax, and

(b) the amount paid exceeded the amount which the Commissioners were liable at that time to repay.

(2) The Commissioners may—

(a) to the best of their judgment, assess the amount of the excess, and

(b) notify the amount to the responsible member.

Supplementary assessments U.K.

30 (1) This paragraph applies where— U.K.

(a) an assessment has been notified under paragraph 29, and

(b) it appears to the Commissioners that the amount which ought to have been assessed as due exceeds the amount that has already been assessed.

(2) The Commissioners may—

(a) on or before the last day on which the assessment under paragraph 29 could have been made, make a supplementary assessment of the amount of tax due, and

(b) notify the amount to the responsible member.

Further provision about assessments under paragraphs 29 and 30 U.K.

31 (1) An amount assessed and notified under paragraph 29 or 30 counts as a liability to digital services tax for the purposes of this Part of this Act. U.K.

(2) But sub-paragraph (1) does not have effect if, or to the extent that, the assessment has been withdrawn or reduced.

Time limits for assessments U.K.

32 U.K. An assessment under paragraph 29 or 30 may not be made more than 4 years after the end of the accounting period in which evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.

PART 8 U.K. Appeals against HMRC decisions on tax

Right of appeal U.K.

33 (1) An appeal may be brought against— U.K.

(a) an amendment of a DST return under paragraph 8 (amendment during enquiry to prevent loss of tax);

(b) an amendment made by a closure notice under paragraph 14;

(c) a discovery assessment (under paragraph 19);

(d) an amendment made by a closure notice under paragraph 28;

(e) an assessment made under paragraph 29 or 30.

(2) Any such appeal is to be brought by the responsible member (“the appellant”).

(3) If an appeal under sub-paragraph (1)(a) against an amendment of a self-assessment is made while an enquiry into the return is in progress none of the steps mentioned in paragraph 36(2)(a) to (c) may be taken in relation to the appeal until the enquiry is completed.

Notice of appeal U.K.

34 (1) Notice of appeal under paragraph 33 must be given to HMRC— U.K.

(a) in writing,

(b) within 30 days after the specified date.

(2) In sub-paragraph (1) “specified date” means—

(a) in relation to an appeal under paragraph 33(1)(a), the date on which the notice of amendment was issued;

(b) in relation to an appeal under paragraph 33(1)(b) or (d), the date on which the closure notice was issued;

(c) in relation to an appeal under paragraph 33(1)(c) or (e), the date on which the notice of assessment was issued.

(3) The notice of appeal must specify the grounds of appeal.

Late notice of appeal U.K.

35 (1) This paragraph applies in a case where— U.K.

(a) notice of appeal may be given to HMRC under this Schedule, but

(b) no notice is given before the relevant time limit.

(2) Notice may be given after the relevant time limit if—

(a) HMRC agree, or

(b) where HMRC do not agree, the tribunal gives permission.

(3) HMRC must agree to notice being given after the relevant time limit if the appellant has requested in writing that HMRC do so and HMRC are satisfied—

(a) that there was a reasonable excuse for not giving the notice before the relevant time limit, and

(b) that the request has been made without unreasonable delay.

(4) If a request of the kind mentioned in sub-paragraph (3) is made, HMRC must notify the appellant whether or not HMRC agree to the request.

(5) In this paragraph “relevant time limit”, in relation to notice of appeal, means the time before which the notice must be given (disregarding this paragraph).

Steps that may be taken following notice of appeal U.K.

36 (1) This paragraph applies if notice of appeal has been given to HMRC. U.K.

(2) In such a case—

(a) the appellant may notify HMRC that the appellant requires HMRC to review the matter in question (see paragraph 37),

(b) HMRC may notify the appellant of an offer to review the matter in question (see paragraph 38), or

(c) the appellant may notify the appeal to the tribunal.

(3) This paragraph does not prevent the matter in question from being dealt with in accordance with paragraph 44(1) and (2) (settling of appeals by agreement).

Right of appellant to require review U.K.

37 (1) If the appellant notifies HMRC that it requires them to review the matter in question, HMRC must— U.K.

(a) notify the appellant of HMRC's view of the matter in question within the relevant period, and

(b) review the matter in question in accordance with paragraph 39.

(2) Sub-paragraph (1) does not apply if—

(a) the appellant has already given a notification under this paragraph in relation to the matter in question,

(b) HMRC have given a notification under paragraph 40 in relation to the matter in question, or

(c) the appellant has notified the appeal to the tribunal.

(3) In this paragraph “the relevant period” means—

(a) the period of 30 days beginning with the day on which HMRC receive the notification from the appellant, or

(b) such longer period as is reasonable.

Offer of review by HMRC U.K.

38 (1) Sub-paragraphs (2) to (5) apply if HMRC notify the appellant of an offer to review the matter in question. U.K.

(2) The notification must include a statement of HMRC's view of the matter in question.

(3) If the appellant notifies HMRC within the acceptance period that it accepts the offer, HMRC must review the matter in question in accordance with paragraph 39.

(4) If the appellant does not accept the offer in accordance with sub-paragraph (3)—

(a) HMRC's view of the matter in question is treated as if it were contained in a settlement agreement (see paragraph 44(1)), but

(b) paragraph 44(3) (right to withdraw from agreement) does not apply in relation to that notional agreement.

(5) Sub-paragraph (4) does not apply to the matter in question if, or to the extent that, the appellant notifies the appeal to the tribunal under paragraph 42.

(6) HMRC may not take the action mentioned in sub-paragraph (1) at any time if before that time—

(a) HMRC have given a notification under this paragraph in relation to the matter in question,

(b) the appellant has given a notification under paragraph 37 in relation to the matter in question, or

(c) the appellant has notified the appeal to the tribunal.

(7) In this paragraph “acceptance period” means the period of 30 days beginning with the date of the document by which HMRC notify the appellant of the offer to review the matter in question.

Nature of review U.K.

39 (1) This paragraph applies if HMRC are required by paragraph 37 or 38 to review the matter in question. U.K.

(2) The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.

(3) For the purpose of sub-paragraph (2), HMRC must, in particular, have regard to steps taken before the beginning of the review—

(a) by HMRC in deciding the matter in question, and

(b) by any person in seeking to resolve disagreement about the matter in question.

(4) The review must take account of any representations made by the appellant at a stage which gives HMRC a reasonable opportunity to consider them.

(5) The review may conclude that HMRC's view of the matter in question is to be—

(a) upheld,

(b) varied, or

(c) cancelled.

(6) HMRC must notify the appellant of the conclusions of the review and their reasoning within—

(a) the period of 45 days beginning with the relevant day, or

(b) such other period as may be agreed.

(7) In sub-paragraph (6) “relevant day” means—

(a) in a case where the appellant required the review, the day when HMRC notified the appellant of HMRC's view of the matter in question;

(b) in a case where HMRC offered the review, the day when HMRC received notification of the appellant's acceptance of the offer.

(8) If HMRC do not give notice of the conclusions of the review within the period specified in sub-paragraph (6), the review is treated as having concluded that HMRC's view of the matter in question is upheld.

(9) If sub-paragraph (8) applies, HMRC must notify the appellant of the conclusions which the review is treated as having reached.

Effect of conclusions of review U.K.

40 (1) If HMRC give notice of the conclusions of a review (see paragraph 39)— U.K.

(a) the conclusions are to be treated as if they were contained in a settlement agreement (see paragraph 44(1)), but

(b) paragraph 44(3) (withdrawal from agreement) does not apply in relation to that notional agreement.

(2) Sub-paragraph (1) does not apply to the matter in question if, or to the extent that, the appellant notifies the appeal to the tribunal (see paragraphs 41 and 42).

Notifying appeal to tribunal after appellant has required review U.K.

41 (1) Where HMRC have notified an appellant under paragraph 37(1)(a) of their view of a matter to which an appeal under paragraph 33 relates, the appellant— U.K.

(a) may not notify the appeal to the tribunal before the beginning of the post-review period;

(b) may notify the appeal to the tribunal after the end of that period only if the tribunal gives permission.

(2) Except where sub-paragraph (3) applies, the post-review period is the period of 30 days beginning with the date of the document in which HMRC give notice of the conclusions of the review in accordance with paragraph 39(6).

(3) If the period specified in paragraph 39(6) ends without HMRC having given notice of the conclusions of the review, the post-review period is the period that—

(a) begins with the day following the last day of the period specified in paragraph 39(6), and

(b) ends 30 days after the date of the document in which HMRC give notice of the conclusions of the review in accordance with paragraph 39(9).

Notifying appeal to tribunal after HMRC have offered review U.K.

42 (1) Where HMRC have offered to review the matter to which a notice of an appeal under paragraph 33 relates, the right of the appellant at any time to notify the appeal to the tribunal depends on whether or not the appellant has accepted the offer at that time. U.K.

(2) If the appellant has accepted the offer, the appellant—

(a) may not notify the appeal to the tribunal before the beginning of the post-review period;

(b) may notify the appeal to the tribunal after the end of that period only if the tribunal gives permission.

(3) If the appellant has not accepted the offer, the appellant—

(a) may notify the appeal to the tribunal within the acceptance period;

(b) may notify the appeal to the tribunal after the end of that period only if the tribunal gives permission.

(4) In this paragraph—

(a) “acceptance period” has the same meaning as in paragraph 38;

(b) “post-review period” has the same meaning as in paragraph 41.

Interpretation of paragraphs 36 to 42 U.K.

43 (1) In paragraphs 36 to 42— U.K.

(a) “matter in question” means the matter to which an appeal relates;

(b) a reference to a notification is to a notification in writing.

(2) In paragraphs 36 to 42, a reference to the appellant includes a person acting on behalf of the appellant except in relation to—

(a) notification of HMRC's view under paragraph 37(1)(a);

(b) notification by HMRC of an offer of review (and of their view of the matter) under paragraph 38;

(c) notification of the conclusions of a review under paragraph 39(6) or (9).

(3) But if a notification falling within any of paragraphs (a) to (c) of sub-paragraph (2) is given to the appellant, a copy of the notification may also be given to a person acting on behalf of the appellant.

Settling of appeals by agreement U.K.

44 (1) In relation to an appeal of which notice has been given under paragraph 34, “settlement agreement” means an agreement in writing between the appellant and an officer of Revenue and Customs that is— U.K.

(a) entered into before the appeal is determined, and

(b) to the effect that the decision appealed against should be upheld without variation, varied in a particular manner or discharged or cancelled.

(2) Where a settlement agreement is entered into in relation to an appeal, the consequences are to be the same (for all purposes) as if, at the time the agreement was entered into, the tribunal had decided the appeal and had upheld the decision without variation, varied it in that manner or discharged or cancelled it, as the case may be.

(3) Sub-paragraph (2) does not apply if, within 30 days beginning with the date on which the settlement agreement was entered into, the appellant gives notice in writing to HMRC that it wishes to withdraw from the agreement.

(4) Sub-paragraph (5) applies where notice of an appeal has been given under paragraph 34 and—

(a) the appellant notifies HMRC, orally or in writing, that the appellant does not wish to proceed with the appeal, and

(b) HMRC do not, within 30 days after that notification, give the appellant notice in writing indicating that they are unwilling that the appeal should be withdrawn.

(5) Sub-paragraphs (1) to (3) have effect as if, at the date of the appellant's notification, the appellant and an officer of Revenue and Customs had agreed that the decision under appeal should be upheld without variation.

Appeal does not postpone recovery of tax U.K.

45 (1) Where there is an appeal under paragraph 33, the tax in question remains due and payable as if there had been no appeal. U.K.

(2) That is subject to paragraphs 46 and 47.

Application for payment of tax to be postponed U.K.

46 (1) If the appellant has grounds for believing that the amendment or assessment overcharges a relevant person to tax, the appellant may— U.K.

(a) first apply by notice in writing to HMRC within 30 days after the specified date for a determination by them of the amount of tax the payment of which should be postponed pending the determination of the appeal, and

(b) if the appellant does not agree with a determination made by HMRC under paragraph (a), refer the application for postponement to the tribunal within 30 days from the date of the document notifying HMRC's determination.

An application under paragraph (a) must state the amount believed to be overcharged to tax and the grounds for that belief.

(2) An application under sub-paragraph (1) may be made more than 30 days after the specified date if there is a change in the circumstances of the case as a result of which the appellant has grounds for believing that the relevant person is overcharged to tax by the decision appealed against.

(3) If, after an application under sub-paragraph (1) has been determined, there is a change in the circumstances of the case as a result of which either party has grounds for believing that the amount determined has become either excessive or insufficient, that party may (if the parties cannot agree on a revised determination) apply to the tribunal for a revised determination of that amount.

(4) An application under sub-paragraph (3) may be made at any time before the determination of the appeal.

(5) Paragraphs 35 (late notice of appeal) and 44 (settling of appeals by agreement) apply to an application under this paragraph as they apply to an appeal under paragraph 33, subject to any necessary modifications.

(6) The amount of tax of which payment is to be postponed pending the determination of the appeal is the amount (if any) by which it appears that there are reasonable grounds for believing that the relevant person is overcharged.

(7) A decision of the tribunal under this paragraph is final and conclusive (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).

(8) In this paragraph “specified date” has the meaning given by paragraph 34.

Agreement to postpone payment of tax U.K.

47 (1) If the appellant and HMRC agree that payment of an amount of tax should be postponed pending the determination of the appeal, the consequences are to be the same (for all purposes) as if the tribunal had, at the time when the agreement was entered into, made a direction to the same effect as the agreement. U.K.

This is without prejudice to the making of a further agreement or further direction.

(2) Where the agreement is not in writing—

(a) sub-paragraph (1) does not apply unless the fact that an agreement was entered into, and the terms agreed, are confirmed by notice in writing given by HMRC to the appellant or by the appellant to HMRC, and

(b) the reference in sub-paragraph (1) to the time when the agreement was entered into is to be read as a reference to the time when notice of confirmation was given.

(3) References in this paragraph to an agreement being entered into with an appellant, and to the giving of notice to or by the appellant, include references to an agreement being entered into, or notice being given to or by, a person acting on behalf of the appellant in relation to the appeal.

Assessments and self-assessments U.K.

48 (1) This paragraph applies where an appeal under paragraph 33 has been notified to the tribunal. U.K.

(2) If the tribunal decides that a relevant person is overcharged by a self-assessment or any other assessment, the assessment must be reduced accordingly.

(3) If the tribunal decides that a relevant person is undercharged to tax by a self-assessment or any other assessment, the assessment must be increased accordingly.

(4) In a case where neither sub-paragraph (2) or (3) apply, the assessment is to stand good.

Payment of tax where appeal has been determined U.K.

49 (1) This paragraph applies where an appeal under paragraph 33 has been notified to the tribunal. U.K.

(2) On the determination of the appeal, any tax overpaid must be repaid.

(3) On the determination of the appeal, section 51 has effect in relation to any relevant tax.

(4) The reference to “relevant tax” is to any tax payable in accordance with the determination, so far as it is tax—

(a) the payment of which had been postponed, or

(b) which would not have been charged by the amendment or assessment if there had been no appeal.

Payment of tax where there is a further appeal U.K.

50 (1) Where a party to an appeal to the tribunal under paragraph 33 makes a further appeal, tax is to be payable or repayable in accordance with the determination of the tribunal or court (as the case may be), even though the further appeal is pending. U.K.

(2) But if the amount charged by the assessment is altered by the order or judgment of the Upper Tribunal or court, then—

(a) if too much tax has been paid, the amount overpaid must be refunded, with any interest allowed by the order or judgment, and

(b) if too little tax has been charged, section 51 has effect in relation to the amount undercharged.

Tribunal determinations U.K.

51 U.K. The determination of the tribunal in relation to any proceedings under this Part of this Schedule is final and conclusive except as otherwise provided in sections 9 to 14 of the Tribunals, Courts and Enforcement Act 2007 (or in this Part of this Act).

PART 9 U.K. Penalties

Failure to deliver return: flat-rate penalty U.K.

52 (1) A person who is required to file a DST return and fails to do so by the filing date is liable to a penalty under this paragraph. U.K.

The person may also be liable to a penalty under paragraph 53 (tax-related penalties).

(2) The penalty is—

(a) £100, if the return is delivered within 3 months after the filing date;

(b) £200, in any other case.

(3) The amounts are increased to £500 and £1,000 (respectively) for a third successive failure.

(4) For this purpose, a “third successive failure” occurs where—

(a) the duty under section 56 (duty to file returns) applies in relation to a group for 3 successive accounting periods,

(b) a person was liable to a penalty under this paragraph in respect of each of the first 2 accounting periods, and

(c) a person is liable to a penalty under this paragraph in respect of the third accounting period.

Failure to deliver return: tax-related penalty U.K.

53 (1) A person who is required to file a DST return for an accounting period and fails to do so within 18 months from the end of that period is liable to a penalty under this paragraph. U.K.

This is in addition to any penalty under paragraph 52 (flat-rate penalty).

(2) The penalty is—

(a) 10% of the unpaid tax, if the return is filed within 2 years from the end of the accounting period;

(b) 20% of the unpaid tax, in any other case.

(3) The “unpaid tax” means the total amount of tax payable by members of the group for the accounting period which remains unpaid on the date when the liability to the penalty under this paragraph arises.

Failure to deliver a return: reasonable excuse U.K.

54 (1) Liability to a penalty under paragraph 52 or 53 in relation to a failure to make a return does not arise if the person (“P”) satisfies HMRC or (on appeal) the tribunal that there is a reasonable excuse for the failure. U.K.

(2) For that purpose—

(a) an insufficiency of funds is not a reasonable excuse,

(b) where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and

(c) where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.

Failure to keep and preserve records: penalty U.K.

55 (1) A person who fails to comply with paragraph 4 in relation to an accounting period is liable to a penalty not exceeding £3,000, subject to the following exception. U.K.

(2) No penalty is incurred if HMRC are satisfied that any facts which they reasonably require to be proved, and which would have been proved by the records, are proved by other documentary evidence provided to HMRC.

Assessment of penalty, etc U.K.

56 (1) If a person is liable to a penalty under this Part of this Schedule, HMRC must— U.K.

(a) assess the penalty, and

(b) notify the person.

(2) The assessment of a penalty—

(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.

(3) A supplementary assessment may be made in respect of a penalty if an earlier assessment is based on an amount of tax due and payable that is found by HMRC to be an underestimate or insufficient.

(4) Sub-paragraph (5) applies if—

(a) an assessment in respect of a penalty is based on a liability to tax that would have been shown in a return, and

(b) that liability is found by HMRC to be excessive.

(5) HMRC may by notice amend the assessment so it is based on the correct amount.

(6) An amendment under sub-paragraph (5)—

(a) does not affect when the penalty must be paid;

(b) may be made after the last day on which the assessment in question could have been made (under sub-paragraph (7)).

(7) An assessment of a penalty must be made before the end of the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of the liability to tax which would have been shown in the return, or

(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.

(8) In sub-paragraph (7) “appeal period” means the period during which—

(a) an appeal could be brought, or

(b) an appeal that has been brought has not been determined or withdrawn.

(9) A penalty must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

Special reduction U.K.

57 (1) If HMRC think it right because of special circumstances, they may reduce a penalty under this Part of this Schedule. U.K.

(2) In sub-paragraph (1) “special circumstances” does not include—

(a) ability to pay, or

(b) the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.

(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to—

(a) staying a penalty, and

(b) agreeing a compromise in relation to proceedings in respect of a penalty.

Right to appeal against penalty U.K.

58 U.K. A person may appeal against—

(a) a decision of HMRC that a penalty under this Part of this Schedule is payable by the person, or

(b) a decision of HMRC as to the amount of any such penalty.

Procedure on appeal against penalty U.K.

59 (1) Part 8 of this Schedule (apart from paragraphs 33, 45 to 47, and 49) applies in relation to an appeal under paragraph 58 as it applies in relation to an appeal under paragraph 33. U.K.

(2) On an appeal under paragraph 58, payment of the penalty is postponed pending determination of the appeal.

(3) On an appeal under paragraph 58(a) that is notified to the tribunal, the tribunal may confirm or cancel the decision.

(4) On an appeal under paragraph 58(b) that is notified to the tribunal, the tribunal may—

(a) confirm the decision, or

(b) substitute for the decision another decision that HMRC had power to make.

(5) If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 57—

(a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or

(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of that paragraph was flawed.

(6) In sub-paragraph (5)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

(7) On determination of an appeal under paragraph 58, where a penalty is payable it is to be paid before the end of 30 days beginning with the day on which the determination was issued.

Payments in respect of penalties U.K.

60 (1) This paragraph applies if— U.K.

(a) a person liable to a penalty under this Part of this Schedule has an agreement in relation to the penalty with one or more companies within the charge to corporation tax, and

(b) as a result of the agreement, the person receives a payment or payments in respect of the penalty that do not, in total, exceed the amount of the penalty.

(2) The payment—

(a) is not to be taken into account in calculating the profits for corporation tax purposes of either the person or the company making the payment, and

(b) is not to be regarded as a distribution for corporation tax purposes.

Section 66

SCHEDULE 9 U.K. DST payment notices

Introduction U.K.

1 (1) This Schedule applies where a payment notice has been given to a person (“the recipient”). U.K.

(2) In this Schedule—

• “DST liability”, “payment notice” and “relevant person” have the same meaning as in section 66;

• “relevant liability” means any DST liability in relation to the group for the accounting period.

Payment notice: effect U.K.

2 (1) For the purposes of the recovery from the recipient of any unpaid digital services tax, penalty or interest (including interest accruing after the date of the payment notice) the recipient is treated as if— U.K.

(a) any relevant liability of a person other than the recipient were a liability of the recipient (“the deemed liability”),

(b) the deemed liability became due and payable when the relevant liability became due and payable, and

(c) any payments made in respect of the relevant liability were made in respect of the deemed liability.

(2) Nothing in this paragraph gives the recipient a right to appeal against any assessment, determination or other decision giving rise to a relevant liability (or against the deemed liability).

Payment notice: appeals U.K.

3 (1) The recipient may appeal against the notice, within the period of 30 days beginning with the date on which it is given, on the ground that the person is not a relevant person. U.K.

(2) Where an appeal is made, anything required by the notice to be paid is due and payable as if there had been no appeal.

Payment notices: effect of making payment etc U.K.

4 (1) If the recipient pays any amount in pursuance of the notice the recipient may recover that amount from the person liable to pay it. U.K.

(2) In calculating the recipient's income, profits or losses for any tax purposes—

(a) a payment in pursuance of the notice is not allowed as a deduction, and

(b) the reimbursement of any such payment is not regarded as a receipt.

(3) Any amount paid by the recipient in pursuance of the notice is to be taken into account in calculating—

(a) the amount unpaid, and

(b) the amount due by virtue of any other payment notice relating to the amount unpaid.

(4) Similarly, any payment by the person liable to pay it of any of the amount unpaid is to be taken into account in calculating the amount due by virtue of the payment notice (or by virtue of any other payment notice relating to the amount unpaid).

Section 70

SCHEDULE 10 U.K. Digital services tax: minor and consequential amendments

Provisional Collection of Taxes Act 1968 U.K.

1 U.K. In section 1(1) of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions affecting income tax etc) after “the apprenticeship levy,” insert “ digital services tax, ”.

FA 1989 U.K.

2 (1) Section 178(2) of FA 1989 (setting of interest rates) is amended as follows. U.K.

(2) Omit the “and” at the end of paragraph (u).

(3) After paragraph (v) insert—

“(w) sections 67 and 68 of the Finance Act 2020.”

FA 2007 U.K.

3 (1) Schedule 24 to FA 2007 (penalties for errors) is amended as follows. U.K.

(2) In paragraph 1, in the table after the entry relating to accounts in connection with ascertaining liability to corporation tax insert—

“Digital services tax

DST return under paragraph 2 of Schedule 8 to FA 2020.”

FA 2008 U.K.

4 U.K. FA 2008 is amended as follows.

5 (1) Schedule 36 (information and inspection powers) is amended as follows. U.K.

(2) In paragraph 63(1) after paragraph (cb) insert—

“(cc) digital services tax,”.

6 (1) Schedule 41 (penalties for failure to notify etc) is amended as follows. U.K.

(2) In paragraph 1, in the table after the entry relating to diverted profits tax insert—

“Digital services tax

Obligation under section 54 of FA 2020 (obligation to notify HMRC when threshold conditions for digital services tax are met).”

(3) In paragraph 7 after sub-paragraph (4A) insert—

“(4B) In the case of a relevant obligation relating to digital services tax and an accounting period, the potential lost revenue is so much of any digital services tax payable by members of the group for the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.”

Section 89

SCHEDULE 11 U.K. Private pleasure craft

Amendments of HODA 1979 U.K.

Yn ddilys o 01/10/2021

1 U.K. HODA 1979 is amended as follows.

Yn ddilys o 01/10/2021

2 U.K. In section 6AB(4A) after “vehicles” insert “ etc ”.

Yn ddilys o 01/10/2021

3 (1) Section 12 is amended as follows. U.K.

(2) In subsection (1) after “vehicle” insert “ or as fuel for propelling a private pleasure craft ”.

(3) After subsection (2) insert—

“(2A) For provision relating to private pleasure craft that corresponds to subsection (2), and for the meaning of “private pleasure craft”, see section 14E.”

(4) In the heading at the end insert “ etc ”.

Yn ddilys o 01/10/2021

4 U.K. In section 13ZB(5), in paragraph (b) of the definition of “prohibited use” after “vehicle” insert “ or as fuel for a private pleasure craft ”.

Yn ddilys o 01/10/2021

5 U.K. In section 14A for subsection (4) substitute—

“(4) For the meaning of “private pleasure craft”, see section 14E.”

Yn ddilys o 01/10/2021

6 (1) Section 14B is amended as follows. U.K.

(2) In subsection (1)(a)—

(a) at the end of sub-paragraph (i) (but before the “or”) insert—

“(ia) used as fuel for propelling a private pleasure craft,”;

(b) in sub-paragraph (ii) for “so used” substitute “ used as mentioned in sub-paragraph (i) or (ia) ”.

(3) In the heading at the end insert “ etc ”.

Yn ddilys o 01/10/2021

7 (1) Section 14C is amended as follows. U.K.

(2) In subsection (1)—

(a) at the end of paragraph (b) insert “ or ”;

(b) omit the “or” at the end of paragraph (c);

(c) omit paragraph (d).

(3) Omit subsection (4A).

8 U.K. For section 14E substitute—

“14E Restrictions on use of certain fuel for private pleasure craft

(1) Restricted fuel must not—

(a) be used as fuel for propelling a private pleasure craft,

(b) be used as an additive or extender in any substance so used, or

(c) be taken into the fuel supply of an engine provided for propelling a vessel that is being used as a private pleasure craft.

(2) “Restricted fuel” means—

(a) rebated fuel, or

(b) marked oil that is not rebated fuel.

(3) “Rebated fuel” means rebated heavy oil, rebated biodiesel or rebated bioblend.

(4) “Marked oil” means any hydrocarbon oil in which a marker is present which is for the time being designated by regulations made by the Commissioners under subsection (5) below, other than marked oil which is in the fuel supply of an engine provided for propelling a vessel having been taken in to that supply in accordance with the law of the place where it was taken in.

(5) The Commissioners may for the purposes of this section designate any marker which appears to them to be used for the purposes of the law of any place (whether within or outside the United Kingdom) for identifying hydrocarbon oil that is not to be used as fuel for propelling private pleasure craft.

(6) In this Act “private pleasure craft” has the same meaning as in Article 14(1)(c) of Council Directive 2003/96/EC (taxation of energy products etc).

(7) The Treasury may by regulations provide for cases in which a vessel is treated as not being a private pleasure craft for the purposes of this Act (which may include cases in which the vessel is used in accordance with instructions given by an officer of HMRC for the purposes of removing restricted fuel from the vessel).”

Commencement Information

I1 Sch. 11 para. 8 in force at 29.6.2021 for specified purposes for N.I. by S.I. 2021/740, reg. 2 (with reg. 1(2))

Yn ddilys o 01/10/2021

9 U.K. For section 14F substitute—

“14F Penalties for contravention of section 14E

(1) Conduct within any of the following paragraphs attracts a penalty under section 9 of the Finance Act 1994 (civil penalties)—

(a) using restricted fuel in contravention of section 14E(1);

(b) becoming liable for restricted fuel being taken into the fuel supply of an engine—

(i) in contravention of section 14E(1), or

(ii) having reason to believe that it will be put to a particular use that is a prohibited use;

(c) supplying restricted fuel, having reason to believe that it will be put to a particular use that is a prohibited use.

(2) An offence is committed if—

(a) a person intentionally uses restricted fuel in contravention of section 14E(1),

(b) a person is liable for restricted fuel being taken into the fuel supply of an engine, and the restricted fuel was taken in with the intention by the person that restrictions imposed by section 14E(1) should be contravened, or

(c) a person supplies restricted fuel, intending that it will be put to a particular use that is a prohibited use.

(3) A person guilty of an offence under this section is liable—

(a) on summary conviction, to a fine not exceeding the maximum fine or imprisonment for a term not exceeding the maximum term (or both);

(b) on conviction on indictment, to a fine or imprisonment for a term not exceeding 7 years (or both).

(4) For the purposes of subsection (3)(a) the “maximum fine” is—

(a) in England and Wales, £20,000 or (if greater) 3 times the value of the heavy oil, biodiesel or bioblend in question;

(b) in Scotland or Northern Ireland, the statutory maximum or (if greater) 3 times the value of the heavy oil, biodiesel or bioblend in question.

(5) For the purposes of subsection (3)(a) the “maximum term” is—

(a) in England or Wales (subject to subsection (6)) or Scotland, 12 months;

(b) in Northern Ireland, 6 months.

(6) In relation to an offence committed before the commencement of section 282 of the Criminal Justice Act 2003 (increase in maximum term that may be imposed on summary conviction of offence triable either way), subsection (5)(a) has effect in England and Wales as if for “12 months” there were substituted “ 6 months ”.

(7) Restricted fuel is liable to forfeiture if it is—

(a) taken into the fuel supply of an engine as mentioned in section 14E(1),

(b) supplied as mentioned in subsection (1)(c) or (2)(c) above, or

(c) taken into the fuel supply of an engine provided for propelling a vessel at a time when it is not a private pleasure craft and remains in the vessel as part of that fuel supply at a later time when it becomes a private pleasure craft.

(8) If rebated fuel is used or taken into the fuel supply of an engine in contravention of section 14E(1), the Commissioners may—

(a) assess an amount equal to the rebate on like fuel at the rate in force at the time of the contravention as being excise duty due from any person who—

(i) used the rebated fuel, or

(ii) was liable for it being taken into the fuel supply, and

(b) notify the person or the person's representative accordingly.

(9) In this section—

• “prohibited use” means a use that contravenes section 14E(1);

• “rebated fuel” has the meaning given by section 14E(3);

• “restricted fuel” has the meaning given by section 14E(2).”

Yn ddilys o 01/10/2021

10 U.K. In section 20AAA(4)(a) after “vehicle” insert “ or as fuel for propelling a private pleasure craft ”.

Yn ddilys o 01/10/2021

11 U.K. In section 24 (control of use of duty-free and rebated oil) after subsection (3) insert—

“(3A) Subsection (3) does not apply to heavy oil, biodiesel or bioblend used for propelling a private pleasure craft if it is proved to the satisfaction of the Commissioners that the heavy oil, biodiesel or bioblend was taken into the vessel in accordance with the laws of the place where it was taken in.”

Yn ddilys o 01/10/2021

12 U.K. In section 27(1) at the appropriate place insert—

““private pleasure craft” has the meaning given by section 14E;”.

13 (1) Schedule 4 (regulations under section 24) is amended as follows. U.K.

(2) In paragraph 19 after “vehicle” insert “ or a vessel ”.

(3) In paragraph 20 after “vehicle” insert “ or a vessel ”.

(4) In paragraph 21—

(a) the existing provision becomes sub-paragraph (1) of that paragraph;

(b) in that sub-paragraph—

(i) after “vehicles” insert “ or vessels ”;

(ii) after “vehicle” insert “ or vessel ”;

(c) after that sub-paragraph insert—

“(2) In this paragraph “premises” includes any floating structure.

(3) Nothing in sub-paragraph (1) enables regulations to be made authorising the examination of the interior of part of a vessel if that part is used as a dwelling.”

Commencement Information

I2 Sch. 11 para. 13 in force at 29.6.2021 for specified purposes for N.I. by S.I. 2021/740, reg. 2 (with reg. 1(2))

Yn ddilys o 01/10/2021

14 (1) Schedule 5 (sampling) is amended as follows. U.K.

(2) In paragraph 1—

(a) in sub-paragraph (a)—

(i) for “motor vehicle” substitute “ vehicle or a vessel ”;

(ii) after “the vehicle” insert “ or the vessel ”;

(b) in sub-paragraph (b) for “motor vehicle” substitute “ vehicle or a vessel ”.

(3) In paragraph 2(3) after “vehicle” insert “ or the vessel ”.

(4) In paragraph 4 after sub-paragraph (6) insert—

“(6A) In sub-paragraphs (5) and (6) “land” includes any floating structure.”

(5) In paragraph 7 after “vehicle” insert “ or a vessel ”.

Yn ddilys o 01/10/2021

Other amendments U.K.

15 U.K. In Schedule 7A to VATA 1994, in Group 1, in Note 1(3) omit paragraph (b) (and the “or” immediately before it).

16 U.K. In Schedule 41 to FA 2008, in the table in paragraph 3(1) for the entry relating to section 14F(2) of HODA 1979 substitute—

“HODA 1979 section 14F(8)

Rebated heavy oil, biodiesel or bioblend”.

17 U.K. In Schedule 9 to TCTA 2018, in paragraph 6 omit sub-paragraphs (3) and (4).

General U.K.

18 U.K. Paragraphs 1 to 17 of this Schedule come into force on such day or days as the Treasury may by regulations appoint.

19 U.K. Different days may be appointed for different purposes or different areas.

20 U.K. The Treasury may by regulations make such transitional, transitory or saving provision as they consider appropriate in connection with the coming into force of any of those paragraphs (including provision conferring functions on the Commissioners for Her Majesty's Revenue and Customs).

21 U.K. The Treasury may by regulations make such amendments of any enactment [F1 , including Schedule 21 to FA 2021,] as they consider appropriate in consequence of the coming into force of any of paragraphs 1 to 17.

Textual Amendments

F1 Words in Sch. 11 para. 21 inserted (10.6.2021) by Finance Act 2021 (c. 26), s. 102(7)

22 U.K. A statutory instrument containing regulations under paragraph 21 is subject to annulment in pursuance of a resolution of the House of Commons.

23 U.K. Any power to make regulations under this Schedule is exercisable by statutory instrument.

Section 95

F2 SCHEDULE 12 U.K. Carbon emissions tax

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

Textual Amendments

F2 Sch. 12 omitted (10.6.2021) by virtue of Finance Act 2021 (c. 26), s. 112(2)

Section 100

SCHEDULE 13 U.K. Joint and several liability of company directors etc

Introduction U.K.

1 (1) This Schedule provides for an individual to be jointly and severally liable to the Commissioners for Her Majesty's Revenue and Customs, in certain circumstances involving insolvency or potential insolvency, for amounts payable to the Commissioners by a company. U.K.

(2) Such liability arises where the individual is given a notice under—

(a) paragraph 2(1) (tax avoidance and tax evasion cases),

(b) paragraph 3(1) (repeated insolvency and non-payment cases), or

(c) paragraph 5(1) (cases involving penalty for facilitating avoidance or evasion).

A notice under paragraph 2(1), 3(1) or 5(1) is referred to in this Schedule as a “joint liability notice”.

(3) In this Schedule “company” has the same meaning as in the Corporation Tax Acts (see section 1121 of CTA 2010), except that it also includes a limited liability partnership.

(4) Paragraph 18 makes provision about the application of this Schedule in relation to limited liability partnerships.

Tax avoidance and tax evasion cases U.K.

2 (1) An authorised HMRC officer may give a notice under this sub-paragraph to an individual if it appears to the officer that conditions A to E are met. U.K.

(2) Condition A is that a company has—

(a) entered into tax-avoidance arrangements, or

(b) engaged in tax-evasive conduct.

(3) Condition B is that—

(a) the company is subject to an insolvency procedure, or

(b) there is a serious possibility of the company becoming subject to an insolvency procedure.

(4) Condition C is that—

(a) the individual—

(i) was responsible (whether alone or with others) for the company entering into the tax-avoidance arrangements or engaging in the tax-evasive conduct, or

(ii) received a benefit which, to the individual's knowledge, arose (wholly or partly) from those arrangements or that conduct,

at a time when the individual was a director or shadow director of the company or a participator in it, or

(b) the individual took part in, assisted with or facilitated the tax-avoidance arrangements or the tax-evasive conduct at a time when the individual—

(i) was a director or shadow director of the company, or

(ii) was concerned, whether directly or indirectly, or was taking part, in the management of the company.

(5) For the purposes of sub-paragraph (4)(a)(ii)—

(a) an individual is treated as knowing anything that the individual could reasonably be expected to know;

(b) an individual is treated as receiving anything that is received by a person with whom the individual is connected (within the meaning given by section 993 of ITA 2007).

(6) Condition D is that there is, or is likely to be, a tax liability referable to the tax-avoidance arrangements or to the tax-evasive conduct (“the relevant tax liability”).

(7) Condition E is that there is a serious possibility that some or all of the relevant tax liability will not be paid.

(8) A notice under sub-paragraph (1) must—

(a) specify the company to which the notice relates;

(b) set out the reasons for which it appears to the officer that conditions A to E are met;

(c) state the effect of the notice;

(d) offer the individual a review of the decision to give the notice, and explain the effect of paragraph 11 (right of review);

(e) explain the effect of paragraph 13 (right of appeal).

(9) It must also—

(a) specify the amount of the relevant tax liability, if the existence and amount of that liability have been established;

(b) if not, indicate that the amount will be specified in a further notice.

(10) Once the existence and amount of the relevant tax liability have been established in a case to which sub-paragraph (9)(b) applies, an authorised HMRC officer must give a further notice specifying that amount.

(11) A notice under sub-paragraph (10) must—

(a) be given to the individual to whom the notice under sub-paragraph (1) was given;

(b) offer the individual a review of the decision to give the notice, and explain the effect of paragraph 11 (right of review);

(c) explain the effect of paragraph 13 (right of appeal).

(12) An individual who is given a notice under sub-paragraph (1) is jointly and severally liable with the company (and with any other individual who is given such a notice) for the relevant tax liability.

This is subject to paragraph 9 (interaction with penalties).

(13) The amount of the individual's liability under sub-paragraph (12) is taken to be the amount specified under sub-paragraph (9)(a) or (10). For provision under which the amount so specified may be varied, see—

(a) paragraph 10 (modification etc),

(b) paragraphs 11 and 12 (review), and

(c) paragraphs 13 and 14 (appeal).

Repeated insolvency and non-payment cases U.K.

3 (1) An authorised HMRC officer may give a notice under this sub-paragraph to an individual if it appears to the officer that conditions A to D are met. U.K.

(2) A notice under sub-paragraph (1) may not be issued after the end of the period of two years beginning with the day on which HMRC first became aware of facts sufficient for them reasonably to conclude that conditions A to D are met.

(3) Condition A is that there are at least two companies (“the old companies”) in the case of each of which—

(a) the individual had a relevant connection with the company at any time during the period of five years ending with the day on which the notice is given (“the five-year period”),

(b) the company became subject to an insolvency procedure during the five-year period, and

(c) at the time when the company became subject to that procedure—

(i) the company had a tax liability, or

(ii) the company had failed to submit a relevant return or other document, or to make a relevant declaration or application, that it was required to submit or make, or

(iii) the company had submitted a relevant return or other document, or had made a relevant declaration or application, but an act or omission on the part of the company had prevented HMRC from dealing with it.

In sub-paragraphs (ii) and (iii) “relevant” means relevant to the question whether the company had a tax liability or how much its tax liability was.

(4) Condition B is that another company (“the new company”) is or has been carrying on a trade or activity that is the same as, or is similar to, a trade or activity previously carried on by—

(a) each of the old companies (if there are two of them), or

(b) any two of the old companies (if there are more than two).

(5) Condition C is that the individual has had a relevant connection with the new company at any time during the five-year period.

(6) Condition D is that at the time when the notice is given—

(a) at least one of the old companies referred to in sub-paragraph (4)(a) or (b) has a tax liability, and

(b) the total amount of the tax liabilities of those companies—

(i) is more than £10,000, and

(ii) is more than 50% of the total amount of those companies' liabilities to their unsecured creditors.

(7) An individual who is given a notice under sub-paragraph (1) is jointly and severally liable with the new company (and with any other individual who is given such a notice)—

(a) for any tax liability that the new company has on the day on which the notice is given, and

(b) for any tax liability of the new company that arises—

(i) during the period of five years beginning with that day, and

(ii) while the notice continues to have effect.

(8) If an old company referred to in sub-paragraph (4)(a) or (b) has a tax liability on the day on which an individual is given a notice under sub-paragraph (1), the individual is also jointly and severally liable with that company (and with any other individual who is given such a notice) for that liability.

(9) Sub-paragraphs (7) and (8) are subject to paragraph 9 (interaction with penalties).

(10) For the purposes of this paragraph—

(a) an individual has a “relevant connection” with one of the old companies if the individual—

(i) is a director or shadow director of the company, or

(ii) is a participator in the company;

(b) an individual has a “relevant connection” with the new company if the individual—

(i) is a director or shadow director of the company,

(ii) is a participator in the company, or

(iii) is concerned, whether directly or indirectly, or takes part, in the management of the company.

(11) A notice under sub-paragraph (1) must—

(a) set out the reasons for which it appears to the officer giving the notice that conditions A to D are met;

(b) state the effect of the notice;

(c) specify any amounts for which the individual is liable under sub-paragraph (7)(a) or (8);

(d) offer the individual a review of the decision to give the notice, and explain the effect of paragraph 11 (right of review);

(e) explain the effect of paragraph 13 (right of appeal).

(12) The amount of the individual's liability under sub-paragraph (7)(a) or (8) is taken to be the amount specified under sub-paragraph (11)(c). For provision under which the amount so specified may be varied, see—

(a) paragraph 10 (modification etc),

(b) paragraphs 11 and 12 (review), and

(c) paragraphs 13 and 14 (appeal).

4 (1) The Treasury may by regulations made by statutory instrument— U.K.

(a) amend paragraph 3(6)(b)(i) by substituting a different amount for the one that is for the time being specified there;

(b) amend paragraph 3(6)(b)(ii) by substituting a different percentage for the one that is for the time being specified there.

(2) A statutory instrument containing regulations under this paragraph—

(a) is subject to annulment in pursuance of a resolution of the House of Commons, if the regulations increase the specified amount by no more than is necessary to reflect changes in the value of money;

(b) otherwise, may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

Cases involving penalty for facilitating avoidance or evasion U.K.

5 (1) An authorised HMRC officer may give a notice under this sub-paragraph to an individual if it appears to the officer that conditions A to D are met. U.K.

(2) Condition A is that—

(a) a penalty under any of the specified provisions (see sub-paragraph (6)) has been imposed on a company by HMRC, or

(b) proceedings have been commenced before the First-tier Tribunal for a penalty under any of those provisions to be imposed on a company.

(3) Condition B is that—

(a) the company is subject to an insolvency procedure, or

(b) there is a serious possibility of the company becoming subject to an insolvency procedure.

(4) Condition C is that the individual was a director or shadow director of the company, or a participator in it, at the time of any act or omission in respect of which—

(a) the penalty was imposed, or

(b) the proceedings for the penalty were commenced.

(5) Condition D is that there is a serious possibility that some or all of the penalty will not be paid.

(6) The specified provisions are—

(a) section 98C(1) of the TMA 1970 (penalties for breach of certain obligations relating to disclosure of tax avoidance schemes by promoters etc of schemes);

(b) paragraphs 2 and 3 of Schedule 35 to FA 2014 (promoters of tax avoidance schemes: penalties);

(c) paragraph 1 of Schedule 20 to FA 2016 (penalties for enablers of offshore tax evasion or non-compliance);

(d) Part 1 of Schedule 16 to F(No.2)A 2017 (penalties for enablers of defeated tax avoidance);

(e) Part 2 of Schedule 17 to that Act (penalties for breach of certain obligations relating to disclosure of tax avoidance schemes by promoters etc of schemes).

(7) A notice under sub-paragraph (1) must—

(a) specify the company to which the notice relates;

(b) set out the reasons for which it appears to the officer that conditions A to D are met;

(c) state the effect of the notice;

(d) offer the individual a review of the decision to give the notice, and explain the effect of paragraph 11 (right of review);

(e) explain the effect of paragraph 13 (right of appeal).

(8) It must also—

(a) specify the amount of the penalty, if sub-paragraph (2)(a) applies;

(b) if sub-paragraph (2)(b) applies, indicate that the amount will be specified in a further notice.

(9) Once the existence and amount of the penalty have been established in a case where sub-paragraph (2)(b) applies, an authorised HMRC officer must give a further notice specifying that amount.

(10) A notice under sub-paragraph (9) must—

(a) be given to the individual to whom the notice under sub-paragraph (1) was given;

(b) offer the individual a review of the decision to give the notice, and explain the effect of paragraph 11 (right of review);

(c) explain the effect of paragraph 13 (right of appeal).

(11) An individual who is given a notice under sub-paragraph (1) is jointly and severally liable with the company (and with any other individual who is given such a notice) for the amount of the penalty.

(12) The amount of the individual's liability under sub-paragraph (11) is taken to be the amount specified under sub-paragraph (8)(a) or (9). For provision under which the amount so specified may be varied, see—

(a) paragraph 10 (modification etc),

(b) paragraphs 11 and 12 (review), and

(c) paragraphs 13 and 14 (appeal).

“Tax-avoidance arrangements” U.K.

6 (1) In this Schedule “tax-avoidance arrangements” means— U.K.

(a) arrangements in respect of which a notice has been given under paragraph 12 of Schedule 43 to FA 2013, paragraph 8 or 9 of Schedule 43A to that Act or paragraph 8 of Schedule 43B to that Act (notice of final decision after considering opinion of GAAR Advisory Panel) stating that a tax advantage is to be counteracted under the general anti-abuse rule;

(b) arrangements in respect of which a notice has been given under section 204 of FA 2014 (follower notice) and not withdrawn;

(c) DOTAS arrangements within the meaning given by subsection (5) of section 219 of that Act (circumstances in which an accelerated payment notice may be given);

(d) arrangements to which HMRC have allocated a reference number under paragraph 22 of Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes) or in respect of which the promoter must provide prescribed information under paragraph 23 of that Schedule;

(e) arrangements in relation to which a relevant tribunal order has been made;

(f) arrangements that—

(i) are substantially the same as arrangements in relation to which a relevant tribunal order has been made (whether involving the same or different parties), and

(ii) have as their promoter the person specified as the promoter in the application for the order.

(2) For the purposes of sub-paragraph (1)(e) and (f) a relevant tribunal order is made in relation to arrangements if the tribunal—

(a) makes an order under—

(i) subsection (1)(a) of section 314A of FA 2004 (order to disclose), or

(ii) paragraph 4(1)(a) of Schedule 17 to F(No.2)A 2017 (corresponding provision for indirect taxes),

that a proposal for the arrangements is notifiable;

(b) makes an order under—

(i) subsection (1)(b) of that section, or

(ii) paragraph 4(1)(b) of that Schedule,

that the arrangements are notifiable;

(c) makes an order under—

(i) subsection (1)(a) of section 306A of FA 2004 (doubt as to notifiability), or

(ii) paragraph 5(1)(a) of Schedule 17 to F(No.2)A 2017,

that a proposal for the arrangements is to be treated as notifiable;

(d) makes an order under—

(i) subsection (1)(b) of that section, or

(ii) paragraph 5(1)(b) of that Schedule,

that the arrangements are to be treated as notifiable.

(3) Section 307 of FA 2004 (meaning of “promoter”) applies for the purposes of sub-paragraph (1)(f)(ii).

In that section as it so applies—

(a) references to a notifiable proposal are to be read as references to the proposal mentioned in sub-paragraph (2)(a) or (c);

(b) references to notifiable arrangements are to be read as references to the arrangements mentioned in sub-paragraph (2)(b) or (d).

“Tax-evasive conduct” U.K.

7 U.K. In this Schedule “tax-evasive conduct” means—

(a) giving to HMRC any deliberately inaccurate return, claim, document or information, or

(b) deliberately failing to comply with an obligation specified in the Table in paragraph 1 of Schedule 41 to FA 2008 (obligations to notify liability to tax, etc).

“Insolvency procedure” etc U.K.

8 (1) For the purposes of this Schedule a company is “subject to an insolvency procedure” if— U.K.

(a) it is undergoing, or has undergone, a relevant winding up (see sub-paragraphs (2) and (3)),

(b) it is in administration (see sub-paragraph (4)) or is a company to which sub-paragraph (5) applies,

(c) it is in receivership (see sub-paragraph (6)),

(d) a relevant scheme (see sub-paragraph (7)) has effect in relation to it, or

(e) its name has been struck off the register under section 1000 or 1003 of the Companies Act 2006.

(2) A company is “undergoing a relevant winding up” for the purposes of this paragraph if—

(a) it is being wound up under—

(i) the Insolvency Act 1986 (“the 1986 Act”), or

(ii) the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (“the 1989 Order”),

otherwise than by way of a members' voluntary winding up,

(b) it is being wound up by way of a members' voluntary winding up under the 1986 Act, or the 1989 Order, and the period of 12 months beginning with the day on which that winding up commenced has expired without the company having paid its debts in full together with interest at the official rate, or

(c) a corresponding situation to a winding up under the 1986 Act or the 1989 Order exists in relation to the company under the law of a country or territory outside the United Kingdom.

(3) A company has “undergone a relevant winding up” for the purposes of this paragraph if—

(a) it has been wound up under the 1986 Act, or the 1989 Order, otherwise than by way of a members' voluntary winding up,

(b) it has been wound up by way of a members' voluntary winding up under the 1986 Act, or the 1989 Order, without having paid its debts in full together with interest at the official rate, or

(c) it has been wound up or dissolved under the law of a country or territory outside the United Kingdom.

(4) A company is “in administration” for the purposes of this paragraph if—

(a) it is in administration within the meaning given by paragraph 1 of Schedule B1 to the 1986 Act or paragraph 2 of Schedule B1 to the 1989 Order, or

(b) there is in force in relation to it under the law of a country or territory outside the United Kingdom any appointment corresponding to the appointment of an administrator under either of those Schedules.

(5) This sub-paragraph applies to a company in respect of which—

(a) a notice under sub-paragraph (1) of paragraph 84 of Schedule B1 to the 1986 Act (moving from administration to dissolution) has been registered under sub-paragraph (3) of that paragraph, or

(b) a notice under sub-paragraph (1) of paragraph 85 of Schedule B1 to the 1989 Order (corresponding provision for Northern Ireland) has been registered under sub-paragraph (3) of that paragraph,

unless an order has been made in relation to that notice under sub-paragraph (7)(c) of that paragraph.

(6) A company is “in receivership” for the purposes of this paragraph if—

(a) there is (or, but for a temporary vacancy, would be) a person who in relation to the company—

(i) is acting as administrative receiver in accordance with Chapter 1 of Part 3 of the 1986 Act or Part 4 of the 1989 Order, or

(ii) is acting as receiver by virtue of section 51 of the 1986 Act, or

(b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company.

(7) In this paragraph “relevant scheme” means a compromise or arrangement—

(a) under Part 1 of the 1986 Act or Part 2 of the 1989 Order (company voluntary arrangements),

(b) under Part 26 of the Companies Act 2006 (arrangements and reconstructions), or

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

Interaction with penalties U.K.

9 U.K. The amount for which an individual is jointly and severally liable under paragraph 2 or 3 in respect of a company's tax liability is reduced by the amount of any penalty that the individual has paid in relation to that liability under any of the following provisions—

(a) section 61 of VATA 1994 (VAT evasion: liability of directors etc);

(b) section 28 of FA 2003 (liability of directors etc where body corporate liable to penalty for evasion of customs duty etc);

(c) paragraph 19 of Schedule 24 to FA 2007 (liability of company officer where company liable to penalty under that Schedule);

(d) paragraph 22 of Schedule 41 to FA 2008 (liability of company officer where company liable to penalty under that Schedule).

Withdrawal or modification of notice U.K.

10 (1) HMRC must withdraw a joint liability notice given to an individual, by giving a further notice to the individual, if— U.K.

(a) any of the relevant conditions were not met when the joint liability notice was given, or

(b) it is not necessary for the protection of the revenue for the notice to continue to have effect.

(2) In this Schedule “relevant conditions” means—

(a) conditions A to E in paragraph 2, in the case of a notice under paragraph 2(1);

(b) conditions A to D in paragraph 3, in the case of a notice under paragraph 3(1);

(c) conditions A to D in paragraph 5, in the case of a notice under paragraph 5(1).

(3) HMRC must withdraw a notice given to an individual under paragraph 3(1), by giving a further notice to the individual, if—

(a) at least one of the old companies (see paragraph 3(3)) is a company that—

(i) became subject to an insolvency procedure on the basis that it was being wound up by way of a members' voluntary winding up, and

(ii) pays its debts in full, together with interest at the official rate, after the end of the period of 12 months beginning with the day on which the members' voluntary winding up commenced but before the end of that winding up, and

(b) condition A in paragraph 3 would not have been met if that company, or each of them (if more than one), had not been subject to an insolvency procedure.

(4) For the purposes of sub-paragraph (3)(a)(ii), the end of a members' voluntary winding up of a company happens when—

(a) the company is dissolved in pursuance of the members' voluntary winding up, or

(b) the members' voluntary winding up becomes a creditors' voluntary winding up.

(5) HMRC may withdraw a notice given to an individual under this Schedule, by giving a further notice to the individual, if they think it appropriate to do so even though sub-paragraph (1) or (3) does not apply.

(6) Where an individual has been given a joint liability notice, HMRC may by further notice to the individual vary an amount specified—

(a) under paragraph 2(9)(a) or (10), paragraph 3(11)(c) or paragraph 5(8)(a) or (9), or

(b) under this sub-paragraph,

if it seems to them that the amount so specified is, or has become, too much or not enough.

(7) Subject to sub-paragraph (8), a joint liability notice that is withdrawn under this paragraph is of no effect.

(8) Where a joint liability notice is withdrawn under sub-paragraph (1)(b) or (3), the withdrawal of the notice does not give the individual a right to recover any amount that the individual has already paid to HMRC in response to the notice.

Right of review U.K.

11 (1) Where— U.K.

(a) an individual is given a joint liability notice or a notice under paragraph 2(10) or 5(9), and

(b) before the end of the permitted period the individual communicates to HMRC written acceptance of the offer of a review contained in the notice,

HMRC must review the decision to give the notice.

(2) For the purposes of this paragraph “the permitted period” begins with the day on which the notice mentioned in sub-paragraph (1)(a) is given, and ends—

(a) with the 30th day after that day, or

(b) if HMRC give the individual a further notice specifying a later day (an “extension notice”), with that day.

(3) An extension notice—

(a) must be given before the permitted period would (but for the notice) have expired;

(b) must specify a day that is at least 30 days after the date of the extension notice;

(c) may be given even if one or more extension notices have already been given.

(4) If the individual does not accept the offer of a review within the permitted period, HMRC must nevertheless review the decision in question if—

(a) after the end of the permitted period, the individual gives HMRC a notice requesting a review out of time, and

(b) HMRC are satisfied that the individual had a reasonable excuse for not accepting the offer within the permitted period, and that the individual made the request without unreasonable delay after the excuse ceased to apply.

(5) HMRC are not required to undertake or continue a review under this paragraph if the individual appeals under paragraph 13 against the notice in question.

Reviews under paragraph 11 U.K.

12 (1) This paragraph applies where HMRC are required to undertake a review under paragraph 11. U.K.

(2) The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.

(3) HMRC must, in particular, have regard to steps taken before the beginning of the review—

(a) by HMRC in reaching the decision, and

(b) by any person in seeking to resolve disagreement about the decision.

(4) The review must take account of any representations made by the individual at a stage which gives HMRC a reasonable opportunity to consider them.

(5) But it is not open to the individual to challenge the existence or amount of any tax liability of a company to which the joint liability notice in question relates.

(6) At the conclusion of the review—

(a) HMRC must set aside the notice to which the review relates if it appears to them that—

(i) any of the relevant conditions were not met when the notice was given, or

(ii) it is not necessary for the protection of the revenue for the notice to continue to have effect;

(b) HMRC must set aside the notice or vary an amount specified under paragraph 2(9)(a), 3(11)(c) or 5(8)(a), or (as the case may be) paragraph 2(10) or 5(9), if it appears to HMRC that the amount specified is incorrect;

(c) otherwise, HMRC must uphold the notice.

(7) HMRC must give the individual notice of the conclusions of the review and their reasoning—

(a) within the period of 45 days beginning with the relevant date, or

(b) within any other period that HMRC and the individual may agree.

(8) In sub-paragraph (7) “relevant date” means—

(a) the date on which HMRC received the individual's notification accepting the offer of a review (in a case falling within paragraph 11(1)), or

(b) the date on which HMRC decided to undertake the review (in a case falling within paragraph 11(4)).

(9) Where HMRC do not give notice of the conclusions within the time period specified in sub-paragraph (7)—

(a) the notice to which the review relates is treated as upheld, and

(b) HMRC must notify the individual accordingly.

(10) Where a joint liability notice is set aside under sub-paragraph (6)(a)(ii), the setting aside of the notice does not give the individual a right to recover any amount that the individual has already paid to HMRC in response to the notice.

Right of appeal U.K.

13 (1) An individual who has been given— U.K.

(a) a joint liability notice, or

(b) a notice under paragraph 2(10) or 5(9),

may appeal against the notice to the First-tier Tribunal.

(2) An appeal under this paragraph must be made before—

(a) the end of the period of 30 days beginning with the day on which the notice appealed against is given, or

(b) if later, the end of the permitted period (within the meaning given by paragraph 11(2)).

This is subject to sub-paragraphs (3) to (5).

(3) Where HMRC are required to undertake a review under paragraph 11 in respect of a notice, any appeal in respect of that notice must be made within the period of 30 days beginning with the date of the notice under paragraph 12(7) communicating the conclusions of the review (“the conclusion date”).

(4) Where HMRC are requested to undertake a review in accordance with paragraph 11(4)—

(a) no appeal may be made unless HMRC have notified the individual as to whether or not a review will be undertaken;

(b) if HMRC have notified the individual that a review will be undertaken, any appeal must be made within the period of 30 days beginning with the conclusion date;

(c) if HMRC have notified the individual that a review will not be undertaken, an appeal may be made only if the tribunal gives permission.

(5) Where paragraph 12(9) applies, any appeal must be made—

(a) after the end of the period specified in paragraph 12(7), and

(b) before the end of the period of 30 days beginning with the date of the notice under paragraph 12(9)(b).

(6) An appeal may be made after the end of the period specified in sub-paragraph (2), (3), (4)(b) or (5)(b) if the tribunal gives permission.

Appeals under paragraph 13 U.K.

14 (1) On an appeal under paragraph 13— U.K.

(a) the tribunal must set aside the notice appealed against if it appears to the tribunal that—

(i) any of the relevant conditions were not met when the notice was given, or

(ii) it is not necessary for the protection of the revenue for the notice to continue to have effect;

(b) the tribunal must set aside the notice or vary an amount specified under paragraph 2(9)(a), 3(11)(c) or 5(8)(a), or (as the case may be) paragraph 2(10) or 5(9), if it appears to the tribunal that the amount specified is incorrect;

(c) otherwise, the tribunal must uphold the notice.

(2) It is not open to an individual appealing under paragraph 13 to challenge the existence or amount of any tax liability of a company to which the joint liability notice in question relates.

(But see paragraph 15, under which the individual may in certain circumstances pursue an appeal in place of the company.)

(3) Where a notice is set aside under sub-paragraph (1)(a)(ii), the setting aside of the notice does not give the individual a right to recover any amount that the individual has already paid to HMRC in response to the notice.

Appeal in respect of liability of company U.K.

15 (1) Where— U.K.

(a) an individual is made jointly and severally liable by a joint liability notice for a tax liability of a company,

(b) an appeal by the company in respect of that liability has been commenced (whether before or after the joint liability notice is given) but has not been determined, and

(c) the company is subject to an insolvency procedure,

the individual is entitled to be a party to the proceedings, and may continue the appeal if the company is unable or unwilling to do so.

(2) Where—

(a) an individual is made jointly and severally liable by a joint liability notice for a tax liability of a company, and

(b) the company is subject to an insolvency procedure and does not make an appeal in respect of that liability,

an appeal in respect of that liability may be made in the name of the individual.

(3) An appeal made under sub-paragraph (2) may be commenced within the period of 30 days beginning with the day on which the joint liability notice is given (even if a time limit for the company to appeal has expired).

Proceedings for determination of penalty to be imposed on company U.K.

16 U.K. Where an individual is given a notice under paragraph 5(1) in a case where paragraph 5(2)(b) applies (proceedings commenced before First-tier Tribunal for penalty to be imposed on company), the individual is entitled to be a party to the proceedings referred to in that provision.

Cases where company has ceased to exist U.K.

17 (1) Where a joint liability notice is given to an individual at a time when the company to which the notice relates has ceased to exist, a reference in this Schedule to the individual being jointly and severally liable with the company for an amount is to be read as— U.K.

(a) a reference to the individual being solely liable for that amount (where no other individual is given a joint liability notice in respect of it), or

(b) a reference to the individual being jointly and severally liable for that amount with each other individual who is given a joint liability notice in respect of it.

(2) The tax liability at a particular time of a company which no longer exists at that time is treated for the purposes of this Schedule as being whatever it was immediately before the company ceased to exist.

Application to limited liability partnerships U.K.

18 (1) This paragraph has effect for the purposes of this Schedule as it applies in relation to a limited liability partnership. U.K.

(2) A reference to a director or shadow director of a company, or a participator in it, is to be read as a reference to a member or shadow member of the limited liability partnership.

(3) A reference in paragraph 8 to the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 is to that Act or Order as applied or incorporated by regulations under section 14 of the Limited Liability Partnerships Act 2000.

(4) A reference in paragraph 8 to the Companies Act 2006 is to that Act as applied or incorporated by regulations under section 15 of the Limited Liability Partnerships Act 2000.

Interpretation U.K.

19 U.K. In this Schedule—

• “authorised HMRC officer” means an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for Her Majesty's Revenue and Customs for the purpose of this Schedule;

• “company” has the meaning given by paragraph 1(3);

• “contract settlement” means an agreement in connection with a person's liability to make a payment to HMRC under or by virtue of an enactment;

• “creditors' voluntary winding up” has the meaning given by—

  (a)

  section 90 of the Insolvency Act 1986 (“the 1986 Act”) (in relation to England and Wales and Scotland), or

  (b)

  Article 76 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (“the 1989 Order”) (in relation to Northern Ireland);

• “director” has the meaning given by section 250 of the Companies Act 2006;

• “joint liability notice” has the meaning given by paragraph 1(2);

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

• “insolvency procedure” has the meaning given by paragraph 8;

• “limited liability partnership” means a body incorporated under the Limited Liability Partnerships Act 2000;

• “member”, in relation to a limited liability partnership, has the same meaning as in the Limited Liability Partnerships Act 2000 (see section 4 of that Act);

• “members' voluntary winding up” has the meaning given by—

  (a)

  section 90 of the 1986 Act (in relation to England and Wales and Scotland), or

  (b)

  Article 76 of the 1989 Order (in relation to Northern Ireland);

• “notice” means notice in writing;

• “notify” means notify in writing;

• “the official rate”, in relation to interest, means the rate payable under section 189 of the 1986 Act or (as the case may be) Article 160 of the 1989 Order;

• “participator” has the meaning given by section 454 of CTA 2010;

• “relevant conditions” has the meaning given by paragraph 10(2);

• “shadow director” has the meaning given by section 251 of the Companies Act 2006;

• “shadow member”, in relation to a limited liability partnership, means a person in accordance with whose directions or instructions the members of the partnership are accustomed to act (except that a person is not treated as a shadow member by reason only that the members of the partnership act on advice given by the person in a professional capacity);

• “tax-avoidance arrangements” has the meaning given by paragraph 6;

• “tax-evasive conduct” has the meaning given by paragraph 7;

• “tax liability”, in relation to a company, means any amount payable to the Commissioners for Her Majesty's Revenue and Customs by the company under or by virtue of an enactment or under a contract settlement;

• “unsecured creditor” has the meaning given by—

  (a)

  section 248 of the 1986 Act (in relation to England and Wales and Scotland);

  (b)

  Article 5(1) of the 1989 Order (in relation to Northern Ireland).

Section 101

SCHEDULE 14 U.K. Amendments relating to the operation of the GAAR

Introduction U.K.

1 U.K. Part 5 of FA 2013 (the general anti-abuse rule) is amended as follows.

Protecting adjustments under the GAAR before time limits expire U.K.

2 U.K. In section 209 (counteracting the tax advantage), for subsection (6) substitute—

“(6) But—

(a) the effect of adjustments made by an officer of Revenue and Customs by virtue of this section is suspended until the procedural requirements of Schedule 43, 43A or 43B have been complied with, and

(b) the power to make adjustments by virtue of this section is subject to any time limit imposed by or under any enactment other than this Part.

The provision made by this subsection needs to be read with sections 209AA to 209AC and has no effect on adjustments so far as made otherwise than by virtue of this section.”

3 U.K. After section 209 insert—

“209AA Protective GAAR notices

(1) An officer of Revenue and Customs may give a written notice (a “protective GAAR notice”) to a person stating that the officer considers—

(a) that a tax advantage might have arisen to the person from tax arrangements that are abusive, and

(b) that, on the assumption that the advantage does arise from tax arrangements that are abusive, it ought to be counteracted under section 209.

(2) The protective GAAR notice must be given within the ordinary assessing time limit applicable to the proposed adjustments.

(3) But if—

(a) a tax enquiry is in progress into a return made by the person, and

(b) the return relates to the tax in respect of which the specified adjustments under the protective GAAR notice are made,

the protective GAAR notice must instead be given no later than the time when the enquiry is completed.

(4) The protective GAAR notice must—

(a) specify the arrangements and the tax advantage, and

(b) specify the adjustments that, on the assumption that the advantage does arise from tax arrangements that are abusive, the officer proposes ought to be made.

(5) The adjustments specified in the protective GAAR notice have effect as if they are made by virtue of section 209.

(6) Notice of appeal may be given against the adjustments specified in the protective GAAR notice (whether or not the adjustments are also made otherwise than by virtue of section 209).

(7) Any appeal against the specified adjustments (whether made by virtue of section 209 or otherwise) is, as a result of this subsection, stayed—

(a) for a period of 12 months beginning with the day on which the protective GAAR notice is given, or

(b) if a final GAAR counteraction notice is given before the end of that period, for a period ending with the day on which the final GAAR counteraction notice is given.

(8) If, in the case of the specified adjustments (whether made by virtue of section 209 or otherwise)—

(a) notice of appeal is not given or notice of appeal is given but the appeal is subsequently withdrawn or determined by agreement, and

(b) no final GAAR counteraction notice is given,

the protective GAAR notice has effect for all purposes (other than the purposes of section 212A) as if it had been given as a final GAAR counteraction notice (and, accordingly, as if the GAAR procedural requirements had been complied with).

(9) In any case not falling within subsection (8)—

(a) the specified adjustments have no effect (so far as they are made by virtue of section 209) unless they (or lesser adjustments) are subsequently specified in a final GAAR counteraction notice, but

(b) the giving of the protective GAAR notice is treated as meeting the requirements of section 209(6)(b) in the case of that final GAAR counteraction notice.”

4 U.K. After section 209AA (as inserted by paragraph 3) insert—

“209AB Adjustments under section 209: notices under Schedule 43 or 43A

(1) This section applies in the case of any particular adjustments in respect of a particular period or matter (“the adjustments concerned”) if—

(a) a person is given a notice under paragraph 3 of Schedule 43 or a pooling notice or notice of binding under Schedule 43A (“the Schedule 43 or 43A notice”) that specifies the adjustments concerned (whether or not other adjustments are specified),

(b) the Schedule 43 or 43A notice is given within the relevant time limit applicable to the adjustments concerned, and

(c) the adjustments concerned have not been specified in a provisional counteraction notice under section 209A, or a protective GAAR notice under section 209AA, given before the time at which the Schedule 43 or 43A notice is given.

(2) The Schedule 43 or 43A notice is given within the relevant time limit if—

(a) it is given within the ordinary assessing time limit applicable to the adjustments concerned, or

(b) if a tax enquiry is in progress into a return made by the person and the particular adjustments concerned relate to the matters contained in the return, it is given no later than the time when the enquiry is completed.

(3) The adjustments concerned have effect as if they are made by virtue of section 209.

(4) If, in the case of the specified adjustments (whether made by virtue of section 209 or otherwise)—

(a) notice of appeal is not given or notice of appeal is given but the appeal is subsequently withdrawn or determined by agreement, and

(b) no final GAAR counteraction notice is given,

the Schedule 43 or 43A notice has effect for all purposes (other than the purposes of section 212A) as if it had been given as a final GAAR counteraction notice (and, accordingly, as if the GAAR procedural requirements had been complied with).

(5) In any case not falling within subsection (4)—

(a) the adjustments concerned have no effect (so far as they are made by virtue of section 209) unless they (or lesser adjustments) are subsequently specified in a final GAAR counteraction notice, but

(b) the giving of the Schedule 43 or 43A notice is treated as meeting the requirements of section 209(6)(b) in the case of that final GAAR counteraction notice.”

5 U.K. After section 209AB (as inserted by paragraph 4) insert—

“209AC Sections 209AA and 209AB: definitions

(1) In sections 209AA and 209AB—

• “final GAAR counteraction notice” means a notice given under—

  (a)

  paragraph 12 of Schedule 43,

  (b)

  paragraph 8 or 9 of Schedule 43A, or

  (c)

  paragraph 8 of Schedule 43B,

• “GAAR procedural requirements” means the procedural requirements of Schedule 43, 43A or 43B,

• “lesser adjustments” means adjustments specified in the final GAAR counteraction notice which assume a smaller tax advantage than was assumed in the protective GAAR notice or (as the case may be) the Schedule 43 or 43A notice, and

• “ordinary assessing time limit”, in relation to any adjustments, means the time limit imposed by or under any enactment other than this Part for the making of the adjustments.

(2) Expressions which are used in section 202 of FA 2014 (“tax enquiry”, and its being “in progress”, and “return”) have the same meaning in sections 209AA and 209AB as they have in that section (and references to completing a tax enquiry are to be read accordingly).”

6 U.K. Omit sections 209A to 209F (provisional counteraction notices).

7 U.K. In section 214(1) (interpretation of Part 5 of FA 2013), omit—

(a) the definition of “notified adjustments”, and

(b) the definition of “provisional counteraction notice”.

Minor amendments U.K.

8 U.K. In paragraph 11 of Schedule 43A (meaning of “equivalent arrangements”), omit “For the purposes of paragraph 1,”.

9 U.K. In paragraph 5 of Schedule 43C (penalty under section 212A), for sub-paragraphs (5) and (6) substitute—

“(5) An assessment of a penalty under this paragraph must be made before the end of the period of 12 months beginning with the date (or the latest of the dates) on which the counteraction mentioned in section 212A(1)(d) becomes final (within the meaning of section 210(8)).”

Commencement U.K.

10 U.K. The amendment made by paragraph 2 has effect in relation to adjustments made by an officer of Revenue and Customs by virtue of section 209 of FA 2013 on or after the commencement date.

11 U.K. The amendment made by paragraph 3 has effect in relation to notices given under section 209AA of FA 2013 on or after the commencement date (whenever the arrangements are entered into) but no notice may be given under that section in relation to any adjustments if a provisional counteraction notice has been given under section 209A of that Act before that date in respect of those adjustments.

12 U.K. The amendment made by paragraph 4 has effect in relation to notices given under Schedule 43 or 43A to FA 2013 on or after the commencement date (whenever the arrangements are entered into).

13 U.K. The amendment made by paragraph 6 does not affect the operation of sections 209A to 209F of FA 2013 in relation to provisional counteraction notices given under section 209A of that Act before the commencement date.

14 U.K. The amendment made by paragraph 9 has effect in relation to cases where a person becomes liable to a penalty under section 212A of FA 2013 on or after the commencement date.

15 U.K. In paragraphs 10 to 14 “the commencement date” means the date on which this Act is passed.

Section 102

SCHEDULE 15 U.K. Tax relief for scheme payments etc

Introductory U.K.

1 (1) This Schedule provides for the following in respect of qualifying payments— U.K.

(a) an exemption from income tax, and

(b) an exemption from capital gains tax.

(2) This Schedule also provides for a relief from inheritance tax in respect of qualifying payments (but see paragraph 5(4), which contains an excepted case).

Qualifying payments U.K.

2 (1) In this Schedule “qualifying payment” means a payment within any of sub-paragraphs (2) to (5). U.K.

(2) A payment is within this sub-paragraph if it is a payment under the Windrush Compensation Scheme.

(3) A payment is within this sub-paragraph if—

(a) it is made otherwise than under the Windrush Compensation Scheme,

(b) it is made to, or in respect of, a person who made a claim under that Scheme (which the person was eligible to make),

(c) it is made in connection with the same circumstances as gave rise to that person's eligibility to make that claim, and

(d) it is made by or on behalf of—

(i) the government of the United Kingdom,

(ii) the government of a part of the United Kingdom, or

(iii) a local or other public authority in the United Kingdom.

(4) A payment is within this sub-paragraph if it is a payment under the Troubles Permanent Disablement Payment Scheme established by the Victims' Payments Regulations 2020 (S.I. 2020/103) (as that scheme is amended from time to time).

(5) A payment is within this sub-paragraph if—

(a) it is a compensation payment of a description specified in regulations made by the Treasury by statutory instrument, and

(b) it is a payment made by or on behalf of—

(i) the government of the United Kingdom,

(ii) the government of a part of the United Kingdom,

(iii) the government of any other country or territory,

(iv) a local or other public authority in the United Kingdom, or

(v) a local or other public authority of a territory outside the United Kingdom.

(6) Regulations under sub-paragraph (5) may provide that a compensation payment of a description specified in the regulations is a qualifying payment only for the purposes of particular provisions of this Schedule.

(7) A statutory instrument containing regulations under sub-paragraph (5) is subject to annulment in pursuance of a resolution of the House of Commons.

(8) In this paragraph “the Windrush Compensation Scheme” means the scheme published by the Home Office on 3 April 2019 which provides compensation for certain categories of persons in recognition of difficulties arising out of an inability to demonstrate lawful immigration status (as that scheme is amended from time to time).

Exemption from income tax U.K.

3 (1) No liability to income tax arises in respect of a qualifying payment. U.K.

(2) A qualifying payment is to be ignored for all other income tax purposes.

(3) This paragraph has effect in relation to qualifying payments within paragraph 2(2) or (3) that are received on or after 3 April 2019.

(4) This paragraph has effect in relation to qualifying payments within paragraph 2(4) that are received on or after 29 May 2020.

(5) This paragraph has effect in relation to qualifying payments within paragraph 2(5) that are received on or after such date as is specified in the regulations concerned (which may be a date before the regulations are made).

Exemptions from capital gains tax U.K.

4 (1) A gain accruing on a disposal is not a chargeable gain if it accrues on— U.K.

(a) a disposal arising as a result of the forfeiture or surrender of rights, or as a result of refraining from exercising rights, in return for a qualifying payment,

(b) a disposal of the right to receive the whole or any part of a qualifying payment, or

(c) a disposal of an interest in any such right.

(2) In sub-paragraph (1)(c) “interest”, in relation to a right, means an interest as a co-owner of the right (whether it is owned jointly or in common and whether or not the interests of the co-owners are equal).

(3) This paragraph has effect—

(a) in a case where the qualifying payment concerned is within paragraph 2(2) or (3), in relation to disposals made on or after 3 April 2019,

(b) in a case where the qualifying payment concerned is within paragraph 2(4), in relation to disposals made on or after 29 May 2020, and

(c) in a case where the qualifying payment concerned is within paragraph 2(5), in relation to disposals made on or after such date as is specified in the regulations concerned (which may be a date before the regulations are made).

Relief from inheritance tax U.K.

5 (1) This paragraph applies where a qualifying payment is at any time received by a person or the personal representatives of a person (but see sub-paragraph (4)). U.K.

(2) The inheritance tax chargeable on the value transferred by the transfer made on the person's death is to be reduced by an amount equal to—

(a) the relevant percentage of the amount of the payment, or

(b) if lower, the amount of inheritance tax that would, apart from this paragraph, be chargeable on the value transferred.

(3) The “relevant percentage” means the percentage in the last row of the third column of the Table in Schedule 1 to IHTA 1984.

(4) This paragraph does not apply in a case where—

(a) the qualifying payment is within paragraph 2(3),

(b) the payment is made after the death of the person mentioned in paragraph (b) of paragraph 2(3), and

(c) the payment is made otherwise than to the personal representatives of that person.

(5) This paragraph has effect, in a case where the qualifying payment is within paragraph 2(2) or (3), in relation to deaths occurring on or after 3 April 2019.

(6) This paragraph has effect, in a case where the qualifying payment is within paragraph 2(4), in relation to deaths occurring on or after 29 May 2020.

(7) This paragraph has effect, in a case where the qualifying payment is within paragraph 2(5), in relation to deaths occurring on or after such date as is specified in the regulations concerned (which may be a date before the regulations are made).

Section 106

SCHEDULE 16 U.K. Taxation of coronavirus support payments

Accounting for coronavirus support payments referable to a business U.K.

1 (1) This paragraph applies if a person carrying on, or who carried on, a business (whether alone or in partnership) receives a coronavirus support payment that is referable to the business. U.K.

(2) So much of the coronavirus support payment as is referable to the business is a receipt of a revenue nature for income tax or corporation tax purposes and is to be brought into account in calculating the profits of that business—

(a) under the applicable provisions of the Income Tax Acts, or

(b) under the applicable provisions of the Corporation Tax Acts.

(3) Subject to paragraph 2(5), sub-paragraph (2) does not apply to an amount of a coronavirus support payment if—

(a) the business to which the amount is referable is no longer carried on by the recipient of the amount, and

(b) the amount is not referable to activities of the business undertaken at a time when it was being carried on by the recipient of the amount.

(4) If an amount of the coronavirus support payment is referable to more than one business or business activity, the amount is to be allocated between those businesses or activities on a just and reasonable basis.

(5) Paragraph 3 contains provision about when, in certain cases, an amount of a coronavirus support payment is, or is not, referable to a business for the purposes of this paragraph and paragraph 2.

(6) In this Schedule “business” includes—

(a) a trade, profession or vocation;

(b) a UK property business or an overseas property business;

(c) a business consisting wholly or partly of making investments.

Amounts not referable to activities of a business which is being carried on U.K.

2 (1) This paragraph applies if a person who carried on a business (whether alone or in partnership) receives a coronavirus support payment that— U.K.

(a) is referable to the business, and

(b) is not wholly referable to activities of the business undertaken while the business was being carried on by the recipient of the payment.

(2) So much of the coronavirus support payment as is referable to the business but which is not referable to activities of the business undertaken while the business was being carried on by the recipient of the payment is to be treated as follows.

(3) An amount referable to a trade, profession or vocation is to be treated as a post-cessation receipt for the purposes of Chapter 18 of Part 2 of ITTOIA 2005 or Chapter 15 of Part 3 of CTA 2009 (trading income: post-cessation receipts), and—

(a) in the application of Chapter 18 of Part 2 of ITTOIA 2005 to that amount, section 243 (extent of charge to tax) is omitted, and

(b) in the application of Chapter 15 of Part 3 of CTA 2009 to that amount, section 189 (extent of charge to tax) is omitted.

(4) An amount referable to a UK property business or an overseas property business is to be treated (in either case) as a post-cessation receipt from a UK property business for the purposes of Chapter 10 of Part 3 of ITTOIA 2005 or Chapter 9 of Part 4 of CTA 2009 (property income: post- cessation receipts), and—

(a) in the application of Chapter 10 of Part 3 of ITTOIA 2005 to that amount, section 350 (extent of charge to tax) is omitted, and

(b) in the application of Chapter 9 of Part 4 of CTA 2009 to that amount, section 281 (extent of charge to tax) is omitted.

(5) In any other case, for the purposes of paragraph 1(3)—

(a) the recipient of the amount is to be treated as if carrying on the business to which the amount is referable at the time of the receipt of the amount, and

(b) the amount is to be treated as if it were referable to activities undertaken by the business at that time.

(6) Where the recipient of the amount has incurred expenses that—

(a) are referable to the amount, and

(b) would be deductible in calculating the profits of the business if it were being carried on at the time of receipt of the amount,

the amount brought into account under paragraph 1(2) by virtue of sub-paragraph (5) is to be reduced by the amount of those expenses.

(7) But sub-paragraph (6) does not apply to expenses of a person that arise directly or indirectly from the person ceasing to carry on business.

Amounts referable to businesses in certain cases U.K.

3 (1) An amount of a coronavirus support payment made under an employment-related scheme— U.K.

(a) is referable to the business of the person entitled to the payment as an employer (even if the person is not for other purposes the employer of the employees to whom the payment relates), and

(b) is not referable to any other business (and no deduction for any expenses in respect of the same employment costs which are the subject of the payment is allowed in calculating the profits of any other business or in calculating the liability of any other person to tax charged under section 242 or 349 of ITTOIA 2005 or section 188 or 280 of CTA 2009 (post-cessation receipts)).

(2) A coronavirus support payment made under the self-employment income support scheme is referable to the business of the individual to whom the payment relates.

(3) Where an amount of a coronavirus support payment made under the self-employment income support scheme is brought into account under paragraph 1(2), the whole of the amount is to be treated as a receipt of a revenue nature of the tax year [F3 in which the payment was received] (irrespective of its treatment for accounting purposes).

(4) But sub-paragraph (3) does not apply to an amount of a coronavirus support payment made under the self-employment income support scheme in respect of a partner of a firm where the amount is distributed amongst the partners (rather than being retained by the partner).

(5) An amount of a coronavirus support payment made under the self-employment income support scheme in respect of a partner of a firm that is retained by the partner (rather than being distributed amongst the partners) is not to be treated as a receipt of the firm.

(6) Accordingly—

(a) the receipt is not to be included in the calculation of the firm's profits for the purposes of determining the share of profits or losses for each partner of the firm (see sections 849 to 850E of ITTOIA 2005 and sections 1259 to 1265 of CTA 2009), and

(b) the receipt is then to be added to the partner's share.

Textual Amendments

F3 Words in Sch. 16 para. 3(3) substituted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2021 (c. 26), s. 32(2)

Modifications etc. (not altering text)

C1 Sch. 16 para. 3 applied (with modifications) (with effect in accordance with reg. 1(2) of the amending S.I.) by The Taxation of Coronavirus Support Payments Regulations 2021 (S.I. 2021/92), regs. 1(1), 3(1)

Exemptions, reliefs and deductions U.K.

4 (1) An amount of a coronavirus support payment that relates only to mutual activities of a business that carries on a mutual trade is to be treated as if it were income arising from those activities (and accordingly the amount is not taxable). U.K.

(2) A coronavirus support payment is to be ignored when carrying out the calculation—

(a) in section 528(1) of ITA 2007 (incoming resources limit for charitable exemptions);

(b) in section 482(1) of CTA 2010 (incoming resources limit for charitable companies);

(c) in section 661CA(1) of CTA 2010 (income condition for community amateur sports clubs).

(3) A coronavirus support payment made under an employment-related scheme is to be ignored when carrying out the calculation—

(a) in section 662(2) of CTA 2010 (exemption from corporation tax for UK trading income of community amateur sports clubs);

(b) in section 663(2) of that Act (exemption from corporation tax for UK property income of community amateur sports clubs).

(4) No relief under Chapter 1 of Part 6A of ITTOIA 2005 (trading allowance) is given to an individual on an amount of a coronavirus support payment made under the self-employment income support scheme brought into account under paragraph 1(2) as profits of that tax year.

(5) For the purposes of that Part, such an amount is to be ignored when calculating the individual's “relevant income” for that tax year under Chapter 1 of that Part.

(6) Neither section 57 of ITTOIA 2005 nor section 61 of CTA 2009 (deductions for pre-trading expenses) (including as they apply by virtue of sections 272 and 272ZA of ITTOIA 2005 and section 210 of CTA 2009) apply to employment costs where an amount of a coronavirus support payment made under an employment-related scheme relates to those costs.

Charge where employment costs deductible by another U.K.

5 (1) Income tax is charged on an amount of a coronavirus support payment made under an employment-related scheme if conditions A and B are met. U.K.

(2) Condition A is that the amount is neither brought into account under paragraph 1(2) in calculating the profits of a business carried on by the person entitled to the payment as an employer nor treated, by virtue of paragraph 2(3) or (4), as a post-cessation receipt arising from the carrying on of such a business.

(3) Condition B is that expenses incurred by another person in respect of the same employment costs which are the subject of the coronavirus support payment and to which the amount relates are deductible—

(a) in calculating the profits of a business carried on by that other person (for income or corporation tax purposes), or

(b) in calculating the liability of that other person to tax charged under section 242 or 349 of ITTOIA 2005 or section 188 or 280 of CTA 2009 (post-cessation receipts).

(4) Tax is charged under sub-paragraph (1) on the whole of the amount to which that sub-paragraph applies.

(5) The person liable for tax charged under sub-paragraph (1) is the person entitled to the coronavirus support payment as an employer.

(6) Section 3(1) of CTA 2009 (exclusion of charge to income tax) does not apply to an amount of a coronavirus support payment that is charged under this paragraph.

Charge where no business carried on U.K.

6 (1) Tax is charged on an amount of a coronavirus support payment, other than a payment made under an employment-related scheme or the self-employment income support scheme, if— U.K.

(a) the amount is neither brought into account under paragraph 1(2) in calculating the profits of a business nor treated as a post-cessation receipt by virtue of paragraph 2(3) or (4), and

(b) at the time the coronavirus support payment was received, the recipient did not carry on a business whose profits are charged to tax and to which the payment could be referable.

(2) In this paragraph “tax” means—

(a) corporation tax, in the case of a company that (apart from this paragraph) is chargeable to corporation tax, or to any amount chargeable as if it was corporation tax, or

(b) income tax, in any other case.

(3) Tax is charged under sub-paragraph (1) on the whole of the amount to which that sub-paragraph applies.

(4) The person liable for tax charged under sub-paragraph (1) is the recipient of that amount.

(5) Where income tax is charged under sub-paragraph (1), sections 527 and 528 of ITA 2007 (exemption and income condition for charitable trusts) have effect as if sub-paragraph (1) were a provision to which section 1016 of that Act applies.

(6) Where corporation tax is charged under sub-paragraph (1), sections 481 and 482 of CTA 2010 (exemption and income condition for charitable companies) have effect as if sub-paragraph (1) were a provision to which section 1173 of that Act applies.

Modification of the Tax Acts U.K.

7 U.K. The Treasury may by regulations modify the application of any provision of the Tax Acts that affects (or that otherwise would affect) the treatment of—

(a) receipts brought into account under paragraph 1(2),

(b) amounts treated as post-cessation receipts under paragraph 2(3) or (4), or

(c) amounts charged under paragraph 5(1) or 6(1).

Charge if person not entitled to coronavirus support payment U.K.

8 (1) A recipient of an amount of a coronavirus support payment is liable to income tax under this paragraph if the recipient is not entitled to the amount in accordance with the scheme under which the payment was made. U.K.

(2) But sub-paragraph (1) does not apply to an amount of a coronavirus support payment made under a coronavirus business support grant scheme or the coronavirus statutory sick pay rebate scheme.

(3) For the purposes of this Schedule, references to a person not being entitled to an amount include, in the case of an amount of a coronavirus support payment made under the coronavirus job retention scheme [F4 or the self-employment income support scheme], a case where the person ceases to be entitled to retain the amount after it was received—

(a) because of a change in circumstances, or

(b) [F5 in the case of a payment made under the coronavirus job retention scheme,] because the person has not, within a reasonable period, used the amount to pay the costs which it was intended to reimburse.

(4) Income tax becomes chargeable under this paragraph—

(a) in a case where the person was entitled to an amount of a coronavirus support payment paid under the coronavirus job retention scheme [F6 or the self-employment income support scheme] but subsequently ceases to be entitled to retain it, at the time the person ceases to be entitled to retain the amount, or

(b) in any other case, at the time the coronavirus support payment is received.

(5) The amount of income tax chargeable under this paragraph is the amount equal to so much of the coronavirus support payment—

(a) as the recipient is not entitled to, and

(b) as has not been repaid to the person who made the coronavirus support payment.

(6) Where income tax which is chargeable under this paragraph is the subject of an assessment (whether under paragraph 9 or otherwise)—

(a) paragraphs 1 to 6 do not apply to the amount of the coronavirus support payment that is the subject of the assessment,

(b) that amount is not, for the purposes of Step 1 of the calculation in section 23 of ITA 2007 (calculation of income tax liability), to be treated as an amount of income on which the taxpayer is charged to income tax (but see paragraph 10 which makes further provision about the application of that section), and

(c) that amount is not to be treated as income of a company for the purposes of section 3 of CTA 2009 (and accordingly the exclusion of the application of the provisions of the Income Tax Acts to the income of certain companies does not apply to the receipt of an amount charged under this paragraph).

(7) No loss, deficit, expense or allowance may be taken into account in calculating, or may be deducted from or set off against, any amount of income tax charged under this paragraph.

(8) In calculating profits or losses for the purposes of corporation tax, no deduction is allowed in respect of the payment of income tax charged under this paragraph.

(9) For the purposes of this paragraph and paragraphs 9(4) and 14, a firm is not to be regarded as receiving an amount of a coronavirus support payment made under the self-employment income support scheme in respect of a partner of that firm that is retained by the partner (rather than being distributed amongst the partners).

Textual Amendments

F4 Words in Sch. 16 para. 8(3) inserted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2021 (c. 26), s. 32(3)(a)(i)

F5 Words in Sch. 16 para. 8(3)(b) inserted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2021 (c. 26), s. 32(3)(a)(ii)

F6 Words in Sch. 16 para. 8(4)(a) inserted (with effect in accordance with s. 32(4) of the amending Act) by Finance Act 2021 (c. 26), s. 32(3)(b)

Modifications etc. (not altering text)

C2 Sch. 16 para. 8(2) applied (with modifications) (with effect in accordance with reg. 1(2) of the amending S.I.) by The Taxation of Coronavirus Support Payments Regulations 2021 (S.I. 2021/92), regs. 1(1), 3(2)

Assessments of income tax chargeable under paragraph 8 U.K.

9 (1) If an officer of Revenue and Customs considers (whether on the basis of information or documents obtained by virtue of the exercise of powers under Schedule 36 to FA 2008 or otherwise) that a person has received an amount of a coronavirus support payment to which the person is not entitled, the officer may make an assessment in the amount which ought in the officer's opinion to be charged under paragraph 8. U.K.

(2) An assessment under sub-paragraph (1) may be made at any time, but this is subject to sections 34 and 36 of TMA 1970.

(3) Parts 4 to 6 of TMA 1970 contain other provisions that are relevant to an assessment under sub-paragraph (1) (for example, section 31 makes provision about appeals and section 59B(6) makes provision about the time to pay income tax payable by virtue of an assessment).

(4) Where income tax is chargeable under paragraph 8 in relation to an amount of a coronavirus support payment received by a firm—

(a) an assessment (under sub-paragraph (1) or otherwise) may be made on any of the partners in respect of the total amount of tax that is chargeable,

(b) each of the partners is jointly and severally liable for the tax so assessed, and

(c) if the total amount of tax that is chargeable is included in a return under section 8 of TMA 1970 made by one of the partners, the other partners are not required to include the tax in returns made by them under that section.

Calculation of income tax liability U.K.

10 (1) Section 23 of ITA 2007 (calculation of income tax liability) applies in relation to a person liable to income tax charged under paragraph 8 as if that paragraph were included in the lists of provisions in subsections (1) and (2) of section 30 of that Act (amounts of tax added at step 7). U.K.

(2) For the purposes of paragraph 7(2) of Schedule 41 to FA 2008, a relevant obligation relating to income tax charged under paragraph 8 of this Schedule relates to a tax year if the income tax became chargeable in that tax year.

(3) But this paragraph does not apply to a company to which paragraph 11 (companies chargeable to corporation tax) applies.

Calculation of tax liability: companies chargeable to corporation tax U.K.

11 (1) This paragraph applies where a person liable to income tax charged under paragraph 8 is a company that is chargeable to corporation tax, or to any amount chargeable as if it was corporation tax, in relation to a period within which the income tax became chargeable. U.K.

(2) Part 5A of TMA 1970 (payment of tax) applies in relation to that company as if—

(a) the reference to “corporation tax” in subsection (1) of section 59D (general rule as to when corporation tax is due and payable) included income tax charged under paragraph 8 of this Schedule;

(b) an amount of income tax charged under paragraph 8 of this Schedule were an amount within subsection (6) of section 59F (arrangements for paying tax on behalf of group members);

(c) any reference in section 59G (managed payment plans) to “corporation tax” included income tax charged under paragraph 8 of this Schedule.

(3) Part 9 of that Act (interest on overdue tax) applies in relation to that company as if—

(a) the references in section 86 (interest on overdue income tax and capital gains tax) to “income tax” did not include income tax charged under paragraph 8 of this Schedule;

(b) in subsection (1) of section 87A (interest on overdue corporation tax) the reference to “corporation tax” included income tax charged under paragraph 8 of this Schedule.

(4) Schedule 18 to FA 1998 (company tax returns etc.) applies in relation to that company as if—

(a) any reference in that Schedule to “tax”, other than the references in paragraph 2 of that Schedule (duty to give notice of chargeability), included income tax charged under paragraph 8 of this Schedule, and

(b) in paragraph 8(1) of that Schedule (calculation of tax payable), at the end there were inserted— “ Sixth step Add any amount of income tax chargeable under paragraph 8 of Schedule 16 to the Finance Act 2020. ”

(5) But the modifications of that Schedule are to be ignored for the purposes of the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175).

(6) Schedule 41 to FA 2008 applies in relation to that company as if —

(a) the references to “income tax” in paragraph 7(2) did not include income tax charged under paragraph 8 of this Schedule;

(b) the reference to “corporation tax” in paragraph 7(3) included income tax charged under paragraph 8 of this Schedule;

(but see paragraph 13(5) of this Schedule which has the effect that paragraph 7 of that Schedule does not apply in certain circumstances).

(7) For the purposes of paragraph 7(3) of Schedule 41 to FA 2008 (as modified by sub-paragraph (6)), a relevant obligation relating to income tax charged under paragraph 8 of this Schedule relates to an accounting period if the income tax became chargeable in that period.

Notification of liability under paragraph 8 U.K.

12 (1) Section 7 of TMA 1970 (notice of liability to income tax and capital gains tax) applies in relation to income tax chargeable under paragraph 8 as provided for in sub-paragraphs (2) to (5). U.K.

(2) Subsection (1) has effect as if paragraph (b) (and the “and” before it) were omitted.

(3) Subsection (1) has effect as if the reference to “the notification period” were to the period commencing on the day on which the income tax became chargeable and ending on the later of—

(a) the 90th day after the day on which this Act is passed, or

(b) the 90th day after the day on which the income tax became chargeable.

(4) Subsection (3)(c) has effect as if after “child benefit charge” there were inserted “ or to income tax under paragraph 8 of Schedule 16 to the Finance Act 2020 ”.

(5) In relation to income tax chargeable under paragraph 8 in relation to an amount of a coronavirus support payment received by a firm, the duty in subsection (1) (as it has effect by virtue of sub-paragraphs (2) and (3)) is taken to have been complied with by each of the partners if one of the partners has complied with it.

(6) The reference in section 36(1A)(b) of TMA 1970 (20 year period for assessment in a case involving a loss of income tax) to a failure to comply with an obligation under section 7 of that Act is not to be taken as including a failure arising by virtue of the modification of that section by this paragraph, unless the failure is one to which paragraph 13 applies.

Penalty for failure to notify: knowledge of non-entitlement to payment U.K.

13 (1) This paragraph applies to a failure of a person to notify, under section 7 of TMA 1970 (as modified by paragraph 12), a liability to income tax chargeable under paragraph 8 where the person knew, at the time the income tax first became chargeable, that the person was not entitled to the amount of the coronavirus support payment in relation to which the tax is chargeable. U.K.

(2) Schedule 41 to FA 2008 (failure to notify) applies to a failure described in sub-paragraph (1) as follows.

(3) The failure is to be treated as deliberate and concealed.

(4) Accordingly, paragraph 6 of that Schedule has effect as if the references to a penalty for “a deliberate but not concealed failure” or for “any other case” were omitted.

(5) For the purposes of that Schedule (except in a case falling within paragraph 14 of this Schedule), the “potential lost revenue” is to be treated as being the amount of income tax which would have been assessable on the person at the end of the last day of the notification period (see paragraph 12(3)).

Penalties: partnerships U.K.

14 (1) This paragraph applies to a failure to notify, under section 7 of TMA 1970 (as modified by paragraph 12), a liability to income tax chargeable under paragraph 8 by a partner of a firm that received the amount of the coronavirus support payment in relation to which the tax is chargeable. U.K.

(2) For the purposes of paragraph 13(1) of this Schedule, each partner is taken to know anything that any of the other partners knows.

(3) Where a partner would be liable to a penalty under Schedule 41 to FA 2008 (whether in a case falling within paragraph 13 or otherwise), the partner is instead jointly and severally liable with the other partners to a single penalty under that Schedule for the failures by each of them to notify.

(4) In a case not falling within paragraph 13, if the failure of at least one of the partners—

(a) was deliberate and concealed, the single penalty is to be treated as a penalty for a deliberate and concealed failure;

(b) was deliberate but not concealed, the single penalty is to be treated as a penalty for a deliberate but not concealed failure.

(5) For the purposes of Schedule 41 to FA 2008, the “potential lost revenue” is to be treated as being the amount of income tax which would have been assessable on any one of the partners (see paragraph 9(4)(a))—

(a) in a case falling within paragraph 13, at the end of the last day of the notification period, or

(b) in any other case, at the end of 31 January following the tax year in which the amount of coronavirus support payment was received by the firm.

(6) Paragraph 22 of that Schedule (limited liability partnerships: members' liability) does not apply.

Liability of officers of insolvent companies U.K.

15 (1) This paragraph— U.K.

(a) provides for an individual to be jointly and severally liable to the Commissioners for Her Majesty's Revenue and Customs for a liability of a company to income tax charged under paragraph 8, where a notice under sub-paragraph (2) is given to the individual, and

(b) applies paragraphs 10 to 15 and 17 of Schedule 13 (joint liability notices: tax avoidance, tax evasion and repeated insolvency and non-payment) to such a notice.

(2) An officer of Revenue and Customs may give a notice under this sub-paragraph to an individual if it appears to the officer that conditions A to D are met.

(3) Condition A is that—

(a) the company is subject to an insolvency procedure, or

(b) there is a serious possibility of the company becoming subject to an insolvency procedure.

(4) Condition B is that the company is liable to income tax under paragraph 8.

(5) Condition C is that the individual was responsible for the management of the company at the time the income tax first became chargeable and the individual knew (at that time) that the company was not entitled to the amount of the coronavirus support payment in relation to which the tax is chargeable.

(6) Condition D is that there is a serious possibility that some or all of the income tax liability will not be paid.

(7) For the purposes of sub-paragraph (5) the individual is responsible for the management of a company if the individual—

(a) is a director or shadow director of the company, or

(b) is concerned (whether directly or indirectly) in, or takes part in, the management of the company.

(8) A notice under sub-paragraph (2) must—

(a) specify the company to which the notice relates;

(b) set out the reasons for which it appears to the officer that conditions A to D are met;

(c) specify the amount of the income tax liability;

(d) state the effect of the notice;

(e) offer the individual a review of the decision to give the notice and explain the effect of paragraph 11 of Schedule 13 (right of review);

(f) explain the effect of paragraph 13 of that Schedule (right of appeal).

(9) An individual who is given a notice under sub-paragraph (2) is jointly and severally liable with the company (and with any other individual who is given such a notice) to the amount of the income tax liability specified under sub-paragraph (8)(c).

For provision under which the amount so specified may be varied, see—

(a) paragraph 10 of Schedule 13 (modification etc),

(b) paragraphs 11 and 12 of that Schedule (review), and

(c) paragraphs 13 and 14 of that Schedule (appeal).

(10) Paragraphs 10 to 15 and 17 of Schedule 13 apply to a notice under sub-paragraph (2) as they apply to a joint liability notice (see paragraph 1(2) of that Schedule) as if—

(a) the references in those paragraphs to “relevant conditions” were to conditions A to D in this paragraph;

(b) sub-paragraphs (3) and (4) of paragraph 10 were omitted (and references to sub-paragraph (3) in that paragraph were omitted);

(c) in paragraph 10(6)(a), after “or (9)” there were inserted “ or paragraph 15(8)(c) of Schedule 16 ”;

(d) in paragraph 12(6)(b) after “5(9)” there were inserted “ or paragraph 15(8)(c) of Schedule 16 ”.

(11) Expressions used in this paragraph and in Schedule 13 have the same meaning in this paragraph as they have in that Schedule (subject to the modification made by sub-paragraph (10)(a)).