SCHEDULES

SCHEDULE 5Provision not at arm’s length: related amendments

Section 30

Taxes Management Act 1970

Notice of enquiry

1

1

Section 9A of the Taxes Management Act 1970 (c. 9) is amended as follows.

2

For subsection (4) (scope of inquiry) substitute—

4

An enquiry extends to—

a

anything contained in the return, or required to be contained in the return, including any claim or election included in the return,

b

consideration of whether to give the taxpayer a transfer pricing notice under paragraph 5C of Schedule 28AA to the principal Act (provision not at arm’s length: medium-sized enterprise),

but this is subject to the following limitation.

Income and Corporation Taxes Act 1988

F32

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Petroleum extraction activities: ring fence trade: charges on income

3

1

Section 494 of the Taxes Act 1988 (charges on income) is amended as follows.

2

In subsection (2) (which restricts the loan relationship debits that may be brought into account in a manner resulting in reduction of ring fence profits)—

a

at the end of paragraph (b) insert “ and ”;

b

omit paragraph (d) (which imposes a restriction by reference to a reasonable commercial rate of return and is superseded by the application of paragraphs 1A and 1B of Schedule 28AA to the Taxes Act 1988 by virtue of paragraph 11 of that Schedule);

c

omit the third sentence (which defines “net debit” for the purposes of paragraph (d)).

3

Omit subsection (2B) (which relates to the net debit within the meaning of subsection (2)(d)).

Assumptions for calculating chargeable profits etc: transfer pricing

4

In Schedule 24 to the Taxes Act 1988, paragraph 20 shall cease to have effect.

Finance Act 1996

Loan relationships: introductory

F15

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Transactions not at arm’s length

F16

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

Continuity of treatment: groups etc.

F17

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Amounts imputed under Schedule 28AA to the Taxes Act 1988

F18

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

Finance Act 1998

Introductory

9

The Finance Act 1998 (c. 36) is amended as follows.

Scope of enquiry

10

1

In Schedule 18 (company tax returns, assessments and related matters) paragraph 25 is amended as follows.

2

In sub-paragraph (1), for the words following paragraph (b) substitute— “ and also extends to consideration of whether to give the company a transfer pricing notice under paragraph 5C of Schedule 28AA to the Taxes Act 1988 (provision not at arm’s length: medium-sized enterprise). But this is subject to the following limitation. ”.

Finance Act 2000

Introductory: tonnage tax: transactions not at arm’s length

11

Schedule 22 to the Finance Act 2000 (c. 17) (tonnage tax) is amended as follows.

Transactions between tonnage tax company and another person

12

1

Paragraph 58 is amended as follows.

2

In sub-paragraph (1) (Schedule 28AA to the Taxes Act 1988 to apply with certain omissions) for the words following paragraph (b) substitute— “ Schedule 28AA to the Taxes Act 1988 (transactions not at arm’s length) has effect with the omission of paragraphs 6 to 7A (elimination of double counting etc). ”.

Transactions between tonnage tax trade and other activities of same company

13

1

Paragraph 59 is amended as follows.

2

For sub-paragraph (2) (Schedule 28AA to the Taxes Act 1988 to apply with certain omissions) substitute—

2

As applied by sub-paragraph (1), Schedule 28AA has effect with the omission of paragraphs 6 to 7A (elimination of double counting etc).

Finance Act 2002

F214

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F215

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F216

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