Finance Act 2013

Section 20

SCHEDULE 7 U.K. Remittance basis: exempt property

1 U.K. Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

2 U.K. In section 809X(3) (exempt property: public access rule), for “sections 809Z and 809Z1)” substitute “ section 809Z) ”.

3 (1) Section 809Y (property that ceases to be exempt property treated as remitted) is amended as follows. U.K.

(2) In subsection (2), for “either” substitute “ any ”.

(3) After subsection (4) insert—

“(4A) Where exempt property has been lost, stolen or destroyed, the first and second cases do not apply in relation to the property during any period—

(a) beginning with the time at which it was lost, stolen or destroyed, and

(b) (if lost or stolen) ending with the time at which it is recovered.

(4B) The third case is where a compensation payment is released in respect of exempt property that has been lost, stolen or destroyed.”

(4) In subsection (6), after “exempt property” insert “ by virtue of the first or second case ”.

4 U.K. After section 809YE insert—

“809YF Exception to section 809Y: compensation taken offshore or invested

(1) Section 809Y(1) does not apply to property if—

(a) it ceases to be exempt property because a compensation payment in respect of it is released, and

(b) conditions A and B are met.

(2) Condition A is that the whole of the compensation payment is taken offshore or used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which the payment is released.

(3) Condition B is that, if Condition A is satisfied wholly or in part by using the compensation payment to make a qualifying investment, the remittance basis user makes a claim for relief under subsection (4) on or before the first anniversary of the 31 January following the tax year in which the payment is released.

(4) If section 809Y(1) does not apply to property by virtue of subsection (1), the income and gains treated under section 809X as not remitted to the United Kingdom continue to be treated after the compensation payment is released as not remitted to the United Kingdom even though the property has ceased to be exempt property.

(5) But nothing in subsection (4) prevents anything done in relation to any part of the compensation payment after that payment is taken offshore (or used to make a qualifying investment) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is done.

(6) Treat the compensation payment as containing or deriving from an amount of each kind of income and gain mentioned in section 809Q(4)(a) to (h) equal to the amount of that kind of income or gain contained in the exempt property when it was brought to, or received or used in, the United Kingdom (as mentioned in section 809X).

(7) Where Condition A was met by using the compensation payment to make a qualifying investment—

(a) the business investment provisions apply to the income and gains that continue, by virtue of subsection (4), to be treated as not remitted as they apply to income or gains that are treated under section 809VA(2) as not remitted, and

(b) if the investment was made using more than just the compensation payment, treat only the part of the investment made using the payment as “the investment” for the purposes of those provisions.”

5 (1) Section 809Z (public access rule: general) is amended as follows. U.K.

(2) In subsection (1), for “A to D” substitute “ B and C ”.

(3) Omit subsection (2).

(4) After subsection (8) insert—

“(8A) But if the property is lost or stolen—

(a) the relevant period ends with the time at which it is lost or stolen, and

(b) a new relevant period begins with its importation or the time at which it is recovered.”

(5) Omit subsection (10).

6 U.K. Omit section 809Z1 (public access rule: relevant VAT relief).

7 (1) Section 809Z4 (temporary importation rule) is amended as follows. U.K.

(2) In subsection (1), after “days” insert “ (subject to any increase under subsection (3B)) ”.

(3) In subsection (3)—

(a) before paragraph (a) insert—

“(za) the property meets the public access rule,”,

(b) after paragraph (b) insert—

“(ba) subsection (3A) applies to the property,”, and

(c) in paragraph (d) for “or 809YC(2)” substitute “ , 809YC(2) or 809YF(4) ”.

(4) After that subsection insert—

“(3A) This subsection applies to the property if—

(a) it is not available to be used or enjoyed in the United Kingdom by or for the benefit of a relevant person because it has been lost, stolen or destroyed,

(b) (if lost or stolen) it has not been recovered, and

(c) no compensation payment has been released in respect of it.

(3B) If—

(a) property that has been lost or stolen is recovered,

(b) the first day after the day on which it is recovered is a countable day, and

(c) excluding that countable day there have already been 231 or more countable days in relation to the property,

the number of countable days specified in subsection (1) is read as being increased by the number necessary for there to be 45 countable days beginning with the countable day mentioned in paragraph (b).”

(5) Omit subsections (4) to (10).

8 U.K. In section 809Z6 (exempt property: other interpretation), after subsection (4) insert—

“(5) References to property being lost, stolen or destroyed are to the property being lost, stolen or destroyed whilst in the United Kingdom.

(6) “Compensation payment”, in relation to property that has been lost, stolen or destroyed, means any payment of compensation (whether under an insurance policy or otherwise) in respect of the property.

(7) A compensation payment is “released” on the day on which it first becomes available for use in the United Kingdom by or for the benefit of any relevant person.

(8) Property that has been lost or stolen is “recovered” on the day on which it becomes available to be used or enjoyed in the United Kingdom by or for the benefit of a relevant person.”

9 U.K. The amendments made by paragraphs 3, 4, 5(4), 7(2), (3)(b) and (c) and (4) and 8 have effect in relation to property that is lost, stolen or destroyed on or after 6 April 2013.

10 U.K. The other amendments made by this Schedule have effect—

(a) in relation to property that is not in the United Kingdom on 6 April 2013, as from that date, and

(b) in relation to property that is in the United Kingdom on that date, as from the time when it ceases to be in the United Kingdom or is lost or stolen.

11 U.K. In the case of property that falls within paragraph 10(b) by virtue of being lost or stolen, any period that is a period of importation in relation to the property for the purposes of section 809Z4 of ITA 2007 ends with the time at which it is lost or stolen.