http://www.legislation.gov.uk/id/ukpga/2022/3

SCHEDULES

SCHEDULE 1Abolition of basis periods

Section 7

PART 1Main amendments of ITTOIA 2005

1

Part 2 of ITTOIA 2005 (trading income) is amended as follows.

Chapter 2 (income taxed as trade profits)

2

1

Section 7 (income charged) is amended as follows.

2

In subsection (1), at the end insert “(including amounts treated as profits of the tax year under section 23E(1))”.

3

Omit subsections (2) and (3).

3

After section 7 insert—

7AApportionment etc of profits to tax year
1
This section and sections 7B to 7D apply if a period of account of a person carrying on a trade (“the trader”) does not coincide with a tax year.
2
Any of the following steps may be taken if they are necessary in order to arrive at the profits or losses of the trade of the tax year—
a
apportioning the profits or losses of a period of account to the parts of that period falling in different tax years, and
b
adding the profits or losses of a period of account (or part of a period) to profits or losses of other periods of account (or parts).
3
The steps must be taken by reference to the number of days in the periods concerned.
4
But the trader may use a different way of measuring the length of the periods concerned if—
a
it is reasonable to do so, and
b
the way of measuring the length of periods is used consistently for the purposes of the trade.
5
Sections 7B and 7C contain rules for the purpose of avoiding the need to apportion profits or losses under this section (and section 7D makes provision for the trader to elect for those rules not to apply).
6
This section and sections 7B to 7D apply to professions and vocations as they apply to trades.
7BRule if trader starts to carry on trade after 31 March
1
This section applies if, in a tax year (“the relevant tax year”), the trader—
a
starts to carry on the trade after 31 March, and
b
does not permanently cease to carry on the trade.
2
For the purposes of this Chapter—
a
the profits or losses of the trade of the relevant tax year are treated as nil, and
b
the actual profits or losses of the trade of the relevant tax year are treated as arising in the following tax year.
7CRule if there is a late accounting date
1
This section applies if, in a tax year (“the relevant tax year”), the trader—
a
does not start to carry on the trade or does so before 1 April,
b
does not permanently cease to carry on the trade, and
c
has an accounting date that is 31 March or 1, 2, 3 or 4 April.
2
For the purposes of this Chapter—
a
the profits or losses of the trade of the period beginning immediately after the accounting date and ending with 5 April in the relevant tax year are treated as nil, and
b
the actual profits or losses of the trade of that period are treated as arising in the following tax year.
3
In this section, “accounting date” in relation to a tax year means—
a
the date in the tax year to which accounts are drawn up, or
b
if there are two or more such dates, the latest of them.
7DElection to disapply late accounting date rules
1
The trader may make an election under this section in relation to the trade.
2
If an election under this section has effect for a tax year, neither of sections 7B and 7C apply in relation to the trade for that tax year.
3
An election under this section—
a
must be made on or before the first anniversary of the normal self-assessment filing date for the first tax year for which it is to have effect, and
b
has effect for that tax year and the four tax years following that tax year (subject to subsection (4)).
4
If the trader permanently ceases to carry on the trade before the end of the last of the tax years mentioned in subsection (3)(b), the election has effect for each tax year up to and including the tax year immediately before the tax year in which the trader permanently ceases to carry on the trade.

Chapter 3A (trade profits: cash basis)

4

In section 31A (conditions to be met for profits to be calculated on cash basis), in subsection (5)(a), omit “the basis period for”.

5

1

Section 31B (relevant maximum for purposes of section 31A) is amended as follows.

2

In subsection (6), for “where the basis period for a tax year is less than 12 months” substitute “where the trade, profession or vocation is carried on for only part of a tax year”.

3

In subsection (7), in the definition of “universal credit claimant”, omit “the basis period for”.

F336

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7

1

Section 31E (calculation of profits on cash basis) is amended as follows.

2

In subsection (2), in each of Steps 1 and 2, omit “the basis period for”.

3

At the end insert—

4
In determining the profits of a trade on the cash basis, section 7A (2) applies as if the profits or losses of a period of account were determined in accordance with subsection (2) of this section (and for these purposes, references in subsection (2) of this section to a tax year are to be read as references to a period of account).

8Chapter 15 (basis periods)

Omit Chapter 15 (basis periods).

PART 2Other amendments of ITTOIA 2005

9

ITTOIA 2005 is amended as follows.

Part 2 (trading income)

10

1

Section 17 (effect of becoming or ceasing to be a UK resident) is amended as follows.

2

In subsection (1), for “otherwise than in partnership” substitute “(alone or in partnership)”.

3

Omit subsection (5).

11

In section 47 (business gifts: exceptions), in subsection (3)(b), for “basis period” substitute “tax year”.

12

In section 133 (meaning of “relevant period” for purposes of Chapter 9), in paragraph (b) omit “the basis period for”.

13

1

Section 154A (certain non-UK residents with interest on 3.5% War Loan 1952 Or After) is amended as follows.

2

In subsection (3)—

a

in Step 1, omit “the basis period for”;

b

in each of Steps 3, 4 and 5, for “basis period” substitute “tax year”.

3

In subsection (4)—

a

for “basis period”, in each place those words occur, substitute “tax year”;

b

for “that period” substitute “that tax year”.

4

In subsection (5), for “basis period” substitute “tax year”.

14

1

Section 225ZD (compensation for compulsory slaughter of animals: effect of claim for spreading profits) is amended as follows.

2

In subsection (1), in each of Steps 2 and 3, for “whose basis period”, in each place those words occur, substitute “which”.

3

Omit subsection (2).

15

In section 240B (“entering the cash basis”), in paragraph (b), omit “the basis period for”.

16

In section 240C (unrelieved qualifying expenditure: Parts 2, 7 and 8 of CAA 2001), in subsection (1)(b)—

a

omit “the basis period for”;

b

for “with that basis period” substitute “in that tax year”.

17

In section 240D (assets not fully paid for), in subsection (1)(b), omit “the basis period for”.

18

In section 240E (effect of election where predecessor and successor are connected persons), in subsection (1)(c), omit “the basis period for”.

19

In section 246 (basic meaning of “post-cessation receipt”), in subsection (3)—

a

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

b

omit paragraph (c) and the “and” before it.

20Part 5 (miscellaneous income)

In section 613 (films and sound recordings: application of trading income rules to non-trade businesses), omit paragraph (a) and the “and” at the end of that paragraph.

21Part 6A (income charged under ITTOIA 2005: trading and property allowances)

Section 805 (meaning of “qualifying care receipts”) is amended as follows.

2

In subsection (1)(b), for “subsections (2) and (3)” substitute “subsection (3)”.

3

Omit subsection (2).

4

In subsection (3), omit “Otherwise”.

24

Omit section 828 (overlap profit).

Part 9 (partnerships)

25

Omit sections 852 to 856 (firms with trading income).

26

In section 857 (partners to whom the remittance basis applies), in subsection (2), for “856” substitute “851”.

27

In section 860 (adjustment income), in subsection (7), for “856” substitute “851”.

28Part 10 (general provisions)

In section 867 (business entertainment and gifts: non-trades and non-property businesses), in subsection (5), omit “(but as if the reference to a basis period were to a tax year)”.

29Schedule (abbreviations and defined expressions)

Part 2 of Schedule 4 (index of defined expressions) is amended as follows—

a

omit the entry for “accounting date”;

b

omit the entry for “overlap period”;

c

omit the entry for “overlap profit”.

PART 3Amendments of other Acts

Taxes Management Act 1970

30

TMA 1970 is amended as follows.

31

In section 8 (personal return), in subsection (1C), omit “or its basis period”.

32

In Schedule A1 (as inserted by section 60(3) of F(No.2)A 2017), in paragraph 8 (end of period statement)—

a

for sub-paragraph (2) substitute—

2
“Relevant period” means a tax year.

b

omit sub-paragraph (6)(b).

Capital Allowances Act 2001

33

CAA 2001 is amended as follows.

34

1

Section 59 (unrelieved qualifying expenditure) is amended as follows.

2

In subsection (4), for “with the basis period for the previous tax year” substitute “in the previous tax year (or, if there is more than one such period, the latest of them)”.

3

In subsection (8)(b)—

a

omit “the basis period for”;

b

for “with that basis period” substitute “in that tax year (or, if there is more than one such period, the latest of them)”.

35

In section 419A (unrelieved qualifying expenditure: entry to cash basis), in subsection (1), for “with the basis period for the tax year”, in both places, substitute “in the tax year (or, if there is more than one such period, the latest of them)”.

36

In section 461A (unrelieved qualifying expenditure: entry to cash basis), in subsection (1), for “with the basis period for the previous tax year” substitute “in the previous tax year (or, if there is more than one such period, the latest of them)”.

37

In section 475A (unrelieved qualifying expenditure: entry to cash basis), in subsection (1), for “with the basis period for the previous tax year” substitute “in the previous tax year (or, if there is more than one such period, the latest of them)”.

Income Tax Act 2007

38

ITA 2007 is amended as follows.

39

In section 24A (limit on Step 2 deductions), omit subsection (7)(c).

40

In section 60 (overview of Chapter), in subsection (3), omit paragraph (b) and the “and” before it.

41

Omit sections 61 and 62 (losses of a tax year of persons carrying on trades etc).

42

1

Section 66 (restriction on relief unless trade is commercial) is amended as follows.

2

In subsection (2), omit “the basis period for”.

3

In subsection (5), for “basis period”, in each place, substitute “tax year”.

43

1

Section 70 (determining losses in previous tax years) is amended as follows.

2

Omit subsection (2).

3

In subsection (3), in the words before paragraph (a), for “This loss” substitute “The loss”.

4

In subsection (4), in the words after paragraph (b)—

a

for “203(2)”, in both places, substitute “7A(2)”;

b

omit “to basis periods are read as references to tax years and references”.

5

In subsection (5), for “203(3) or (4)” substitute “7A(3) or (4)”.

44

In section 74 (restrictions on relief unless trade is commercial etc), in subsection (2)—

a

in the words before paragraph (a), omit “the basis period for”;

b

in paragraph (b), for “basis period” substitute “tax year”.

45

1

Section 74C (meaning of “non-active capacity” for purposes of section 74A etc) is amended as follows.

2

For subsection (3) substitute—

3
For this purpose “the relevant period” means—
a
where the individual first started to carry on the trade less than six months before the end of the tax year, the period of six months beginning with the date on which the individual first started to carry on the trade;
b
where the individual permanently ceased to carry on the trade less than six months after the start of the tax year, the period of six months ending with the date on which the individual permanently ceased to carry on the trade;
c
in any other case, the tax year.

3

Omit subsection (4).

46

1

Section 75 (trade leasing allowances given to individuals) is amended as follows.

2

In subsection (5)—

a

omit “the basis period for”;

b

omit “(“the loss-making basis period”)”.

3

In subsection (6), in each of paragraphs (a) and (b), for “loss-making basis period” substitute “tax year”.

47

In section 83 (carry forward against subsequent trade profits), in subsection (6)(f), for “sections 17(3) and 852(7)” substitute “section 17(3)”.

48

1

Section 90 (losses that are “terminal losses”) is amended as follows.

2

In subsection (4)—

a

for “203(3) and (4)” substitute “7A(3) and (4)”;

b

for “203(2)” substitute “7A(2)”.

3

Omit subsection (5).

49

1

Section 103B (meaning of “non-active partner” etc) is amended as follows.

2

For subsection (3) substitute—

3
For this purpose “the relevant period” means—
a
where the individual first started to carry on the trade less than six months before the end of the tax year, the period of six months beginning with the date on which the individual first started to carry on the trade;
b
where the individual permanently ceased to carry on the trade less than six months after the start of the tax year, the period of six months ending with the date on which the individual permanently ceased to carry on the trade;
c
in any other case, the tax year.

3

Omit subsection (4).

50

In section 104 (restriction on reliefs for limited partners), in subsection (4), in the words after paragraph (b), omit “the basis period for”.

51

In section 107 (restriction on reliefs for members of LLPs), in subsection (5), in the words after paragraph (b), omit “the basis period for”.

52

In section 110 (restriction on reliefs for non-active partners in early tax years), in subsection (4), in the words after paragraph (b), omit “the basis period for”.

53

In section 113 (unrelieved losses brought forward), in subsection (7), omit paragraph (b) and the “and” before it.

54

1

Section 525 (meaning of “charitable trade”) is amended as follows.

2

In subsection (1), in the words before paragraph (a), omit “the basis period for”.

3

Omit subsection (5).

55

In section 528 (condition as to trading and miscellaneous incoming resources), in subsection (2)(a), omit “the basis period for”.

56

In section 544 (section 543: supplementary), omit subsection (4).

57

In section 681AD (relevant income tax relief: deduction not to exceed commercial rent), in subsection (2)(a)(ii), omit “the basis period of”.

58

In section 681CC (tax deduction not to exceed commercial rent), in subsection (2)(a)(ii), omit “the basis period of”.

59

1

Section 795 (meaning of “post-1 December 2004 loss”) is amended as follows.

2

In subsection (1), in each of paragraphs (a) and (b), omit “the basis period for”.

3

In subsection (2)(b), omit “the basis period for”.

4

Omit subsection (4).

60Taxation (International and Other Provisions) Act 2010

In TIOPA 2010, omit sections 22 to 24 (credit for foreign tax on overlap profit if credit for that tax already allowed).

PART 4Commencement

61

1

Subject to sub-paragraph (3), the amendments made by Parts 1 to 3 of this Schedule have effect for the tax year 2024-25 and subsequent tax years.

2

The amendments of section 70 of ITA 2007 (which applies for determining losses in previous tax years for certain purposes), made by paragraph 43 of this Schedule, have effect where the “tax year before the current tax year” mentioned in that section is the tax year 2024-25 or a subsequent tax year.

3

In addition to the commencement provision made by sub-paragraph (1), sections 7B to 7D of ITTOIA 2005, inserted by paragraph 3 of this Schedule, have effect in relation to a person who—

a

starts to carry on a trade, profession or vocation in the tax year 2023-24, and

b

does not permanently cease to carry on the trade, profession or vocation in that tax year.

(And see Part 5 of this Schedule for further transitional provision in relation to such persons.)

PART 5Transitional provision: new trades etc

62Application of this Part of this Schedule

1

This Part of this Schedule applies in relation to a person (“the trader”) who—

a

starts to carry on a trade (alone or in partnership) in the tax year 2023-24, and

b

does not permanently cease to carry on the trade in that tax year.

2

This Part of this Schedule applies to professions and vocations as it applies to trades.

63Basis period for the tax year 2023-24

1

Chapter 15 of Part 2 of ITTOIA 2005 (basis periods) applies as if sections 208 to 210 of that Act (rules where first accounting date shortly before end of tax year) were disregarded.

2

Accordingly, the basis period for the tax year 2023-24, determined in accordance with section 199 of ITTOIA 2005, ends with 5 April 2024.

PART 6Transitional provision: continuing trades etc

64Application of this Part of this Schedule

1

This Part of this Schedule applies in relation to a person (“the trader”) who—

a

carries on a trade (alone or in partnership) in the tax year 2023-24,

b

does not start to carry on the trade in that tax year, and

c

does not permanently cease to carry on the trade in that tax year.

2

This Part of this Schedule applies to professions and vocations as it applies to trades.

in any other case (or where an election under paragraph 67(3) has effect), 5 April 2024.

66Relevant maximum for purposes of cash basis election

1

Sub-paragraph (2) applies if the basis period for the tax year 2023-24 (determined in accordance with paragraph 65(1)(a)), is longer than 12 months.

2

For the purposes of section 31B of ITTOIA 2005 (relevant maximum for purposes of cash basis election), the amounts specified in subsections (3), (4) and (5) of that section, and the VAT threshold (within the meaning given by subsection (7) of that section), are proportionately increased.

67Late accounting date rules

1

This paragraph applies if—

a

the standard part of the basis period for the tax year 2023-24, or

b

any transition part of that basis period,

ends with 31 March or 1, 2, 3 or 4 April 2024 (“the late accounting date”).

2

For the purposes of Chapter 2 of Part 2 of ITTOIA 2005—

a

treat the profits or losses of the period beginning immediately after the late accounting date and ending with 5 April, as nil, and

b

treat the actual profits or losses of that period as arising in the tax year 2024-25.

3

The trader may, on or before the first anniversary of the normal self-assessment filing date for the tax year 2023-24, elect for sub-paragraph (2) not to apply.

4

If an election under sub-paragraph (3) has effect—

a

there is a transition part of the basis period for the tax year 2023-24 (whether or not there would otherwise be such a part), and

b

that transition part ends on 5 April 2024 (instead of the date on which it would otherwise end).

68Deductions for overlap profit allowed under this Part of this Schedule

References in this Part of this Schedule to a “deduction for overlap profit allowed under this Part of this Schedule” are to—

a

any deduction for overlap profit that would be allowed under section 205 of ITTOIA 2005 (deduction for overlap profit in final tax year), were the trader to have permanently ceased to carry on the trade on 5 April 2024, or

b

any deduction for overlap profit allowed under section 220 of that Act (deduction for overlap profit on change of accounting date) for a tax year before the tax year 2023-24 but not made for that earlier tax year (or any amount of such a deduction not made).

69Trade profits if there is no transition part of the basis period for the tax year 2023-24

1

Sub-paragraph (2) applies if there is no transition part of the basis period for the tax year 2023-24 (because the standard part ends on or after 31 March 2024 and there is no election under paragraph 67(3)).

2

In calculating the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005, make any deduction for overlap profit allowed under this Part of this Schedule (see paragraph 68).

70Trade profits if there is a transition part of the basis period for the tax year 2023-24

1

Sub-paragraph (2) applies if there is a transition part of the basis period for the tax year 2023-24 (see paragraphs 65(3) and 67(4)(a)).

2

In calculating the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005, take the following Steps.

Step 1
Determine the amount of the profits of the tax year 2023-24 attributable to the standard part of the basis period for that tax year.
To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the standard part of the basis period for that tax year.
Step 2
Determine the amount of the profits of the tax year 2023-24 attributable to the transition part of the basis period for that tax year.
To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the transition part of the basis period for that tax year.
Step 3
Deduct from the amount given by Step 2 the amount of any deduction for overlap profit allowed under this Part of this Schedule (see paragraph 68).
Step 4
Calculate the sum of the amounts given by Steps 1 and 3.
If the amount given by either or both of—
1. a
  Step 3, and
2. b
  this Step,
is nil, or less than nil, the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is the amount given by this Step (and see paragraph 71 for the treatment of a loss, or an increased loss, for the tax year 2023-24 arising from this Step).
Otherwise, proceed to Steps 5 and 6.
Step 5
For the purposes of Step 6, and paragraphs 72 to 75, the amount of the trader’s “transition profits” for the tax year 2023-24 is the lesser of—
1. a
  the amount given by Step 3, and
2. b
  the amount given by Step 4.
Step 6
The amount of the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is—
1. a
  if the amount given by Step 1 is nil, or less than nil, such amount of the transition profits for the tax year 2023-24 as is treated (in accordance with paragraphs 72 and 73) as arising in that tax year;
2. b
  if the amount given by Step 1 is more than nil, the sum of that amount and such amount of the transition profits for the tax year 2023-24 as is treated (in accordance with paragraphs 72 and 73) as arising in that tax year.

71Treatment of losses arising from deduction for overlap profit

1

This paragraph applies if, by virtue of a deduction for overlap profit allowed and made under this Part of this Schedule (see paragraphs 68 and 69(2) and Step 3 of the calculation in paragraph 70(2))—

a

the trader makes a loss for the tax year 2023-24 where the trader would (but for the deduction) have made a profit, or

b

the trader makes a loss for the tax year 2023-24 that is greater than it would have been had the deduction not been made.

2

Sections 89 to 91 of ITA 2007 (terminal trade loss relief) apply in relation to the trader as if—

a

the trader had permanently ceased to carry on the trade on 5 April 2024, and

b

the amount of the loss mentioned in sub-paragraph (1)(a), or the amount by which the loss mentioned in sub-paragraph (1)(b) is increased as a result of the deduction being made, were a terminal loss made in the trade in the final tax year.

3

Nothing in this paragraph is to be taken to affect the further application of sections 89 to 91 of ITA 2007 in relation to the trade.

72Spreading of transition profits

1

This paragraph applies if the trader has transition profits for the tax year 2023-24 (see Step 5 of the calculation in paragraph 70(2)).

2

The amount of the transition profits is spread over five tax years as follows.

3

In each of the four tax years beginning with the tax year 2023-24, an amount equal to 20% of the amount of the transition profits is treated as arising and chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005.

4

In the fifth tax year, the balance of the amount of the transition profits is treated as arising and chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005.

5

Sub-paragraph (6) applies if, before the whole of the amount of the transition profits has been charged to income tax, the trader permanently ceases to carry on the trade.

6

The balance of the amount of the transition profits is treated as arising, and chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005, for the tax year in which the trader permanently ceases to carry on the trade.

73Election to accelerate charge

1

If the trader is liable to a charge to income tax for a tax year on an amount of the transition profits for the tax year 2023-24 (see Step 5 of the calculation in paragraph 70(2) and paragraph 72), the trader may elect for an additional amount of those profits to be treated as arising in the tax year.

2

The election must be made on or before the first anniversary of the normal self-assessment filing date for the tax year to which it relates.

3

The election must specify the amount of the transition profits to be treated as arising in the tax year (which may be any amount of those profits not previously charged to tax).

4

If an election is made, paragraph 72 applies in relation to any subsequent tax year as if the amount of the transition profits (as reduced by any previous application of this paragraph) were reduced by the amount given by the following formula—

A \times \frac{5}{T}

where—

A is the additional amount of the transition profits treated as arising in the tax year for which the election is made;
T is the number of tax years remaining after that tax year in the period of five tax years referred to in paragraph 72.

74Transition profits ignored in averaging of profits of farmers and creative artists

No amount of the transition profits for the tax year 2023-24 treated as arising and chargeable to income tax in a tax year (see Step 5 of the calculation in paragraph 70(2) and paragraphs 72 and 73) is to be taken into account in determining “the relevant profits” for the purposes of Chapter 16 of Part 2 of ITTOIA 2005 (averaging profits of farmers and creative artists).

75Calculation of income tax liability on amount of transition profits

1

This paragraph applies for determining the trader’s liability to income tax for a tax year in which an amount of the transition profits for the tax year 2023-24 is chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005 (see Step 5 of the calculation in paragraph 70(2) and paragraphs 72 and 73).

2

To find the trader’s liability to income tax for the tax year, section 23 of ITA 2007 applies as if—

a

the amount of the transition profits chargeable to income tax were a separate component of total income (“the transition component”),

b

the transition component were relieved in accordance with Step 2,

c

the amount of the transition component left after Step 2 were left out of the calculation of net income (and subsequent Steps), and

d

for the purposes of Steps 5 to 7, the amount (if any) given by sub-paragraph (3) were treated as an amount of tax calculated at Step 4.

3

The amount given by this sub-paragraph is the difference between—

a

the total amount of tax that would be calculated at Step 5 if Steps 1 to 4 were applied in accordance with sub-paragraph (2)(a) to (c) (ignoring sub-paragraph (2)(d)), and

b

the total amount of tax that would be calculated at Step 5 if Steps 1 to 4 were applied in accordance with sub-paragraph (2)(a) and (b) (ignoring sub-paragraph (2)(c) and (d)).

4

The Steps mentioned in sub-paragraphs (2) and (3) are Steps of the calculation in section 23 of ITA 2007.

Sub-paragraph (2) applies where—

a

a deduction is to be made under paragraph 79, and

b

the amount to be deducted (or the sum of the amounts to be deducted) exceeds the amount which would otherwise be the amount of the profits of the notional business of the tax year 2023-24.

2

The amount of the excess is to be deducted in calculating the partner’s income for the tax year 2023-24.

SCHEDULE 2Qualifying asset holding companies

Section 14

PART 1Introduction and conditions for being a QAHC

1Introduction

1

This Part of this Schedule (after this paragraph) sets out the conditions that must be met for a company to be a qualifying asset holding company (a “QAHC”).

2

Parts 2 and 3 of this Schedule—

a

set out how a company becomes, and ceases to be, a QAHC, and

b

set out some of the consequences of becoming or ceasing to be a QAHC (for example, the effect on a company’s accounting periods).

3

Part 4 makes provision about groups of companies that include QAHCs.

4

Part 5 makes provision about the application of provisions about close companies, exchange gains and basis of accounting to QAHCs.

5

Part 6 makes provision about the application of transfer pricing rules and corporate interest restriction rules to QAHCs.

6

Part 7 makes provision about the treatment of certain amounts payable by a QAHC.

7

Part 8 makes provision in relation to an overseas property business of a QAHC.

8

Part 9 makes provision about the taxation of disposals by QAHCs of overseas land and certain shares.

9

Part 10 provides for an exemption from stamp duty and stamp duty reserve tax on the repurchase by an QAHC of its own shares or loan capital.

10

Part 11 amends ITA 2007 to provide for an exemption from the duty to deduct under section 874 of that Act (withholding tax).

11

Part 12 makes supplementary provision (including provision about the meaning of terms used in this Schedule).

2Conditions for being a qualifying asset holding company

1

A company is a qualifying asset holding company if—

a

it is UK resident,

b

it meets the ownership condition set out in paragraph 3,

c

it meets the activity condition set out in paragraph 13,

d

it meets the investment strategy condition set out in that paragraph,

e

it is F31neither a securitisation company nor a UK REIT,

f

no equity securities of the company are listed or traded on a recognised stock exchange or any other public market or exchange, and

g

an entry notification is in force in relation to the company (see paragraph 14).

2

But see—

a

paragraph 16, which allows a company to treated as meeting the ownership condition in its first two years of being a QAHC, and

b

paragraph 29, which contains provision about when a company that was a QAHC ceases to be a QAHC (and see also paragraphs 27(3) to (5) and 28 which make provision about cure periods and wind-down periods).

3Ownership condition

1

The ownership condition is met in relation to a company if—

a

the sum of relevant interests in it held by persons who are not category A investors does not exceed 30%, and

b

where the company has issued securities that entitle their holders to a greater proportion of profits or assets of a particular class (“an enhanced class”) than to other profits or assets of the company, the sum of relevant interests in that class of profits or assets held by persons who are not category A investors does not exceed 30%.

2

A person has a relevant interest in a company if, as a result of a direct or indirect interest the person has in the company, the person—

a

is beneficially entitled to a proportion of the profits available for distribution to equity holders of the company,

b

is beneficially entitled to a proportion of the assets of the company for distribution to its equity holders on a winding up, or

c

has a proportion of the voting power in the company,

and the amount of that relevant interest, for the purposes of the calculation in sub-paragraph (1)(a), is the greatest of such of those proportions as arise as a result of that interest.

3

A person has a relevant interest in an enhanced class of a company if, as a result of a direct or indirect interest the person has in the company, the person—

a

is beneficially entitled to a proportion of the profits that fall within that class that are available for distribution to equity holders of the company, or

b

is beneficially entitled to a proportion of the assets of the company that fall within that class for distribution to its equity holders on a winding up,

and the amount of that relevant interest, for the purposes of the calculation in sub-paragraph (1)(b), is the greatest of such of those proportions as arise as a result of that interest.

4

Paragraphs 4 to 7 set out how to determine the amounts of relevant interests.

5

Those amounts are to be expressed as percentages, but there is no need to adjust any of those amounts if the application of the rules in those paragraphs has the result that the total amount of relevant interests in a company or an enhanced class of a company is more than 100% (as may sometimes be the case).

F205A

See also paragraph 59, which makes provision for parties to alternative finance arrangements who are equivalent to equity holders to be treated as such.

6

In this paragraph—

“securities” means—
1. a
  ordinary shares within the meaning of section 160 of CTA 2010 (meaning of ordinary shares for the purposes of section 158(1)(a) of that Act), and
2. b
  loans, other than normal commercial loans;
“normal commercial loan” is to be construed in accordance with section 162 of that Act (meaning of normal commercial loan for the purposes of sections 158(1)(b) and 159(4)(b) of that Act).

4Only direct and certain indirect interests to constitute “relevant interests”

1

An interest of a person (“T”) only constitutes a relevant interest in a company, or in an enhanced class of that company, if as a result of that interest T is—

a

beneficially entitled to profits or assets directly,

b

beneficially entitled to profits or assets—

i

partly directly or through a company (“C”), other than a QAHC, that is beneficially entitled to those profits or assets directly and is connected to T, and

ii

partly through another person that is not a QAHC or through other persons that are not QAHCs, or

c

beneficially entitled to profits or assets solely through one or more QAHCs.

2

But where T has an interest falling within sub-paragraph (1)(b) partly as a result of an entitlement through C, in determining the amount of that interest for the purposes of paragraph 3(2) or (3), ignore any amount attributable to the entitlement through C.

F162A

For the purposes of sub-paragraph (1)(b)(i), a beneficial entitlement of T or C held solely through one or more QAHCs is to be treated as held by that person directly.

3

For the purposes of sub-paragraph (1)(b)(ii), where—

a

T is connected to a person (“U”), other than C, who is not a category A investor,

b

U has an indirect beneficial entitlement to profits or assets of the company through another person that is not a QAHC, or through other persons that are not QAHCs, and

c

that entitlement would not otherwise be included in the determination of relevant interests in the company, or in an enhanced class of the company for the purposes of paragraph 3(2) or (3),

that entitlement is to be treated as an entitlement of T.

4

In this paragraph, “connected”, in relation to two persons being connected with one another, is to be read in accordance with sections 1122 and 1123 of CTA 2010, but for the purposes of this paragraph section 1122(7) has effect as if any reference to a partnership did not include a partnership that is a qualifying fund.

Where a person has a beneficial entitlement to profits that arises under investment management profit-sharing arrangements, use the maximum proportional entitlement that could arise over the life of the arrangements, instead of the actual proportion at any particular time.

6

For the purposes of sub-paragraph (5) “investment management profit-sharing arrangements” means arrangements under which a person has a variable entitlement to a proportion of the profits of investments in connection with the provision of investment management services in relation to those investments.

7

Where a person is entitled to a dividend which amounts to a fee for administrative services provided in connection with investment in the relevant company, that entitlement is treated as not amounting to a relevant interest.

6Determining relevant interests: transparent entities

1

The normal rule is that transparent entities do not have relevant interests in a company or in an enhanced class of a company (in their own right).

2

But where a beneficial entitlement to profits or assets of a company, or of an enhanced class of the company, arises as a result of a person’s participation in a transparent qualifying fund—

a

where the beneficial entitlement arises partly as described in paragraph 4(1)(b)(i), the entitlement arising as a result of that participation is to be treated as an entitlement of that person described in paragraph 4(1)(b)(ii) (entitlement partly through another person), and

b

otherwise, is to be treated as an entitlement of the fund (rather than of that person).

And references to a person in this paragraph, and in paragraphs 3 to 5, are to be treated as including any such fund that is not a person.

3

Where securities of a company held through a transparent qualifying fund confer voting power in that company, that voting power is to be treated as power of the fund.

4

Sub-paragraphs (5) and (6) apply when making a determination in relation to the relevant interests in a company or in an enhanced class of a company of—

a

a partner of a partnership, or

b

a beneficiary of a trust under which the beneficiary is absolutely entitled to the property which is the subject of the trust and any profits arising from that property,

unless the partnership or trust constitutes a transparent qualifying fund.

5

Where—

a

such a partner or a trustee of such a trust has a priority entitlement, over other partners or trustees, to profits or gains arising from the partnership or trust, and

b

that priority entitlement arises as a result of contractual arrangements relating to the management of the investments of the partnership or trust,

those profits or gains are to be ignored in making any determination of any person’s relevant interest in a company or in an enhanced class of a company to the extent the entitlement is related to those arrangements.

6

Where securities of a company held through such a partnership or trust confer voting power in that company, that power is to be treated as the power of the partners, or (as the case may be) the beneficiaries, divided between them in the same proportions as they would be entitled to profits arising from those securities.

7

In this paragraph—

“securities” has the same meaning it has in paragraph 3;
an entity (“E”) is “transparent” if investments of E would be regarded, for the purposes of corporation tax on chargeable gains, as the investments of another entity (such as a member or partner of E or the beneficiary of a trust).

7References to voting power

1

References to “voting power” in paragraphs 3 to 6 are to be construed in accordance with this paragraph.

2

The amount of voting power a person has in a company is to be determined by reference to the proportion of the voting power that person has in the case of a vote at a forum of the company’s members (for example, in the case of a company incorporated in the United Kingdom, at its annual general meeting) on a standard resolution.

3

The reference in sub-paragraph (2) to a standard resolution is to a resolution in relation to which there are no rules specific to resolutions of that type which vary the voting power of members in relation to a resolution of that type as compared to other types of resolutions.

8Category A investors

1

The following are category A investors—

a

a QAHC;

b

a qualifying fund (see paragraph 9);

c

a relevant qualifying investor (see paragraph 10);

d

an intermediate company (see paragraph 11);

e

a public authority falling within sub-paragraph (2).

2

Those public authorities are—

a

any Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975);

b

any United Kingdom government department;

c

the Scottish Ministers;

d

any Northern Ireland department;

e

the Welsh Ministers;

f

any local authority or local authority association in the United Kingdom;

g

the Education Authority of Northern Ireland;

h

the Northern Ireland Housing Executive;

i

any health service body (within the meaning given by section 985 of CTA 2010);

j

any public authority who exercises public functions in connection with the coordination or provision of public transport for a region of the United Kingdom (for example, Transport for London or an executive for an integrated transport area, a combined authority area or a passenger transport area).

3

The Treasury may by regulations provide that any other public authority specified, or falling within a description specified, in the regulations is also a category A investor.

In this paragraph—

“fund” means a collective investment scheme or an AIF;
“manager”, in relation to a fund, means—
1. a
  any person who is the manager of the property that is the subject of or held by the fund, or
2. b
  any other person who has, or is expected to have, day-to-day control of that property;
F25“multi-vehicle arrangements” means arrangements comprising two or more funds under which an investor in one of those funds would reasonably regard that investment as an investment in the arrangements as a whole rather than exclusively in any particular fund.

10Relevant qualifying investors

The following persons are relevant qualifying investors—

a

a person acting in the course of a long-term insurance business (that is, the activity of effecting or carrying out contracts of long-term insurance within the meaning of the Financial Services and Markets (Regulated Activities) Order 2001 (S.I. 2001/544)) who—

i

is authorised under FISMA 2000 to carry on such business, or

ii

has an equivalent authorisation under the law of a territory outside the United Kingdom to carry on such business;

b

a person who cannot be liable for corporation tax or income tax (as relevant) on the ground of sovereign immunity;

c

a UK REIT;

d

a person who is resident in a territory outside the United Kingdom in accordance with the law of that territory relating to taxation and is the equivalent of a UK REIT;

e

a company that is a collective investment vehicle for the purposes of Schedule 5AAA to TCGA 1992 as a result of any of paragraphs (d), (e) or (f) of paragraph 1(1) of that Schedule (non-UK resident company meeting property income condition);

f

the trustee or manager of a pension scheme (within the meaning given by section 150(1) of FA 2004) other than an investment-regulated pension scheme (within the meaning given by paragraphs 1 and 2 of Schedule 29A to that Act);

g

a charity, unless—

i

the main source of donations to that charity is—

a

individuals involved in the management of the company in respect of which the charity would otherwise be a relevant qualifying investor, and

b

persons connected (within the meaning of section 1122 of CTA 2010 (“connected” persons)) with such individuals, or

ii

the charity is controlled (within the meaning of section 450 of that Act) by such individuals or persons.

11Intermediate company

1

For the purposes of this Part of this Schedule, a company is an “intermediate company” if—

a

it meets the activity condition in paragraph 13(1), and

b

it is wholly or almost wholly owned by another category A investor, other than a QAHC, or by other category A investors who are not QAHCs.

2

For the purposes of sub-paragraph (1), a company is wholly or almost wholly owned by a category A investor, or by category A investors, if that investor has, or those investors between them have, a 99% investment in the company.

3

Whether a category A investor has, or category A investors between them have, a 99% investment in a company is determined by applying paragraph 9 of Schedule 1A to TCGA 1992 (meaning of “25% investment”) as if—

a

in sub-paragraph (1) of that paragraph—

i

for the words before paragraph (a) there were substituted “A category A investor or category A investors together (“P”) has or have a 99% investment in a company (“C”) if all of the following conditions are met—”;

ii

paragraph (a) were omitted;

iii

in each of paragraphs (b), (c) and (d), for “25%” there were substituted “99%”;

iv

for the “or” at the end of paragraph (c) there were substituted “and”;

b

in sub-paragraph (7), “or indirect” were omitted in both places it occurs;

c

sub-paragraphs (8) and (9) were omitted;

d

any reference to a person, other than the references in sub-paragraph (11) of that paragraph, included a qualifying fund that is transparent (within the meaning given by paragraph 6(7)), and any interests of its participants that are held through the fund were interests of the fund itself;

e

paragraph 10 of that Schedule were omitted.

12Requirement of QAHC to monitor compliance with ownership condition

A QAHC must take reasonable steps to monitor whether the ownership condition is met in relation to it.

within the period of thirty days after the disposal, C acquires securities (“the acquired securities”) of the same class,

Where a company makes the declaration mentioned in sub-paragraph (2)(c)(ii) in an entry notification, the notification must also include a declaration that the company reasonably expects the ownership condition to be met within 2 years of becoming a QAHC.

6

An entry notification comes into force in relation to the company at the beginning of the date specified in accordance with sub-paragraph (2)(b) and continues in force until an exit notification under paragraph 25 comes into force.

7

Where a company has ceased to be a QAHC, a new entry notification must be made for it to become a QAHC again, other than as a result of paragraph 27(2) (retrospective curing of non-deliberate breach of the activity condition).

15Entry into regime

1

A company becomes a QAHC at the beginning of the first day on which all of the relevant conditions are met.

2

The “relevant conditions” are—

a

where the company has made an entry notification that includes the declaration mentioned in paragraph 14(2)(c)(i), the conditions in paragraph 2(1), or

b

where the company has made an entry notification that includes the declaration mentioned in paragraph 14(2)(c)(ii), all of those conditions apart from the ownership condition.

But if, at any time during that period, it becomes apparent to the QAHC that there is no reasonable expectation of the ownership condition being met by the end of that period—

a

the QAHC must notify HMRC of that fact as soon as reasonably practicable, and

b

sub-paragraph (4) ceases to apply from the time when it became so apparent.

at the time of the deemed sale, the shares had been held by C for less than 12 months,

e

C continues to hold those shares until they have been held for a period of 12 months (whether or not C remains a QAHC at the end of that period), and

f

if C were to dispose of them immediately after the end of that period, any gain on that disposal would not be a chargeable gain as a result of an exemption under Part 1 of Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding),

any gain accruing to C on the deemed sale of the shares is not a chargeable gain.

5

But for the purposes of sub-paragraph (4)(f), Schedule 7AC to TCGA 1992 has effect as if—

a

paragraph 9 of that Schedule (aggregation of holdings of group companies) were omitted, and

b

in paragraph 19(1), the references to the time of the disposal were instead to the end of the 12 month period referred to in sub-paragraph (4)(e).

6

Paragraph 11 of Schedule 7AC to TCGA 1992 (effect of deemed disposal and reacquisition) has effect as if any reference to a “deemed disposal and reacquisition” did not include a deemed sale and reacquisition under sub-paragraph (2) of this paragraph.

18Application of paragraph 17(2) to formerly non-resident companies

Paragraph 17(2) does not apply to assets held by a company that was previously resident in a territory outside the United Kingdom and became UK resident within the 30 days before it became a QAHC if those assets were held immediately before it became UK resident.

19Adjustment of gains to avoid double charge

Where—

a

a chargeable gain (the “relevant gain”) accrues to a company on a deemed sale of qualifying shares as a result of paragraph 17(2), and

b

the value of those shares reflects the value of an asset in respect of which a chargeable gain (“the underlying gain”) accrues, or would accrue if paragraph 18 were ignored, to another company as a result of paragraph 17(2) on the same day as, or before, the relevant gain accrued,

the relevant gain is to be reduced (on a just and reasonable basis and not to below nil) by an amount reflecting the amount of the underlying gain.

1

If a QAHC decides that an entry notification is to cease to be in force in relation to it, it may make a notification to HMRC (an “exit notification”).

2

An exit notification must—

a

state the name and Unique Taxpayer Reference of the QAHC;

b

specify the date on which the entry notification no longer has effect.

3

The date specified may be no earlier than the day after the day on which the exit notification is made.

4

An exit notification comes into force on that specified date.

26Requirement to notify when conditions no longer met

1

A QAHC must notify HMRC if a relevant condition ceases to be met in relation to it as soon as reasonably practicable after becoming aware of the breach of the condition.

2

In sub-paragraph (1) “relevant condition” means any of the conditions in paragraph 2(1), other than the condition in paragraph 2(1)(g) (requirement for entry notification to be in force).

3

A notification under sub-paragraph (1) must set out—

a

a description of the breach,

b

the date on which it occurred,

c

the date on which the QAHC first became aware of it, and

d

where the breach is a breach of the ownership condition to which a cure period could apply (see paragraph 27(3))—

i

whether the QAHC intends to rely on that period, and

ii

if so, what steps (if any) the QAHC has taken, or expects to take, in order to secure the meeting of the ownership condition before the end of that period.

a cure period applies to a breach of the ownership condition, and

b

d

a director, or any other person involved in the management, of a person referred to in paragraph (c).

the acquisition of assets where those assets are reasonably required in connection with the ceasing of the QAHC’s ring fence business, or

b

the acquisition of assets, or the raising of capital, if that acquisition or raising of capital is reasonably necessary to prevent the insolvency of the QAHC or a person in which the QAHC has an interest.

6

A QAHC must notify HMRC of any acquisition of assets, or raising of capital during a wind-down period (whether capable of causing the wind-down period to cease or not).

29Exiting the regime

1

A QAHC ceases to be a QAHC as a result of ceasing to meet any of the conditions mentioned in paragraph 2.

2

The general rule is that a breach of a condition will cause a QAHC to cease to be a QAHC immediately after the condition ceases to be met.

But sub-paragraphs (3) to (7) contain different rules in relation to certain types of breach.

3

A breach of the activity condition causes a QAHC to cease to be a QAHC immediately after the time at which the QAHC becomes aware of the breach (but see paragraph 27(1) and (2) which may allow a breach to be retrospectively cured).

4

A breach of the ownership condition to which a cure period applies will cause a QAHC to cease to be a QAHC at the end of the last day of that period (if the breach was not cured during the period).

5

But where a breach of the ownership condition was subject to a cure period and the cure period ceases to apply as a result of paragraph (a) of paragraph 27(3) (sum of relevant interests held by persons other than category A investors exceeds 50%) no longer being satisfied, the QAHC ceases to be a QAHC immediately after the time at which that paragraph ceases to be satisfied.

6

A breach of the ownership condition to which a wind-down period applies will cause a QAHC to cease to be a QAHC at the end of the last day of that period.

7

But where a wind-down period ceases to apply to a breach of the ownership condition as a result of paragraph 28(4) (no acquisition of assets or raising of capital during wind-down), the QAHC ceases to be a QAHC immediately after the time at which the wind-down period ceases to apply.

30Timings of transactions that lead to breach of ownership condition

1

For the purposes of determining whether the ownership condition is breached, a transfer of relevant interests in a QAHC, or in an enhanced class of a QAHC, is to be treated as effective at the earlier of—

a

the time when the obligations of the parties to the transfer necessary to effect the transfer have been met, and

b

the time when any of the substantive consideration for the transfer has been provided,

(instead of at any earlier time when the transfer is effective).

2

In sub-paragraph (1)(b) the reference to “substantive consideration” means any amount of the consideration for the transfer other than any amount provided before the transfer which would not be refundable if the transfer did not take place as a result of the transferee not meeting its obligations under the arrangements to make the transfer.

3

But sub-paragraph (1) does not apply if—

a

one or more of the parties to the transfer have acted in connection with the transfer with the aim of securing a tax advantage that arises as a result of the application of sub-paragraph (1) (for example by delaying the point at which consideration is provided), and

b

it is reasonable to conclude that to act in that fashion is contrived, is abnormal or lacks a genuine commercial purpose.

4

For the purposes of sub-paragraph (3) “tax advantage” is to be construed in accordance with section 1139 of CTA 2010.

interest is payable under securities of a company in connection with arrangements for a transfer of relevant interests in that company, or in an enhanced class of that company, and

b

that company ceased to be a QAHC as a result of that transfer,

any payment of that interest made on the same day as the company ceased to be a QAHC after it ceased being a QAHC is to be treated as a payment of interest by a QAHC.

PART 4Groups

33Acquisition of assets into and out of QAHC ring fence business from other member of group

1

This paragraph applies to a disposal by a company to a QAHC of any of the following at a time when the company and the QAHC are members of the same group, other than a disposal from any QAHC ring fence business of the company—

a

any overseas land;

b

any loan relationship or derivative contract the QAHC will, following its acquisition, be party to for the purposes of an overseas property business of the QAHC, to the extent (apportioned on a just and reasonable basis)—

i

the relationship or contract is attributable to those purposes, and

ii

profits arising from that relationship or contract will be exempt from corporation tax as a result of paragraph 52(4);

c

any qualifying shares;

d

any other asset that will, as a result of the disposal, be within the QAHC ring fence business of the QAHC.

Where—

a

a company that has ceased to be a QAHC (“C”) acquired (when it was a QAHC) shares from a company (“G”) as a result of a transfer described in paragraph 33 (1) (disposal to QAHC by member of same group),

b

immediately before the disposal, G held a substantial shareholding in a company as a result of holding the shares that were disposed of,

c

at that time, those shares had been held by G for less than 12 months, and

d

following the disposal C holds those shares until they have been held by G and the C between them for a total period of 12 months,

C is, for the purposes of paragraph 7 of Schedule 7AC to TCGA 1992, to be deemed to have held the shares for that entire period.

F1035F10...

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

36Gain or loss arising where section 179 of TCGA 1992 applies in relation to transfer of assets

1

This paragraph applies where—

a

section 179 of TCGA 1992 (company ceasing to be a member of group) applies in relation to the acquisition of an asset (“the relevant asset”), other than an exempt asset, by a company (“A”) from another company (“B”),

b

a chargeable gain or an allowable loss would have accrued to B on a disposal of qualifying shares, but did not as B was a QAHC at the time of the disposal of those shares (see paragraph 53), and

c

that gain or loss would have been adjusted as a result of subsection (3D) or (3E) of that section by reference to a chargeable gain or an allowable loss that would, in the absence of subsection (3A), have accrued to A under subsection (3) in relation to the relevant asset.

2

Where a chargeable gain would have accrued to A, a chargeable gain in the same amount is treated as accruing to B outside its QAHC ring fence business.

3

Where an allowable loss would have accrued to A, an allowable loss in the same amount is treated as accruing to B outside its QAHC ring fence business.

4

Assets are exempt assets if a gain accruing to a QAHC on a disposal of such assets would not be a chargeable gain as a result of paragraph 53 (no chargeable gain on disposal of overseas land or qualifying shares).

PART 5Close companies, exchange gains and basis of accounting

37Non-close QAHCs treated as close companies for certain purposes

Chapters 3 to 3B of Part 10 of CTA 2010 (charge to tax in case of loan to participator etc) apply to a QAHC that is not a close company as if the QAHC were a close company.

38Exchange gains

1

The Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) Regulations 2005 (S.I. 2005/3422) are amended as follows.

2

In regulation 2 (interpretation), after the definition of “loan relationship” insert—

“QAHC” has the same meaning as in Schedule 2 to FA 2022;

3

In regulation 5 (exchange gain or loss arising from loan relationship assets or liabilities), after paragraph (3) insert—

4
But where paragraph (1) applies in relation to loan relationship assets or liabilities of a QAHC and—
a
an amount is recognised in the QAHC‘s accounts which arises from comparing at different times the fair value of the asset or liability (or in the case of regulation 5(1)(b) any part of it), and
b
the change in fair value is attributable to any extent to fluctuations in the spot rate of exchange between the base currency of the QAHC and—
i
the currency in which the asset or liability is denominated, or
ii
another currency which is relevant to the value of the asset or liability,
the exchange gain or loss is instead calculated as set out in paragraph (5).
5
The exchange gain or loss for any accounting period is the change in fair value between the earlier and the later time in that period that is attributable only to fluctuations in the spot rate of exchange between that currency, or those currencies, and the base currency of the QAHC.

39Amortised cost basis not required for certain connected companies relationships

1

Section 349 of CTA 2009 (application of amortised cost basis to connected companies relationships) does not apply to a debtor relationship that is a connected companies relationship of a QAHC to the extent the money received under it is used to lend money under, or is used on the acquisition of, loan relationships falling within sub-paragraph (2).

2

A loan relationship falls within this sub-paragraph if—

a

it is a creditor relationship of the QAHC,

b

it is dealt with in the QAHC’s accounts on the basis of fair value accounting,

c

credits and debits which are to be brought into account for the purposes of Part 5 of CTA 2009 in respect of the relationship are not determined on an amortised cost basis of accounting.

3

In this paragraph “creditor relationship”, “debtor relationship”, “fair value accounting”, “amortised cost basis of accounting” and “connected companies relationship” have the meanings they have in Part 5 of CTA 2009 (see sections 302, 313 and 348 of that Act).

PART 6Transfer pricing and corporate interest restriction rules

40Transfer pricing: participation condition always met for investors in a QAHC etc

1

For the purposes of section 147(1) of TIOPA 2010 (basic pre-condition), where the affected persons are—

a

a QAHC, and

b

a person with a sufficient connection to the QAHC,

the participation condition in section 148 of that Act is treated as met.

2

An affected person (“A”) has a sufficient connection to the QAHC if—

a

A has a relevant interest in the QAHC or in an enhanced class of the QAHC, or

b

any of the persons with such an interest has a relationship with A such that the participation condition in that section would have been met had the affected persons been A and that person (instead of A and the QAHC).

3

In this paragraph, and in paragraph 41, “affected person” is to be construed in accordance with Part 4 of that Act.

41Transfer pricing: no small and medium-sized enterprise exemption

1

Section 166(1) of TIOPA 2010 (exemption for small and medium-sized enterprises from basic transfer pricing rule) does not apply to a potentially advantaged person if that person or the other affected person is a QAHC.

2

In this paragraph “potentially advantaged person” is to be construed in accordance with Part 4 of that Act.

Expressions used in this paragraph or in paragraph 43 that are defined for the purposes of Part 10 of TIOPA 2010 have the same meaning they have in that Part.

5

In this paragraph, and in paragraph 43, “subsidiary” has the meaning given by international accounting standards (but see section 494 of TIOPA 2010 for the definition of “wholly-owned subsidiary”).

a

meets Condition B, C or D, or any combination of those conditions, in section 1015 of CTA 2010 (meaning of “special securities”) and does not meet Condition A or E in that section, or

b

is a non-commercial security within the meaning of section 1005 of that Act.

5

Where a QAHC is party to a security partly for the purposes of its QAHC ring fence business and partly for another purpose, only the proportion of a relevant distribution in respect of that security that is attributable to the QAHC ring fence business (apportioned on a just and reasonable basis) is not to be treated as a distribution for the purposes of the Corporation Tax Acts.

45Application of hybrid and other mismatches rules where paragraph 44 applies

1

For the purposes of subsection (2) of section 259CB of TIOPA 2010 (hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), so far as the excess referred to in that subsection arises by reason of a qualified distribution, it is to be taken not to arise by reason of the terms, or any other feature, of the security in respect of which the qualified distribution is made (whether or not it would have arisen by reason of the terms, or any other feature, of the security regardless).

2

For the purposes of subsection (7) of section 259CB of TIOPA 2010 (hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), so far as an amount of ordinary income is under taxed by reason of a qualified distribution, it is to be taken not to be under taxed by reason of the terms, or any other feature, of the security in respect of which the qualified distribution is made (even if it would have been under taxed for another reason regardless of the terms, or any other feature, of the security).

3

That section has effect as if in subsections (4) and (8) after “(9)” there were inserted “and paragraph 45(1) and (2) of Schedule 2 to FA 2022”.

4

Where a QAHC is obliged to make a qualified distribution as a result of a payment to it, so much of that payment as gives rise to the obligation is to be treated as ordinary income of the QAHC for the purposes of Chapter 3 of Part 6A of TIOPA 2010 (hybrid and other mismatches from financial instruments).

5

In this paragraph—

“qualified distribution” means a relevant distribution (see paragraph 44) that is not treated as a distribution for the purposes of the Corporation Tax Acts as a result of paragraph 44;
“payment”, “ordinary income” and “under taxed” have the meanings they have in Part 6A of TIOPA 2010 (see sections 259BB, 259BC and 259CC of that Act).

46Payments of distributions etc to individual to whom the remittance basis applies

1

a company in which the QAHC has at least a 25% interest.

4

To determine for the purposes of sub-paragraph (3)(b) whether a QAHC has at least a 25% interest in a company, apply the rules for determining whether a company is a 75% subsidiary of another company for the purposes of Part 5 of CTA 2010 (see section 151 and Chapter 3 of Part 24 of that Act) as if references to “75%” were to “25%”.

5

In this paragraph—

“employment-related securities” has the meaning given by section 421B of ITEPA 2003;
“fund manager”, in relation to a QAHC, means an individual who provides investment management services in relation to the QAHC ring fence business of the QAHC;
“own shares”, in relation to a company, means shares of the company.

48Disapplication of paragraph 47 during cure period for certain non-category A investors

1

Where a QAHC has breached the ownership condition and a cure period applies to the breach, paragraph 47(1) does not apply to payments made to a person who is not a category A investor if—

a

where the sum of relevant interests in the QAHC held by persons who are not category A investors exceeds 30%, the person has increased their relevant interests in the QAHC on or after the day on which that limit was exceeded, or

b

b

the QAHC is party to the relationship for the purposes of its QAHC ring fence business, and

c

the interest to which the debit relates accrues at a time when the QAHC is a QAHC.

3

Where a QAHC is party to a debtor relationship partly for the purposes of its QAHC ring fence business and partly for another purpose, sub-paragraph (1) applies only to the proportion of the qualifying debit that is attributable to the QAHC ring fence business (apportioned on a just and reasonable basis).

4

In this paragraph “debit” and “debtor relationship” are to be construed in accordance with Part 5 of CTA 2009.

51Deeply discounted securities

1

Section 409(2) of CTA 2009 (postponement until redemption of debits for close companies’ deeply discounted securities) does not apply to a qualifying debit.

2

For the purposes of this paragraph, a debit is “qualifying” if—

a

it is a debit in respect of a deeply discounted security of the QAHC that relates to the amount of the discount,

b

the QAHC is party to the security for the purposes of its QAHC ring fence business, and

c

the discount to which the debit relates is referable to an accounting period during which the QAHC is a QAHC.

3

Where a QAHC is party to a deeply discounted security partly for the purposes of its QAHC ring fence business and partly for another purpose, sub-paragraph (1) applies only to the proportion of the qualifying debit that is attributable to the QAHC ring fence business (apportioned on a just and reasonable basis).

4

In this paragraph—

“debit” is to be construed in accordance with Part 5 of CTA 2009;
“deeply discounted security” has the meaning it has in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see section 430 of that Act);
“the discount” has the meaning given by section 406(3) of CTA 2009.

PART 8Overseas property income

52Overseas property income of a QAHC

1

No liability to corporation tax arises in respect of QAHC overseas property profits to the extent those profits are taxable in a foreign jurisdiction.

2

“QAHC overseas property profits” means any profits that would, ignoring this paragraph, be chargeable to tax under Chapter 3 of Part 4 of CTA 2009 (profits of property businesses) as profits of an overseas property business of a QAHC.

3

Profits are taxable in a foreign jurisdiction if they are chargeable to tax (and are neither subject to any exemption or relief from tax nor chargeable at a nil rate) under the law of a territory outside the United Kingdom so far as that tax—

a

is charged on income and corresponds to United Kingdom income tax, or

b

is charged on income and corresponds to the United Kingdom charge to corporation tax on income.

4

No liability to corporation tax arises in respect of profits that arise from loan relationships and derivative contracts that a QAHC is party to for the purposes of an overseas property business of that QAHC to the extent (apportioned on a just and reasonable basis) those profits relate to profits that are exempt from corporation tax as a result of sub-paragraph (1).

5

Where a QAHC is party to a loan relationship or a derivative contract partly for the purposes of an overseas property business and partly for another purpose, sub-paragraph (4) only applies to the proportion of profits arising from that relationship or contract that are attributable to the overseas property business (apportioned on a just and reasonable basis).

PART 9Disposals of overseas land and certain shares

53No chargeable gain on disposal of overseas land or certain shares

1

A gain accruing to a QAHC on a disposal of overseas land or qualifying shares is not a chargeable gain.

2

“Qualifying shares” means any shares apart from shares whose disposal would, in accordance with Part 2 of Schedule 1A to TCGA 1992 (whether asset derives at least 75% of its value from UK land), be regarded as a disposal of an asset deriving at least 75% of its value from UK land.

3

For the purposes of sub-paragraph (2), “shares” includes—

a

stock;

b

any other interest of a member in a company (including a company that has no share capital);

c

any interest as co-owner of shares (whether the shares are owned jointly or in common and whether or not the interests of the co-owners are equal);

d

rights of unit holders in unit trust schemes that are treated as if they were shares for the purposes of TCGA 1992 as a result of section 99(1) of that Act;

e

units in tax transparent funds that are treated as assets for the purposes of that Act as a result of section 103D(3) of that Act;

f

any derivative contract to the extent that the underlying subject matter of the contract is shares.

4

In this paragraph—

F29“derivative contract” means—
1. a
  a derivative contract within the meaning of Part 7 of CTA 2009 (see section 576 of that Act), or
2. b
  a contract which is not a derivative contract within the meaning of that Part only as a result of section 589(2)(b) of that Act (general exclusion of contracts whose underlying subject matter consists of shares);
“unit trust scheme” and “unit holder” have the meaning they have in section 99 of TCGA 1992;
“tax transparent fund” and “units” in relation to such a fund have the meaning they have in section 103D of that Act.

7

In this paragraph “loan capital” has the meaning given by section 78(7) of FA 1986, and reference to the issue of loan capital includes the issuing of any rights in connection with the raising of capital.

PART 11Exemption from section 874 of ITA 2007 (withholding tax)

55

In Part 15 of ITA 2007 (deduction of income tax at source), after section 888D insert—

888DAPayments of interest by a QAHC
The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest (however the interest arises) by a QAHC (within the meaning of Schedule 2 to FA 2022).

PART 12Supplementary

56Minor and consequential amendments

1

In section 212 of TCGA 1992 (annual deemed disposal of certain holdings of insurance companies), in subsection (1), at the end of paragraph (c) insert

or,
d
shares in a company which is, or is a member of, a QAHC within the meaning of Schedule 2 to the Finance Act 2022 (qualifying asset holding companies),

2

In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”) omit the “and” before paragraph (i) and after that paragraph insert

, and
j
paragraph 46(2) of Schedule 2 to FA 2022 (qualifying asset holding companies).

3

In section 465(3) of CTA 2009 (exclusion of distributions except in tax avoidance cases) omit the “and” before paragraph (d) and after that paragraph insert

, and
e
paragraph 44 of Schedule 2 to FA 2022 (distributions under certain securities issued by qualifying asset holding companies).

57Making of notifications and returns

1

HMRC may require that any information required to be given to HMRC by virtue of this Schedule is to be given in such form and manner (including by specified means of electronic communication) as may be specified in a notice published by HMRC.

2

A notice under sub-paragraph (1) may be amended or withdrawn by HMRC by publication of a further notice.

58Interpretation

1

In this Schedule—

“AIF” has the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773);
“category A investor” is to be construed in accordance with paragraph 8;
“collective investment scheme” has the meaning given by section 235 of FISMA 2000;
“company tax return” has the meaning it has in Schedule 18 to FA 1998;
“cure period” is to be construed in accordance with paragraph 27(3) to (5);
“enhanced class” is to be construed in accordance with paragraph 3(3);
“entry notification” is to be construed in accordance with paragraph 14;
“equity holder” has the meaning it has in Part 5 of CTA 2010 (see section 158 of that Act) F7, but see also paragraph 59 of this Schedule;
“equity securities” has the meaning given by section 560 of the Companies Act 2006;
“exit notification” is to be construed in accordance with paragraph 25;
“fund” and “qualifying fund” are to be construed in accordance with paragraph 9;
“HMRC” means Her Majesty’s Revenue and Customs;
“land” includes—
1. a
  buildings and structures;
2. b
  any estate, interest or right in or over land;
3. c
  land under the sea or otherwise covered by water;
“market value” has the meaning it has in TCGA 1992 (see sections 272 and 273 of that Act);
“own shares” is to be construed in accordance with paragraph 47(5);
“overseas land” means land outside the United Kingdom;
“QAHC ring fence business” has the meaning given by paragraph 20(1);
“qualifying shares” is to be construed in accordance with paragraph 53;
“participant”, in relation to a qualifying fund, means a person who takes part in the arrangements constituting the fund, whether by becoming the owner of, or of any part of, the property that is the subject of the arrangements or otherwise;
“relevant distribution” has the meaning given by paragraph 44(3);
“relevant interest” is to be construed in accordance with paragraph 3;
F27“securitisation company” means a company whose profits are brought into account, for corporation tax purposes, in accordance with regulation 14 of the Taxation of Securitisation Companies Regulations 2006 (S.I. 2006/3296);
“substantial shareholding” is to be construed in accordance with Schedule 7AC to TCGA 1992 (see, in particular, paragraphs 8 and 8A of that Schedule);
“UK REIT” means—
1. a
  a company UK REIT within the meaning of Part 12 of CTA 2010 (see section 524 of that Act), or
2. b
  a company that is a member of a group UK REIT within the meaning of that Part (see sections 523 and 606 of that Act);
“underlying subject matter”, in relation to a derivative contract, is to be construed in accordance with section 583 of CTA 2009 (meaning of “underlying subject matter”);
“wind-down period” is to be construed in accordance with paragraph 28.

2

References in this Schedule to “investment management services” are to be construed in accordance with the definition of that term in section 809EZE of ITA 2007 as if—

a

references in that definition to an investment scheme included a QAHC, and

b

references to participants were, in relation to a QAHC, to persons with a relevant interest in the QAHC.

F223

In this Schedule, apart from in paragraphs 42 and 43 (worldwide groups), references to a company being a member of a group of companies are to be read in accordance with section 170 of TCGA 1992 (interpretation of sections 171 to 181 of that Act: groups).

F659F6Alternative finance arrangements

1

Sub-paragraph (2) applies for the purposes of determining the amounts of relevant interests in companies in accordance with paragraphs 3 to 6 and the provisions of Chapter 6 of Part 6 of CTA 2010 applied by those paragraphs.

2

Where a person has (in substance) a beneficial entitlement to the profits of a company as a result of qualifying alternative finance arrangements—

a

that entitlement is to be treated as an entitlement to a proportion of the profits of that company available for distribution to equity holders of the company, and

b

that person is to be treated as an equity holder.

3

“Qualifying alternative finance arrangements” means arrangements—

a

that constitute alternative finance arrangements for the purposes of Chapter 6 of Part 6 of CTA 2009 (alternative finance arrangements), or

b

that do not constitute alternative finance arrangements only as a result of section 508 of that Act (exclusion provision not at arms length).

4

But arrangements that are analogous to a normal commercial loan are not qualifying alternative finance arrangements.

5

Arrangements are analogous to a normal commercial loan if, were the arrangements structured as a loan that resulted in the same or similar entitlements of the parties to the arrangements, they would constitute a normal commercial loan within the meaning of section 162 of CTA 2010.

SCHEDULE 3Real Estate Investment Trusts

Section 15

1

The amendments made by this Schedule are to Part 12 of CTA 2010 (real estate investment trusts) unless otherwise stated.

2Conditions for companies in relation to UK REITs

1

In section 527 (being a UK REIT in relation to an accounting period)—

a

in subsection (2)(aa), at the end insert “(but see subsection (3A))”;

b

in subsection (3)(aa), at the end insert “(but see subsection (3A))”;

c

after subsection (3) insert—

3A
Subsections (2)(aa) and (3)(aa) do not apply in relation to a period, or to any part of a period, in respect of which condition C in section 528 is met as a result of subsection (3)(b) of that section.

2

In section 528 (conditions for company)—

a

in subsection (3)—

i

the words from “the shares” to the end become paragraph (a), and

ii

after that paragraph insert

, or
b
at least 70% of the shares forming the company’s ordinary share capital are owned by one or more institutional investors (see sections 528ZA and 528ZB).

b

after subsection (3) insert—

3A
Subsection (3B) applies where condition C ceases to be met in relation to a company UK REIT or the principal company of a group UK REIT as a result of subsection (3)(b) ceasing to apply in relation to that company.
3B
The company is to be treated as if condition C continued to be met in relation to that company as a result of that subsection for the period of 12 months beginning with the day on which this subsection begins to apply.

c

in subsection (4A)(j) omit “, under the law of that territory,”.

3

After section 528 insert—

528ZAListing requirement: ownership by institutional investors
1
This section applies for the purposes of section 528(3)(b) (listing requirement where at least 70% of shares are owned by institutional investors).
2
A person “owns” ordinary share capital if the person owns it—
a
directly,
b
indirectly, or
c
partly directly and partly indirectly.
3
Sections 1155 to 1157 (meaning of “indirect ownership” and calculation of amounts owned indirectly) apply for the purposes of subsection (2).
4
For the purposes of sections 1155 to 1157 as applied by subsection (3), treat references to a body corporate as including—
a
an exempt unauthorised unit trust,
b
anything which is included in references to a body corporate for the purposes of paragraph 46 of Schedule 5AAA to the TCGA 1992 (UK property rich collective investment vehicles etc) (see sub-paragraph (12) of that paragraph), and
c
an authorised contractual scheme which is a co-ownership scheme,
and, in relation to an entity within paragraph (a), (b) or (c), references to ordinary share capital are to be treated as references to units or other corresponding interests in the entity concerned.
5
A person is also to be regarded as owning ordinary share capital in a company in circumstances where the person would be regarded as holding shares in a company under paragraphs 12 and 13 of Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding).
6
Where the assets of a partnership include ordinary share capital of a company, each partner is to be regarded as owning a proportion of that share capital equal to the partner’s proportionate interest in that ordinary share capital.
7
But subsection (6) does not apply in relation to a limited partnership which is a collective investment scheme as mentioned in section 528(4A)(c) at any time when the partnership meets the genuine diversity of ownership condition (see section 528ZB (2)).
8
In subsection (4)—
“authorised contractual scheme” and “co-ownership scheme” have the meanings given by sections 237(3) and 235A, respectively, of FISMA 2000;
“exempt unauthorised unit trust” has the same meaning as in the Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819).
528ZBListing requirement: collective investment schemes
1
For the purposes of section 528(3)(b) (listing requirement where at least 70% of shares are owned by institutional investors), where shares are owned by a person acting on behalf of a limited partnership which is a collective investment scheme as mentioned in section 528(4A)(c), the person is to be treated as an institutional investor only if the collective investment scheme meets the genuine diversity of ownership condition.
2
A collective investment scheme meets the genuine diversity of ownership condition at any time if, at that time, it meets—
a
the conditions in regulation 75(2), (3) and (4)(a) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), or
b
the condition in regulation 75(5) of those Regulations (assuming for this purpose that regulation 75(4)(b) is omitted),
and those Regulations apply for the purposes of this subsection as if any collective investment scheme which is not an offshore fund were regarded as an offshore fund.
3
For the purposes of determining whether a collective investment scheme meets the genuine diversity of ownership condition as mentioned in subsection (2), the fact that (for any reason) the capacity of the vehicle to receive investments is limited does not prevent regulation 75(3) of the Offshore Funds (Tax) Regulations 2009 (including as it applies for the purposes of regulation 75(5) of those Regulations) from being met.
4
Subsection (3) does not apply if—
a
the limited capacity of the scheme to receive investments is fixed by the documents of the vehicle (or otherwise), and
b
a pre-determined number of specific persons, or specific groups of connected persons, make investments in the vehicle that collectively exhaust all, or substantially all, of that capacity.
5
For the purposes of determining whether a collective investment scheme constituted before 1 April 2022 meets the genuine diversity of ownership condition as mentioned in subsection (2), it is to be assumed that regulation 75(2) of the Offshore Funds (Tax) Regulations 2009 (including as it applies for the purposes of regulation 75(5) of those Regulations) has effect as if it referred to a statement prepared by the manager of the scheme, available to HMRC, which—
a
specifies the intended categories of investor when the scheme was marketed,
b
confirms that the interests in the scheme were made widely available, and
c
confirms that interests in the scheme were marketed and made available in accordance with the requirements of regulation 75(4)(a) of those Regulations (and that provision is to be read accordingly).

3Requirements for financial statements

1

In section 531 (conditions as to balance of business)—

a

in subsection (2)—

i

in paragraph (a) omit “(as shown in the financial statement under section 532(2)(a))”;

ii

in paragraph (b) omit “(as shown in the financial statement under section 532(2)(c))”;

b

after subsection (2) insert—

2A
Where the matters mentioned in section 533(1)(a) to (ca) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of a group (see section 533(1C))—
a
the reference in subsection (2)(a) to the profits of property rental business of members of the group are to those profits as shown in the financial statement under section 532(2)(a), and
b
the reference in subsection (2)(b) to the profits of residual business of members of the group are to those profits as shown in the financial statement under section 532(2)(c).

c

in subsection (6), in the words before paragraph (a), after “group” insert “, where the matters mentioned in section 533(1)(d) must be specified in a financial statement under section 532(2)(a) and (c) in relation to each member of the group (see section 533(1G))”.

2

In section 533 (financial statements: supplementary)—

a

in subsection (1)—

i

in the words before paragraph (a), omit “each member of”;

ii

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

iii

after paragraph (c) insert—

ca
the items specified in section 531(4)(b) to (d), and

iv

in paragraph (d), in the words before sub-paragraph (i), after “assets” insert “, including assets within subsection (1ZA),”;

b

after subsection (1) insert—

1ZA
Assets are within this subsection if they are held solely—
a
in connection with the items mentioned in section 531(4)(b) and (c), or
b
as a result of compliance with planning obligations entered into as mentioned in section 531(4)(d).

c

after subsection (1A) insert—

1B
Subsection (1C) applies where in the accounting period for which statements are prepared under section 532(2) profits of the group’s property rental business are less than 80% of the sum of—
a
the profits of property rental business of the group, and
b
the profits of residual business of the group.
1C
In addition to being specified in relation to the group, the matters mentioned in subsection (1)(a) to (ca) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of the group.
1D
For the purposes of establishing whether subsection (1C) applies—
a
the references to profits in subsection (1B) are to profits determined in the same way as profits are determined in accordance with section 531(4);
b
any expenses relating to both property rental business and residual business are to be apportioned on a just and reasonable basis.
1E
Where the effect of subsections (1B) and (1C) is that there is no requirement to specify in a financial statement for an accounting period under section 532(2)(a) or (c) the matters mentioned in subsection (1)(a) to (ca) in relation to each member of a group, it is to be assumed that the group meets condition A in section 531(1) in relation to that accounting period.
1F
Subsection (1G) applies where, at the beginning of the accounting period for which statements are prepared under section 532(2), the sum of—
a
the value of the assets relating to property rental business, and
b
the value of the assets relating to residual business so far as consisting of cash or relevant UK REIT shares,
is less than 80% of the total value of assets held by the group.
1G
In addition to being specified in relation to the group, the matters mentioned in subsection (1)(d) must be specified in a financial statement under section 532(2)(a) or (c) in relation to each member of the group.
1H
For the purposes of establishing whether subsection (1G) applies, references to assets in subsection (1F) are to the assets excluding—
a
assets held solely in connection with the items mentioned in section 531(4)(b) and (c), and
b
assets held solely as a result of compliance with planning obligations entered into as mentioned in section 531(4)(d).
1I
Where the effect of subsections (1F) and (1G) is that there is no requirement to specify in a financial statement for an accounting period under section 532(2)(a) or (c) the matters mentioned in subsection (1)(d) in relation to each member of a group, it is to be assumed that the group meets condition B in section 531(5) in relation to that accounting period.

4Balance of business test

1

In section 531 (conditions as to balance of business)—

a

in subsection (4)—

i

in the words before paragraph (a) omit “In the case of a company,”;

ii

in the words before paragraph (a), for “(1) and (3)” substitute “(1) to (3)”;

iii

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

iv

at the end of paragraph (c) insert

, and
d
profits of residual business of the company or, as the case may be, group resulting from compliance with planning obligations entered into in accordance with section 106 of the Town and Country Planning Act 1990 in the course of the property rental business of the company or group.

b

after subsection (7) insert—

7A
References in subsections (5) to (7) to assets are to assets excluding—
a
assets held solely in connection with the items mentioned in subsection (4)(b) and (c), and
b
assets of residual business of members of the group or of the company held solely as a result of compliance with planning obligations entered into as mentioned in subsection (4)(d).

2

In consequence of the amendments made by sub-paragraph (1), in the Real Estate Investment Trusts (Financial Statements of Group Real Estate Investment Trusts) Regulations 2006 (S.I. 2006/2865), omit regulation 7.

I125Holders of excessive rights

In section 553 (meaning of “holder of excessive rights”), in subsection (1), after paragraph (b) insert

,
other than a person to whom a payment of a distribution must be made without deduction of income tax in accordance with regulation 7 of the Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006 (S.I. 2006/2867) (gross payment of distributions).

6Application and commencement

a

so much of the straddling period as falls before the commencement day, and

b

so much of the straddling period as falls on or after that day,

are to be treated as separate periods for the purposes of the provisions mentioned in sub-paragraph (1).

3

The amount of the claimant company’s profits for the straddling period is to be attributed, on an apportionment in accordance with this paragraph, to those separate accounting periods.

4

If the loss period of the non-UK resident company begins before the commencement day and ends on or after that day—

a

so much of the loss period as falls before the commencement day, and

b

so much of the loss period as falls on or after that day,

are to be treated as separate periods for the purposes of the provisions mentioned in sub-paragraph (1).

5

The amount of the loss or other amount of the non-resident company for the loss period is to be attributed, on an apportionment in accordance with this paragraph, to those separate accounting periods.

if that method produces a result that is unjust or unreasonable, on a just and reasonable basis.

6

1

The amendments made by section 24(4), and section 24(5) and paragraph 3 of this Schedule so far as they relate to those amendments, have effect in relation to accounting periods beginning on or after the commencement day.

2

If an accounting period (a “straddling period”) of a surrendering company begins before the commencement day and ends on or after that day—

a

so much of the straddling period as falls before the commencement day, and

b

so much of the straddling period as falls on or after that day,

are to be treated as separate periods for the purposes of the provisions mentioned in sub-paragraph (1).

3

Where the surrendering company surrenders any amount of loss that has been carried forward to the straddling period, it may determine how much (if any) of the loss is surrendered in relation to each of the separate accounting periods.

7

In this Part—

“claimant company” has the meaning given by section 135(2) of CTA 2010;
“commencement day” means 27 October 2021;
“surrendering company” has the meaning given by section 99(7) of CTA 2010.

SCHEDULE 5Insurance contracts: change in accounting standards

Section 29

PART 1Power to make provision in connection with IFRS 17

1

The Treasury may by regulations make such provision as they consider appropriate for the purposes of corporation tax in connection with the introduction of or any amendment to International Financial Reporting Standard 17 (insurance contracts) issued by the International Accounting Standards Board.

2

Regulations under sub-paragraph (1) may (among other things)—

a

make different provision for different purposes,

b

make incidental, supplementary, consequential, transitional, transitory and saving provision, and

c

make provision subject to an election or other specified circumstances.

PART 2Amendments in connection with IFRS 17

I15 I72

In FA 2012 omit section 79 (spreading of acquisition expenses).

For section 26A of TCGA 1992 (transfer of dormant bank or building society account) substitute—

26ATransfers in respect of dormant assets
1
This section applies where there is a transfer in respect of a dormant asset.
2
There is a transfer in respect of a dormant asset where an amount is transferred by an institution in respect of an asset—
a
to an authorised reclaim fund, with the result that section 1 of the 2008 Act or section 2, 5, 8, 12 or 14 of the 2022 Act applies in relation to the asset, or
b
to an authorised reclaim fund and one or more charities, with the result that section 2 of the 2008 Act applies in relation to the asset.
3
For the purposes of this Act—
a
the transfer is not to be treated as involving any acquisition or disposal of the asset, and
b
rights which a person (“P”) acquires under Part 1 of the 2008 Act or Part 1 or sections 22 to 25 of the 2022 Act (as the case may be) after the transfer are to be treated as the same asset as the original rights, acquired as the original rights were acquired and having the same characteristics as those rights.
4
In this section—
“the 2008 Act” means the Dormant Bank and Building Society Accounts Act 2008;
“the 2022 Act” means the Dormant Assets Act 2022;
“asset” means an asset within the scope of the dormant assets scheme (see section 1(6) of the 2022 Act);
“authorised reclaim fund” has the same meaning as in the Dormant Assets Acts 2008 to 2022;
“the original rights” are P’s rights against the institution immediately before the transfer.

I18 I52Amendment to FA 2008

For section 39 of FA 2008 (dormant bank and building society accounts) substitute—

39Dormant assets
1
The Commissioners for Her Majesty’s Revenue and Customs may by regulations—
a
modify Chapters 2 and 3 of Part 15 of ITA 2007 (deduction of income tax on interest payments at source) in relation to interest paid or credited in respect of a relevant dormant asset, and
b
provide that, for the purposes of Chapter 2 of Part 4 of ITTOIA 2005 (charge to income tax on interest), such interest is to be treated as not being paid until the time (if any) at which the balance of the dormant asset is paid out following a claim made by virtue of—
i
section 1(2)(b) or 2(2)(b) of the 2008 Act, or
ii
section 2(2)(b), 5(2)(b), 5(3)(b), 8(2)(b), 12(2)(b), 14(2)(b) or 22(1) of the 2022 Act.
2
A relevant dormant asset is an asset in respect of which an amount is to be, or has been, transferred by an institution—
a
to an authorised reclaim fund, with the result that section 1 of the 2008 Act or section 2, 5, 8, 12 or 14 of the 2022 Act applies in relation to the asset, or
b
to an authorised reclaim fund and one or more charities, with the result that section 2 of the 2008 Act applies in relation to the asset.
3
Interest paid or credited in respect of a relevant dormant asset includes interest paid or credited by a person who administers the asset on behalf of an authorised reclaim fund after the balance has been transferred.
4
In this section—
“the 2008 Act” means the Dormant Bank and Building Society Accounts Act 2008;
“the 2022 Act” means the Dormant Assets Act 2022;
“asset” means an asset within the scope of the dormant assets scheme (see section 1(6) of the 2022 Act);
“authorised reclaim fund” has the same meaning as in the Dormant Assets Acts 2008 to 2022.

I28 I93Amendments to the Income Tax (Deposit-takers and Building Societies) (Interest Payments) Regulations 2008 (S.I. 2008/2682)

1

The Income Tax (Deposit-takers and Building Societies) (Interest Payments) Regulations 2008 (S.I. 2008/2682) are amended in accordance with sub-paragraphs (2) to (4).

2

In regulation 2 (interpretation)—

a

the existing text becomes paragraph (1);

b

in that paragraph, before the definition of “certificate” insert—

“authorised reclaim fund” has the same meaning as in the Dormant Assets Acts 2008 to 2022;

c

in that paragraph, for the definition of “relevant dormant account” substitute—

“relevant dormant asset” means—
a
a dormant account the balance of which is to be, or has been, transferred—
i
to an authorised reclaim fund, with the result that section 1 of the Dormant Bank and Building Society Accounts Act 2008 applies in relation to the account, or
ii
to an authorised reclaim fund and one or more charities, with the result that section 2 of the Dormant Bank and Building Society Accounts Act 2008 applies in relation to the account, or
b
a dormant asset (within the meaning of section 1(6) of the Dormant Assets Act 2022) the balance of which is to be, or has been, transferred to an authorised reclaim fund with the result that section 2, 8, 12 or 14 of that Act applies in relation to it;

d

in that paragraph, for the definition of “repayment claim” substitute—

“repayment claim” means a claim made by virtue of—
a
section 1(2)(b) or 2(2)(b) of the Dormant Bank and Building Society Accounts Act 2008, or
b
section 2(2)(b), 8(2)(b), 12(2)(b) or 14(2)(b) of the Dormant Assets Act 2022.

e

after that paragraph insert—

2
Terms used in regulations 4A and 4B and in the Dormant Assets Acts 2008 to 2022 (apart from “repayment claim”) have the same meaning in those regulations as in those Acts.

3

In regulation 4A (dormant accounts - postponement of obligation to deduct sum representing income tax)—

a

in the heading, for “accounts” substitute “asset”;

b

in each place it occurs, for “account” substitute “asset”.

4

In regulation 4B, in both places it occurs for “account” substitute “asset”.

I20 I104Exemption for reclaim amounts in respect of individual investment plans

1

An amount is exempt from income tax and capital gains tax if and to the extent that—

a

it is paid out of an authorised reclaim fund in respect of a relevant dormant asset, and

b

the amount transferred to the fund in respect of the asset was an amount owing to a person by virtue of an investment to which regulations under Chapter 3 of Part 6 of ITTOIA 2005 (exemption for income from individual investment plans) applied.

2

In this paragraph—

“authorised reclaim fund” has the same meaning as in the Dormant Assets Acts 2008 to 2022;
“relevant dormant asset” has the same meaning as in section 39(2) of FA 2008 (as substituted by paragraph 2).

I16 I35Power to make provision for the purposes of the Income Tax Acts and TCGA 1992 in relation to dormant assets

1

The Treasury may by regulations make provision for the purposes of any provision of the Income Tax Acts or TCGA 1992 in relation to the dormant assets scheme (within the meaning of the Dormant Assets Acts 2008 to 2022).

2

Regulations under sub-paragraph (1) may, among other things—

a

amend any provision of the Income Tax Acts or TCGA 1992 (including section 26A of that Act as substituted by paragraph 1);

b

disapply any provision made by or under those Acts;

c

provide for any provision made by or under those Acts to have effect with modifications specified in the regulations.

3

Regulations under sub-paragraph (1) may make provision having effect in relation to times before the regulations are made.

4

Regulations under sub-paragraph (1) may—

a

make different provision for different purposes, and

b

make supplementary, incidental, consequential or transitional or saving provision.

5

The power conferred by sub-paragraph (1) is not exercisable after 31 December 2023.

I29 I16Commencement

This Schedule comes into force on such day as the Treasury may by regulations appoint.

SCHEDULE 7RPDT reliefs

Section 41

PART 1RPDT loss relief

1Introduction

This Part of this Schedule provides that if a company makes an adjusted trading loss in an accounting period the company is to be given relief from RPDT in a subsequent accounting period.

2Carry forward of a trading loss to next accounting period

1

Sub-paragraph (2) applies if—

a

in an accounting period (“the loss-making period”) an RP developer has an adjusted trading loss,

b

relief is not given for an amount of the loss (“the unrelieved amount”) under Part 2 or 3 of this Schedule (RPDT group reliefs), and

c

the RP developer is an RP developer in the next accounting period (“the later period”).

2

The unrelieved amount is carried forward to the later period and relief for the RP developer is given in accordance with sub-paragraph (3).

3

The relief is to be given effect in the later period in accordance with section 38 as “allowable RPDT loss relief”.

4

But sub-paragraph (3) is subject to sub-paragraphs (5) and (6) and section 42.

5

Sub-paragraph (6) applies in relation to any amount of the unrelieved amount that is greater than the maximum deduction for the later period permitted by section 42 (“the excess amount”).

6

The excess amount is carried forward to the accounting period after the later period (“the further period”) instead of being given effect in the later period (see paragraph 3).

3Carry forward of trading losses to subsequent accounting periods

1

Sub-paragraph (2) applies if—

a

an amount of an adjusted trading loss is carried forward to a later period under paragraph 2(2),

b

the RP developer has an excess amount, and

c

the RP developer is an RP developer in the further period.

2

Paragraph 2(2) to (6) apply as if—

a

references to the unrelieved amount were to the excess amount, and

b

references to the later period were to the further period.

PART 2RPDT group relief

Introduction

4

1

This Part of this Schedule allows—

a

a company (“the surrendering company”) to surrender an adjusted trading loss it has for an accounting period to another company (“the claimant company”) that is part of the same relief group, and

b

enables the claimant company to claim relief from RPDT for that loss.

2

The relief mentioned in sub-paragraph (1) is called “RPDT group relief”.

5

In this Part of this Schedule, in relation to an adjusted trading loss that a company has for an accounting period—

“surrender period” means an accounting period for which the surrendering company has the loss;
“surrenderable amounts” means an adjusted trading loss so far as eligible for surrender under this Part of this Schedule.

6

In this Part of this Schedule, “company” means any body corporate.

7Surrender of company’s losses for an accounting period

1

Sub-paragraph (2) applies if—

a

a surrendering company has an adjusted trading loss for a surrender period, and

b

the company is part of a relief group.

2

The surrendering company may surrender the loss.

8Claims for RPDT group relief

1

This paragraph applies in relation to the surrendering company’s surrenderable amounts for the surrender period under paragraph 7.

2

The claimant company may make a claim for RPDT group relief for an accounting period (“the claim period”) in relation to those amounts (in whole or in part) if—

a

the surrendering company consents to the claim,

b

there is a period (“the overlapping period”) that is common to the claim period and the surrender period, and

c

at a time during the overlapping period the surrendering company and the claimant company are part of the same relief group.

3

More than one company may make a claim for RPDT group relief in relation to any surrenderable amounts (but the giving of RPDT group relief in relation to any claim is subject to the provisions of this Part of this Schedule).

4

Paragraph 70(3) and (4) of Schedule 18 to FA 1998 apply for the purposes of any consent given under this paragraph.

9Giving of RPDT group relief

1

If a claimant company makes a claim under paragraph 8, the relief is to be given effect in accordance with section 38 as “allowable RPDT group relief”.

2

The amount of the relief is—

a

an amount equal to the surrendering company’s surrenderable amounts for the surrender period, or

b

if the claim is in relation to only part of those amounts, an amount equal to that part.

But this is subject to section 42 and paragraph 10.

3

The deduction of the relief under section 38 is to be made after the deduction of any relief under Part 1 of this Schedule but before the deduction of any relief under Part 3 of this Schedule.

10Limitation on amount of RPDT group relief to be given

1

Paragraph 9(2) is subject to the limitation in sections 138 to 142 of CTA 2010 (general limitation on amount of group relief to be given) as if those sections applied to RPDT group relief under this Part of this Schedule as they apply to group relief under Part 5 of that Act.

2

For the purposes of sub-paragraph (1)—

a

section 140 of CTA 2010 (unrelieved part of claimant company’s available total profits) has effect as if—

i

in subsection (7), for the words from “references to its” to the end there were substituted “references to its adjusted trading profits (within the meaning of section 39 of FA 2022) after the deduction of any relief given under Part 1 of Schedule 7 to FA 2022.”;

ii

subsection (8) were omitted;

b

section 142 of CTA 2010 (meaning of the “overlapping period”) has effect as if—

i

in subsection (1) for the words in parenthesis there were substituted “(see paragraph 8(2)(b) of Schedule 7 to FA 2022)”;

ii

in subsection (3), for the words from “group relief condition is the” to the end there were substituted “requirement in paragraph 8(2)(c) of Schedule 7 to FA 2022”.

11Arrangements for transfer of companies

Sections 154 and 155A to 156 of CTA 2010 (arrangements for transfer of member of group of companies etc) apply for the purposes of this Part of this Schedule as they apply for the purposes of Part 5 of that Act, but as if the references in sections 155A(1) and 155B(1) to “or 155(3)” were omitted.

PART 3RPDT group relief for carried-forward losses

Introduction

12

1

This Part of this Schedule—

a

allows a company (“the surrendering company”) to surrender an adjusted trading loss that has been carried forward to an accounting period of the company (see Part 1 of this Schedule) to another company (“the claimant company”) that is part of the same relief group, and

b

enables the claimant company to claim relief from RPDT for those losses.

2

The relief mentioned in sub-paragraph (1) is called “RPDT group relief for carried-forward losses”.

13

In this Part of this Schedule, in relation to losses that a company has carried forward to an accounting period—

“surrender period” means an accounting period to which the surrendering company has carried forward losses;
“surrenderable amounts” means an adjusted trading loss so far as eligible for surrender under this Part of this Schedule.

14

In this Part of this Schedule, “company” means any body corporate.

15Surrender of company’s carried-forward losses for an accounting period

1

Sub-paragraph (2) applies if—

a

an adjusted trading loss is carried forward to a surrender period of a surrendering company under Part 1 of this Schedule,

b

relief under that Part is not given for an amount of the loss (“the unrelieved amount”), and

c

the company is part of a relief group.

2

The surrendering company may surrender the unrelieved amount.

16Claims for RPDT group relief for carried-forward losses

1

This paragraph applies in relation to the surrendering company’s surrenderable amounts for a surrender period under paragraph 15.

2

The claimant company may make a claim for group relief for carried-forward losses for an accounting period (“the claim period”) if in relation to those amounts (in whole or in part)—

a

the surrendering company consents to the claim,

b

there is a period (“the overlapping period”) that is common to the claim period and the surrender period, and

c

at a time during the overlapping period the surrendering company and the claimant company are part of the same relief group.

3

More than one company may make a claim for group relief for carried-forward losses in relation to any surrenderable amounts (but the giving of group relief in relation to any claim is subject to the provisions of this Part of this Schedule).

4

Paragraph 70(3) and (4) of Schedule 18 to FA 1998 apply for the purposes of any consent given under this paragraph.

17Giving of RPDT group relief for carried-forward losses

1

If a claimant company makes a claim under paragraph 16, the relief is to be given effect in accordance with section 38 as “allowable RPDT group relief for carried-forward losses”.

2

The amount of the relief is—

a

an amount equal to the surrendering company’s surrenderable amounts for the surrender period, or

b

if the claim is in relation to only part of those amounts, an amount equal to that part.

But this is subject to section 42 and paragraph 18.

3

The deduction of the relief under section 38 is to be made after the deduction of any relief under Part 1 or 2 of this Schedule.

18Limitation on amount of group relief for carried-forward losses to be given

1

Paragraph 17(2) is subject to the limitation in sections 188DB to 188DG of CTA 2010 (general limitation on amount of group relief for carried-forward losses to be given) as if those sections applied to RPDT group relief for carried-forward losses under that paragraph as they apply to group relief for carried-forward losses under section 188CB of that Act.

2

For the purposes of sub-paragraph (1)—

a

section 188DC of CTA 2010 (unused part of the surrenderable amounts) has effect as if subsection (4)(a)(ii) were omitted;

b

section 188DD of CTA 2010 (claimant company’s relevant maximum for overlapping period) has effect as if—

i

in subsection (1), in Step 1, for “section 269ZD(4)” there were substituted “section 42 of FA 2022”;

ii

in subsection (1), for Step 2 there were substituted—

Step 2
Deduct from that amount the sum of any deductions made by the company for the claim period under paragraphs 2(3) and 9(1) of Schedule 7 to FA 2022.

i

any adjusted trading losses that the RP developer has for that period, and

ii

any joint venture losses that are attributable to the RP developer for that period in accordance with section 40.

SCHEDULE 8Management of RPDT

Section 45

1Amendments of TMA 1970

1

Part 5A of TMA 1970 (payment of tax) is amended as follows.

2

In section 59E (further provision as to when corporation tax is due and payable), in subsection (11) after paragraph (d) insert—

e
to any sum chargeable on a company under section 33 of FA 2022 (residential property developer tax) as if it were an amount of corporation tax chargeable on the company.

3

In section 59F (arrangements for paying corporation tax on behalf of group members), in subsection (6)—

a

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

b

after paragraph (c) insert

, and
d
to any sum chargeable on a company under section 33 of FA 2022 (residential property developer tax) as if it were an amount of corporation tax chargeable on the company.

2Amendments of FA 1998

1

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

2

In paragraph 1 (meaning of “tax”)—

a

omit the “and” at the end of the paragraph beginning “section 330(1)”;

b

omit the “and” at the end of the paragraph beginning “step 5 in section 371BC(1)”;

c

at the end of the paragraph beginning “paragraphs 50 and 51” insert

, and
section 33 of the Finance Act 2022 (residential property developer tax).

3

After paragraph 7 insert—

7AResidential property developer tax
1
A residential property developer must include in its company tax return for an accounting period a statement of—
a
its RPD profits in relation to the accounting period,
b
its adjusted trading profits or adjusted trading losses for that period,
c
the amount of any joint venture profits that are attributable to the developer for that period,
d
any allowable RPDT loss relief which the developer is given for that period,
e
any allowable RPDT group relief claimed by the developer for that period,
f
any allowable RPDT group relief for carried-forward losses claimed by the developer for that period, and
g
its allowance for that period,
unless sub-paragraph (2) applies in relation to the accounting period.
2
This sub-paragraph applies where it is reasonable to assume that the developer would have no liability to residential property developer tax in relation to the accounting period if no amount were deducted in the calculation at section 38 of the Finance Act 2022 in relation to that accounting period in respect of any—
a
allowable RPDT loss relief,
b
allowable RPDT group relief, or
c
allowable RPDT group relief for carried-forward losses.
3
Terms used in Part 2 of the Finance Act 2022 have the same meaning in this paragraph as in that Part (unless the contrary intention appears).

4

In paragraph 8(1) (calculation of tax payable), under the heading “Third step”, at the end insert—

1
Any amount of residential property developer tax chargeable by virtue of section 33 of the Finance Act 2022.

SCHEDULE 9Miscellaneous provision

Section 49

1Residential property developer tax to be ignored for corporation tax purposes

In calculating profits or losses for corporation tax purposes, no deduction is allowed in respect of RPDT.

2Payments made for RPDT reliefs to be ignored for corporation tax purposes

An amount which is, as a result of section 40(5) or paragraph 19 of Schedule 7, not to be taken account in determining profits or losses under section 39 (adjusted trading profits and losses)—

a

is also not to be taken into account in calculating profits or losses for the corporation tax purposes, and

b

is not to be regarded for those purposes as a distribution.

3Provision made or imposed between RPD activities and other activities of the same company

Chapters 1 and 3 to 6 (read in accordance with Chapters 2 and 8) of Part 4 of TIOPA 2010 (transfer pricing) apply to provision made or imposed as between an RP developer’s RPD activities and other activities carried on by it as if—

a

those activities were carried on by two different persons,

b

the provision were made or imposed between those persons by means of a transaction, and

c

the two persons were both controlled by the same person at the time of the making or imposition of the provision.

4Provision made or imposed between an RP developer and another person under the same control

1

Chapters 1 and 3 to 6 (read in accordance with Chapters 2 and 8) of Part 4 of TIOPA 2010 apply to provision made or imposed as between an RP developer and a relevant company by means of a transaction or series of transactions that—

a

in relation to the RP developer, falls to be regarded as made or imposed in the course of, or with respect to, the RP developer’s RPD activities, and

b

in relation to the relevant company, does not fall to be regarded as made or imposed in the course of, or with respect to, RPD activities carried on by that company.

2

A company is a relevant company if it and the RP developer are under the same control at the time when the provision was made or imposed.

SCHEDULE 10Public interest business protection tax

Section 67

PART 1Charge

1Charge on value of assets held for qualifying purposes

1

Where—

a

a person (“P”) takes disqualifying steps in relation to an asset in disqualifying circumstances, and

b

it is subject to arrangements, imposed in connection with the insolvency of the person carrying it on by or under an enactment (including by virtue of any licence required by or under an enactment), for the transfer of customers of the business to another business, or

c

such other circumstances relating to insolvency as may be specified in regulations made by the Treasury exist in relation to the business or the person carrying it on.

4

In this paragraph—

“energy supply business” means the business of making supplies required to be authorised under—
1. a
  a licence granted under section 7A(1) of the Gas Act 1986 (gas supply licences), or
2. b
  a licence granted under section 6(1)(d) of the Electricity Act 1989 (electricity supply licences);
“special administration” means an insolvency procedure—
1. a
  that is similar or corresponds to ordinary administration, and
2. b
  under which the administrator has one or more special objectives instead of or in addition to the objectives of ordinary administration;
“special administration regime” means provision made by an enactment that provides for special administration;
“ordinary administration” means the insolvency procedure provided for by—
1. a
  Schedule B1 to the Insolvency Act 1986, or
2. b
  Schedule B1 to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

3Adjusted value of assets

1

To determine the adjusted value of an asset, take the following steps—

Step 1 - value the asset
Determine the underlying value of the asset.
Step 2 - apply reduction to reflect potential losses as a result of taking steps
Deduct an amount equal to 10% of the underlying value from that value.

2

The underlying value of the asset is the greater of—

a

the fair value of the asset immediately before the first disqualifying step was taken in relation to it, and

b

the amount or value of any consideration paid directly or indirectly in connection with, or otherwise in consequence of, the taking of the disqualifying steps (whether paid to the person taking them or to any other person).

3

Where it is reasonable to conclude that an asset was held partly for qualifying purposes in relation to the public interest business in question and partly for other purposes, reduce the underlying value so that it reflects the proportion of the asset that can be attributed (on a just and reasonable basis) to its being held for qualifying purposes in relation to the business.

PART 2Joint and several liability

4Liability of associated companies

1

This paragraph applies to any company, other than a company that is subject to special measures, that was associated, at any point during the disqualifying period, with a company (“the principal taxpayer”) that is liable to public interest business protection tax as a result of paragraph 1.

2

A company is associated with another if—

a

one of the two has control of the other, or

b

both are under the control of the same person or persons.

3

A company to which this paragraph applies is, together with the principal taxpayer, jointly and severally liable to public interest business protection tax.

4

In this Schedule the “disqualifying period” means the period commencing with the day on which the first disqualifying step was taken and ending with the last day of the period in which the principal taxpayer must make a return under paragraph 8(1).

5Joint and several liability of connected persons and others who may benefit

1

the terms of the loan were agreed between parties dealing at arm’s length.

6Qualifying interests in company, partnership or unincorporated association

1

A person (“the qualifying person”) had a qualifying interest in a company, partnership or unincorporated association liable to tax (“the taxed entity”) during the disqualifying period if at any point during the period—

a

the qualifying person was beneficially entitled to a proportion of the profits available for distribution to equity holders of the taxed entity, or

b

the qualifying person was beneficially entitled to a proportion of the assets of the taxed entity for distribution to its equity holders on a winding up,

and the qualifying interest of the person is, for the purposes of paragraph 5(2)(b) and (5)(b), to be treated as the greatest of the proportions that applied at any point during the period.

2

Chapter 6 of Part 5 of CTA 2010 applies for the purposes of determining the proportions of profits or assets of the taxed entity that the qualifying person is beneficially entitled to as it applies for the purposes of determining the proportions of profits or assets of a company that another company is beneficially entitled to (see, in particular, sections 165 and 166 of that Act).

3

That Chapter has effect for the purposes of sub-paragraph (1) as if—

a

in sections 170(3) and 172(3) (shares or securities with limited or temporary rights), for “less than” there were substituted “more than”,

b

in section 174 (option arrangements)—

i

in subsection (1), in Step 4, for “lowest proportion” there were substituted “highest proportion”, and

ii

in subsection (2), for “less than” there were substituted “more than”,

c

in sections 175(3), 176(3), 177(3) and 178(3) (cases in which more than one of sections 170, 172, and 174 apply), for “lowest proportion” there were substituted “highest proportion”, and

d

sections 179 to 182 were omitted.

4

That Chapter is to be read, for those purposes, with all modifications necessary to ensure that—

a

it applies to a company which does not have share capital or to a partnership or unincorporated association, and to holders of corresponding ordinary holdings in such a company, partnership or unincorporated association, in a way which corresponds to the way they apply to companies with ordinary share capital and holders of ordinary shares in such companies,

b

it applies in relation to ownership through any trust or other arrangement, in a way which corresponds to the way it applies to ownership through a company, and

c

for the purposes of achieving paragraphs (a) and (b), profits or assets are attributed to holders of corresponding ordinary holdings in partnerships, unincorporated associations, trusts or other arrangements in a manner which corresponds to the way profits or assets are attributed to holders of ordinary shares in a company which is a body corporate.

5

In this paragraph “corresponding ordinary holding” means a holding or interest which provides the holder with economic rights corresponding to those provided by a holding of ordinary shares.

7Claim for relief

An officer of Revenue and Customs may by notice require a person liable to public interest business protection tax as a result of paragraph 4 or 5—

a

to make and deliver to the officer a return containing such information as may reasonably be required in pursuance of the notice, and

b

to deliver with the return such accounts, statements and documents, relating to information contained in the return as may reasonably be so required.

2

A notice may only be given to a person under this paragraph if the officer considers that there is a risk that the full amount of tax due from the principal taxpayer (see paragraphs 4 and 5) will not be recovered from the principal taxpayer.

3

A notice under this paragraph must state the amount the officer determines is the liability of the principal taxpayer.

4

A return required as a result of a notice given under this paragraph must contain an assessment of the amount (a “self-assessment”), on the basis of the information contained in the return and the amount stated in the notice in accordance with sub-paragraph (3), the person is liable to pay.

5

A return required as a result of a notice given under this paragraph must be made and delivered before the end of the period of 30 days beginning with the day on which the notice was given.

6

A person who has paid an amount of tax under or in pursuance of a notice under this paragraph may recover that amount from the principal taxpayer.

7

Where a return is made under this paragraph, the amount assessed is payable on the day after the end of the period of 45 days beginning with the day on which the notice to which it relates was given.

3 months beginning with the day on which the notice was given.

to the officer who gave the notice under sub-paragraph (4), and

b

before the end of the period of 30 days beginning with the day on which the notice under sub-paragraph (4) was issued.

12HMRC to determine tax where no return made in time

1

Where a person required to make a return as a result of paragraph 8 or 9 has not delivered that return, an officer of Revenue and Customs may determine to the best of the officer’s information and belief the amount of tax payable by the person.

2

The power to make a determination under this paragraph becomes exercisable if no return is delivered before the end of the period in which the return must be delivered.

3

The officer must give notice of a determination under this paragraph to the person, and that notice must state the date on which the determination is issued.

4

A determination under this paragraph is to have effect as if it were a self-assessment contained in a return under (as the case may be) paragraph 8 or 9.

5

But if a return is subsequently made containing a self-assessment of the tax, that determination is superseded by the self-assessment provided that return is made and delivered—

a

5

An enquiry extends to anything contained in the return, or required to be contained in the return, subject to the following limitations.

6

Where a notice of enquiry is given as a result of an amendment of the return under paragraph 11(1) and that notice is given—

a

after the end of the period referred to in sub-paragraph (2), or

b

after a closure notice has been issued in relation to an enquiry into the return,

the enquiry into the return is limited to matters to which the amendment relates or which are affected by the amendment.

14Completion of enquiry

1

The enquiry is completed when an officer of Revenue and Customs informs the taxpayer by notice (“a closure notice”) that the officer’s enquiries have been completed.

2

A closure notice must state the officer’s conclusions and—

a

state that in the officer’s opinion no amendment of the return is required, or

the reference in paragraph 2(1) of that Schedule to section 9ZA of that Act were to paragraph 11(1) of this Schedule,

b

in paragraph 2(3) of that Schedule—

i

the reference to section 9B(3) of that Act were to paragraph 15(3) of this Schedule,

ii

the reference to section 9B(3)(a)(i) of that Act were to paragraph 15(4)(a) of this Schedule, and

iii

the reference to section 9B(3)(b) of that Act were to paragraph 15(5) of this Schedule,

c

in paragraph 2(4) of that Schedule—

i

in paragraph (a), for “partial or final closure notice” there were substituted “closure notice”, and

ii

for paragraph (b) there were substituted—

b
in the case of an amount that is repayable, the day on which the closure notice relating to the enquiry was given.

d

the reference in paragraph 3(1) of that Schedule to section 9ZB of that Act were to paragraph 11(3) of this Schedule,

e

the reference in paragraph 4(1) of that Schedule to section 9C of that Act were to paragraph 16 of this Schedule, and

f

the reference in paragraph 5(1) of that Schedule to section 28A of that Act were to paragraph 14 of this Schedule.

18Discovery assessment

1

If an officer of Revenue and Customs discovers—

a

that a person who ought to have been assessed to tax has not been assessed to tax,

b

that an assessment to tax is or has become insufficient, or

c

that any relief from tax which has been given is or has become excessive,

the officer may make an assessment (a “discovery assessment”) in the amount, or the 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

Where a person has made and delivered a return under paragraph 8 or 9 a discovery assessment may not be made in respect of the tax to which the return relates unless condition A or B is met.

3

Condition A is that the situation mentioned in sub-paragraph (1) was brought about carelessly or deliberately by the person or a person acting on that person’s behalf.

4

Condition B is that at the time when an officer of Revenue and Customs—

a

ceased to be entitled to give a notice of enquiry to the person, or

b

in a case where a notice of enquiry was given in relation to the return, issued a closure notice,

the officer 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 sub-paragraph (1).

5

For the purposes of sub-paragraph (4), information is made available to an officer of Revenue and Customs if—

a

it is contained in the person’s return under paragraph 8 or 9, or in any accounts, statements or documents accompanying the return;

b

it is contained in any claim made under this Schedule by the person, or in any accounts, statements or documents accompanying any such claim;

c

it is contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an officer of Revenue and Customs, are produced or furnished by the person to the officer;

d

it is information the existence of which, and the relevance of which as regards the situation mentioned in sub-paragraph (1)—

i

could reasonably be expected to be inferred by an officer of Revenue and Customs from information falling within paragraphs (a) to (c), or

ii

are notified in writing by the person to an officer of Revenue and Customs.

6

An objection to the making of an assessment under this paragraph on the ground that neither condition A nor B is fulfilled may only be made on an appeal against the assessment.

7

Where an amount of tax is assessed under this paragraph, that amount is payable on the day after the end of the 14 day period beginning with the day on which the notice of assessment is issued.

3

Sections 47C to 57 of TMA 1970 (appeals) apply (subject to the other provisions of this Schedule) to an appeal under this paragraph as they apply to an appeal under the Taxes Acts.

4

But in the case of section 55 (recovery of tax not postponed), that section has effect as if—

a

in subsection (1) for paragraphs (a) and (aa) there were substituted—

a
an amendment of a self-assessment under paragraph 16 of Schedule 10 to the Finance Act 2022,
aa
a conclusion stated or an amendment made by a closure notice,

b

after subsection (3) there were inserted—

3ZA
But the payment of any amount of public interest business protection tax is not to be postponed unless HMRC or the tribunal (as the case may be) determines that the circumstances of the appellant are exceptional such that it would not be just to refuse postponement of the payment of that amount.

by preserving the information contained in them in any form and by any means,

subject to any conditions or exceptions specified in writing by the Commissioners for Her Majesty’s Revenue and Customs.

7

A person who fails to comply with this paragraph is liable to a penalty not exceeding £3,000.

8

But no penalty is incurred if the records which the person fails to keep or preserve are records which might have been needed only for the purposes of a claim under this Schedule.

9

Sections 100 to 103 of TMA 1970 apply to a penalty under this paragraph as they apply to a penalty under a provision of the Taxes Acts to which those sections apply.

23Collection and recovery

Part 6 of TMA 1970 applies to public interest business protection tax as it applies to tax within the meaning of that Act as if in section 69(1) (recovery of penalty or interest), before paragraph (c) there were inserted—

ba
penalties imposed under Schedule 56 to the Finance Act 2009 as a result of the modifications made by paragraph 28 of Schedule 10 to the Finance Act 2022;

24Overpaid tax

1

Paragraphs 51 to 51G of Schedule 18 to FA 1998 (overpaid tax) apply, as those provisions apply in relation to a claim for repayment or discharge of corporation tax, for the purposes of making a claim for repayment or discharge of an amount of public interest business protection tax (an “overpayment claim”) where the person believes the tax is not due.

2

Those provisions have effect for the purposes of an overpayment claim as if—

a

in paragraph 51—

i

in sub-paragraph (4), the reference to Part 7 of Schedule 18 to FA 1998 were to paragraph 25 of this Schedule, and

ii

in sub-paragraph (6), for paragraphs (a) and (b) there were substituted—

a
by provision made by or under Schedule 10 to the Finance Act 2022, or
b
by provision having effect for the purposes of public interest business protection tax as a result of provision made by or under that Schedule.

b

in paragraph 51A(3), for “the Corporation Tax Acts” there were substituted “—

a
provision made by or under Schedule 10 to the Finance Act 2022, or
b
provision having effect for the purposes of public interest business protection tax as a result of provision made by or under that Schedule

c

in paragraph 51B—

i

in sub-paragraph (1), for “more than 4 years after the end of the relevant accounting period” there were substituted “after the last day on which a self-assessment may be made and delivered in relation to the tax (see paragraphs 8(5) and 10(5) of Schedule 10 to the Finance Act 2022)”,

ii

sub-paragraphs (2) and (3) were omitted, and

iii

in sub-paragraph (4), for “company tax return” there were substituted “return under paragraph 8 or 9 of Schedule 10 to the Finance Act 2022”,

d

in paragraph 51BA(1)—

i

in paragraph (a), for “paragraph 36 or 37” there were substituted “paragraph 12 of Schedule 10 to the Finance Act 2022”, and

ii

in paragraph (b) for sub-paragraph (iii) there were substituted—

iii
the last day on which a self-assessment may be made and delivered in relation to the tax (see paragraphs 8(5) and 10(5) of Schedule 10 to the Finance Act 2022) has passed, and

e

paragraphs 51C and 51D were omitted,

f

in paragraph 51E—

i

references to a discovery assessment were to a discovery assessment under this Schedule (see paragraph 18),

ii

references to a discovery determination were omitted, and

iii

in sub-paragraph (2)(a), for “restrictions in paragraphs 42 to 45” there were substituted “restriction in paragraph 18(2) of Schedule 10 to the Finance Act 2022”,

g

paragraph 51F were omitted, and

h

in paragraph 51G—

i

in sub-paragraph (1), for “company” there were substituted “person”, and

ii

in sub-paragraph (3)(c), the reference to paragraph 51F(1)(b) were omitted.

25Claims under this Schedule

1

A claim under paragraph 7 or 24 (for relief from, or repayment or discharge of, tax) must be for an amount which is quantified at the time when the claim is made.

2

A claim must be made within 4 years from the day on which the person whose claim it is became liable to the tax to which the claim relates.

3

A person who has made a claim under this Schedule and subsequently discovers that a mistake has been made in it may make a supplementary claim within the time allowed for making the original claim.

4

Paragraphs 2 and 2A of Schedule 1A to TMA 1970 (making of claims and keeping and preserving of records) apply to a claim under paragraph 7 of this Schedule but as if in paragraph 2A of that Schedule—

a

in sub-paragraph (1) “in relation to a year of assessment or other period” were omitted, and

b

the relevant day for the purposes of that sub-paragraph were the day on which an officer of Revenue and Customs has issued a notice under paragraph 7(7) of this Schedule in relation to the claim.

5

Schedule 1A to TMA 1970 (claims etc not included in returns) applies to a claim under paragraph 24 of this Schedule but as if in paragraph 2A(1) of that Schedule “in relation to a year of assessment or other period” were omitted.

26Penalty for failure to submit return

1

Schedule 55 to FA 2009 (penalty for failure to make returns) has effect with the following modifications.

2

Paragraph 1(2) of that Schedule has effect as if for the words before paragraph (a) there were substituted “Paragraphs 2 to 13P set out—”.

3

The Table in that paragraph has effect as if at the end there were inserted—

30
Public interest business protection tax
a
Return under paragraph 8 or 9 of Schedule 10 to FA 2022
b
Accounts, statement or document required under either of those paragraphs.

4

That Schedule has effect as if before paragraph 14 there were inserted—

Amount of penalty: public interest business protection tax
13K
Paragraphs 13L to 13P apply in the case of a return falling within item 30 in the Table.
13L
P is liable to a penalty under this paragraph of £10,000.
13M
1
P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 30 days beginning with the penalty date.
2
The penalty under this paragraph is £10,000.
13N
1
P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 3 months beginning with the penalty date.
2
The penalty under this paragraph is 10% of any liability to tax which would have been shown in the return in question.
13O
1
P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 6 months beginning with the penalty date.
2
The penalty under this paragraph is 10% of any liability to tax which would have been shown in the return in question.
13P
1
P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 12 months beginning with the penalty date.
2
Where, by failing to make the return, P withholds information which would enable or assist HMRC to assess P’s liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).
3
If the withholding of the information is deliberate and concealed, the penalty is 100% of any liability to tax which would have been shown in the return in question.
4
If the withholding of the information is deliberate but not concealed, the penalty is 70% of any liability to tax which would have been shown in the return in question.
5
In any other case, the penalty under this paragraph is 10% of any liability to tax which would have been shown in the return in question.

27Penalties for errors

Schedule 24 to FA 2007 has effect as if in the Table in paragraph 1 after the entry for “Machine games duty” there were inserted—

Public interest business protection tax
Return under paragraph 8 or 9 of Schedule 10 to FA 2022.
Public interest business protection tax
Return, statement or declaration in connection with a claim for a relief.
Public interest business protection tax
Accounts in connection with ascertaining liability to tax.

28Failure to pay public interest business protection tax on time

Schedule 56 to FA 2009 has effect as if in the Table in paragraph 1 of that Schedule, after the entry for item 1A there were inserted—

1B
Public interest business protection tax
Amount payable under paragraph 8(6) of Schedule 10 to FA 2022
The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid
1C
Public interest business protection tax
Amount payable under paragraph 9(7) of Schedule 10 to FA 2022
The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid
1D
Public interest business protection tax
Amount payable under paragraph 12(8) of Schedule 10 to FA 2022
The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid

29Interest

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 as a result of provision made by this Schedule.

30Application of information, inspection and data-gathering powers

1

Schedule 36 to FA 2008 (information and inspection powers) has effect as if, in paragraph 63(1) of that Schedule (meaning of “tax” for the purposes of that Schedule), after paragraph (c) there were inserted—

cza
public interest business protection tax,

2

Schedule 23 to FA 2011 (data-gathering powers) has effect as if, in paragraph 45(1) of that Schedule (meaning of “tax” for the purposes of that Schedule), after paragraph (c) there were inserted—

cza
public interest business protection tax,

31Documents

1

Section 115 of TMA 1970 applies to documents to be given, sent, served or delivered under provision made by or under this Schedule as it applies to documents to be given, sent, served or delivered under the Taxes Acts.

2

The Income and Corporation Taxes (Electronic Communications) Regulations 2003 (S.I. 2003/282) have effect as if, in regulation 2(1)(a)—

a

the “or” and the end of paragraph (vi) were omitted,

b

for the “; and” at the end of paragraph (vii) there were substituted “, or”, and

c

after that paragraph there were inserted—

viii
Schedule 10 to the Finance Act 2022; and

32Disclosures to persons who are joint and severally liable to tax

1

Her Majesty’s Revenue and Customs may disclose information about a person they consider liable to public interest business protection tax as a result of paragraph 1 for the purposes mentioned in sub-paragraph (2).

2

Those purposes are—

a

or otherwise.

4

In this paragraph “arrangements” include any agreement, understanding, scheme transaction or series of transactions (whether or not legally enforceable).

37No deduction for public interest business protection tax

In calculating profits, losses or gains for income tax, capitals gains tax or corporation tax purposes, no deduction is allowed in respect of public interest business protection tax.

38Information sharing

1

This paragraph applies to information that—

a

is held by the Secretary of State or the Gas and Electricity Markets Authority, and

b

is relevant to public interest business protection tax.

2

Information to which this paragraph applies may be disclosed by whichever of the Secretary of State or Gas and Electricity Markets Authority holds it (or anyone acting on behalf of that person) to the Commissioners for Her Majesty’s Revenue and Customs for the purposes of their functions relating to public interest business protection tax or any other tax.

3

Subject to sub-paragraph (5), no duty of confidentiality or other restriction on disclosure (however imposed) prevents the disclosure of information in accordance with sub-paragraph (2).

4

This paragraph does not limit the circumstances in which information may be disclosed under section 105(2) to (4) of the Utilities Act 2000 or under any other enactment or rule of law.

5

Nothing in this paragraph authorises the making of a disclosure which—

a

contravenes the data protection legislation (save that the power conferred by this paragraph is to be taken into account in determining whether a disclosure contravenes that legislation), or

b

39Application of the Provisional Collection of Taxes Act 1968

The Provisional Collection of Taxes Act 1968 has effect as if section 1(1) of that Act (temporary statutory effect of House of Commons resolutions affecting listed taxes or customs or excise duties) contained a reference to public interest business protection tax.

40Power to apply, disapply or modify provisions of relevant tax legislation

1

For purposes in connection with the administration of public interest business protection tax, the Treasury may by regulations make provision about the application of relevant tax legislation to public interest business protection tax (including provision disapplying or modifying such legislation or applying legislation that would not otherwise apply).

2

Relevant tax legislation means any provision made by or under—

a

the Taxes Acts, or

b

Part 3 of this Schedule.

41Regulations

1

A power to make regulations under this Schedule includes power to make—

a

consequential, supplementary, incidental, transitional or saving provision;

b

provision having retrospective effect.

2

Regulations under this Schedule are to be made by statutory instrument.

3

Sub-paragraph (4) applies to—

a

regulations under paragraph 2,

b

regulations under this Schedule that have the effect of limiting the application of, reducing or removing any existing relief or exemption from tax, or

c

regulations under this Schedule which have retrospective effect, other than regulations having retrospective effect which provide for a new or increased relief or a new exemption.

4

A statutory instrument containing (whether alone or with other provision) regulations to which this sub-paragraph applies may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

5

Any other statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.

42Interpretation of Schedule

1

In this Schedule—

“adjusted value” is to be construed in accordance with paragraph 3;
“asset” is to be construed in accordance with paragraph 1(10);
“company” means a body corporate;
“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);
“discovery assessment” is to be construed in accordance with paragraph 18(1);
“disposal” is to be construed in accordance with paragraph 1(10);
“disqualifying period” is to be construed in accordance with paragraph 4(4);
“disqualifying steps” is to be construed in accordance with paragraph 1;
“fair value”, in relation to an asset held by a person (“P”), means the amount which, at the time as at which the value is to be determined, is the amount which P would obtain from an independent person dealing at arm’s length for—
1. a
  in the case of an asset comprising rights and liabilities, the transfer of P’s rights under the asset and the release of all P’s liabilities under it, or
2. b
  in any other case, the transfer of the asset;
“principal taxpayer” is to be construed in accordance with (as the case may require) paragraph 4(1), 5(1) or 5(2);
“public interest business” is to be construed in accordance with paragraph 2(1);
“qualifying purpose” is to be construed in accordance with paragraph 1;
“special measures” is to be construed in accordance with paragraph 2(3);
“tax” (except where the context otherwise requires) means public interest business protection tax;
“the Taxes Acts” has the meaning given by section 118(1) of TMA 1970;
“the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

2

For the purposes of this Schedule—

a

whether a person is connected with another person is to be determined in accordance with section 1122 of CTA 2010, and

b

whether a person controls a company is to be determined in accordance with section 1124(2) of that Act.

3

Subsections (5) to (7) of section 118 of TMA 1970 (meaning of references to bringing about loss of tax or situation carelessly or deliberately) apply for the purposes of this Schedule as they apply for the purposes of that Act.

4

The Treasury may by regulations make further provision about the meaning and application of “fair value” in cases specified in the regulations.

43Commencement and expiry

1

This Schedule has effect in relation to the taking of disqualifying steps (whenever taken) in disqualifying circumstances where the public interest business in question becomes subject to special measures—

a

on or after 28 January 2022, and

b

before F230 April 2024.

2

The Treasury may, for the date for the time being specified in sub-paragraph (1)(b), by regulations substitute such later date before 29 January 2025 as may be specified in the regulations.

3

The power in sub-paragraph (2)—

a

may be exercised on more than one occasion;

b

may not be exercised on or after the date for the time being specified in sub-paragraph (1)(b).

SCHEDULE 11Restriction of use of rebated diesel and biofuels

Section 76

PART 1Amendments to HODA 1979

I301

HODA 1979 is amended as follows.

I212

In section 12 (rebate not allowed on fuel for road vehicles)—

a

in subsection (2), for paragraphs (a) and (b) substitute—

a
be used as fuel other than for an excepted machine, or
b
be taken into any vehicle, vessel, machine or appliance, other than an excepted machine, as fuel,

b

for subsection (2A) substitute—

2A
But subsection (2) does not apply in relation to fuel used or taken in as mentioned in section 14E (private pleasure craft).

I193

In section 13 (penalties for contravention of section 12)—

a

in subsection (4), for “road vehicle” substitute “vehicle, vessel, machine or appliance”;

b

in subsection (6), in paragraph (a), for “road vehicle as mentioned in” substitute “vehicle, vessel, machine or appliance, other than an excepted machine, in contravention of”.

I254

In section 14E as it extends to Northern Ireland (restrictions on use of certain fuel for private pleasure craft), after subsection (1) insert—

1A
Subsection (1) does not apply in relation to the use of rebated heavy oil or bioblend in a private pleasure craft in Northern Ireland where there is a declaration, in relation to the oil or bioblend, in accordance with subsection (3) of this section—
a
as it extended to Northern Ireland before 1 October 2021, or
b
as it extends to any other part of the United Kingdom at any time.

I265

In section 14F as it extends to England and Wales and Scotland, after subsection (5) insert—

6
Rebated heavy oil or bioblend is liable to forfeiture if—
a
it is in the fuel supply of an engine provided for propelling a vessel that is being used as a private pleasure craft, and
b
its use would be in contravention of section 14E(2).

I276

In section 24 (control of use of duty-free and rebated oil), omit subsection (3A) (as inserted by paragraph 11 of Schedule 11 to FA 2020).

I147

In section 24A (penalties for misuse of marked oil)—

a

in subsection (1), omit the first “for”;

b

after subsection (8) insert—

9
This section does not apply in relation to marked oil—
a
the use of which is lawful in accordance with section 12 (rebate not allowed on fuel other than for excepted machines),
b
which, on or after 1 April 2022, is taken into a vehicle, vessel, machine or appliance that is not an excepted machine in accordance with the law of a place outside the United Kingdom, or
c
which is used or taken in as mentioned in section 14E (private pleasure craft).

I318

In section 27 (interpretation), in subsection (1B)—

a

in the words before paragraph (a), for “1” substitute “1A”;

b

in each of paragraphs (a), (b) and (c), for “vehicle” substitute “machine”.

I179

In Schedule 1A (excepted machines) (as inserted by paragraph 22 of Schedule 21 to FA 2021)—

a

in paragraph 2 (agricultural vehicles)—

i

for sub-paragraph (2) substitute—

2
An agricultural vehicle that is primarily kept for use within sub-paragraph (1) at a time when it is used for any other purpose on private land where it is ordinarily kept.

ii

in sub-paragraph (5), in paragraph (c), for the words from “that Act” to the end substitute “the Vehicle Excise and Registration Act 1994 (vehicles used between different parts of land)”;

iii

in sub-paragraph (5), for paragraph (d) substitute—

d
any other vehicle that is used for the conveyance of machinery that is built into or permanently attached to the vehicle, provided that the machinery is used in the processing or handling of agricultural, horticultural, piscicultural or forestry produce or materials.

b

in paragraph 3 (special vehicles), in sub-paragraph (1)—

i

omit the “or” at the end of paragraph (a);

ii

at the end of paragraph (b) insert

, or
c
to go to, or from, a golf course or land maintained by a community amateur sports club to be used, or after being used, on the golf course or land.

c

in paragraph 6 (vessels)—

i

in sub-paragraph (1) omit “in Northern Ireland”;

ii

in sub-paragraph (3) omit “in Northern Ireland”;

iii

omit sub-paragraph (4);

d

in paragraph 8 (other machines or appliances), in sub-paragraph (1)—

i

after paragraph (a) insert—

aa
for any purpose on land where it is kept and used for purposes relating to agriculture, horticulture, pisciculture or forestry;

ii

after paragraph (d) insert—

e
for heating of premises that are used for commercial purposes provided that it uses kerosene for fuel.

e

in paragraph 9 (interpretation), in sub-paragraph (3)—

i

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

ii

for paragraph (b) substitute—

b
it is fully dismantled at least once a year, and

iii

after that paragraph insert—

c
the persons who provide or operate it are able to demonstrate that, when the fair or circus is dismantled, it is capable of being transported to another location.

PART 2Amendments to FA 2021

10

The following provisions of Schedule 21 to FA 2021 (restriction of use of rebated diesel and biofuels) are omitted—

a

paragraph 5(1)(c);

b

paragraph 6(2)(a);

c

paragraph 6(2)(b)(ii);

d

paragraph 6(3)(a)(ii);

e

paragraph 6(4);

f

paragraph 6(5);

g

paragraph 6(6);

h

paragraph 6(7)(a);

i

paragraph 14;

j

paragraph 15;

k

paragraph 18.

SCHEDULE 12Plastic packaging tax

Section 84

1

Part 2 of FA 2021 (plastic packaging tax) is amended as follows.

2No charge for persons below de minimis

In section 43 (charge to plastic packaging tax), after subsection (2) insert—

2A
A person who is neither registered nor liable to be registered (see sections 55 to 57) is to be treated, for the purposes of subsection (1) of this section, as not acting in the course of a business.

3Time of importation

1

In section 50 (time of importation)—

a

in subsection (2), for “This section” substitute “Subsection (1)”;

b

after subsection (2) insert—

3
The Commissioners may by regulations make provision about when a chargeable plastic packaging component is imported into the United Kingdom for the purposes of plastic packaging tax.
4
Regulations under subsection (3) may amend this Part.

2

In section 84 (regulations), in subsection (5), after paragraph (b) insert—

ba
section 50(3) (timing of importation);

4Reliefs for persons enjoying certain immunities and privileges

1

Section 55 (liability to register: producers and importers) is amended as follows.

2

In subsection (1), at the end insert “(subject to subsection (5))”.

3

After subsection (4) insert—

5
Subsection (1) does not apply to any person for the time being listed in section 13B(1) of the Customs and Excise Duties (General Reliefs) Act 1979 (members of visiting forces etc).
6
The Commissioners may by regulations make provision about the administration of the disapplication of subsection (1) by subsection (5), including provision making it subject to conditions or requirements set out in the regulations.

5Records

In section 63 (records), in subsection (3), for the words from “6 years” to the end substitute

—
a
in a case where the records relate to an accounting period, 6 years beginning with the day after the end of the accounting period to which the records relate, or
b
in any other case, 6 years beginning with the day on which the records are created.

6Groups

1

Section 71 (groups of companies) is amended in accordance with sub-paragraphs (2) to (4).

2

In subsection (1), in the words after paragraph (b), after “is” insert “treated as”.

3

In subsection (2)—

a

after “Part” insert “, and save as otherwise provided by or under this Part,”;

b

after “if” insert

—
a

c

after “P” insert

,
b
it had assumed all other obligations in relation to plastic packaging tax that, apart from this subsection, would have been obligations of P, and
c
it had assumed all entitlements in relation to plastic packaging tax that—
i
apart from this subsection, would have been entitlements of P, and
ii
arose after P and the representative member began to be treated as members of the same group.

4

after subsection (3) insert—

3A
The Commissioners may by regulations make such further provision as they consider appropriate about—
a
a body corporate that is treated as a member of a group being treated as if it had or had not assumed an entitlement given by or under this Part (ignoring the regulations) to another body corporate that is treated as a member of the group;
b
the performance or discharge by a body corporate that is treated as a member of a group of an obligation or liability imposed by or under this Part (ignoring the regulations) on another body corporate that is treated as a member of the group.

5

In Schedule 13 (groups of companies)—

a

in paragraph 3 (application for group treatment)—

i

in sub-paragraph (1), omit the words from “from” to the end;

ii

for sub-paragraph (3) substitute—

3
Where the Commissioners receive an application under sub-paragraph (1), they must, by notice to the applicants or the body that is to be the representative member—
a
confirm whether they accept or refuse the application, and
b
if they accept the application, specify a date from which the applicants are to be treated as members of the same group.
4
The Commissioners must give the notice within the period of 90 days beginning with the day on which the application is received.
5
The date mentioned in sub-paragraph (3)(b) must be within that period.

b

in paragraph 5 (applications to modify group treatment)—

i

in sub-paragraph (1), omit the words after paragraph (d);

ii

for sub-paragraph (2) substitute—

2
Where the Commissioners receive an application under sub-paragraph (1), they must, by notice to the applicant and, in a case within sub-paragraph (1)(b), the proposed new representative member—
a
confirm whether they accept or refuse the application, and
b
if they accept the application, specify a date from which the application is to be treated as having been accepted.
3
The Commissioners must give the notice within the period of 90 days beginning with the day on which the application is received.
4
The date mentioned in sub-paragraph (2)(b) must be within that period.

7Secondary liability and assessment notices etc: acting in the course of a related business

In Schedule 9 (secondary liability and assessment notices and joint and several liability notices), in paragraph 21 (interpretation: related businesses), in paragraph (b)(ii)—

a

for “unincorporated association” substitute “unincorporated body (other than a partnership)”, and

b

for “the association” substitute “the body”.

SCHEDULE 13Penalties for facilitating avoidance schemes involving non-resident promoters

Section 91

1Liability to penalty

1

Sub-paragraph (2) applies in relation to a person (“A”) if the person is liable to pay—

a

a penalty within sub-paragraph (3), or

b

regardless of any outstanding appeal relating to the original penalty.

6

In this paragraph, a “non-resident promoter” is a person who carries on a business as a promoter and is resident outside the United Kingdom.

there are, or purport to be, separate transactions in respect of different elements of the bargain.

An assessment of a person as liable to pay an amount in respect of a penalty under paragraph 1(2) may not take place more than 2 years after information sufficient to enable the assessment first came to the attention of HMRC.

section 114 (want of form);

c

section 115 (delivery and service of documents).

6Application of information and inspection powers

1

Schedule 36 to FA 2008 (information and inspection powers) applies for the purpose of checking a relevant person’s position as regards liability for a penalty under paragraph 1(2) as it applies for checking a person’s tax position, subject to the modifications set out in this paragraph.

2

In this paragraph, “relevant person” means a person an officer of Revenue and Customs has reason to suspect is or may be liable to a penalty under paragraph 1(2) (including if the person would or may be so liable if found liable to pay one or more penalties within paragraph 1(3) or (4)).

3

In its application for the purpose mentioned in sub-paragraph (1), Schedule 36 to FA 2008 has effect as if—

a

any provisions which can have no application for that purpose were omitted;

b

references to “the (or a) taxpayer” were to “the (or a) relevant person”;

c

references to a person’s “tax position” were to the relevant person’s position as regards liability for a penalty under paragraph 1(2);

d

references to “business documents” included any documents (or copies of documents) in connection with any relevant proposal or relevant arrangements;

e

references to prejudice to the assessment or collection of tax included a reference to prejudice to the investigation of a relevant person’s position as regards liability for a penalty under paragraph 1(2);

f

references to a pending appeal relating to tax were to a pending appeal by a relevant person under this Schedule;

g

in paragraph 10A (power to inspect business premises of involved third parties) the reference in sub-paragraph (1) to the position of any person or class of persons as regards a relevant tax were a reference to the position of a relevant person as regards liability to a penalty under paragraph 1(2);

h

paragraphs 21 to 21B (certain taxpayer notices) were omitted;

i

paragraph 25 (tax advisers) were omitted;

j

paragraphs 50 and 51 (tax-related penalty) were omitted.

7Application

A is liable to a further penalty under paragraph 1(2) only where the original penalties imposed on A relate only to activities carried out after this Schedule comes into force.

8Interpretation

1

Expressions used in Part 5 of FA 2014 have the same meaning in this Schedule as in that Part, unless the contrary intention appears (and, in particular, see sections 234 and 235 of FA 2014 for the meanings of “relevant proposal”, “relevant arrangements”, “promoter” and “as a promoter” and Schedule 33A to that Act for the meaning of “promotion structure”).

2

In this Schedule, references to an “authorised officer” are to an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners to exercise functions conferred by this Schedule.

3

In this Schedule—

“facilitated proposal or arrangements” has the meaning given by paragraph 1(2)(b);
“the original penalties” has the meaning given by paragraph 1(1);
“tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate in light of paragraph 4(3)).

SCHEDULE 14Electronic sales suppression

Section 92

PART 1Introductory

1Meaning of “electronic sales suppression tool” etc

1

This paragraph defines “electronic sales suppression tool” and related terms for the purposes of this Schedule.

2

An “electronic sales suppression tool” is a tool which meets both of the following conditions—

a

the first condition is that the tool must be capable (whether by itself or in combination with, or as part of, any other thing) of suppressing relevant electronic sales records;

b

the second condition is that it must be reasonable to assume that the main function of the tool, or one of its main functions, is to suppress relevant electronic sales records.

3

A “relevant electronic sales record” is a record which—

a

is required by or under any legislation relating to tax to be kept, and

b

comprises or includes information that is or would be (but for the use of a tool that meets the first condition in sub-paragraph (2)) recorded by an electronic point of sale system.

4

An “electronic point of sale system” is any tool or combination of tools used to record information in electronic form about transactions involving the sale of goods or services.

5

A relevant electronic sales record is suppressed if any information it comprises or includes is dealt with in such a way (whether by being falsified, manipulated, hidden, obfuscated, destroyed or prevented from being created) as to fail to record a matter accurately.

6

References in this Schedule to a “tool” include a physical device, software, computer code or other data in digital form (wherever held), or any other thing.

7

An “electronic sales suppression penalty” is a penalty under this Schedule.

PART 2Liability to a penalty

2

In determining the amount of a penalty under paragraph 2, 3 or 4, the officer—

a

must take into account any matter specified in a notice published by HMRC, so far as that matter is relevant, and

b

may take into account any other matter, so far as the officer considers it appropriate to do so.

3

“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 purposes of this paragraph.

Liability to a penalty under this paragraph does not arise if P has been assessed to a penalty under paragraph 2 or 3 in respect of the electronic sales suppression tool that P is in possession of, or has otherwise obtained access to.

7

Liability to a penalty under this paragraph does not arise if P satisfies HMRC or (on appeal) the tribunal that P was unaware that the tool that P was in possession of, or had otherwise obtained access to, was an electronic sales suppression tool.

7Daily default penalties

1

b

agreeing a compromise in relation to proceedings in respect of a penalty.

11Assessment

1

Where a person becomes liable to an electronic sales suppression penalty—

a

HMRC may assess the penalty, and

b

if they do so, HMRC must notify the person.

2

No electronic sales suppression penalty may be notified under sub-paragraph (1)(b) later than the end of the period of two years beginning with the day on which evidence of facts, sufficient in the opinion of HMRC to indicate liability to the penalty, comes to HMRC’s knowledge.

to a different extent, but only if the tribunal thinks that HMRC’s decision in respect of the application of that paragraph was flawed.

7

In sub-paragraph (6)(b), “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

8

Subject to this paragraph and paragraph 13, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Schedule as they have effect in relation to an appeal against an assessment to income tax or, if the person is a company within the charge to corporation tax, corporation tax.

13Enforcement

1

An electronic sales suppression penalty must be paid—

a

before the end of the period of 30 days beginning with the date on which notification of the penalty was given under paragraph 11(1)(b), or

b

if notice of an appeal is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn.

2

An electronic sales suppression penalty is recoverable as a debt due to the Crown.

14Application of provisions of TMA 1970

Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Part of this Schedule as they apply for the purposes of the Taxes Acts—

a

section 108 (responsibility of company officers);

b

section 114 (want of form);

c

section 115 (delivery and service of documents).

15Power to change amount of penalty

1

If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations made by statutory instrument substitute for the sum for the time being specified in paragraph 5(1), 6(1), 7(2) or 7(3) such other sum as seems to them to be justified by the change.

2

In sub-paragraph (1), “relevant date” means—

a

the date on which this Act is passed, and

b

each date on which the power conferred by sub-paragraph (1) has been exercised in relation to the sum in question.

3

Regulations under sub-paragraph (1) are subject to annulment in pursuance of a resolution of the House of Commons.

4

Regulations under sub-paragraph (1) do not apply in relation to an electronic sales suppression penalty to which liability arose before the date on which the regulations come into force.

16Interpretation

In this Schedule—

“HMRC” means Her Majesty’s Revenue and Customs;
“tribunal” means the First-tier Tribunal or, where determined by or under the Tribunal Procedure Rules, the Upper Tribunal.

“free zone procedure” has the meaning given by the Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018 (S.I. 2018/1249) (see regulation 2(3)(b) of those Regulations);

b

in the definition of “warehouse”, after paragraph (d) insert “,

but does not include a warehouse so far as it is used for the storage of goods declared for a free zone procedure.”

7

At the end of Part 3 (application of VATA 1994 in particular cases) insert—

57AImportation following zero-rated free zone supply: deemed supply
1
This section applies where—
a
a person (“P”) receives—
i
a zero-rated free zone supply of goods, or
ii
a zero-rated free zone supply of services, and
b
Condition A or B is met.
2
Condition A is met where, after the supply mentioned in subsection (1)(a), there is, in respect of the goods supplied or the goods on or in relation to which the service is performed (as the case may be), a breach of a requirement relating to the free zone procedure without there having been a zero-rated free zone supply by P of the goods after receiving the supply mentioned in that subsection.
3
Condition B is met where, after the supply mentioned in subsection (1)(a)—
a
the goods supplied or the goods on or in relation to which the service is performed (as the case may be) are imported (other than by virtue of Condition A being met) without there having been a zero-rated free zone supply by P of those goods after receiving the supply mentioned in that subsection, and
b
within the period of three months beginning with the day on which the goods are imported, P does not make a taxable supply of the goods to another person in the course or furtherance of P’s business.
4
For the purposes of this Act—
a
a supply of goods identical to the zero-rated free zone supply of goods or a supply of services identical to the zero-rated free zone supply of services (as the case may be) is to be treated as having been made—
i
by P in the course or furtherance of a business carried on by P, and
ii
to P for the purposes of that business, and
b
that supply is to be treated—
i
as taking place on the relevant day,
ii
as being made in the United Kingdom,
iii
as having the same value as the zero-rated free zone supply of goods or the zero-rated free zone supply of services (as the case may be), and
iv
as a taxable (and not a zero-rated) supply.
5
For the purposes of Condition A, the reference to a breach of a requirement relating to a free zone procedure is to—
a
a breach, occurring while the procedure has effect, of the terms of the declaration for the procedure or of any other requirement imposed in relation to the procedure by or under Schedule 2 to TCTA 2018, or
b
a breach, occurring at any time after the declaration was made, of any other requirement imposed by an officer of Revenue and Customs in relation to the goods for which the declaration was made.
6
The Commissioners may by regulations make provision—
a
modifying the application or effect of this section, or
b
applying this section, with or without modification,
in relation to cases set out in the regulations.
7
In this section—
“free zone procedure” has the same meaning as in Group 22 of Schedule 8 (free zones);
“relevant day” means—
a
in a case where this section applies by virtue of Condition A being met, the day on which the breach mentioned in that Condition occurred;
b
in a case where this section applies by virtue of Condition B being met, the day after the end of the period mentioned in that Condition;
“zero-rated free zone supply of goods” means a supply of goods within Item 1(a) of Group 22 to Schedule 8 (free zone procedure goods);
“zero-rated free zone supply of services” means a supply of services within Item 1(b) of that Group (free zone services).

8

This Schedule is treated as having come into force on 3 November 2021.

SCHEDULE 16Freeport tax site reliefs: provision about regulations

Section 95

PART 1First-year allowance for plant and machinery

Section 270BNC of CAA 2001 (structures and buildings allowances: power to amend meaning of “freeport qualifying expenditure”) is amended as follows.

2

In the heading, at the end insert “etc”.

3

In subsection (1)—

a

the words from “change” to the end become paragraph (a);

b

after that paragraph insert

, or
b
make provision adding, removing or altering, or otherwise about, circumstances in which qualifying expenditure is to be treated as if it were—
i
freeport qualifying expenditure, or
ii
other qualifying expenditure,
including provision about assessments, adjustments to assessments, returns, amendments of returns and penalties.

4

In subsection (4)(b), after “subsection” insert “(1)(b) or”.

5

At the end insert—

5
The power to make regulations under subsection (1)(b) may be exercised only in relation to qualifying expenditure incurred on or after the date on which the regulations come into force.

PART 3Stamp duty land tax

6

1

In Schedule 6C to FA 2003 (stamp duty land tax: relief for freeport tax sites), paragraph 12 (power to change the cases in which relief is available) is amended as follows.

2

In sub-paragraph (1)—

a

at the end of paragraph (a) insert “or”;

b

for paragraphs (b) and (c) substitute—

b
make other provision about the availability of relief under this Schedule, including provision—
i
adding, removing or altering, or otherwise about, conditions that must be met in order for relief to be available,
ii
about the withdrawal of relief, or
iii
about returns where relief is withdrawn.

3

In sub-paragraph (4)(b), after “on” insert “sub-paragraph (1)(b) of this paragraph or on”.

4

At the end insert—

5
The power to make regulations under this paragraph may be exercised only in relation to transactions with an effective date that is on or after the date on which the regulations come into force.

SCHEDULE 17Large businesses: notification of uncertain tax treatment

Section 96

PART 1Key definitions

1

This Part applies for the purposes of this Schedule.

The Treasury may by regulations provide that a company of a description specified in the regulations is not a qualifying company for the purposes of this Schedule (or any such purpose specified in the regulations).

1

“Partnership” means a partnership (wherever formed) or a limited liability partnership incorporated in the United Kingdom that is carrying on a trade, business or profession with a view to profit.

2

A partnership is not a partnership for the purposes of this Schedule if it is—

a

a collective investment scheme, within the meaning of Part 17 of FISMA 2000, or

b

an AIF, as defined by regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773).

3

A partnership is a “qualifying partnership” in any financial year if, in the previous financial year, the partnership had either or both of the following—

a

UK turnover of more than £200 million;

b

a UK balance sheet total of more than £2 billion.

4

The Treasury may by regulations provide that a partnership of a description specified in the regulations is not a qualifying partnership for the purposes of this Schedule (or any such purpose specified in the regulations).

5“Relevant tax” and “relevant return”

1

A tax that is listed in the first column of the following table is a “relevant tax” and a return which appears in the corresponding entry in the second column of the table is, in relation to the relevant tax concerned, a “relevant return”.

Tax to which return relates	Return
Corporation tax	Company tax return
Income tax or corporation tax	Partnership return
Income tax	PAYE return
VAT	VAT return

2

In this Schedule—

“company tax return” means a return under paragraph 3 of Schedule 18 to FA 1998;
“corporation tax” includes any amount chargeable under section 330(1), 455 or 464A of CTA 2010 as if it were corporation tax but does not include—
1. a
  an amount chargeable under section 269DA of CTA 2010 (surcharge on banking companies);
2. b
  an amount chargeable under Part 9A of TIOPA 2010 (controlled foreign companies);
3. c
  an amount of the bank levy (see Schedule 19 to FA 2011);
“partnership return” has the same meaning as in TMA 1970;
“PAYE return” means a return under PAYE regulations;
“VAT” means value added tax charged in accordance with VATA 1994;
“VAT return” means a return under regulations under paragraph 2 of Schedule 11 to VATA 1994.

3

A relevant return is delivered to HMRC “for” a financial year if it relates to—

a

the whole of that financial year, or

b

a part of that financial year.

4

References to a return being required to be made include a requirement to file, deliver or submit a return (however expressed).

6“Financial year”

1

“Financial year”—

a

in relation to a company which is (or is treated as if it is) formed and registered under the Companies Act 2006, has the meaning given by that Act (see section 390 of the Companies Act 2006);

b

in relation to a company to which Chapter 3 of Part 5 of the Overseas Companies Regulations 2009 (S.I. 2009/1801) (companies not required to prepare and disclose accounts under parent law) applies, has the meaning given by regulation 37 of those regulations (which modifies the application of sections 390 to 392 of the Companies Act 2006);

c

in relation to a company to which Chapter 3 of Part 6 of the Overseas Companies Regulations 2009 (institutions not required to prepare and disclose accounts under parent law) applies, has the meaning given by regulation 52 of those regulations (which modifies the application of sections 390 to 392 of the Companies Act 2006);

d

in relation to any other company or a non-UK resident partnership, means any period in respect of which a profit and loss account for the company’s or (as the case may be) the partnership’s undertaking is required to be made up (whether by its constitution or by the law under which it is formed), whether that period is 12 months or not;

e

in relation to a UK resident partnership, means any period of account for which its representative partner has provided, or is required to provide, a partnership statement F13within the meaning of TMA 1970.

2

In this paragraph—

“UK resident partnership” means a partnership which is resident in the United Kingdom;
“non-UK resident partnership” means a partnership which is not resident in the United Kingdom;
“representative partner”, in relation to a UK resident partnership, means
1. (a)
  F1the partner who is required by a notice served under or by virtue of section 12AA(2) or (3) of TMA 1970 to make and deliver returns to an officer of Revenue and CustomsF4, or
2. (b)
  F8the nominated partner within the meaning of paragraph 5 of Schedule A1 to TMA 1970.

3

For the purposes of this paragraph a partnership is resident in the territory in which the control and management of the activities of the partnership take place.

in relation to a non-UK resident company, means so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income;

c

in relation to a UK resident partnership, means its balance sheet total;

d

in relation to a non-UK resident partnership, means so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.

5

In this paragraph—

“UK resident company” and “non-UK resident company” have the same meaning as in the Corporation Tax Acts;
“UK resident partnership” means a partnership which is resident in the United Kingdom;
“non-UK resident partnership” means a partnership which is not resident in the United Kingdom.

6

A notification under sub-paragraph (2) must be given by such means, and in such form, and include such information, as is specified in a notice published by HMRC.

9Deadline for notification

1

The time by which a notification required by paragraph 8(2) must be given to HMRC is determined in accordance with the following table—

Case	Deadline for notification
Notification under paragraph 8(2)(a) of an amount included in a company tax return delivered to HMRC for a financial year	On or before the later of— a the filing date for the return (within the meaning given by paragraph 14 of Schedule 18 to FA 1998), or b if the period for which the return is required to be made is a period for which the company is required to deliver accounts under the Companies Act 2006, the last day for the delivery of those accounts to the registrar of companies
Notification under paragraph 8(2)(a) of an amount included in a partnership return delivered to HMRC for a financial year	On or before the date on which the return is required to be made
Notification under paragraph 8(2)(a) of an amount included in a PAYE return delivered to HMRC for a financial year	On or before the date on which the last PAYE return for the financial year is required to be made
Notification under paragraph 8(2)(a) of an amount included in a VAT return delivered to HMRC for a financial year	On or before the date on which the last VAT return for the financial year is required to be made
Notification under paragraph 8(2)(b) of an amount included in a company tax return or partnership return delivered to HMRC for a financial year	On or before the date (determined in accordance with this table) by which the notification would be required if— a the notification were required by paragraph 8(2)(a), and b the return were delivered to HMRC for the financial year in which the accounting provision is recognised in the accounts of the company or partnership (see paragraph 10(2)).
Notification under paragraph 8(2)(b) of an amount included in a PAYE return or VAT return delivered to HMRC for a financial year	On or before the date (determined in accordance with this table) by which the notification would be required if— a the notification were required by paragraph 8(2)(a), and b the return were delivered to HMRC for the financial year following the financial year in which the accounting provision is recognised in the accounts of the company or partnership.

2

In the table, references to a notification under paragraph 8(2)(a) in relation to a return do not include references to a notification required as a result of an amendment of the return (see instead sub-paragraph (3)).

3

Where the notification is required by paragraph 8(2)(a) and concerns an amount included in a relevant return as a result of an amendment of the return, the notification must be given before the end of the period of 30 days beginning with the day on which HMRC is notified of the amendment.

10Uncertain tax treatment

1

For the purposes of this Part, an amount brought into account by a company or partnership for the purposes of a relevant tax is an “uncertain amount” if either or both of sub-paragraphs (2) and (3) apply in relation to the amount.

2

This sub-paragraph applies if provision has been recognised in the accounts of the company or partnership to reflect the probability that a different tax treatment will be applied to a transaction to which the amount relates.

3

This sub-paragraph applies if the tax treatment applied in arriving at the amount relies (wholly or in part) on an interpretation or application of the law that is not in accordance with the way in which it is known that HMRC would interpret or apply the law.

4

For the purposes of sub-paragraph (3), HMRC’s position on a matter is taken to be “known” by a company or partnership if it is apparent from—

a

guidance, statements or other material of HMRC that is of general application and in the public domain, or

b

dealings with HMRC by or in respect of the company or partnership (whether or not they concern the amount in question or the transaction to which the amount relates).

avoidance or reduction of a charge to tax or an assessment to tax;

d

avoidance of a possible assessment to tax;

e

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

f

avoidance of an obligation to deduct or account for tax.

VAT paid or payable by the company or partnership on the importation of any goods.

4

Terms used in this paragraph which are defined in section 96 of VATA 1994 have the meanings given by that section.

To the extent that a tax advantage results in a loss recorded for the purposes of corporation tax or income tax, the value of it is nil where, because of—

a

the nature of the loss, or

b

the circumstances of the company or partnership that has brought the uncertain amount into account for tax purposes,

there is no reasonable prospect of the loss being used to support a claim to reduce a tax liability (of any person).

15The “expected amount”

1

For the purposes of the threshold test in paragraph 11(2), the “expected amount”, in relation to an uncertain amount, is the amount that it is reasonable to conclude the uncertain amount would be were the tax treatment applied in arriving at the amount—

a

where the uncertain amount is uncertain by virtue of paragraph 10(2), the different tax treatment for which provision has been recognised in the relevant accounts;

b

where the uncertain amount is uncertain by virtue of paragraph 10(3), a tax treatment that is wholly in accordance with HMRC’s known interpretation and application of the law.

2

Where more than one tax treatment is wholly in accordance with HMRC’s known interpretation and application of the law, sub-paragraph (1)(b) applies by reference to whichever of those treatments would give the least amount of tax advantage for the purposes of the threshold test.

3

Where sub-paragraph (1) gives more than one expected amount, because the uncertain amount is uncertain by virtue of both of sub-paragraphs (2) and (3) of paragraph 10, the threshold test applies by reference to whichever of those expected amounts would give the most amount of tax advantage.

4

Paragraph 10(4) applies for the purposes of sub-paragraph (1)(b) as it applies for the purposes of paragraph 10(3).

16Relevant period

1

This paragraph applies for determining whether a company’s or partnership’s failure to give a notification in accordance with paragraph 8(2)(a) is, in respect of a relevant tax—

a

a first failure,

b

a second failure, or

c

a further failure.

2

b

more than 6 years after the end of the financial year in which the notification should have been given.

Subject to this paragraph, and paragraph 25, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Schedule as they have effect in relation to an appeal against an assessment to income tax.

25Enforcement

1

A penalty under paragraph 20 must be paid—

a

before the end of the period of 30 days beginning with the date on which the notification by HMRC under paragraph 23(1)(b) was issued, or

b

if a notice of appeal is given, before the end of the period of 30 days beginning with the day on which the appeal is determined or withdrawn.

2

A penalty under paragraph 20 may be enforced—

a

where the penalty is payable by a company, as if it were corporation tax charged in an assessment and due and payable;

b

where the penalty is payable by a partnership, as if it were income tax charged in an assessment and due and payable.

26Power to change amount of penalty

c

section 115 (delivery and service of documents).

30Interpretation

In this Schedule—

“the charge to corporation tax on income” has the same meaning as in CTA 2009 (see section 2(3) of that Act);
“HMRC” means Her Majesty’s Revenue and Customs;
“transaction” includes arrangements, agreements and understandings (whether or not they are, or are intended to be, legally enforceable).

PART 5Consequential Amendments

31

In Schedule 14 to F(No.2)A 2017 (digital reporting and record-keeping for income tax etc: further amendments), at the end insert—

50FA 2022
1
Schedule 17 to FA 2022 (large businesses: notification of uncertain tax treatment) is amended as follows.
2
In paragraph 6(1)(e) (definition of “financial year” in relation to a UK resident partnership), for “under section 12AB” substitute “within the meaning”.
3
In paragraph 6(2), in the definition of “representative partner”—
a
the words from “the partner” to the end of the definition become paragraph (a) of the definition;
b
at the end of that paragraph (a) insert “, or”;
c
after that paragraph insert—
b
the nominated partner within the meaning of paragraph 5 of Schedule A1 to TMA 1970.

32

The reference in section 61(6) of F(No.2)A 2017 (commencement) to Schedule 14 to that Act is to be read as a reference to that Schedule as amended by paragraph 31 of this Schedule.

PART 6Commencement

33

This Schedule applies in relation to relevant returns that are required to be made on or after 1 April 2022.

SCHEDULE 18Vehicle CO₂ emissions certificates

Section 101

PART 1Amendments of CAA 2001

1

Section 268C of CAA 2001 (terms relating to emissions) is amended as follows.

2

In subsection (1) for “an EC certificate of conformity, or a UK approval certificate,” substitute “a certificate or other document on the basis of which the vehicle is registered”.

3

In subsection (2), after “Part,” insert “and subject to subsection (3A),”.

4

In subsection (3), after “Part,” insert “and subject to subsection (3A),”.

5

After subsection (3) insert—

3A
For the purposes of determining the vehicle’s CO₂ emissions figure in a case where the vehicle is first registered on or after IP completion day, ignore any values specified in the qualifying emissions certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.

6

In subsection (4) omit the definitions of “EC certificate of conformity” and “UK approval certificate”.

7

This paragraph has effect—

a

for income tax purposes, in relation to the tax year 2017-18 and subsequent tax years, and

b

for corporation tax purposes, in relation to accounting periods ending on or after 4 November 2017.

PART 2Amendments of ITEPA 2003

2

Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) is amended as follows.

3

In section 134(1) (meaning of car with a CO₂ emissions figure)—

a

in paragraph (b)—

i

after “October 1999” insert “but before IP completion day”;

ii

after “section 136” insert “(registration from 1st October 1999 to IP completion day)”;

b

at the end of paragraph (b) omit “or” and insert—

ba
a car first registered on or after IP completion day to which section 136A (registration on or after IP completion day) applies,

c

in paragraph (c)—

i

after “January 2000” insert “but before IP completion day”;

ii

after “(bi-fuel cars” insert “: registration from 1st January 2000 to IP completion day”;

d

at the end of paragraph (c) insert

, or
d
a car first registered on or after IP completion day to which section 137A (bi-fuel cars: registration on or after IP completion day) applies.

4

1

In section 136 (car with a CO₂ emissions figure: post-September 1999 registration)—

a

in the heading, for “post-September 1999 registration” substitute “registration from 1st October 1999 to IP completion day”;

b

in subsection (1) after “October 1999” insert “but before IP completion day”;

c

in subsection (3) after “(bi-fuel cars” insert “: registration from 1st January 2000 to IP completion day”.

2

After section 136 insert—

136ACar with a CO₂ emissions figure: registration on or after IP completion day
1
This section applies to a car first registered on or after IP completion day if it is so registered on the basis of a qualifying emissions certificate.
2
The car’s CO₂ emissions figure is the figure specified in the qualifying emissions certificate unless more than one figure is specified, in which case the car’s CO₂ emissions figure is the figure specified as the CO₂ emissions (combined) figure.
3
For the purpose of determining the car’s CO₂ emissions figure ignore any values specified in the qualifying emissions certificate that are not WLTP (worldwide harmonised light vehicles test procedures) values.
4
Subsection (2) is subject to—
a
section 137A (bi-fuel cars registered after IP completion day), and
b
section 138 (automatic car for a disabled employee).

5

1

In section 137 (car with a CO₂ emissions figure: bi-fuel cars)—

a

in the heading, at the end insert “: registration from 1st January 2000 to IP completion day”;

b

in subsection (1) after “January 2000” insert “but before IP completion day”.

2

After section 137 insert—

137ACar with a CO₂ emissions figure: bi-fuel cars registered on or after IP completion day
1
This section applies to a car first registered on or after IP completion day if it is so registered on the basis of a qualifying emissions certificate which specifies separate CO₂ emissions figures in terms of grams per kilometre driven for different fuels.
2
The car’s CO₂ emissions figure is—
a
the lowest figure specified, or
b
if there is more than one figure specified in relation to each fuel, the lowest CO₂ emissions (combined) figure specified.
3
For the purpose of determining the car’s CO₂ emissions figure ignore any values specified in the qualifying emissions certificate that are not WLTP (worldwide harmonised light vehicles test procedures) values.
4
Subsection (2) is subject to section 138 (automatic car for a disabled employee).

6

1

Section 171(1) (minor definitions: general) is amended as follows.

2

After the definition of “EC type-approval certificate” insert—

“qualifying emissions certificate” has the same meaning as in CAA 2001 (see section 268C(1) of that Act);

3

For the definition of “UK approval certificate” substitute—

“UK approval certificate” means—
a
a certificate issued under—
i
section 58(1) or (4) of the Road Traffic Act 1988, or
ii
Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1)), or
b
any other certificate or document issued in the United Kingdom on the basis of which a vehicle is first registered, other than an EC certificate of conformity or an EC type-approval certificate.

4

Sub-paragraph (3) has effect in relation to the tax year 2017-18 and subsequent tax years.

7

In the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682), in Schedule A1 (real time returns), in paragraph 22B(2) (benefits in kind: cars), in sub-paragraph (a)(ii) (car with a CO₂ emission figure)—

a

after “136,” insert “136A,”;

b

after “137,” insert “137A”.

PART 3Amendments of VERA 1994

8

1

In Part 1A of Schedule 1 to VERA 1994 (light passenger vehicles registered before 1 April 2017), in paragraph 1G, for sub-paragraph (2) substitute—

2
References in this Part of this Schedule to a “UK approval certificate” are, in relation to a vehicle, to—
a
a certificate issued under—
i
section 58(1) or (4) of the Road Traffic Act 1988, or
ii
Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1)), or
b
any other certificate or document issued in the United Kingdom on the basis of which the vehicle is first registered, other than an EC certificate of conformity.

2

The amendments made by this paragraph have effect in relation to licences taken out on or after 3 November 2021.

PART 4Power to make consequential provision

9

1

The Treasury may by regulations made by statutory instrument make such consequential provision as they consider appropriate in connection with any provision of this Schedule.

2

Regulations under sub-paragraph 9(1) may (among other things)—

a

make different provision for different purposes, and

b

amend, repeal or revoke provision made by or under any enactment.

3

A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.

Public interest business protection tax	Return under paragraph 8 or 9 of Schedule 10 to FA 2022.
Public interest business protection tax	Return, statement or declaration in connection with a claim for a relief.
Public interest business protection tax	Accounts in connection with ascertaining liability to tax.

1B	Public interest business protection tax	Amount payable under paragraph 8(6) of Schedule 10 to FA 2022	The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid
1C	Public interest business protection tax	Amount payable under paragraph 9(7) of Schedule 10 to FA 2022	The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid
1D	Public interest business protection tax	Amount payable under paragraph 12(8) of Schedule 10 to FA 2022	The date falling 30 days after the date specified in that paragraph as the date by which the amount must be paid