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Finance (No. 4) Bill


Finance (No. 4) Bill
Schedule 12 — Foreign income and gains
Part 2 — Remittance for investment purposes

309

 

(a)   

relate to a service actually provided by the relevant person to

the transferor in connection with effecting the disposal, and

(b)   

do not exceed the amount that would be charged for that

service if it were provided in the ordinary course of business

and on arm’s length terms.

5

809Z9   

Taking proceeds etc offshore or investing them

(1)   

This section applies to a provision of this Chapter that is satisfied if

something (for example, disposal proceeds) is taken offshore or used

by a relevant person to make a qualifying investment.

(2)   

Things are to be regarded as “taken offshore” if (and only if) they are

10

taken outside the United Kingdom such that, on leaving the United

Kingdom, they cease to be available—

(a)   

to be used or enjoyed in the United Kingdom by or for the

benefit of a relevant person, or

(b)   

to be used or enjoyed in any other way that would count as

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remitting income or gains to the United Kingdom.

(3)   

If—

(a)   

the thing required to be taken offshore or invested is money,

and

(b)   

it is paid temporarily into an account pending satisfaction of

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the provision,

   

the provision is satisfied only if the money actually taken offshore or

invested is taken from the same account.

(4)   

If the thing required to be taken offshore or invested is something in

money’s worth, the provision may be satisfied—

25

(a)   

by taking the thing offshore or investing it, or

(b)   

by taking offshore or investing money or other property of

the equivalent value.

(5)   

“The equivalent value” is the market value of the thing in money’s

worth, assessed as at the date of the sale or other disposal in relation

30

to which the provision is triggered.

(6)   

If the consideration for a disposal is deemed under section 809Z8(4),

the provision may be satisfied by taking offshore or investing money

or other property of a value equal to—

(a)   

the amount of the deemed consideration, less

35

(b)   

any agency fees (within the meaning of section 809Z8) that

are deducted before the actual consideration is paid or

otherwise made available to or for the benefit of a relevant

person.

(7)   

Subsections (4)(b) and (6) do not apply in the case of other property

40

of the equivalent value if the other property is—

(a)   

exempt property under section 809X,

(b)   

consideration for the disposal of any such exempt property,

or

(c)   

consideration for the disposal of all or part of the holding (see

45

section 809VC) relating to a qualifying investment.

 
 

Finance (No. 4) Bill
Schedule 12 — Foreign income and gains
Part 3 — Sales of exempt property

310

 

(8)   

Money or other property taken offshore or invested in accordance

with subsection (4)(b) or (6) is to be treated for the purposes of this

Chapter—

(a)   

as deriving from the thing required to be taken offshore or

invested, and

5

(b)   

as having the same composition of kinds of income and

capital as that thing.

(9)   

A provision to which this section applies may be satisfied—

(a)   

by taking the whole thing offshore or investing the whole

thing, or

10

(b)   

by taking one part offshore and investing the other part.

(10)   

References in this section to something being “invested” are to

something being used by a relevant person to make a qualifying

investment.

(11)   

The provisions to which this section applies include section 809VB(2)

15

but in that case—

(a)   

disregard references in this section to investment, and

(b)   

the assessment date for the purposes of subsection (5) is the

date of the relevant event (see section 809VA(3)(b)).

809Z10  

General interpretation

20

In this Chapter—

“the business investment provisions” means sections 809VA to

809VO;

“the Commissioners” means the Commissioners for Her

Majesty’s Revenue and Customs;

25

“market value” has the same meaning as in TCGA 1992 (see in

particular sections 272 and 273 of that Act);

“qualifying investment” has the meaning given by section

809VC (and references to making a qualifying investment are

to be read in accordance with that section);

30

“relevant person” has the meaning given by section 809M;

“the remittance basis user”, in relation to income or chargeable

gains of an individual, means that individual.”

Application of Part 2

17         

The amendments made by this Part of this Schedule have effect where the

35

relevant event (as defined in section 809VA of ITA 2007) or the ceasing to be

exempt property (as defined in section 809Y of that Act) occurs on or after 6

April 2012.

Part 3

Sales of exempt property

40

Relief from deemed remittance rule

18         

After section 809Y of ITA 2007 (property that ceases to be exempt property

 
 

Finance (No. 4) Bill
Schedule 12 — Foreign income and gains
Part 3 — Sales of exempt property

311

 

treated as remitted) insert—

“809YA  

Exception to section 809Y: proceeds taken offshore or invested

(1)   

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

(a)   

it ceases to be exempt property because the whole of it is sold

whilst it is in the United Kingdom, and

5

(b)   

conditions A to F are met.

(2)   

Condition A is that the sale is to a person other than a relevant

person.

(3)   

Condition B is that the sale is by way of a bargain made at arm’s

length.

10

(4)   

Condition C is that, once the sale is completed, no relevant person—

(a)   

has any interest in the property,

(b)   

is able or entitled to benefit from the property by virtue of any

interest, right or arrangement, or

(c)   

has any right (whether conditional or unconditional) to

15

acquire any interest mentioned in paragraph (a) or ability or

entitlement mentioned in paragraph (b).

(5)   

Condition D is that the whole of the disposal proceeds are released

(whether in one go or in instalments) on or before the final deadline.

(6)   

“The final deadline” is the first anniversary of the 5 January

20

following the tax year in which the property ceases to be exempt

property (within the meaning of section 809Y).

(7)   

Condition E is that—

(a)   

the whole of the disposal proceeds are taken offshore or used

by a relevant person to make a qualifying investment within

25

the period of 45 days beginning with the day on which the

proceeds are released, or

(b)   

if the disposal proceeds are paid in instalments, each

instalment is taken offshore or used by a relevant person to

make a qualifying investment within the period of 45 days

30

beginning with the day on which the instalment is released.

(8)   

But if any of the disposal proceeds are released in the period of 45

days ending with the final deadline, Condition E is satisfied, as

respects those proceeds, only if they are taken offshore or used by a

relevant person to make a qualifying investment on or before the

35

final deadline.

(9)   

Condition F is that, if Condition E is satisfied wholly or in part by

using disposal proceeds to make a qualifying investment, the

remittance basis user makes a claim for relief under section 809YC(2)

on or before the first anniversary of the 31 January following the tax

40

year in which the property is sold.

(10)   

For the purposes of this section, proceeds or instalments are

“released” on the day on which they first become available for use by

or for the benefit of any relevant person.

 
 

Finance (No. 4) Bill
Schedule 12 — Foreign income and gains
Part 3 — Sales of exempt property

312

 

(11)   

This section does not apply if the sale is made as part of or as a result

of a scheme or arrangement the main purpose or one of the main

purposes of which is the avoidance of tax.

809YB   

Condition E: supplementary

(1)   

An officer of Revenue and Customs may agree in a particular case to

5

extend any period within which disposal proceeds (or instalments)

must be taken offshore or used by a relevant person to make a

qualifying investment in order to satisfy Condition E.

(2)   

The power to agree to an extension is exercisable only in exceptional

circumstances and only if the remittance basis user requests such an

10

extension.

809YC   

Effect of disapplying section 809Y

(1)   

This section has effect if section 809Y(1) does not apply to property

by virtue of section 809YA.

(2)   

The income and gains treated under section 809X as not remitted to

15

the United Kingdom continue to be treated after the sale as not

remitted to the United Kingdom even though the property has

ceased to be exempt property.

(3)   

But nothing in subsection (2) prevents anything done in relation to

any part of the disposal proceeds after that part is taken offshore (or

20

used to make a qualifying investment) from counting as a remittance

of the underlying income or gains to the United Kingdom at the time

when the thing is done.

(4)   

Treat the disposal proceeds as containing or deriving from an

amount of each kind of income and gain mentioned in section

25

809Q(4)(a) to (h) equal to the amount of that kind of income or gain

contained in the exempt property when it was brought to, or

received or used in, the United Kingdom (as mentioned in section

809X).

(5)   

Where Condition E was met by using the disposal proceeds to make

30

a qualifying investment—

(a)   

the business investment provisions apply to the income and

gains that continue, by virtue of subsection (2), to be treated

as not remitted as they apply to income or gains that are

treated under section 809VA(2) as not remitted, and

35

(b)   

if the investment was made using more than just the disposal

proceeds, treat only the part of the investment made using

the disposal proceeds as “the investment” for the purposes of

those provisions.

809YD   

Chargeable gains accruing on sales of exempt property

40

(1)   

This section applies to an individual (“P”) if—

(a)   

a chargeable gain (but not a loss) accrues to a person on a sale

of exempt property,

(b)   

but for section 809YA, section 809Y(1) would have applied to

the property by virtue of the sale, and

45

(c)   

P is either—

(i)   

the person to whom the gain accrues, or

 
 

Finance (No. 4) Bill
Schedule 12 — Foreign income and gains
Part 3 — Sales of exempt property

313

 

(ii)   

a person to whom a part of the gain is treated as

accruing under section 13 of TCGA 1992 (members of

non-resident companies).

(2)   

The relevant UK gain is to be treated for the purposes of this Chapter

as if—

5

(a)   

it were a foreign chargeable gain of P, and

(b)   

in the case of section 809E, it were not part of P’s UK income

and gains.

(3)   

Accordingly, if section 809F applies to P for the applicable tax year

and P is not domiciled in the United Kingdom in that year, the

10

relevant UK gain is charged in accordance with section 12 of TCGA

1992 as if it were a foreign chargeable gain.

(4)   

The relevant UK gain is—

(a)   

in a case falling within subsection (1)(c)(i), the gain accruing

to P,

15

(b)   

in a case falling within subsection (1)(c)(ii), the part of the

gain treated as accruing to P.

(5)   

The applicable tax year is —

(a)   

if section 10A of TCGA 1992 (temporary non-residents)

applies in P’s case and the relevant UK gain is within

20

subsection (2) of that section, the year of return as defined in

that section,

(b)   

otherwise, the tax year in which the relevant UK gain accrues.

(6)   

In applying this Chapter to the relevant UK gain—

(a)   

treat the amount of any gains mentioned in section 809Q(4)(e)

25

contained in the disposal proceeds by virtue of section

809YC(4) as increased by the amount of the relevant UK gain,

(b)   

disregard section 809U, and

(c)   

anything done in relation to any part of the disposal proceeds

before the part is taken offshore or used to make a qualifying

30

investment (or both) does not count as a remittance to the

United Kingdom of any of the relevant UK gain.

(7)   

The relevant UK gain is to be treated for the purposes of the

following provisions of TCGA 1992 as if it fell within the definition

of foreign chargeable gains in section 12(4) of that Act—

35

(a)   

section 10A,

(b)   

section 12,

(c)   

section 14A, and

(d)   

sections 16ZB to 16ZD.

(8)   

This section has effect despite section 14A(2) of TCGA 1992.

40

(9)   

This section does not apply with respect to a chargeable gain if P

gives notice to Her Majesty’s Revenue and Customs under this

subsection.

(10)   

A notice under subsection (9)—

(a)   

must be in writing and must identify the gain in question,

45

(b)   

must be given on or before the first anniversary of the 31

January following the applicable tax year, and

 
 

Finance (No. 4) Bill
Schedule 12 — Foreign income and gains
Part 4 — Nominated income

314

 

(c)   

may not be revoked after that first anniversary.”

Application of Part 3

19         

The amendment made by this Part of this Schedule has effect in relation to

exempt property that is sold on or after 6 April 2012 (including property sold

pursuant to a contract entered into before that date so long as the contract

5

only becomes unconditional on or after that date).

Part 4

Nominated income

Disapplication of ordering rules

20    (1)  

Section 809I of ITA 2007 (remittance basis charge: income and gains treated

10

as remitted) is amended as follows.

      (2)  

In subsection (1)—

(a)   

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

(b)   

at the end of paragraph (b) insert “, and

(c)   

the £10 test is met for that year.”

15

      (3)  

In subsection (3), after “earlier tax year” insert “(each such year for which the

individual has made a nomination under that section being referred to as a

“nomination year”)”.

      (4)  

After subsection (4) insert—

“(5)   

The £10 test is met for the tax year mentioned in subsection (1)(a)

20

(“year X”) if, taking each nomination year separately, the cumulative

total as respects at least one nomination year exceeds £10.

(6)   

In relation to a nomination year—

(a)   

“the cumulative total” means the sum, for all the tax years in

aggregate up to and including year X, of the amounts of

25

relevant income and gains remitted to the United Kingdom in

those tax years from that nomination year, and

(b)   

“relevant income and gains” means the income and

chargeable gains nominated by the individual under section

809C for that nomination year.”

30

Application of Part 4

21         

The amendments made by this Part of this Schedule have effect for

determining whether section 809I of ITA 2007 applies for the tax year 2012-

13 or any subsequent tax year.

 
 

 
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Revised 28 March 2012