Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 2 — Income tax and capital gains tax
355

10    (1)
Suspension under paragraph 9 of a potential donor’s obligation to pay an
amount of or on account of tax stops the donor from becoming liable to late
payment penalties for or in connection with the failure to pay that amount
by the due date.
      (2)
But it does not stop late payment interest from accruing on that amount from
5
the due date.
      (3)
HMRC may by notice in writing to the potential donor withdraw its
agreement to the suspension with effect from such date, before conclusion of
the negotiations, as may be specified in the notice.
      (4)
If it does so, the potential donor must pay the amount, together with any late
10
payment interest that has accrued on it since the due date, by the end of the
period of 30 days beginning with the date specified in the notice.
      (5)
The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.
15
      (6)
Paragraph 11 explains what happens once the negotiations conclude
(depending on the outcome of the negotiations).
Conclusion of negotiations
11    (1)
This paragraph applies if a potential donor’s obligation to pay an amount of
or on account of tax remains suspended under paragraph 9 when the
20
negotiations conclude (within the meaning of that paragraph).
      (2)
The potential donor must pay the amount, together with any late payment
interest that has accrued on it since the due date, within the period of 30 days
beginning with the day on which the negotiations concluded.
      (3)
The last day of that 30-day period is to be treated for the purposes of any
25
enactment relating to late payment penalties as the date on or before which
the amount must be paid.
      (4)
But if the negotiations conclude because a qualifying gift is made pursuant
to the offer or a part of the offer—
(a)
sub-paragraph (2) is to be read subject to paragraph 3(1) (and its
30
effect as described in paragraph 6), and
(b)
accordingly, the potential donor is only required to pay so much as
is not treated as satisfied under paragraph 3(1).
      (5)
If the negotiations conclude in relation to a part only of the offer—
(a)
this paragraph is to be given effect as far as reasonably practicable in
35
relation to that part, and
(b)
on receipt of a revised copy of the donor proposal, HMRC may give
effect to paragraph 9 in relation to the part of the offer that remains
under negotiation.

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 3 — Corporation tax
356

Part 3
Corporation tax
Taxes affected
12    (1)
This Part applies to a company’s liability to corporation tax.
      (2)
A reference in this Part to a company’s “tax liability” is to the company’s
5
liability to corporation tax.
      (3)
References to an amount of or on account of “tax” are to be read accordingly.
The basic rule
13    (1)
If a company (“C”) makes a qualifying gift, a portion of C’s tax liability for
the relevant accounting period is to be treated as satisfied, as if C had paid
10
that portion when it became due (or on the offer registration date, if the
portion became due before that date).
      (2)
“The relevant accounting period” is the accounting period of C’s in which
the offer registration date falls.
The portion treated as satisfied
15
14    (1)
The portion of C’s tax liability for the relevant accounting period that is to
be treated as satisfied is an amount equal to the smaller of—
(a)
the tax reduction figure, and
(b)
the amount of C’s tax liability for that period less any portion of that
amount that is treated as satisfied in consequence of any qualifying
20
gift made by C on a previous occasion.
      (2)
The amount determined under sub-paragraph (1) may be nil.
      (3)
The tax reduction figure is—
(a)
20% of the value set out in the agreed terms as the agreed value of the
property forming the subject of the qualifying gift, or
25
(b)
such lower figure as may be specified in the agreed terms as the tax
reduction figure.
      (4)
The Treasury may by order substitute a different percentage for the
percentage specified for the time being in sub-paragraph (3)(a).
Effect of basic rule on interest and penalties
30
15    (1)
This paragraph explains the effect of paragraph 13 as regards late payment
interest and late payment penalties.
      (2)
The effect is that liability to pay amounts specified in sub-paragraph (3)
ceases when the qualifying gift is made, as if the liability had never arisen.
      (3)
The amounts are—
35
(a)
any late payment interest that accrued on the relevant portion during
the negotiation period, and
(b)
any late payment penalty to which C became liable in the negotiation
period for failing to pay the relevant portion (together with any
interest on such a penalty).
40

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 3 — Corporation tax
357

      (4)
“The relevant portion” is the portion of C’s tax liability for the relevant
accounting period that is treated under paragraph 13 as satisfied.
      (5)
In determining for the purposes of sub-paragraph (2) whether or to what
extent—
(a)
late payment interest accruing on an amount of or on account of C’s
5
tax liability for the relevant accounting period is attributable to the
relevant portion, or
(b)
a late payment penalty incurred for failing to pay an amount of or on
account of C’s tax liability for the relevant accounting period is
attributable to the relevant portion,
10

any attribution or apportionment is to be done in the way that maximises the
relief obtained by C by virtue of this paragraph.
      (6)
“The negotiation period” is the period—
(a)
beginning with the offer registration date, and
(b)
ending with the day on which the qualifying gift is made.
15
      (7)
Nothing in this paragraph affects any late payment interest that accrued, or
any late payment penalty to which C became liable, before the offer
registration date.
Changes to C’s tax liability
16    (1)
If the amount of C’s tax liability for the relevant accounting period is revised
20
at any time, the portion of that liability that is treated under paragraph 13 as
satisfied is to be re-calculated.
      (2)
But nothing in this paragraph permits any revision of the agreed terms.
Gifts set aside etc
17
If a qualifying gift is set aside or declared void after it is made—
25
(a)
the portion of C’s tax liability for the relevant accounting period
treated as satisfied ceases to be treated as satisfied,
(b)
the effect described in paragraph 15 is negated, and
(c)
C is required to pay the portion due, together with any late payment
interest and late payment penalties in respect of it, by the later of—
30
(i)
the end of the period of 30 days beginning with the day on
which the gift was set aside or declared void, and
(ii)
the day by which C would have been required to pay those
amounts but for this Schedule.
Suspension pending negotiations
35
18    (1)
A company that makes an offer in the circumstances described in paragraph
1 (a “potential donor”) may make a request under this paragraph if—
(a)
the offer is registered in accordance with the scheme,
(b)
the offer includes a proposal (“the donor proposal”) of what should
be in the agreed terms,
40
(c)
the potential donor will be required to pay an amount of or on
account of tax for the relevant accounting period by a certain date,
and

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 3 — Corporation tax
358

(d)
the negotiations are not expected to conclude before that date
(referred to as “the due date”).
      (2)
For the purposes of this paragraph, the negotiations “conclude” when—
(a)
a qualifying gift is made pursuant to the offer,
(b)
the offer is withdrawn by the potential donor, or
5
(c)
the offer is rejected.
      (3)
A request under this paragraph is a request that the potential donor’s
obligation to pay the amount by the due date be suspended until the
negotiations conclude.
      (4)
But the running total of amounts for which suspension may be requested
10
under this paragraph in respect of the same offer must not exceed the
proposed tax reduction figure.
      (5)
“The proposed tax reduction figure” is the amount shown in the donor
proposal as the proposed tax reduction figure.
      (6)
A request under this paragraph—
15
(a)
must be made in writing to HMRC at least 45 days before the due
date, and
(b)
must be accompanied by a copy of the donor proposal and such
other information as an officer of Revenue and Customs may
reasonably require.
20
      (7)
In considering whether or to what extent to agree to a request, HMRC must
have regard to all the circumstances of the case (including, for example, the
creditworthiness of the potential donor).
      (8)
HMRC may impose conditions with respect to the suspension.
19    (1)
Suspension under paragraph 18 of a potential donor’s obligation to pay an
25
amount of or on account of tax stops the donor from becoming liable to late
payment penalties for or in connection with the failure to pay that amount
by the due date.
      (2)
But it does not stop late payment interest from accruing on that amount from
the due date.
30
      (3)
HMRC may by notice in writing to the potential donor withdraw its
agreement to the suspension with effect from such date, before conclusion of
the negotiations, as may be specified in the notice.
      (4)
If it does so, the potential donor must pay the amount, together with any late
payment interest that has accrued on it since the due date, by the end of the
35
period of 30 days beginning with the date specified in the notice.
      (5)
The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.
      (6)
Paragraph 20 explains what happens once the negotiations conclude
40
(depending on the outcome of the negotiations).

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 4 — General provision
359

Conclusion of negotiations
20    (1)
This paragraph applies if a potential donor’s obligation to pay an amount of
or on account of tax remains suspended under paragraph 18 when the
negotiations conclude (within the meaning of that paragraph).
      (2)
The potential donor must pay the amount, together with any late payment
5
interest that has accrued on it since the due date, within the period of 30 days
beginning with the day on which the negotiations concluded.
      (3)
The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.
10
      (4)
But if the negotiations conclude because a qualifying gift is made pursuant
to the offer or a part of the offer—
(a)
sub-paragraph (2) is to be read subject to paragraph 13 (and its effect
as described in paragraph 15), and
(b)
accordingly, the potential donor is only required to pay so much as
15
is not treated as satisfied under paragraph 13.
      (5)
If the negotiations conclude in relation to a part only of the offer—
(a)
this paragraph is to be given effect as far as reasonably practicable in
relation to that part, and
(b)
on receipt of a revised copy of the donor proposal, HMRC may give
20
effect to paragraph 18 in relation to the part of the offer that remains
under negotiation.
Part 4
General provision
Orders
25
21    (1)
An order under Part 2 or 3 of this Schedule is to be made by statutory
instrument.
      (2)
It may include transitional and saving provisions.
      (3)
A statutory instrument containing an order under Part 2 or 3 of this Schedule
is subject to annulment in pursuance of a resolution of the House of
30
Commons.
Pre-eminent property
22    (1)
In this Schedule, “pre-eminent property” means—
(a)
any picture, print, book, manuscript, work of art, scientific object or
other thing that the relevant Minister is satisfied is pre-eminent for
35
its national, scientific, historic or artistic interest,
(b)
any collection or group of pictures, prints, books, manuscripts,
works of art, scientific objects or other things if the relevant Minister
is satisfied that the collection or group, taken as a whole, is pre-
eminent for its national, scientific, historic or artistic interest, or
40
(c)
any object that is or has been kept in a significant building if it
appears to the relevant Minister desirable for the object to remain
associated with the building.

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 4 — General provision
360

      (2)
A “significant building” is any building falling within section 230(3)(a) to (d)
of IHTA 1984 (acceptance of property in lieu of tax).
      (3)
“National interest” includes interest within any part of the United Kingdom.
      (4)
In determining whether an object or collection or group of objects is pre-
eminent, regard is to be had to any significant association of the object,
5
collection or group with a particular place.
The relevant Minister
23    (1)
For the purposes of paragraph 22, “the relevant Minister” is—
(a)
for items with a purely Scottish interest, the Scottish Ministers,
(b)
for items with some Scottish interest but with no Northern Irish
10
interest and no Welsh interest, the Secretary of State and the Scottish
Ministers concurrently,
(c)
for items with a purely Northern Irish interest, the Northern Ireland
Department of Culture, Arts and Leisure,
(d)
for items with some Northern Irish interest but with no Scottish
15
interest and no Welsh interest, the Secretary of State and the
Northern Ireland Department of Culture, Arts and Leisure
concurrently,
(e)
for items with a purely Welsh interest, the Welsh Ministers,
(f)
for items with some Welsh interest but with no Scottish interest and
20
no Northern Irish interest, the Secretary of State and the Welsh
Ministers concurrently, and
(g)
for any other items, the Secretary of State.
      (2)
If an item within sub-paragraph (1)(g) has more than one devolved interest,
the Secretary of State must consult the appropriate Minister for each such
25
interest before making a decision under paragraph 22 affecting the item.
      (3)
An item has a purely Scottish interest if—
(a)
it is located in Scotland, and
(b)
the offer contains—
(i)
no wish about where the item is to be displayed, or
30
(ii)
a wish that it is to be displayed in Scotland.
      (4)
An item has some Scottish interest if it does not have a purely Scottish
interest but—
(a)
it is located in Scotland, or
(b)
the offer contains a wish that it is to be displayed in Scotland.
35
      (5)
An item has no Scottish interest if it does not have a purely Scottish interest
and it does not have some Scottish interest.
      (6)
References to items with a purely Northern Irish or purely Welsh interest, to
items with some Northern Irish or some Welsh interest and to items with no
Northern Irish interest or no Welsh interest are to be read in accordance with
40
sub-paragraphs (3) to (5), but replacing references to Scotland with
references to Northern Ireland or, as the case may be, Wales.
      (7)
A “devolved interest” is some Scottish interest, some Northern Irish interest
or some Welsh interest.
      (8)
“The appropriate Minister” is—
45

Finance (No. 4) Bill
Schedule 14 — Gifts to the nation
Part 5 — Related changes
361

(a)
if the item has some Scottish interest, the Scottish Ministers,
(b)
if the item has some Northern Irish interest, the Northern Ireland
Department of Culture, Arts and Leisure, and
(c)
if the item has some Welsh interest, the Welsh Ministers.
      (9)
“Item” means an object or collection or group of objects.
5
General interpretation
24
In this Schedule—
“the Commissioners” means the Commissioners for Her Majesty’s
Revenue and Customs;
“company” has the meaning given in section 992 of ITA 2007;
10
“corporation tax” includes any amount assessable or chargeable as if it
were corporation tax;
“HMRC” means Her Majesty’s Revenue and Customs;
“late payment interest” means interest under section 101 of FA 2009, or
under or by virtue of Part 9 of TMA 1970, on amounts payable to
15
HMRC;
“late payment penalty” means a penalty under Schedule 56 to FA 2009.
25
Nothing in this Schedule is to give rise to any right or expectation that an
offer made as mentioned in paragraph 1 will be accepted.
Part 5
20
Related changes
IHTA 1984
26
IHTA 1984 is amended as follows.
27
In section 25 (gifts for national purposes etc), after subsection (2) insert—
“(3)
A transfer of value is an exempt transfer to the extent that the value
25
transferred by it is attributable to property that is being transferred
in the circumstances described in paragraph 1 of Schedule 14 to the
Finance Act 2012 (gifts to the nation).”
28
In section 26A (potentially exempt transfer of property subsequently held
for national purposes etc), in paragraph (b), after “below” insert “or in the
30
circumstances described in paragraph 1 of Schedule 14 to the Finance Act
2012 (gifts to the nation)”.
29    (1)
Section 32 (conditionally exempt transfers: chargeable events) is amended as
follows.
      (2)
In subsection (3), for “subsections (4) and (5)” substitute “subsections (4),
35
(4A) and (5)”.
      (3)
After subsection (4) insert—
“(4A)
A death or disposal is not a chargeable event with respect to any
property if—
(a)
in the case of a death, a person who became beneficially
40
entitled to the property on the death disposes of it in the
circumstances described in paragraph 1 of Schedule 14 to the