Finance (No. 4) Bill (HC Bill 325)

(b) treat the underlying income or gains as the income or gains treated under section 809VA(2) as not remitted to the United Kingdom as a result of the re-investment, and

(c) treat the amount used to make the re-investment as the sum originally invested.

(5) If the re-investment is made using more than the minimum amount of disposal proceeds required to satisfy section 809VI(1) or (2)(b)—

(a) that investment is to be treated as two separate investments, one made using the minimum amount of disposal proceeds and one made using the excess, and

(b) references in the business investment provisions to “the investment” and “the holding” relate only to the investment made using the minimum amount of disposal proceeds.

(6) “The underlying income or gains” means the affected income or gains (within the meaning of section 809VG) or, if one part of the disposal proceeds is taken offshore and the other part re-invested, a corresponding proportion of the affected income or gains.

(7) A further claim must be made in accordance with section 809VA in respect of the re-investment and, if no such claim is made on or before the first anniversary of the 31 January following the tax year in which the re-investment was made, section 809VG(2) applies, as

respects the original investment, as if the appropriate mitigation steps had not been taken within the grace period allowed for each step.

(8) Section 809VM makes further provision in cases involving a tax deposit.

809VM Cases involving tax deposits

(1) This section applies in cases where—

(a) section 809VG(2) did not apply because the appropriate mitigation steps were taken within the grace period allowed for each step,

(b) the amount required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) had been reduced under section 809VK, and

(c) but for that reduction, the amount that was actually taken offshore or re-invested would not have been enough to satisfy section 809VI(1) or (2)(b).

(2) The tax deposit that gave rise to the reduction is referred to in this section as “the tax deposit”.

(3) Use of the tax deposit to pay the relevant tax liability does not count as remitting the underlying income or gains to the United Kingdom (and, accordingly, section 809VA(2) continues to apply to the income or gains).

(4) If any of the CTD conditions is breached, the underlying income or gains are to be treated as having been remitted to the United Kingdom immediately after the day on which the breach occurs.

(5) “The underlying income or gains” means such portion of the affected income or gains (within the meaning of section 809VG) as is—

(a) represented by the payment, in the case of subsection (3), or

(b) affected by the breach, in the case of subsection (4).

(6) The CTD conditions are as follows—

(a) the tax deposit must not be used to pay a tax liability other than the relevant tax liability,

(b) if any of the tax deposit is withdrawn by the depositor, the amount withdrawn must be taken offshore or re-invested within the period of 45 days beginning with the day on which the withdrawal was made, and

(c) any part of the tax deposit that has been neither used to pay a tax liability nor withdrawn by the due date must be withdrawn by the depositor and taken offshore or re-invested within the period of 45 days beginning with that date.

(7) Where the CTD conditions were not breached because the requisite amount was taken offshore or re-invested within the 45-day period mentioned in subsection (6)(b) or (c)—

(a) section 809VL applies to the amount taken offshore or re-invested as it applies to disposal proceeds, but

(b) read the reference in section 809VL(4)(a) to the potentially chargeable event as a reference to—

(i) the withdrawal, in a case within subsection (6)(b), and

(ii) the due date, in a case within subsection (6)(c).

(8) For the purposes of this section—

(a) “the relevant tax liability” means P’s liability to capital gains tax for the tax year in which the disposal took place,

(b) “the due date” means the date by which the relevant tax liability is required to be paid,

(c) “re-invested” has the meaning given in section 809VI(7), and

(d) references to withdrawal include repayment for whatever reason.

809VN Order of disposals etc

(1) Subsection (2) applies if at any time income or chargeable gains of an individual are treated under section 809VA as not remitted to the United Kingdom as a result of—

(a) more than one qualifying investment made in the same target company,

(b) more than one qualifying investment made in companies in the same eligible trading group, or

(c) qualifying investments made in an eligible trading company and in an eligible stakeholder company that holds investments in that trading company.

(2) In the application of section 809VG at that time—

(a) treat the investments and holdings as if they were a single qualifying investment and a single holding, and

(b) assume that a disposal of all or part of that deemed single holding affects the deemed single investment in the order in which the qualifying investments were made (that is to say, on a first in, first out basis).

(3) Subsection (4) applies if at any time—

(a) income or chargeable gains of an individual are treated under section 809VA as not remitted to the United Kingdom as a result of one or more qualifying investments,

(b) in addition to that investment or those investments, a relevant person holds at least one other investment in the same target company, the same eligible trading group or a related eligible company, and

(c) that other investment is not a qualifying investment.

(4) In the application of section 809VG at that time—

(a) treat the investments and holdings as if they were a single investment and a single holding, and

(b) assume that a disposal of all or part of that deemed single holding is a disposal of a holding from a qualifying investment until the holdings from all the qualifying investments have been disposed of.

(5) The reference to a “related eligible company”—

(a) in relation to an eligible trading company, is to an eligible stakeholder company that holds investments in that company, and

(b) in relation to an eligible stakeholder company, is to an eligible trading company in which that company holds investments.

(6) Subsections (2) and (4) apply whether the investments in question are held by the same relevant person or different ones.

809VO Investments made from mixed funds

(1) This section applies if—

(a) but for section 809VA(2), income or gains would have been remitted to the United Kingdom by virtue of a relevant event, and

(b) section 809Q (transfers from mixed funds) would have applied in determining the amount that would have been so remitted.

(2) The relevant event counts as an offshore transfer for the purposes of section 809R(4).

(3) The holding is to be treated as containing a proportion of each kind of income and capital contained in the invested property equal to the fixed proportion.

(4) “The fixed proportion” is the proportion of that kind of income or capital contained in the invested property by virtue of subsection (2).

(5) “The invested property” means the money or other property used to make the investment.

(6) Subsection (7) applies in cases where—

(a) section 809VG(2) does not apply because an amount is taken offshore, re-invested or used to make a tax deposit, or

(b) section 809VM(4) does not apply because an amount is taken offshore or re-invested.

(7) The amount taken offshore, re-invested or used to make a tax deposit is treated, immediately after that step, as containing the fixed proportion of each kind of income and capital contained in the holding.

(8) In cases where section 809VG(2) applies—

(a) the affected income or gains are so much of the fixed amount of each kind of income or gain mentioned in subsection (1)(a) as reflects the portion of the investment affected by the potentially chargeable event (see section 809VG(6)),

(b) “the fixed amount” is the amount of that kind of income or gain that the holding is treated as containing by virtue of subsection (3), and

(c) section 809Q does not apply in determining the affected income or gains.

(9) Section 809R(2) and (3) and section 809S apply for the purposes of this section.”

8 After the sections inserted by paragraph 7 insert the heading “Relief for certain UK services”.

9 Immediately before section 809X insert the heading “Exempt property relief”.

Formerly exempt property used to make investment

10 In section 809Y (property that ceases to be exempt property treated as remitted), after subsection (5) insert—

“(6) Subsection (1) does not apply to property that ceases to be exempt property if—

(a) the property, or anything into which it is converted, is used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which it ceased to be exempt property, and

(b) the remittance basis user makes a claim for relief under this subsection on or before the first anniversary of the 31 January following the tax year in which the property ceases to be exempt property.

(7) The reference in subsection (6)(a) to anything into which property is converted is—

(a) if the property is disposed of, the disposal proceeds, and

(b) if the property is converted into money in some other way, the money into which it is converted,

(including where the disposal or conversion occurs after the property ceases to be exempt property).

(8) If subsection (1) does not apply by virtue of subsection (6)—

(a) the property (or thing into which it was converted) used to make the investment is to be treated as containing or deriving from an amount of each kind of income and gain mentioned in section 809Q(4)(a) to (h) equal to the fixed amount,

(b) the income or gains treated under section 809X as not remitted to the United Kingdom continue to be treated as not remitted to the United Kingdom even though the property has ceased to be exempt property, and

(c) the business investment provisions apply to the income and gains as they apply to income or gains treated under section 809VA(2) as not remitted to the United Kingdom.

(9) “The fixed amount” is the amount of that kind of income or gain contained in the property when it was brought to, or received or used in, the United Kingdom (as mentioned in section 809X).

(10) If the investment is made using more than just the property (or thing into which it was converted), treat only the part made using the property (or thing into which it was converted) as “the investment” for the purposes of the business investment provisions.”

11 In section 809Z2 (personal use rule), in subsection (2), omit paragraph (a) (including the word “and” at the end of it).

12 In section 809Z4 (temporary importation rule), in subsection (3)—

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

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

(c) after that paragraph insert—

“(d) all or any part of the income or chargeable gains contained in the property (or from which the property derives) is treated, or continues to be treated, under section 809VA(2), 809Y(8)(b) or 809YC(2) as not remitted to the United Kingdom.”

Interpretation provisions

13 In section 809M (meaning of “relevant person”), in subsection (1), for “sections 809L, 809N and 809O” substitute “this Chapter”.

14 In section 809Z7 (interpretation of Chapter), omit subsection (7).

15 For the heading of that section substitute “Meaning of “foreign income and gains” etc”.

16 After that section insert—

“809Z8 Meaning of “the disposal proceeds”

(1) In this Chapter, in relation to a sale or other disposal, “the disposal proceeds” means—

(a) the consideration for the disposal, less

(b) any agency fees that are deducted before the consideration is paid or otherwise made available to or for the benefit of the person making the disposal (“the transferor”) or any other relevant person.

(2) The following rules apply in determining the consideration for the disposal.

(3) If the consideration is provided in the form of anything other than money, the amount of the consideration is the market value of the thing at the time of the disposal.

(4) If the disposal is made other than by way of a bargain made at arm’s length, the disposal is deemed to be made for a consideration equal to the market value, immediately before the disposal, of the thing being disposed of.

(5) Without limiting the generality of subsection (4), a disposal made to another relevant person or to a person connected with a relevant person is treated in all cases as made other than by way of a bargain at arm’s length.

(6) In subsection (1), “agency fees” means fees and other incidental costs of the disposal that are charged to the transferor by any person by or through whom the disposal is effected, but excluding any such fees or costs that—

(a) are charged to the transferor by another relevant person, or

(b) are to be passed on to or otherwise applied for the benefit of a relevant person.

(7) The exclusion mentioned in subsection (6) does not apply to the extent that the fees or costs—

(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.

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 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 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 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—

(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 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

(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 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 section 809VC) relating to a qualifying investment.

(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

(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

(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) 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

In this Chapter—

• “the business investment provisions” means sections 809VA to 809VO;

• “the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

• “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);

• “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 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

Relief from deemed remittance rule

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

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

(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.

(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 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 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 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 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 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 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.

(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 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 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 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 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 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 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

(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

(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

(c) P is either—

(i) the person to whom the gain accrues, or

(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—

(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 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,

(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 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) 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 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—

(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.

(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,

(b) must be given on or before the first anniversary of the 31 January following the applicable tax year, and

(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 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 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.”

(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) (“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 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.”

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.

Section 48

SCHEDULE 13 Employer asset-backed pension contributions etc

Part 1 Denial of relief for contributions paid during period 29 November 2011 to 21 February 2012

1 In Chapter 4 of Part 4 of FA 2004 (registered pension schemes: tax reliefs and exemptions) after section 196A insert—

“196B Employer asset-backed contributions: denial of relief (1)

(1) An employer (“E”) is not to be given relief in respect of a contribution (“E’s contribution”) paid by E under a registered pension scheme if conditions A, B and C are met.

(2) Condition A is that—

(a) under an arrangement (“the asset-backed arrangement”)—

(i) a person (“the borrower”) receives money or another asset (“the advance”) from another person (“the lender”),

(ii) the borrower, or a person connected with the borrower, makes a disposal of an asset (“the security”) to or for the benefit of the lender or a person connected with the lender, and

(iii) the lender, or a person connected with the lender, is entitled to payments in respect of the security,

(b) the borrower is E or a person connected with E, and

(c) the advance is (wholly or partly) paid or provided by the lender out of E’s contribution (directly or indirectly),

and the case is not one in relation to which either condition A in section 196C or condition A in section 196D is met.

(3) For the purposes of subsection (2)(a)(iii) it does not matter if an entitlement of the lender, or a person connected with the lender, is subject to any condition.

(4) Condition B is that the asset-backed arrangement is not a structured finance arrangement.

(5) Condition C is that it is reasonable to suppose that the amount of one or more of the payments mentioned in subsection (2)(a)(iii) has been, or is to be, determined (wholly or partly) on the basis that, in essence, the whole or a part of the advance represents a loan which is (wholly or partly) to be repaid by way of one or more of those payments.

(6) For the purposes of subsection (5) it does not matter—

(a) that the repayment of the loan might be subject to any condition, or

(b) that the accounts of any person do not record a financial liability in respect of the whole or a part of the advance or that the whole or a part of the advance is not otherwise treated as representing a loan for the purposes of the accounts of any person,

but, subject to that, all relevant circumstances are to be taken into account in order to get to the essence of the matter.

(7) For the purposes of this section—

(a) the borrower and the lender are not connected with one another if that would otherwise be the case,

(b) if the borrower is not E, references to a person connected with the borrower include a person connected with E who would not otherwise be connected with the borrower, and

(c) “loan” includes any advance of money.

196C Employer asset-backed contributions: denial of relief (2)

(1) An employer (“E”) is not to be given relief in respect of a contribution (“E’s contribution”) paid by E under a registered pension scheme if conditions A and B are met.

(2) Condition A is that—

(a) under an arrangement (“the asset-backed arrangement”) a person (“the transferor”) makes a disposal of an asset (“the security”) to a partnership,

(b) the transferor is E or a person connected with E,

(c) the transferor, or a person connected with the transferor, is a member of the partnership immediately after the disposal (whether or not a member immediately before it),

(d) under the asset-backed arrangement the partnership receives money or another asset (“the advance”) from a person (“the lender”) other than the transferor,

(e) the advance is (wholly or partly) paid or provided by the lender out of E’s contribution (directly or indirectly),

(f) there is a relevant change in relation to the partnership (see section 196E), and

(g) under the asset-backed arrangement the share in the partnership’s profits of the person involved in the relevant change (see section 196E) is determined by reference (wholly or partly) to payments in respect of the security.

(3) If the transferor is not E, for the purposes of this section references to a person connected with the transferor include a person connected with E who would not otherwise be connected with the transferor.

(4) For the purposes of subsection (2)(g) it does not matter if any determination of the share in the partnership’s profits of the person involved in the relevant change as mentioned is subject to any condition.

(5) Condition B is that the asset-backed arrangement is not a structured finance arrangement.

196D Employer asset-backed contributions: denial of relief (3)

(1) An employer (“E”) is not to be given relief in respect of a contribution (“E’s contribution”) paid by E under a registered pension scheme if conditions A and B are met.

(2) Condition A is that—

(a) a partnership holds an asset (“the security”) at any time before an arrangement (“the asset-backed arrangement”) is made,

(b) under the asset-backed arrangement the partnership receives money or another asset (“the advance”) from another person (“the lender”),

(c) the advance is (wholly or partly) paid or provided by the lender out of E’s contribution (directly or indirectly),

(d) there is a relevant change in relation to the partnership (see section 196E), and

(e) under the asset-backed arrangement the share in the partnership’s profits of the person involved in the relevant change (see section 196E) is determined by reference (wholly or partly) to payments in respect of the security.

(3) For the purposes of subsection (2)(e) it does not matter if any determination of the share in the partnership’s profits of the person involved in the relevant change as mentioned is subject to any condition.

(4) Condition B is that the asset-backed arrangement is not a structured finance arrangement.

196E What is a “relevant change in relation to the partnership” etc?

(1) For the purposes of sections 196C and 196D there is a relevant change in relation to the partnership if condition X or Y is met.

(2) Condition X is that, in connection with the asset-backed arrangement, the lender or a person connected with the lender becomes a member of the partnership at any time.

(3) Condition Y is that—

(a) in connection with the asset-backed arrangement, there is at any time a change in a member’s share in the partnership’s profits, and

(b) the member is the lender or a person connected with the lender or a person who in connection with the asset-backed arrangement becomes at any time connected with the lender.

(4) For the purposes of subsections (2) and (3) an event occurs in connection with the asset-backed arrangement if it occurs directly or indirectly in consequence of it or otherwise in connection with it.

(5) For the purposes of sections 196C and 196D references to the person involved in the relevant change are—

(a) if it is condition X that is met, to the lender or the person connected with the lender (as the case may be), and

(b) if it is condition Y that is met, to the member of the partnership in whose share in the partnership’s profits there is a change.

196F Employer asset-backed contributions: anti-avoidance

(1) This section applies if—

(a) an employer (“E”) pays a contribution (“E’s contribution”) under a registered pension scheme,

(b) conditions A and C in section 196B are met or condition A in section 196C or 196D is met,

(c) the asset-backed arrangement is a structured finance arrangement and, accordingly, condition B in section 196B, 196C or 196D (as the case may be) is not met,

(d) at any time (“the relevant time”) E, or a person connected with E, enters into an arrangement (“the avoidance arrangement”), and

(e) the main purpose, or one of the main purposes, of E or the person connected with E in entering into the avoidance arrangement is to secure that the total amount of the relevant payments will be less than the amount of E’s contribution.

(2) If the relevant time is the same as the time at which the advance is received or earlier, section 196B, 196C or 196D (as the case may be) applies in relation to E’s contribution as if condition B in that section were met.

(3) Otherwise, the amount of the relevant financial liability as at the relevant time is treated as follows as relevant—

(a) for corporation tax purposes, the amount is treated as if it were a profit which E has in respect of E’s loan relationships chargeable to corporation tax under section 299 of CTA 2009 for E’s accounting period in which the relevant time falls, or

(b) for income tax purposes, the amount is treated as if it were an amount of income of E chargeable to income tax under Chapter 8 of Part 5 of ITTOIA 2005 for the tax year in which the relevant time falls.

(4) The amount treated as profit or income by subsection (3)(a) or (b) is not to exceed the total amount of relief given in respect of E’s contribution.

(5) For the purposes of this section—

(a) “the advance” and “the asset-backed arrangement” have the same meaning as in section 196B, 196C or 196D (as the case may be),

(b) “the relevant financial liability” means the financial liability mentioned in section 809BZA(3), 809BZF(3) or 809BZJ(3) of ITA 2007 or section 758(3), 763(3) or 767(3) of CTA 2010 (as the case may be) in respect of the advance,

(c) “the relevant payments” means the payments which reduce that liability as so mentioned, and

(d) the amount of the relevant financial liability as at the relevant time is to be determined in accordance with generally accepted accounting practice.

196G Employer asset-backed contributions: reduction of financial liability under structured finance arrangement

(1) This section applies if—

(a) an employer (“E”) pays a contribution (“E’s contribution”) under a registered pension scheme,

(b) conditions A and C in section 196B are met or condition A in section 196C or 196D is met,

(c) the asset-backed arrangement is a structured finance arrangement and, accordingly, condition B in section 196B, 196C or 196D (as the case may be) is not met, and

(d) there occurs an event (“the relevant event”)—

(i) which is not the making of a relevant payment, but

(ii) by virtue of which, in accordance with generally accepted accounting practice, the amount of the relevant financial liability is reduced to nil or in part.

(2) If the relevant financial liability is reduced to nil, Chapter 5B of Part 13 of ITA 2007 or Chapter 2 of Part 16 of CTA 2010 (as the case may be) is no longer to apply in relation to the asset-backed arrangement from when the relevant event occurs.

(3) But no person is, by virtue of subsection (2), to be placed in a position which is more advantageous than the position in which the person would have been had this section never applied; and, in order to give effect to this principle, such assessments to tax or adjustments to any assessment to tax as are just and reasonable are to be made.

(4) In any case, the amount of the reduction of the relevant financial liability mentioned in subsection (1)(d) is treated as follows as relevant—

(a) for corporation tax purposes, the amount is treated as if it were a profit which E has in respect of E’s loan relationships chargeable to corporation tax under section 299 of CTA 2009 for E’s accounting period in which the relevant event occurs, or

(b) for income tax purposes, the amount is treated as if it were an amount of income of E chargeable to income tax under Chapter 8 of Part 5 of ITTOIA 2005 for the tax year in which the relevant event occurs.

(5) The amount treated as profit or income by subsection (4)(a) or (b) is not to exceed the total amount of relief given in respect of E’s contribution.

(6) For the purposes of this section—

(a) “the advance” and “the asset-backed arrangement” have the same meaning as in section 196B, 196C or 196D (as the case may be),

(b) “the relevant financial liability” means the financial liability mentioned in section 809BZA(3), 809BZF(3) or 809BZJ(3) of ITA 2007 or section 758(3), 763(3) or 767(3) of CTA 2010 (as the case may be) in respect of the advance,

(c) “relevant payment” means a payment which reduces that liability as so mentioned, and

(d) the amount of the relevant financial liability before its reduction by virtue of the relevant event and the amount of the reduction are to be determined in accordance with generally accepted accounting practice.

196H Employer asset-backed contributions: extension of section 196G

(1) This section applies if—

(a) an employer (“E”) pays a contribution (“E’s contribution”) under a registered pension scheme,

(b) conditions A and C in section 196B are met or condition A in section 196C or 196D is met,

(c) the asset-backed arrangement is a structured finance arrangement and, accordingly, condition B in section 196B, 196C or 196D (as the case may be) is not met, and

(d) after the beginning of 21 March 2012, an event (“the relevant event”) listed in subsection (4) occurs.

(2) Section 196G applies as if the relevant event were an event (other than the making of a relevant payment) by virtue of which, in accordance with generally accepted accounting practice, the amount of the relevant financial liability is reduced to nil.

(3) For this purpose, in section 196G (4) references to E’s accounting period, or the tax year, in which the relevant event occurs are to be read as references to E’s accounting period, or the tax year, in which falls the time immediately before the occurrence of the relevant event.

(4) The events are—

(a) if E is a company within the charge to corporation tax when E’s contribution is paid, E ceases to be within that charge;