Finance Bill

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Finance Bill

Finance 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
15
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
20
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 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 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 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 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 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.