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Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

322

 

      (5)  

Section 196H of FA 2004 also has effect in relation to contributions paid by

employers before 29 November 2011 (and, for the purpose of applying

section 196H in relation to such contributions, assume that sections 196B to

196D also have effect in relation to such contributions).

      (6)  

Section 196I of FA 2004 also has effect in relation to contributions paid by

5

employers before 29 November 2011 (and, for the purpose of applying

section 196I in relation to such contributions, assume that sections 196B to

196D also have effect in relation to such contributions).

Part 2

Transitional provision relating to Part 1

10

Application and interpretation

4     (1)  

This Part of this Schedule applies if—

(a)   

before 29 November 2011, an employer (“E”) pays a contribution

(“E’s contribution”) under a registered pension scheme (“the

relevant scheme”),

15

(b)   

at any time, relief is given in respect of E’s contribution,

(c)   

if the reference in paragraph 3(2) above to 29 November 2011 were

instead a reference to the date on which E’s contribution is paid, E

would have no entitlement to relief in respect of E’s contribution by

virtue of section 196B, 196C or 196D of FA 2004, and

20

(d)   

the asset-backed arrangement is not completed before 29 November

2011.

      (2)  

For the purposes of sub-paragraph (1)(c) section 196F of FA 2004 is to be

ignored.

5          

For the purposes of this Part of this Schedule—

25

(a)   

terms used in section 196B, 196C or 196D of FA 2004 (as the case may

be) have the same meaning as in that section, and

(b)   

as necessary, assume that section 196B, 196C or 196D of FA 2004 (as

the case may be) has effect in relation to E’s contribution.

6     (1)  

This paragraph applies for the purposes of this Part of this Schedule.

30

      (2)  

Sub-paragraph (3) applies if the section which would have applied as

mentioned in paragraph 4(1)(c) above is section 196B of FA 2004.

      (3)  

The asset-backed arrangement is “completed” when neither the lender nor

any person connected with the lender is any longer entitled under the asset-

backed arrangement (conditionally or unconditionally) to payments in

35

respect of the security.

      (4)  

Sub-paragraph (5) applies if the section which would have applied as

mentioned in paragraph 4(1)(c) above is section 196C or 196D of FA 2004.

      (5)  

The asset-backed arrangement is “completed” when the share in the

partnership’s profits of the person involved in the relevant change is no

40

longer to be determined under the asset-backed arrangement (conditionally

or unconditionally) by reference (wholly or partly) to payments in respect of

the security.

 
 

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

323

 

7     (1)  

In this Part of this Schedule “the completion day” means the earliest of the

following—

(a)   

the day on which the asset-backed arrangement is to be completed

determined as at the beginning of 29 November 2011;

(b)   

the day on which the asset-backed arrangement is actually

5

completed;

(c)   

the day on which a completion event occurs (see sub-paragraphs (2)

to (10));

(d)   

if an event falling within paragraph 8 occurs, the day on which falls

the time immediately before the occurrence of the event.

10

      (2)  

Sub-paragraphs (3) and (4) apply if the section which would have applied as

mentioned in paragraph 4(1)(c) above is section 196B of FA 2004.

      (3)  

To determine if a completion event occurs for the purposes of sub-paragraph

(1)(c) first determine, as at the beginning of 22 February 2012, the

following—

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(a)   

the number of payments to be made after the beginning of 22

February 2012 to which the lender or a person connected with the

lender is entitled under the asset-backed arrangement,

(b)   

what the amounts of those payments are to be, and

(c)   

the times at which those payments are to be made.

20

      (4)  

A completion event occurs for the purposes of sub-paragraph (1)(c) if, after

the beginning of 22 February 2012—

(a)   

whether as a result of a term of the asset-backed arrangement or

another arrangement or otherwise—

(i)   

there is a change in the number of payments to be made from

25

that determined under sub-paragraph (3),

(ii)   

there is a significant change in the amount of a payment to be

made from that so determined, or

(iii)   

there is a significant change in the time at which a payment is

to be made from that so determined,

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(b)   

a payment determined under sub-paragraph (3) is not made,

(c)   

a payment determined under sub-paragraph (3) is made but its

amount is significantly different from the amount so determined for

the payment, or

(d)   

a payment determined under sub-paragraph (3) is made but is made

35

at a time significantly different from the time so determined for the

payment.

      (5)  

Sub-paragraphs (6) and (7) apply if the section which would have applied as

mentioned in paragraph 4(1)(c) above is section 196C or 196D of FA 2004.

      (6)  

To determine if a completion event occurs for the purposes of sub-paragraph

40

(1)(c) first determine, as at the beginning of 22 February 2012, the

following—

(a)   

what the amount of the share in the partnership’s profits of the

person involved in the relevant change is to be so far as the share is

to be determined under the asset-backed arrangement by reference

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to payments made after the beginning of 22 February 2012,

(b)   

the number of drawings to be made from the partnership on account

of the amount determined under paragraph (a) and the number of

any other payments to be made after the beginning of 22 February

 
 

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

324

 

2012 to which the person involved in the relevant change, the lender

or any other person connected with the lender is entitled under the

asset-backed arrangement,

(c)   

what the amounts of those drawings or other payments are to be, and

(d)   

the times at which those drawings or other payments are to be made.

5

      (7)  

A completion event occurs for the purposes of sub-paragraph (1)(c) if, after

the beginning of 22 February 2012—

(a)   

whether as a result of a term of the asset-backed arrangement or

another arrangement or otherwise—

(i)   

there is a change in the number of drawings or other

10

payments to be made from that determined under sub-

paragraph (6),

(ii)   

there is a significant change in the amount of a drawing or

other payment to be made from that so determined, or

(iii)   

there is a significant change in the time at which a drawing or

15

other payment is to be made from that so determined,

(b)   

a drawing or other payment determined under sub-paragraph (6) is

not made,

(c)   

a drawing or other payment determined under sub-paragraph (6) is

made but its amount is significantly different from the amount so

20

determined for the drawing or other payment, or

(d)   

a drawing or other payment determined under sub-paragraph (6) is

made but is made at a time significantly different from the time so

determined for the drawing or other payment.

      (8)  

In sub-paragraphs (3) and (4) and (6) and (7) references to payments are to

25

payments of any type including payments in respect of the security or any

other asset.

      (9)  

In sub-paragraphs (6) and (7) references to the making of drawings from the

partnership include references to the receiving of distributions from the

partnership.

30

     (10)  

For the purposes of sub-paragraphs (4)(b) to (d) and (7)(b) to (d) it does not

matter if the event in question is authorised by a term of the asset-backed

arrangement or results from the occurrence or non-occurrence of another

event which is so authorised.

8     (1)  

The events falling within this paragraph are those listed in sub-paragraph

35

(2).

           

But an event falls within this paragraph only if it occurs after the beginning

of 21 March 2012.

      (2)  

The events are—

(a)   

if E is a company within the charge to corporation tax when E’s

40

contribution is paid, E ceases to be within that charge;

(b)   

if E is a limited liability partnership in relation to which section

863(1) of ITTOIA 2005 or section 1273(1) of CTA 2009 applies when

E’s contribution is paid, that provision ceases to apply in relation to

E;

45

(c)   

if E is a firm for the purposes of ITTOIA 2005 (see section 847) or CTA

2009 (see section 1257) (other than a limited liability partnership)

when E’s contribution is paid, the partnership ceases to carry on the

trade, profession or business in question;

 
 

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

325

 

(d)   

in any case—

(i)   

if E is a company, E enters administration or the winding up

of E starts;

(ii)   

if E is a partnership, the partnership is dissolved;

(iii)   

if E is an individual, E dies.

5

      (3)  

Sections 10(3) and 12(7) of CTA 2009 apply for the purposes of sub-

paragraph (2)(d)(i).

Certain tax consequences not to have effect

9     (1)  

This paragraph applies if—

(a)   

the section which would have applied as mentioned in paragraph

10

4(1)(c) above is section 196B of FA 2004, and

(b)   

the asset-backed arrangement would have the relevant effect

(ignoring this paragraph).

      (2)  

The asset-backed arrangement is not to have the relevant effect.

      (3)  

The relevant effect is that—

15

(a)   

an amount of income on which the borrower or a person connected

with the borrower would otherwise have been charged to tax is not

so charged,

(b)   

an amount which would otherwise have been brought into account

in calculating for tax purposes any income of the borrower or of a

20

person connected with the borrower is not so brought into account,

or

(c)   

the borrower or a person connected with the borrower becomes

entitled to deduct an amount—

(i)   

in calculating income for tax purposes, or

25

(ii)   

from total income or total profits (as the case may be).

      (4)  

But if the borrower is a partnership the relevant effect is that—

(a)   

an amount of income on which a member of the partnership would

otherwise have been charged to tax is not so charged,

(b)   

an amount which would otherwise have been brought into account

30

in calculating for tax purposes any income of a member of the

partnership is not so brought into account, or

(c)   

a member of the partnership becomes entitled to deduct an

amount—

(i)   

in calculating income for tax purposes, or

35

(ii)   

from total income or total profits (as the case may be).

      (5)  

In sub-paragraphs (3) and (4) “amount” means an amount which arises on

or after 29 November 2011 but on or before the completion day.

10    (1)  

This paragraph applies if—

(a)   

the section which would have applied as mentioned in paragraph

40

4(1)(c) above is section 196C of FA 2004, and

(b)   

any relevant change in relation to the partnership would have the

relevant effect (ignoring this paragraph).

      (2)  

In such a case—

 
 

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

326

 

(a)   

Part 9 of ITTOIA 2005 or sections 1259 to 1265 of CTA 2009 (as the

case may be) is or are to have effect in relation to the transferor, or

any person connected with the transferor, as if the relevant change in

relation to the partnership had not occurred, and

(b)   

accordingly, the asset-backed arrangement is not to have the relevant

5

effect.

      (3)  

The relevant effect is that—

(a)   

an amount of income on which the transferor, or the person

connected with the transferor, would otherwise have been charged

to tax is not so charged,

10

(b)   

an amount which would otherwise have been brought into account

in calculating for tax purposes any income of the transferor, or the

person connected with the transferor, is not so brought into account,

or

(c)   

the transferor, or the person connected with the transferor, becomes

15

entitled to deduct an amount—

(i)   

in calculating income for tax purposes, or

(ii)   

from total income or total profits (as the case may be).

      (4)  

In sub-paragraph (3) “amount” means an amount which arises on or after 29

November 2011 but on or before the completion day.

20

      (5)  

In deciding whether sub-paragraph (1)(b) is met assume that amounts of

income equal to the payments mentioned in section 196C(2)(g) of FA 2004

were payable to the partnership before the relevant change in relation to it

occurred.

11    (1)  

This paragraph applies if—

25

(a)   

the section which would have applied as mentioned in paragraph

4(1)(c) above is section 196D of FA 2004, and

(b)   

any relevant change in relation to the partnership would have the

relevant effect (ignoring this paragraph).

      (2)  

The relevant effect is that—

30

(a)   

an amount of income on which a relevant member would otherwise

have been charged to tax is not so charged,

(b)   

an amount which would otherwise have been brought into account

in calculating for tax purposes any income of a relevant member is

not so brought into account, or

35

(c)   

a relevant member becomes entitled to deduct an amount—

(i)   

in calculating income for tax purposes, or

(ii)   

from total income or total profits (as the case may be).

      (3)  

A relevant member is a person who—

(a)   

was a member of the partnership immediately before the relevant

40

change in relation to it occurred, and

(b)   

is not the lender.

      (4)  

In sub-paragraph (2) “amount” means an amount which arises on or after 29

November 2011 but on or before the completion day.

      (5)  

If this paragraph applies—

45

(a)   

Part 9 of ITTOIA 2005 or sections 1259 to 1265 of CTA 2009 (as the

case may be) is or are to have effect in relation to any relevant

 
 

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

327

 

member as if the relevant change in relation to the partnership had

not occurred, and

(b)   

accordingly, the asset-backed arrangement is not to have the relevant

effect.

      (6)  

In deciding whether sub-paragraph (1)(b) is met assume that amounts of

5

income equal to the payments mentioned in section 196D(2)(e) of FA 2004

were payable to the partnership before the relevant change in relation to it

occurred.

Adjustments

12    (1)  

For the purposes of paragraphs 13 and 14—

10

(a)   

amount A is the total amount of relief given in respect of E’s

contribution,

(b)   

amount B is the total of the following amounts—

(i)   

any amounts of income which are charged to tax by virtue of

paragraph 9, 10 or 11 above (as the case may be),

15

(ii)   

any amounts brought into account in calculating income for

tax purposes by virtue of paragraph 9, 10 or 11 above (as the

case may be) (so far as not reflected in sub-paragraph (i)), and

(iii)   

any amounts stopped from being the subject of an income

deduction by virtue of paragraph 9, 10 or 11 above (as the

20

case may be) (so far as not reflected in sub-paragraph (i) or

(ii)), and

(c)   

subject to sub-paragraph (7), amount C is the amount of the payment

mentioned in sub-paragraph (4) or (6) (as the case may be) so far as

the payment—

25

(i)   

is made under the asset-backed arrangement on the

completion day,

(ii)   

is not reflected in amount B,

(iii)   

is not the subject of an income deduction, and

(iv)   

is not a contribution paid by E under the relevant scheme but

30

nevertheless becomes (directly or indirectly) part of the sums

held for the purposes of the relevant scheme.

      (2)  

In sub-paragraph (1) “income deduction” means a deduction to which any

person is entitled—

(a)   

in calculating income for tax purposes, or

35

(b)   

from total income or total profits.

      (3)  

Sub-paragraph (4) applies if the section which would have applied as

mentioned in paragraph 4(1)(c) above is section 196B of FA 2004.

      (4)  

The payment referred to in sub-paragraph (1)(c) is the payment (if any)

which the borrower, or a person connected with the borrower, makes to the

40

lender, or a person connected with the lender, in order to acquire—

(a)   

the security, or

(b)   

any asset substituted for the security under the asset-backed

arrangement.

      (5)  

Sub-paragraph (6) applies if the section which would have applied as

45

mentioned in paragraph 4(1)(c) above is section 196C or 196D of FA 2004.

 
 

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 2 — Transitional provision relating to Part 1

328

 

      (6)  

The payment referred to in sub-paragraph (1)(c) is the payment (if any)

which E, or a person connected with E, makes to the lender, or a person

connected with the lender, in order to reverse the relevant change in relation

to the partnership.

      (7)  

Amount C is to be taken to be nil if—

5

(a)   

the completion day is on or after 22 February 2012,

(b)   

on or before the completion day, a commitment (whether or not

legally enforceable and whether or not subject to any conditions) is

given (directly or indirectly) to a relevant person, and

(c)   

the commitment—

10

(i)   

is a commitment to secure that a person receives money or

another asset, and

(ii)   

is linked (directly or indirectly) to the making of the payment

covered by amount C.

      (8)  

In sub-paragraph (7)(b) “relevant person” means—

15

(a)   

E;

(b)   

a person connected with E;

(c)   

a person acting (directly or indirectly) at the direction or request, or

with the agreement, of E or a person connected with E;

(d)   

a person chosen (directly or indirectly) by E or a person connected

20

with E;

(e)   

a person within a class of person chosen (directly or indirectly) by E

or a person connected with E;

(f)   

a partnership.

      (9)  

But “relevant person” does not include—

25

(a)   

the persons who from time to time are the trustees of the relevant

scheme, or

(b)   

the persons who from time to time are the persons controlling the

management of the relevant scheme,

           

in their capacity as such.

30

13    (1)  

This paragraph applies if amount A exceeds the sum of amounts B and C.

      (2)  

The amount of the excess 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

35

period in which the beginning of the completion day 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 beginning of the

completion day falls.

40

14         

If the sum of amounts B and C exceeds amount A—

(a)   

E is to be treated as having paid a contribution under the relevant

scheme in respect of any individual of an amount equal to the excess,

(b)   

the contribution is to be treated as having been paid at the beginning

of the completion day, and

45

(c)   

E is to be given relief as provided for by section 196 of FA 2004

accordingly.

 
 

 
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