Finance Bill

Session 2012 - 13
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Finance Bill

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 4 — Transitional provision relating to Part 3
348

(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
nevertheless becomes (directly or indirectly) part of the sums
held for the purposes of the relevant scheme.
5
      (2)
In sub-paragraph (1)(b) “relevant provision” means—
(a)
paragraph 23, 24 or 25 above (as the case may be);
(b)
a relevant charging provision (as defined in paragraph 26 above) as
applied in relation to the asset-backed arrangement for amounts
arising on or before the completion day;
10
(c)
paragraph 27 above (if applicable).
      (3)
No amount is to be included in amount B by virtue of sub-paragraph (2)(c)
so far as it is reflected in an amount included in amount B by virtue of sub-
paragraph (2)(a) or (b).
      (4)
In sub-paragraph (1) “income deduction” means a deduction to which any
15
person is entitled—
(a)
in calculating income for tax purposes, or
(b)
from total income or total profits.
      (5)
Sub-paragraph (6) applies if the section which would have applied as
mentioned in paragraph 18(1)(d) above is section 196B of FA 2004.
20
      (6)
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
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
25
arrangement.
      (7)
Sub-paragraph (8) applies if the section which would have applied as
mentioned in paragraph 18(1)(d) above is section 196D or 196F of FA 2004.
      (8)
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
30
connected with the lender, in order to reverse the relevant change in relation
to the partnership.
      (9)
Amount C is to be taken to be nil if—
(a)
on or before the completion day, a commitment (whether or not
legally enforceable and whether or not subject to any conditions) is
35
given (directly or indirectly) to a relevant person, and
(b)
the commitment—
(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
40
covered by amount C.
     (10)
In sub-paragraph (9)(a) “relevant person” means—
(a)
E;
(b)
a person connected with E;
(c)
a person acting (directly or indirectly) at the direction or request, or
45
with the agreement, of E or a person connected with E;

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 5 — Other provision relating to finance arrangements
349

(d)
a person chosen (directly or indirectly) by E or a person connected
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.
5
     (11)
But “relevant person” does not include—
(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,
10

in their capacity as such.
30    (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
15
corporation tax under section 299 of CTA 2009 for E’s accounting
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
20
completion day falls.
31
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
25
of the completion day, and
(c)
E is to be given relief as provided for by section 196 of FA 2004
accordingly.
Part 5
Other provision relating to finance arrangements
30
Chapter 5B of Part 13 of ITA 2007
32
Chapter 5B of Part 13 of ITA 2007 (finance arrangements) is amended as
follows.
33
In section 809BZA (type 1 finance arrangements: definition) after subsection
(2) insert—
35
“(2A)
For the purposes of subsection (2)(c) it does not matter if an
entitlement of the lender or a person connected with the lender is
subject to any condition.”
34    (1)
Section 809BZF (type 2 finance arrangements: definition) is amended as
follows.
40
      (2)
In subsection (2)(b) after “transferor” insert “or a person connected with the
transferor”.

Finance Bill
Schedule 13 — Employer asset-backed pension contributions etc
Part 5 — Other provision relating to finance arrangements
350

      (3)
After subsection (2) insert—
“(2A)
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.”
5
35
In section 809BZH (type 2 finance arrangements: certain tax consequences
not to have effect) after “transferor” (wherever occurring) insert “or the
person connected with the transferor”.
36
In section 809BZJ (type 3 finance arrangements: definition) after subsection
(2) insert—
10
“(2A)
For the purposes of subsection (2)(d) 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.”
Chapter 2 of Part 16 of CTA 2010
15
37
Chapter 2 of Part 16 of CTA 2010 (finance arrangements) is amended as
follows.
38
In section 758 (type 1 finance arrangements: definition) after subsection (2)
insert—
“(2A)
For the purposes of subsection (2)(c) it does not matter if an
20
entitlement of the lender or a person connected with the lender is
subject to any condition.”
39    (1)
Section 763 (type 2 finance arrangements: definition) is amended as follows.
      (2)
In subsection (2)(b) after “transferor” insert “or a person connected with the
transferor”.
25
      (3)
After subsection (2) insert—
“(2A)
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.”
30
40
In section 765 (type 2 finance arrangements: certain tax consequences not to
have effect) after “transferor” (wherever occurring) insert “or the person
connected with the transferor”.
41
In section 767 (type 3 finance arrangements: definition) after subsection (2)
insert—
35
“(2A)
For the purposes of subsection (2)(d) 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.”
Commencement
40
42    (1)
Subject to what follows, the amendments made by paragraphs 32 to 41
above have effect in relation to arrangements whenever made.

Finance Bill
Schedule 14 — Gifts to the nation
Part 1 — Introduction
351

      (2)
In relation to arrangements made before 21 March 2012, an amount is by
virtue of the amendments—
(a)
to be charged to tax, or
(b)
to be brought into account in calculating any income for tax purposes
or deducted from any income for tax purposes,
5

only if the amount arises on or after 21 March 2012.
      (3)
The amendments have no effect for the purposes of section 196J(4) of FA
2004 inserted by paragraph 1 above.
      (4)
The amendments have no effect for the purposes of section 196C(2)(b),
196E(2)(b) or 196G(2)(b) of FA 2004 inserted by paragraph 15 above if the
10
asset-backed arrangement is made before 21 March 2012.
Schedule 14
Section 49

Gifts to the nation
Part 1
Introduction
15
Qualifying gifts
1     (1)
For the purposes of this Schedule, a person makes a “qualifying gift” if the
person makes a gift in the circumstances described in sub-paragraph (2).
      (2)
The circumstances are—
(a)
the person offers to give pre-eminent property to be held for the
20
benefit of the public or the nation,
(b)
the person is legally and beneficially entitled to the property and the
property is not owned jointly (or in common) with others,
(c)
the offer is made in accordance with a scheme set up by the Secretary
of State for the purposes of this Schedule,
25
(d)
the offer is registered in accordance with the scheme,
(e)
the offer, or a part of the offer, is accepted in accordance with the
scheme, and
(f)
the gift is made pursuant to the offer, or the part of the offer,
accepted.
30
      (3)
In this Schedule—
(a)
“the agreed terms” means the terms on which acceptance is agreed,
as recorded in the manner prescribed by the scheme, and
(b)
“the offer registration date” means the date when the offer was
registered in accordance with the scheme.
35

Finance Bill
Schedule 14 — Gifts to the nation
Part 2 — Income tax and capital gains tax
352

Part 2
Income tax and capital gains tax
Taxes affected
2     (1)
This Part applies to an individual’s liability to income tax and capital gains
tax.
5
      (2)
It does not apply to any liability arising as a trustee or personal
representative.
      (3)
Subject to sub-paragraph (2)—
(a)
a reference in this Part to an individual’s “tax liability” is to the
individual’s liability to income tax and capital gains tax, and
10
(b)
references to an amount of or on account of “tax” are to be read
accordingly.
The basic rule
3     (1)
If an individual (“N”) makes a qualifying gift, a portion of N’s tax liability
for each relevant tax year is to be treated as satisfied, as if N had paid that
15
portion when it became due (or on the offer registration date, if the portion
became due before that date).
      (2)
A “relevant tax year” is a tax year identified in the agreed terms as a tax year
to which this paragraph is to apply.
      (3)
Up to 5 tax years may be identified in the agreed terms, but each one must
20
be either—
(a)
the tax year in which the offer registration date falls, or
(b)
one of the 4 tax years following that tax year.
The portion treated as satisfied
4     (1)
The portion of N’s tax liability for a relevant tax year that is to be treated as
25
satisfied is an amount equal to the smaller of—
(a)
the tax reduction figure allocated to that tax year, and
(b)
the amount of N’s tax liability for that tax year less any portion of
that amount that is treated as satisfied in consequence of any
qualifying gift made by N on a previous occasion.
30
      (2)
The amount determined under sub-paragraph (1) may be nil.
      (3)
The tax reduction figure allocated to a tax year is such part of the total tax
reduction figure as is expressed in the agreed terms to be allocated to that tax
year.
      (4)
The figures allocated to the relevant tax years must in total add up to no
35
more than the total tax reduction figure.
      (5)
“The total tax reduction figure” is 30% of the value set out in the agreed
terms as the agreed value of the property forming the subject of the
qualifying gift.
      (6)
The Treasury may by order substitute a different percentage for the
40
percentage specified for the time being in sub-paragraph (5).

Finance Bill
Schedule 14 — Gifts to the nation
Part 2 — Income tax and capital gains tax
353

Order in which benefit is applied
5     (1)
If the tax reduction figure allocated to a relevant tax year is less than the
amount determined under paragraph 4(1)(b) for that tax year, the benefit of
paragraph 3(1) is to be applied to N’s tax liability in the order specified in the
agreed terms.
5
      (2)
If no order is specified, the order is—
(a)
first, to N’s liability to income tax for that year, and
(b)
then, to N’s liability to capital gains tax for that year.
Effect of basic rule on interest and penalties
6     (1)
This paragraph explains the effect of paragraph 3(1) as regards late payment
10
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—
(a)
any late payment interest that accrued on the relevant portion during
15
the negotiation period, and
(b)
any late payment penalty to which N became liable in the negotiation
period for failing to pay the relevant portion (together with any
interest on such a penalty).
      (4)
“The relevant portion” is the portion of N’s tax liability for a relevant tax
20
year that is treated under paragraph 3 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 N’s
tax liability for the relevant tax year is attributable to the relevant
25
portion, or
(b)
a late payment penalty incurred for failing to pay an amount of or on
account of N’s tax liability for the relevant tax year is attributable to
the relevant portion,

any attribution or apportionment is to be done in the way that maximises the
30
relief obtained by N 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.
      (7)
Nothing in this paragraph affects any late payment interest that accrued, or
35
any late payment penalty to which N became liable, before the offer
registration date.
Changes to N’s tax liability
7     (1)
If the amount of N’s tax liability for a relevant tax year is revised at any time,
the portion of that liability that is treated under paragraph 3(1) as satisfied is
40
to be re-calculated.
      (2)
But nothing in this paragraph permits any revision of the agreed terms.

Finance Bill
Schedule 14 — Gifts to the nation
Part 2 — Income tax and capital gains tax
354

Gifts set aside etc
8
If a qualifying gift is set aside or declared void after it is made—
(a)
the portion of N’s tax liability for each relevant tax year that is
treated as satisfied ceases to be treated as satisfied,
(b)
the effect described in paragraph 6 is negated, and
5
(c)
N is required to pay the portion due for each relevant tax year,
together with any late payment interest and late payment penalties
in respect of it, by the later of—
(i)
the end of the period of 30 days beginning with the day on
which the gift was set aside or declared void, and
10
(ii)
the day by which N would have been required to pay those
amounts but for this Schedule.
Suspension pending negotiations
9     (1)
An individual who makes an offer in the circumstances described in
paragraph 1 (a “potential donor”) may make a request under this paragraph
15
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,
(c)
the potential donor will be required to pay an amount of or on
20
account of tax for a relevant tax year by a certain date, and
(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,
25
(b)
the offer is withdrawn by the potential donor, or
(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.
30
      (4)
But the running total of amounts for which suspension may be requested
under this paragraph in respect of the same offer and the same relevant tax
year must not exceed the proposed tax reduction figure for that tax year.
      (5)
“The proposed tax reduction figure” for a tax year is the amount shown in
the donor proposal as the proposed tax reduction figure for that year.
35
      (6)
A request under this paragraph—
(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
40
reasonably require.
      (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.
45