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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

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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,

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(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.

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