Finance Bill (HC Bill 49)

benefit of, the individual or the individual’s
spouse or civil partner in any circumstances
whatsoever, or

(ii) the individual or the individual’s spouse or civil
partner enjoys a benefit deriving (directly or
5indirectly) from the property or any derived
property, and

(b) a “relevant reduction” in the value of the individual’s
estate occurs—

(i) if and when the value of the individual’s estate
10first becomes less than it would have been in the
absence of the arrangements, and

(ii) on each subsequent occasion when the value of
that estate becomes less than it would have been
in the absence of the arrangements and that
15difference in value is greater than the sum of any
previous relevant reductions.

(3F) In subsections (3D) and (3E)—

• “arrangements” includes any scheme, transaction or series
  of transactions, agreement or understanding, whether
  20or not legally enforceable, and any associated
  operations;

• “derived property”, in relation to any property, means—

  (a)

  income from that property,

  (b)

  property directly or indirectly representing—

  (i)

  25proceeds of that property, or

  (ii)

  proceeds of income from that property,
  or

  (c)

  income from property which is derived property
  by virtue of paragraph (b).”

(3) 30After section 74 insert—

“74A Settled property ceasing to be excluded property

(1) This section applies where by virtue of section 48(3D), property
comprised in a settlement ceases to be excluded property.

(2) In determining whether this section applies, section 48(3D) is to apply
35as if section 48(3B) applied only where the interest in possession
mentioned in section 48(3B)(a) falls within section 5(1B).

(3) For the purposes of this section and section 74B—

(a) “the arrangements” means the arrangements mentioned in
section 48(3D),

(b) 40“the individual” means the individual mentioned in section
48(3D)(b),

(c) “relevant reduction” has the meaning given by section
48(3E)(b),

(d) the amount of a relevant reduction is—

(i) 45in the case of a reduction within section 48(3E)(b)(i), the
difference between the value of the estate and its value
in the absence of the arrangements, and

(ii) in the case of a reduction within section 48(3E)(b)(ii), the
amount by which the difference in value mentioned in
that provision exceeds the sum of any previous relevant
reductions, and

(e) 5“the relevant time” means—

(i) the time the relevant reduction occurs, or

(ii) if later, the time section 48(3D)(a) to (d) is first satisfied.

(4) Subsection (6) applies if all or a part of a relevant reduction (“amount
A”) is attributable to the value of the individual’s section 49(1) property
10being less than it would have been in the absence of the arrangements.

(5) “The individual’s section 49(1) property” means settled property to
which the individual is treated as beneficially entitled under section
49(1) by reason of the individual being beneficially entitled to an
interest in possession in the property.

(6) 15Where this subsection applies—

(a) a part of that interest in possession is deemed, for the purposes
of section 52, to come to an end at the relevant time, and

(b) that section applies in relation to the coming to an end of that
part as if the reference in subsection (4)(a) of that section to a
20corresponding part of the whole value of the property in which
the interest in possession subsists were a reference to amount A.

(7) Subsection (8) applies to so much (if any) of a relevant reduction as is
not amount A (“amount B”).

(8) Tax is to be charged as if the individual had made a transfer of value at
25the relevant time and the value transferred by it had been equal to
amount B.

74B Section 74A: supplementary provision

(1) A transfer of value arising by virtue of section 74A is to be taken to be
a transfer which is not a potentially exempt transfer.

(2) 30For the purposes of section 74A—

(a) when determining the value transferred by a transfer of value
arising by virtue of that section, no account is to be taken of
section 3(2),

(b) nothing in section 10(1) applies to prevent such a transfer, and

(c) 35nothing in sections 102 to 102C of the Finance Act 1986 applies
in relation to such a transfer.

(3) Where, ignoring this subsection, a transfer of value would arise by
virtue of section 74A (“the current transfer”), the value transferred by a
relevant related transfer is to be treated as reducing the value
40transferred by the current transfer.

But this subsection does not apply if and to the extent that the relevant
related transfer has already been applied to reduce another transfer of
value arising by virtue of that section.

(4) “Relevant related transfer” means—

(a) 45where the arrangements consist of a series of operations, any
transfer of value constituted by one or more of those operations
which occur before or at the same time as the current transfer,

other than a transfer of value arising by virtue of section 74A,
and

(b) where the arrangements consist of a single operation, any
transfer of value which arises from that operation, other than a
transfer of value arising by virtue of section 74A.

(5) 5Section 268(3) does not apply to a transfer of value arising by virtue of
section 74A.

(6) Where—

(a) a transfer of value has arisen by virtue of section 74A,

(b) in the course of the arrangements the individual acquires an
10interest in possession in settled property, and

(c) section 5(1B) applies to the interest in possession so that it forms
part of the individual’s estate,

this Act has effect as if that transfer of value had never arisen.

(7) In this section “operation” includes an omission.”

(4) 15In section 201 (liability for tax: settled property), after subsection (4) insert—

“(4A) Where a charge to tax arises—

(a) under or by virtue of section 74A, or

(b) under section 64 or 65 in respect of property which, by virtue of
section 48(3D), has ceased to be excluded property,

20subsection (1) of this section has effect as if the persons listed in that
subsection included the individual mentioned in section 48(3D)(b).”

(5) The amendments made by this section are treated as having come into force on
21 March 2012, and, subject to subsection (6), have effect in relation to
arrangements entered into before, or on or after, that day.

(6) 25In a case where the arrangements were entered into before 21 March 2012—

(a) no transfer of value arises by virtue of section 74A of IHTA 1984, and

(b) if paragraphs (a) to (d) of subsection (3D) of section 48 of that Act were
first satisfied before 21 March 2012, that subsection is to be read as if for
“from the time paragraphs (a) to (d) are first satisfied” there were
30substituted “on and after 21 March 2012”.

Bank levy

209 The bank levy

Schedule 33 contains provision about the bank levy.

Stamp duty land tax, stamp duty reserve tax and stamp duty

210 35Prevention of avoidance: subsales etc

(1) In section 45 of FA 2003 (contract and conveyance: effect of transfer of rights),
after subsection (1) insert—

“(1A) The reference in subsection (1)(b) to an assignment, subsale or other
transaction does not include the grant or assignment of an option.”

(2) The amendment made by this section has effect in relation to grants or
assignments of options on or after 21 March 2012.

211 Rate in respect of residential property where consideration over £2m

(1) In section 55(2) of FA 2003 (amount of SDLT chargeable), in Table A (bands and
5percentages for residential property), for the final entry (cases where
consideration is more than £1,000,000 to be chargeable at 5%) substitute—

(2) The amendment made by this section has effect in relation to any land
transaction of which the effective date is on or after 22 March 2012.

(3) But that amendment does not have effect in relation to any transaction—

(a) 15effected in pursuance of a contract entered into and substantially
performed before 22 March 2012, or

(b) effected in pursuance of a contract entered into before that date and not
excluded by subsection (4).

(4) A transaction effected in pursuance of a contract entered into before 22 March
202012 is excluded by this subsection if—

(a) there is any variation of the contract, or assignment (or assignation) of
rights under the contract, on or after 22 March 2012,

(b) the transaction is effected in consequence of the exercise on or after that
date of any option, right of pre-emption or similar right, or

(c) 25on or after that date there is an assignment (or assignation), subsale or
other transaction relating to the whole or part of the subject-matter of
the contract as a result of which a person other than the purchaser
under the contract becomes entitled to call for a conveyance.

212 Higher rate for certain transactions

30Schedule 34 contains provision about the amount of tax chargeable on certain
transactions involving higher threshold interests in dwellings.

213 Disclosure of stamp duty land tax avoidance schemes

In section 308 of FA 2004 (duties of promoter), after subsection (5) insert—

“(6) The Treasury may by regulations provide for this section to apply with
35modifications in relation to proposals or arrangements that—

(a) enable, or might be expected to enable, a person to obtain an
advantage in relation to stamp duty land tax, and

(b) are of a description specified in the regulations.”

214 Health service bodies

(1) In Part 4 of FA 2003 (stamp duty land tax), after section 67 insert—

“67A Acquisitions by certain health service bodies

(1) A land transaction is exempt from charge if the purchaser is any of the
5following—

(a) the National Health Service Commissioning Board;

(b) a clinical commissioning group established under section 14D
of the National Health Service Act 2006;

(c) an NHS foundation trust;

(d) 10a Local Health Board established under section 11 of the
National Health Service (Wales) Act 2006;

(e) a National Health Service trust established under section 18 of
that Act;

(f) a Health and Social Services trust established under the Health
15and Personal Social Services (Northern Ireland) Order 1991.

(2) Any relief under this section must be claimed in a land transaction
return or an amendment of such a return.”

(2) The following provisions are repealed—

(a) section 61(3) to (3C) of the National Health Service and Community
20Care Act 1990 (stamp duty and stamp duty land tax reliefs for health
service bodies);

(b) section 58 of the National Health Service Act 2006 (which applies those
stamp duty and stamp duty land tax reliefs to NHS foundation trusts);

(c) paragraphs 132 and 133 of Schedule 1 to the National Health Service
25(Consequential Provisions) Act 2006.

(3) The repeals in subsection (2), to the extent that they relate to stamp duty, have
effect in relation to any instrument executed on or after the day on which this
Act is passed.

(4) Subject to that, the amendments made by this section have effect in relation to
30any land transaction of which the effective date is on or after the day on which
this Act is passed.

(5) Until such time as bodies of a kind mentioned in subsection (6) are abolished
under the Health and Social Care Act 2011, section 67A of FA 2003 has effect as
if the list in that section included bodies of that kind.

(6) 35Those bodies are—

(a) a National Health Service trust established under section 25 of the
National Health Service Act 2006, and

(b) a Primary Care Trust.

215 Collective investment schemes: stamp duty and stamp duty reserve tax

(1) 40The Treasury may by regulations confer an exemption or other relief from
stamp duty or stamp duty reserve tax for transactions relating to collective
investment schemes.

(2) The regulations may, in particular—

(a) specify descriptions of collective investment scheme in relation to
which the exemption or relief is available, and

(b) specify the cases in which the exemption or relief is available.

(3) Regulations under this section may make different provision for different cases
5or different purposes.

(4) Regulations under this section—

(a) may modify any enactment or instrument (whenever passed or made),
and

(b) may include incidental, consequential, supplementary or transitional
10provision.

(5) Regulations under this section are to be made by statutory instrument.

(6) A statutory instrument containing regulations under this section is subject to
annulment in pursuance of a resolution of the House of Commons.

(7) In this section—

• 15“collective investment scheme” has the meaning given by section 235 of
  the Financial Services and Markets Act 2000, and

• “modify” includes amend, repeal or revoke.

Part 9 Miscellaneous matters

20International matters

216 Agreement between UK and Switzerland

(1) Schedule 35 contains provision giving effect to—

(a) an agreement signed on 6 October 2011 between the United Kingdom
and the Swiss Confederation on co-operation in the area of taxation, as
25amended by a protocol signed by them on 20 March 2012 and by a
mutual agreement signed by them on 18 April 2012 implementing
article XVIII of that protocol, and

(b) the joint declaration (concerning a tax finality payment) forming an
integral part of that protocol.

(2) 30Schedule 35 comes into force on the day on which the agreement of 6 October
2011 enters into force.

(3) In section 23 of the Constitutional Reform and Governance Act 2010, after
subsection (2A) insert—

“(2B) Section 20 does not apply to any treaty referred to in section 216(1) of
35the Finance Act 2012.”

217 Penalties: offshore income etc

In paragraph 21A of Schedule 24 to FA 2007 (classification of territories), in
sub-paragraph (4)—

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

(b) at the end of paragraph (c) insert—

“(d) the existence of any other arrangements between the UK
and that territory for co-operation in the area of taxation,
and

(e) 5the quality of any such other arrangements (in
particular, the extent to which the co-operation
provided for in them assists or is likely to assist in the
protection of revenue raised from taxation in the UK).”

218 International military headquarters, EU forces, etc

10Schedule 36 contains provision about the tax treatment of international
military headquarters, EU forces, etc.

Financial sector regulation

219 Tax consequences of financial sector regulation

(1) The Treasury may by regulations make provision about the tax consequences
15in relation to securities of any regulatory requirement imposed by any EU
legislation (whenever adopted) or enactment on—

(a) persons who are authorised persons for the purposes of the Financial
Services and Markets Act 2000 (see section 31 of that Act), or

(b) parent undertakings (as defined in section 420 of that Act) of such
20persons.

(2) Regulations under this section may, in particular, make provision—

(a) charging any tax or granting, withdrawing or restricting an exemption
or other relief from any tax, and

(b) about the treatment of arrangements the purpose, or one of the main
25purposes, of which is to secure a tax advantage.

(3) Regulations under this section may provide that a reference in the
regulations—

(a) to any EU legislation or enactment,

(b) to any document, or

(c) 30to any provision of any EU legislation, enactment or document

is to be construed as a reference to that legislation, enactment, document or
provision as amended from time to time.

(4) Regulations under this section—

(a) may apply (with or without modifications) or disapply any enactment,

(b) 35may modify, amend, repeal or revoke any enactment,

(c) may make different provision for different cases or different purposes,
and

(d) may include incidental, consequential, supplementary or transitional
provision.

(5) 40Regulations under this section are to be made by statutory instrument.

(6) No regulations may be made under this section unless a draft of the statutory
instrument containing them has been laid before and approved by a resolution
of the House of Commons.

(7) In this section—

• “arrangements” includes any arrangements, scheme or understanding of
  any kind, whether or not legally enforceable and whether involving a
  single transaction or two or more transactions;

• 5“enactment” includes an enactment contained in subordinate legislation
  (within the meaning of the Interpretation Act 1978), and includes an
  enactment whenever passed or made;

• “tax” includes stamp duty;

• “tax advantage” means—

  (a)

  10a relief from tax (including a tax credit) or increased relief from
  tax,

  (b)

  a repayment of tax or increased repayment of tax,

  (c)

  the avoidance, reduction or delay of a charge to tax or an
  assessment to tax, or

  (d)

  15the avoidance of a possible assessment to tax.

Incapacitated persons and minors

220 Removal of special provision for incapacitated persons and minors

(1) In TMA 1970 omit—

(a) section 42(8) (procedure for making claims etc on behalf of
20incapacitated persons),

(b) section 72 (trustees, guardians, etc of incapacitated persons), and

(c) section 73 (further provision as to infants).

(2) In Part 4 of FA 2003 (stamp duty land tax), omit section 106(1) and (2) (persons
acting in a representative capacity on behalf of incapacitated persons and
25minors).

(3) Accordingly, incapacitated persons are (and minors remain) assessable and
chargeable to the taxes in question.

(4) In consequence of the amendments made by subsections (1) and (2)—

(a) in section 118(1) of TMA 1970, omit the definitions of “incapacitated
30person” and “infant”,

(b) omit paragraphs 33 and 34 of Schedule 1 to the Age of Legal Capacity
(Scotland) Act 1991,

(c) in paragraph 5 of Schedule 2 to the Social Security Contributions and
Benefits Act 1992—

(i) 35omit paragraph (a) (and the “or” after it), and

(ii) in paragraph (b), for “such” substitute “Class 4”,

(d) in paragraph 5 of Schedule 2 to the Social Security Contributions and
Benefits (Northern Ireland) Act 1992—

(i) omit paragraph (a) (and the “or” after it), and

(ii) 40in paragraph (b), for “such” substitute “Class 4”, and

(e) in section 81B(4) of FA 2003, omit paragraph (b) (and the “or” before it).

(5) The amendments made by subsections (1) and (4)(a) to (d) have effect for the
tax year 2012-13 and subsequent tax years.

(6) The amendments made by subsections (2) and (4)(e) have effect in relation to
land transactions of which the effective date is on or after the day on which this
Act is passed.

Administration

221 5Tax agents: dishonest conduct

(1) Schedule 37 contains provision about tax agents who engage in dishonest
conduct.

(2) That Schedule comes into force on such day as the Treasury may by order
appoint.

(3) 10An order under subsection (2)—

(a) may make different provision for different purposes, and

(b) may include transitional provision and savings.

(4) The Treasury may by order make any incidental, supplemental, consequential,
transitional or saving provision in consequence of Schedule 37.

(5) 15An order under subsection (4) may—

(a) make different provision for different purposes, and

(b) make provision amending, repealing or revoking any provision made
by or under an Act (whenever passed or made).

(6) An order under this section is to be made by statutory instrument.

(7) 20A statutory instrument containing an order under subsection (4) is subject to
annulment in pursuance of a resolution of the House of Commons.

222 Information powers

(1) Schedule 36 to FA 2008 (information and inspection powers) is amended as
follows.

(2) 25After paragraph 5 insert—

“Power to obtain information about persons whose identity can be ascertained

5A (1) An authorised officer of Revenue and Customs may by notice in
writing require a person to provide relevant information about
another person (“the taxpayer”) if conditions A to D are met.

(2) 30Condition A is that the information is reasonably required by the
officer for the purpose of checking the tax position of the taxpayer.

(3) Condition B is that—

(a) the taxpayer’s identity is not known to the officer, but

(b) the officer holds information from which the taxpayer’s
35identity can be ascertained.

(4) Condition C is that the officer has reason to believe that—

(a) the person will be able to ascertain the taxpayer’s identity
from the information held by the officer, and

(b) the person obtained relevant information about the taxpayer
in the course of carrying on a business.

(5) Condition D is that the taxpayer’s identity cannot readily be
ascertained by other means from the information held by the officer.

(6) 5“Relevant information” means all or any of the following—

(a) name,

(b) last known address, and

(c) date of birth (in the case of an individual).

(7) This paragraph applies for the purpose of checking the tax position
10of a class of persons as for the purpose of checking the tax position of
a single person (and references to “the taxpayer” are to be read
accordingly).”

(3) In paragraph 6 (notices), in sub-paragraph (1), for “or 5” substitute “, 5 or 5A”.

(4) In paragraph 31 (right to appeal against notice given under paragraph 5), after
15“paragraph 5” insert “or 5A”.

(5) Accordingly, in the heading immediately before paragraph 31, at the end insert
“or 5A”.

(6) In section 18D of TMA 1970 (savings income: content of regulations under
section 18B), in subsection (1), for “sections 17 and 18” substitute “paragraph 1
20of Schedule 23 to the Finance Act 2011 (data-gathering powers)”.

(7) The amendments made by subsections (1) to (5) apply for the purpose of
checking the tax position of a taxpayer as regards periods or tax liabilities
whenever arising (whether before, on or after the day on which this Act is
passed).

(8) 25The amendment made by subsection (6) is treated as having come into force on
1 April 2012.

223 PAYE regulations: information

(1) Section 684 of ITEPA 2003 (PAYE regulations) is amended as follows.

(2) In the list in subsection (2)—

(a) 30after item 4 insert—

“4ZA Provision—

(a) for authorising or requiring a person who provides
with respect to payments of or on account of PAYE
income a service that is specified or of a specified
35description (“a relevant payment service”) to supply
to Her Majesty’s Revenue and Customs information
about payments with respect to which the service is
provided, or any information the Commissioners
may request about features of the service provided or
40to be provided with respect to particular payments;

(b) for conferring power on the Commissioners to specify
by directions circumstances in which provision made
by virtue of paragraph (a) or subsection (4ZB) is not to
apply in relation to a payment;