Finance Bill (HC Bill 49)

(2) insert—

“(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
5follows.

(2) In subsection (2)(b) after “transferor” insert “or a person connected with the
transferor”.

(3) After subsection (2) insert—

“(2A) For the purposes of subsection (2)(e) it does not matter if any
10determination of the share in the partnership’s profits of the person
involved in the relevant change as mentioned is subject to any
condition.”

35 In section 809BZH (type 2 finance arrangements: certain tax consequences
not to have effect) after “transferor” (wherever occurring) insert “or the
15person connected with the transferor”.

36 In section 809BZJ (type 3 finance arrangements: definition) after subsection
(2) insert—

“(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
20involved in the relevant change as mentioned is subject to any
condition.”

Chapter 2 of Part 16 of CTA 2010

37 Chapter 2 of Part 16 of CTA 2010 (finance arrangements) is amended as
follows.

38 25In 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
entitlement of the lender or a person connected with the lender is
subject to any condition.”

39 (1) 30Section 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”.

(3) After subsection (2) insert—

“(2A) For the purposes of subsection (2)(e) it does not matter if any
35determination of the share in the partnership’s profits of the person
involved in the relevant change as mentioned is subject to any
condition.”

40 In section 765 (type 2 finance arrangements: certain tax consequences not to
have effect) after “transferor” (wherever occurring) insert “or the person
40connected with the transferor”.

41 In section 767 (type 3 finance arrangements: definition) after subsection (2)

insert—

“(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.”

5Commencement

42 (1) Subject to what follows, the amendments made by paragraphs 32 to 41
above have effect in relation to arrangements whenever made.

(2) In relation to arrangements made before 21 March 2012, an amount is by
virtue of the amendments—

(a) 10to 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,

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
152004 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
asset-backed arrangement is made before 21 March 2012.

Section 49

SCHEDULE 14 Gifts to the nation

20Part 1 Introduction

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) 25The circumstances are—

(a) the person offers to give pre-eminent property to be held for the
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) 30the offer is made in accordance with a scheme set up by the Secretary
of State for the purposes of this Schedule,

(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) 35the gift is made pursuant to the offer, or the part of the offer,
accepted.

(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.

5Part 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.

(2) 10It 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

(b) 15references 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
20portion 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
25be 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
30satisfied 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.

(2) 35The 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
40more 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
5percentage specified for the time being in sub-paragraph (5).

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
10agreed terms.

(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) 15This paragraph explains the effect of paragraph 3(1) as regards late payment
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) 20any late payment interest that accrued on the relevant portion during
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) 25“The relevant portion” is the portion of N’s tax liability for a relevant tax
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
30tax liability for the relevant tax year is attributable to the relevant
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,

35any attribution or apportionment is to be done in the way that maximises the
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) 40Nothing in this paragraph affects any late payment interest that accrued, or
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
to be re-calculated.

(2) 5But nothing in this paragraph permits any revision of the agreed terms.

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) 10the effect described in paragraph 6 is negated, and

(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
15which the gift was set aside or declared void, and

(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
20paragraph 1 (a “potential donor”) may make a request under this paragraph
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) 25the potential donor will be required to pay an amount of or on
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) 30a qualifying gift is made pursuant to the offer,

(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
35negotiations conclude.

(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
40the donor proposal as the proposed tax reduction figure for that year.

(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
reasonably require.

(7) In considering whether or to what extent to agree to a request, HMRC must
5have 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.

10 (1) Suspension under paragraph 9 of a potential donor’s obligation to pay an
amount of or on account of tax stops the donor from becoming liable to late
10payment penalties for or in connection with the failure to pay that amount
by the due date.

(2) But it does not stop late payment interest from accruing on that amount from
the due date.

(3) HMRC may by notice in writing to the potential donor withdraw its
15agreement to the suspension with effect from such date, before conclusion of
the negotiations, as may be specified in the notice.

(4) If it does so, the potential donor must pay the amount, together with any late
payment interest that has accrued on it since the due date, by the end of the
period of 30 days beginning with the date specified in the notice.

(5) 20The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.

(6) Paragraph 11 explains what happens once the negotiations conclude
(depending on the outcome of the negotiations).

25Conclusion of negotiations

11 (1) This paragraph applies if a potential donor’s obligation to pay an amount of
or on account of tax remains suspended under paragraph 9 when the
negotiations conclude (within the meaning of that paragraph).

(2) The potential donor must pay the amount, together with any late payment
30interest that has accrued on it since the due date, within the period of 30 days
beginning with the day on which the negotiations concluded.

(3) The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.

(4) 35But if the negotiations conclude because a qualifying gift is made pursuant
to the offer or a part of the offer—

(a) sub-paragraph (2) is to be read subject to paragraph 3(1) (and its
effect as described in paragraph 6), and

(b) accordingly, the potential donor is only required to pay so much as
40is not treated as satisfied under paragraph 3(1).

(5) If the negotiations conclude in relation to a part only of the offer—

(a) this paragraph is to be given effect as far as reasonably practicable in
relation to that part, and

(b) on receipt of a revised copy of the donor proposal, HMRC may give
effect to paragraph 9 in relation to the part of the offer that remains
under negotiation.

Part 3 5Corporation tax

Taxes affected

12 (1) This Part applies to a company’s liability to corporation tax.

(2) A reference in this Part to a company’s “tax liability” is to the company’s
liability to corporation tax.

(3) 10References to an amount of or on account of “tax” are to be read accordingly.

The basic rule

13 (1) If a company (“C”) makes a qualifying gift, a portion of C’s tax liability for
the relevant accounting period is to be treated as satisfied, as if C had paid
that portion when it became due (or on the offer registration date, if the
15portion became due before that date).

(2) “The relevant accounting period” is the accounting period of C’s in which
the offer registration date falls.

The portion treated as satisfied

14 (1) The portion of C’s tax liability for the relevant accounting period that is to
20be treated as satisfied is an amount equal to the smaller of—

(a) the tax reduction figure, and

(b) the amount of C’s tax liability for that period less any portion of that
amount that is treated as satisfied in consequence of any qualifying
gift made by C on a previous occasion.

(2) 25The amount determined under sub-paragraph (1) may be nil.

(3) The tax reduction figure is—

(a) 20% of the value set out in the agreed terms as the agreed value of the
property forming the subject of the qualifying gift, or

(b) such lower figure as may be specified in the agreed terms as the tax
30reduction figure.

(4) The Treasury may by order substitute a different percentage for the
percentage specified for the time being in sub-paragraph (3)(a).

Effect of basic rule on interest and penalties

15 (1) This paragraph explains the effect of paragraph 13 as regards late payment
35interest 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
the negotiation period, and

(b) any late payment penalty to which C became liable in the negotiation
period for failing to pay the relevant portion (together with any
5interest on such a penalty).

(4) “The relevant portion” is the portion of C’s tax liability for the relevant
accounting period that is treated under paragraph 13 as satisfied.

(5) In determining for the purposes of sub-paragraph (2) whether or to what
extent—

(a) 10late payment interest accruing on an amount of or on account of C’s
tax liability for the relevant accounting period is attributable to the
relevant portion, or

(b) a late payment penalty incurred for failing to pay an amount of or on
account of C’s tax liability for the relevant accounting period is
15attributable to the relevant portion,

any attribution or apportionment is to be done in the way that maximises the
relief obtained by C by virtue of this paragraph.

(6) “The negotiation period” is the period—

(a) beginning with the offer registration date, and

(b) 20ending with the day on which the qualifying gift is made.

(7) Nothing in this paragraph affects any late payment interest that accrued, or
any late payment penalty to which C became liable, before the offer
registration date.

Changes to C’s tax liability

16 (1) 25If the amount of C’s tax liability for the relevant accounting period is revised
at any time, the portion of that liability that is treated under paragraph 13 as
satisfied is to be re-calculated.

(2) But nothing in this paragraph permits any revision of the agreed terms.

Gifts set aside etc

17 30If a qualifying gift is set aside or declared void after it is made—

(a) the portion of C’s tax liability for the relevant accounting period
treated as satisfied ceases to be treated as satisfied,

(b) the effect described in paragraph 15 is negated, and

(c) C is required to pay the portion due, together with any late payment
35interest 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

(ii) the day by which C would have been required to pay those
amounts but for this Schedule.

40Suspension pending negotiations

18 (1) A company that makes an offer in the circumstances described in paragraph
1 (a “potential donor”) may make a request under this paragraph 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
account of tax for the relevant accounting period by a certain date,
5and

(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,

(b) 10the 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.

(4) 15But the running total of amounts for which suspension may be requested
under this paragraph in respect of the same offer must not exceed the
proposed tax reduction figure.

(5) “The proposed tax reduction figure” is the amount shown in the donor
proposal as the proposed tax reduction figure.

(6) 20A 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
25reasonably 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.

19 (1) 30Suspension under paragraph 18 of a potential donor’s obligation to pay an
amount of or on account of tax stops the donor from becoming liable to late
payment penalties for or in connection with the failure to pay that amount
by the due date.

(2) But it does not stop late payment interest from accruing on that amount from
35the due date.

(3) HMRC may by notice in writing to the potential donor withdraw its
agreement to the suspension with effect from such date, before conclusion of
the negotiations, as may be specified in the notice.

(4) If it does so, the potential donor must pay the amount, together with any late
40payment interest that has accrued on it since the due date, by the end of the
period of 30 days beginning with the date specified in the notice.

(5) The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.

(6) Paragraph 20 explains what happens once the negotiations conclude
(depending on the outcome of the negotiations).

Conclusion of negotiations

20 (1) This paragraph applies if a potential donor’s obligation to pay an amount of
5or on account of tax remains suspended under paragraph 18 when the
negotiations conclude (within the meaning of that paragraph).

(2) The potential donor must pay the amount, together with any late payment
interest that has accrued on it since the due date, within the period of 30 days
beginning with the day on which the negotiations concluded.

(3) 10The last day of that 30-day period is to be treated for the purposes of any
enactment relating to late payment penalties as the date on or before which
the amount must be paid.

(4) But if the negotiations conclude because a qualifying gift is made pursuant
to the offer or a part of the offer—

(a) 15sub-paragraph (2) is to be read subject to paragraph 13 (and its effect
as described in paragraph 15), and

(b) accordingly, the potential donor is only required to pay so much as
is not treated as satisfied under paragraph 13.

(5) If the negotiations conclude in relation to a part only of the offer—

(a) 20this paragraph is to be given effect as far as reasonably practicable in
relation to that part, and

(b) on receipt of a revised copy of the donor proposal, HMRC may give
effect to paragraph 18 in relation to the part of the offer that remains
under negotiation.

25Part 4 General provision

Orders

21 (1) An order under Part 2 or 3 of this Schedule is to be made by statutory
instrument.

(2) 30It may include transitional and saving provisions.

(3) A statutory instrument containing an order under Part 2 or 3 of this Schedule
is subject to annulment in pursuance of a resolution of the House of
Commons.

Pre-eminent property

22 (1) 35In this Schedule, “pre-eminent property” means—

(a) any picture, print, book, manuscript, work of art, scientific object or
other thing that the relevant Minister is satisfied is pre-eminent for
its national, scientific, historic or artistic interest,

(b) any collection or group of pictures, prints, books, manuscripts,
40works of art, scientific objects or other things if the relevant Minister
is satisfied that the collection or group, taken as a whole, is pre-
eminent for its national, scientific, historic or artistic interest, or