(i) in a case within subsection (1), the chargeable
payments mentioned in paragraph (b) of that
subsection, and

(ii) in a case within subsection (2), the new payment.

(5) 5Subsection (4) does not apply in relation to a repayment which gives
rise to a charge to income tax on the participator or associate by
reference to whom the loan, advance or benefit was a chargeable
payment.

(6) The Treasury may by order vary a sum specified in subsection (1) or
10(2).

(7) An order under subsection (6) may contain incidental, supplemental,
consequential and transitional provision and savings.

464D Section 464C: supplementary

(1) All such assessments and adjustments of assessments are to be made
15as are necessary to give effect to section 464C(4).

(2) If a person who has made a tax return becomes aware that, after
making it, anything in it has become incorrect because of the
operation of section 464C(4), the person must give notice to an officer
of Revenue and Customs specifying how the return needs to be
20amended.

(3) The notice must be given within 3 months beginning with the day on
which the person became aware that anything in the return had
become incorrect because of the operation of section 464C(4).

(4) In section 464C, “chargeable payment” means—

(a) 25a loan or advance made by a close company which gives rise
to a charge to tax under section 455, or

(b) the conferral of a benefit on an individual in circumstances
which give rise to a charge to tax under section 464A.

(5) In a case within subsection (4)(b)—

(a) 30the conferral of the benefit is to be treated for the purposes of
section 464C as a loan made by the close company to the
individual to the value of the benefit conferred, and

(b) any payment in respect of which (apart from section 464C)
relief is due to the close company under section 464B is to be
35treated for the purposes of section 464C as a repayment of the
loan.”

(2) The amendment made by this paragraph has effect in relation to repayments
and return payments made on or after 20 March 2013.

7 In section 465 (power to obtain information), after “Chapter 3” (in both
40places) insert “or 3A”.

Part 2 Other amendments

Taxes Management Act 1970

8 TMA 1970 is amended as follows.

9 5In section 59E(11)(a) (provision as to when tax is due and payable)—

(a) after “455” insert “or 464A”, and

(b) after “loan” insert “or benefit”.

10 In section 59F(6)(a) (arrangements for paying tax on behalf of group
members)—

(a) 10after “455” insert “or 464A”, and

(b) after “loan” insert “or benefit”.

11 (1) Section 109 (corporation tax on close company in connection with loans to
participators etc) is amended as follows.

(2) In subsection (1)—

(a) 15after “459” insert “and 464A and 464B”, and

(b) for “by close companies” insert “or benefits”.

(3) For subsection (3) substitute—

“(3) For the purposes of section 87A of this Act as applied by subsection
(1) above—

(a) 20the date when tax under section 455 of CTA 2010 became due
and payable is that determined in accordance with
subsection (3) of that section, and

(b) the date when tax under section 464A of CTA 2010 became
due and payable is that determined in accordance with
25subsection (4) of that section.”

(4) After subsection (3A) insert—

“(3B) If there is a payment which for the purposes of section 464B of CTA
2010 is a return payment in respect of a benefit conferred, interest
under section 87A of this Act on so much of the tax under section
30464A of CTA 2010 as is referable to the return payment is not payable
in respect of any period after the date on which the return payment
was made.”

(5) In subsection (4), after “458” insert “or 464B”.

(6) In subsection (5), after “459” insert “or 464A and 464B”.

(7) 35In the heading, after “loans” insert “or benefits”.

12 The amendments made by paragraphs 9 to 11 are treated as having come
into force on 20 March 2013.

Finance Act 1998

13 (1) Schedule 18 to FA 1998 (company tax returns, assessments and related
40matters) is amended as follows.

(2) In paragraph 1 (meaning of “tax”), after the entry relating to section 455 of
CTA 2010 insert—

• “section 464A of that Act (tax on other benefit conferred on
  participator),”.

(3) 5In paragraph 8(1) (calculation of tax payable), in paragraph 1 of the third
step—

(a) after “455” insert “or 464A”, and

(b) for “or advance made by close company” substitute “, advance or
benefit”.

(4) 10In paragraph 18 (failure to deliver return: tax-related penalty), for sub-
paragraph (4) substitute—

“(4) In determining that amount no account is to be taken of—

(a) any relief under section 458 of the Corporation Tax Act
2010 (relief in respect of repayment, etc of loan) which is
15deferred under subsection (5) of that section, or

(b) any relief under section 464B of that Act (relief in respect of
return payment) which is deferred under subsection (5) of
that section.”

(5) The amendments made by this paragraph are treated as having come into
20force on 20 March 2013.

Income Tax (Trading and Other Income) Act 2005

14 (1) In section 417 of ITTOIA 2005 (person liable for charge on release of loan or
advance), for subsection (1) substitute—

“(1) The person liable for any tax charged under this Chapter is—

(a) 25in the case of a loan or advance made to a partnership, any
partner who is an individual, and

(b) in any other case, the person to whom the loan or advance
was made.

(1A) If more than one person is liable in a case within subsection (1)(a), the
30liability is to be apportioned between them in a just and reasonable
manner.”

(2) The amendment made by this paragraph has effect in relation to loans or
advances made on or after 20 March 2013.

Section 86

SCHEDULE 29 Miscellaneous amendments relating to decommissioning

Part 1 Abandonment guarantees and abandonment expenditure

5Expenditure on abandonment guarantees

1 (1) In Part 2 of ITTOIA 2005 (trading income), Chapter 16A (oil activities) is
amended as follows.

(2) In section 225N (expenditure on and under abandonment guarantees)—

(a) after subsection (1) insert—

“(1A) 10Subsection (2) also applies if expenditure incurred by a
participator in an oil field would be so allowable as a result of
section 3(1)(hh) of that Act but for the fact that the oil field is
a non-taxable oil field within the meaning of Part 3 of FA 1993
(see section 185 of that Act).”;

(b) 15in subsection (2), for “that expenditure is so allowable” substitute
“the expenditure mentioned in subsection (1) or (1A) is or would be
so allowable”.

(3) In section 225R (introduction to sections 225S and 225T)—

(a) in paragraph (a) of subsection (1), omit the words from “, or would
20apply” to “made”;

(b) in paragraph (b) of that subsection, after “Schedule” insert “, or
would fall to be so attributed if a claim under paragraph 2A(2) of that
Schedule were made”;

(c) after subsection (1) insert—

“(1A) 25The condition in subsection (1)(b) is to be treated as met for
the purposes of this section if it would be met but for the fact
that the contributing participator is (or was) a participator in
an oil field that is a non-taxable oil field within the meaning
of Part 3 of FA 1993 (see section 185 of that Act).”;

(d) 30in subsection (2), before “attributed” insert “or would be”.

2 (1) In Part 8 of CTA 2010 (oil activities), Chapter 4 (calculation of profits) is
amended as follows.

(2) In section 292 (expenditure on and under abandonment guarantees)—

(a) after subsection (1) insert—

“(1A) 35Subsection (2) also applies if expenditure incurred by a
participator in an oil field would be so allowable as a result of
section 3(1)(hh) of that Act but for the fact that the oil field is
a non-taxable oil field within the meaning of Part 3 of FA 1993
(see section 185 of that Act).”;

(b) 40in subsection (2), for “that expenditure is so allowable” substitute
“the expenditure mentioned in subsection (1) or (1A) is or would be
so allowable”.

(3) In section 296 (introduction to sections 297 and 298)—

(a) in paragraph (a) of subsection (1), omit the words from “, or would
apply” to “made”;

(b) in paragraph (b) of that subsection, after “Schedule” insert “, or
would fall to be so attributed if a claim under paragraph 2A(2) of that
5Schedule were made”;

(c) after subsection (1) insert—

“(1A) The condition in subsection (1)(b) is to be treated as met for
the purposes of this section if it would be met but for the fact
that the contributing participator is (or was) a participator in
10an oil field that is a non-taxable oil field within the meaning
of Part 3 of FA 1993 (see section 185 of that Act).”;

(d) in subsection (2), before “attributed” insert “or would be”.

Expenditure under abandonment guarantees

3 In Schedule 3 to OTA 1975 (petroleum revenue tax: miscellaneous
15provisions), in paragraph 8 (certain subsidised expenditure to be
disregarded), after sub-paragraph (1) insert—

“(1A) But sub-paragraph (1) above does not apply to any expenditure
for which the relevant participator is liable that has been or is to be
met directly or indirectly out of a payment made by the guarantor
20under an abandonment guarantee.

(1B) In sub-paragraph (1A) above—

• “abandonment guarantee” has the same meaning as it has for
  the purposes of section 3 of this Act (see section 104 of the
  Finance Act 1991), and

• 25“the guarantor” and “the relevant participator” have the
  same meaning as in section 104 of that Act.”

4 In Schedule 5 to OTA 1975 (allowance of expenditure), in paragraph 2C(2),
in the definition of “sum in default”, for the words from “less the aggregate
of” to the end substitute “less so much of that payment as has been made by
30the defaulter”.

5 (1) Part 3 of FA 1991 (oil taxation) is amended as follows.

(2) Omit section 105 (restriction of expenditure relief by reference to payments
under abandonment guarantees).

(3) Omit section 106 (relief for reimbursement expenditure under abandonment
35guarantees).

6 (1) In Part 2 of ITTOIA 2005 (trading income), Chapter 16A (oil activities) is
amended as follows.

(2) In section 225N (expenditure on and under abandonment guarantees), omit
subsections (3) and (4).

(3) 40Omit section 225O (relief for reimbursement expenditure under
abandonment guarantees).

7 (1) In Part 8 of CTA 2010 (oil activities), Chapter 4 (calculation of profits) is
amended as follows.

(2) In section 292 (expenditure on and under abandonment guarantees), omit
subsections (3) and (4).

(3) Omit section 293 (relief for reimbursement expenditure under abandonment
guarantees).

5Reimbursement by defaulter in respect of abandonment expenditure

8 In Part 3 of FA 1991, omit section 108 (reimbursement by defaulter in respect
of certain abandonment expenditure).

9 In Part 2 of ITTOIA 2005, omit section 225T (reimbursement by defaulter in
respect of certain abandonment expenditure).

10 10In Part 8 of CTA 2010, omit section 298 (reimbursement by defaulter in
respect of certain abandonment expenditure).

Consequential amendments

11 (1) Section 104 of FA 1991 is amended as follows.

(2) In subsection (1), omit “and sections 105 and 106 below”.

(3) 15In subsection (2), omit “and section 106 (but not section 105) below”.

12 In FA 2008, omit section 105.

13 In Part 2 of ITTOIA 2005, Chapter 16A is amended as follows.

14 (1) Section 225N is amended as follows.

(2) Omit subsection (5).

(3) 20In subsection (6), in the definition of “abandonment guarantee”—

(a) for “section 105 of FA 1991” substitute “section 3 of OTA 1975”, and

(b) for “that Act” substitute “FA 1991”.

(4) The heading of that section becomes “Expenditure on abandonment
guarantees”.

15 25Omit sections 225P and 225Q.

16 In section 225R (introduction to sections 225S and 225T)—

(a) in subsection (1), for “Sections 225S and 225T apply” substitute
“Section 225S applies”;

(b) the heading of section 225R becomes “Introduction to section 225S”.

17 30In Part 8 of CTA 2010, Chapter 4 is amended as follows.

18 (1) Section 292 is amended as follows.

(2) Omit subsection (5).

(3) In subsection (6), in the definition of “abandonment guarantee”—

(a) for “section 105 of FA 1991” substitute “section 3 of OTA 1975”, and

(b) 35for “that Act” substitute “FA 1991”.

(4) The heading of that section becomes “Expenditure on abandonment
guarantees”.

19 Omit sections 294 and 295.

20 In section 296 (introduction to sections 297 and 298)—

(a) in subsection (1), for “Sections 297 and 298 apply” substitute “Section
297 applies”;

(b) 5the heading of section 296 becomes “Introduction to section 297”.

Part 2 Receipts arising from decommissioning

Calculation of profits chargeable to corporation tax and supplementary charge

21 In Chapter 4 of Part 8 of CTA 2010 (oil activities: calculation of profits), after
10section 298 insert—

“Receipts arising from decommissioning

298A Receipts arising from decommissioning

(1) This section applies if—

(a) a company that is or has been carrying on a ring fence trade
15(“the defaulter”) has defaulted on a liability under—

(i) a relevant agreement, or

(ii) an abandonment programme,

to make a payment towards decommissioning expenditure,

(b) another company that is or has been carrying on a ring fence
20trade (“the contributing company”) pays an amount (“the
relevant contribution”) in or towards meeting the whole or
part of the default, and

(c) the amount of the relevant contribution is less than the sum
of the amounts within subsection (2).

(2) 25The amounts within this subsection are—

(a) any payments made (directly or indirectly) to the
contributing company by the guarantor under an
abandonment guarantee as a result of the defaulter
defaulting on the liability,

(b) 30any reimbursement payments, and

(c) any relief from tax which the contributing company obtains
in respect of the relevant contribution.

(3) The difference between—

(a) the sum of the amounts within subsection (2), and

(b) 35the relevant contribution,

(“the relevant difference”) is to be treated as a receipt (in the nature
of income) of the contributing company’s ring fence trade for the
relevant accounting period (see subsection (4)).

(4) “The relevant accounting period” means the accounting period that
40includes the day on which the Secretary of State certifies that the
relevant abandonment programme has been satisfactorily completed
(“the certification date”).

This is subject to subsections (5) and (6).

This is subject to subsections (5) and (6).

(5) If the contributing company has ceased to carry on the ring fence
trade before the certification date, “the relevant accounting period”
is the last accounting period of the trade.

(6) If the contributing company has ceased to be within the charge to
5corporation tax in respect of the ring fence trade before the
certification date, “the relevant accounting period” is the accounting
period during or at the end of which the contributing company
ceased to be within the charge to corporation tax in respect of the
trade.

(7) 10The relevant difference is to be determined—

(a) in a case where subsection (5) or (6) applies, at the end of the
calendar year in which the certification date falls, and

(b) in any other case, at the end of the relevant accounting
period.

(8) 15In a case where subsection (5) or (6) applies, any corporation tax
chargeable for the relevant accounting period by virtue of this
section is due and payable as if it were corporation tax for an
accounting period beginning with the certification date.

(9) Any additional assessment to corporation tax required in order to
20take account of a receipt arising under this section may be made at
any time not later than 4 years after the end of the calendar year in
which the certification date falls.

(10) In this section—

• “abandonment programme” means an abandonment
  25programme approved under Part 4 of the Petroleum Act 1998
  (including such a programme as revised),

• “decommissioning expenditure” has the meaning given by
  section 330C,

• “reimbursement payment” means any payment made to the
  30contributing company by the defaulter in reimbursing the
  contributing company in respect of, or otherwise making
  good to the contributing company, the whole or any part of
  the relevant contribution,

• “the relevant abandonment programme” means the
  35abandonment programme in respect of which the
  decommissioning expenditure mentioned in subsection
  (1)(a) was incurred, and

• “relevant agreement” has the meaning given by section
  104(5)(a) of FA 1991.”

40Calculation of profits chargeable to income tax

22 In Chapter 16A of Part 2 of ITTOIA 2005 (trading income: oil activities), after
section 225U insert—

“Receipts arising from decommissioning

225V Receipts arising from decommissioning

(1) 45This section applies if—

(a) a person that is or has been carrying on a ring fence trade
(“the defaulter”) has defaulted on a liability under—

(i) a relevant agreement, or

(ii) an abandonment programme,

5to make a payment towards decommissioning expenditure,

(b) another person that is or has been carrying on a ring fence
trade (“the contributing person”) pays an amount (“the
relevant contribution”) in or towards meeting the whole or
part of the default, and

(c) 10the amount of the relevant contribution is less than the sum
of the amounts within subsection (2).

(2) The amounts within this subsection are—

(a) any payments made (directly or indirectly) to the
contributing person by the guarantor under an abandonment
15guarantee as a result of the defaulter defaulting on the
liability,

(b) any reimbursement payments, and

(c) any relief from tax which the contributing person obtains in
respect of the relevant contribution.

(3) 20The difference between—

(a) the sum of the amounts within subsection (2), and

(b) the relevant contribution,

(“the relevant difference”) is to be treated as a receipt (in the nature
of income) of the contributing person’s ring fence trade for the
25relevant tax year (see subsection (4)).

(4) “The relevant tax year” means the tax year that includes the day on
which the Secretary of State certifies that the relevant abandonment
programme has been satisfactorily completed (“the certification
date”).

30This is subject to subsection (5).

This is subject to subsection (5).

(5) If the contributing person’s ring fence trade is permanently
discontinued before the certification date, “the relevant tax year” is
the last tax year in which that trade is carried on.

(6) 35The relevant difference is to be determined—

(a) in a case where subsection (5) applies, at the end of the tax
year in which the certification date falls, and

(b) in any other case, at the end of the relevant tax year.

(7) In a case where subsection (5) applies, any income tax chargeable for
40the relevant tax year by virtue of this section is due and payable for
the tax year in which the certification date falls.

(8) Any additional assessment to income tax required in order to take
account of a receipt arising under this section may be made at any
time not later than 4 years after the end of the tax year in which the
45certification date falls.

(9) In this section—

Finance (No. 2) BillPage 379

• “abandonment programme” means an abandonment
  programme approved under Part 4 of the Petroleum Act 1998
  (including such a programme as revised),

• “decommissioning expenditure” has the meaning given by
  5section 330C of CTA 2010,

• “reimbursement payment” means any payment made to the
  contributing person by the defaulter in reimbursing the
  contributing person in respect of, or otherwise making good
  to the contributing person, the whole or any part of the
  10relevant contribution,

• “the relevant abandonment programme” means the
  abandonment programme in respect of which the
  decommissioning expenditure mentioned in subsection
  (1)(a) was incurred, and

• 15“relevant agreement” has the meaning given by section
  104(5)(a) of FA 1991.”

Part 3 Commencement

23 The amendments made by this Schedule have effect in relation to
20expenditure incurred on or after the day on which this Act is passed.

Section 90

SCHEDULE 30 Restrictions on allowances for certain oil-related expenditure

Part 1 Decommissioning expenditure

1 25CAA 2001 is amended as follows.

2 After section 165 insert—

“Restrictions on allowances: anti-avoidance

165A Decommissioning services supplied by connected person

(1) Allowances under this Part are restricted under section 165B(1) if—

(a) 30a person (“R”) who is carrying on, or has ceased to carry on,
a ring fence trade enters into an arrangement,

(b) under the arrangement, a person (“S”) who is connected with
R provides a service to R, and

(c) all or part of the consideration for the service is
35decommissioning expenditure.

(2) Subsection (1)(b) may be satisfied whether the service is provided to
R directly or indirectly; and in particular it does not matter—

(a) whether R and S are parties to the same contract, or

(b) whether payments are made by R directly to S.