Finance (No. 2) Bill (HC Bill 154)

(i) is not used as mentioned in paragraph 24A(1)(b) or
24B(1)(b) (as the case may be), and

(ii) is removed from the site at which the station is
situated or from the CHPQA site of the station (as
5the case may be);

(bb) after—

(i) a determination is made under regulations falling
within paragraph 24B(3) that a quantity, or a
proportion of a quantity, of a carbon price support
10rate commodity is referable to the production of
electricity, and

(ii) it is accordingly determined that the quantity or
proportion of a quantity is the subject of a deemed
supply under paragraph 24B,

15it is determined that the quantity or proportion of a
quantity was not referable to the production of electricity;

(bc) after an amount is determined to be payable by way of levy
on a deemed supply under paragraph 24A or 24B, it is
determined that that amount is too high;”.

17 20In paragraph 146 (regulations) in sub-paragraph (3)—

(a) for “14(3),” substitute “5(2A), 14(2),”, and

(b) after “16,” insert “17(1B),”.

18 In paragraph 147 (definitions)—

(a) at the appropriate places, insert—

• 25““carbon price support rate commodity” means any
  taxable commodity other than electricity;”,

• ““CHPQA certificate” has the same meaning as in the
  Climate Change Levy (Combined Heat and Power
  Stations) Exemption Certificate Regulations 2001 (S.I.
  302001/486);”,

• ““exempt unlicensed electricity supplier” has the
  meaning given by paragraph 152A;”,

• ““Great Britain” includes the territorial waters of the
  United Kingdom so far as adjacent to Great Britain;”,

• 35““small generating station” has the meaning given by
  paragraph 152B;”, and

• ““stand-by generator” means a generating station
  which—

  (a)

  is used to provide an emergency electricity
  40supply to a building in the event of a failure of
  the building’s usual electricity supply, and

  (b)

  is not used for any other purpose;”, and

(b) in the definition of “prescribed”—

(i) for “14(3),” substitute “5(2A), 14(2),”, and

(ii) 45after “16(3)” insert “, 17(1B)”.

19 After paragraph 152 insert—

“Meaning of “exempt unlicensed electricity supplier”

152A (1) In this Schedule “exempt unlicensed electricity supplier” means a
person—

(a) 5to whom an exemption from section 4(1)(c) of the
Electricity Act 1989 (persons supplying electricity to
premises) has been granted by an order under section 5 of
that Act, or

(b) to whom an exemption from Article 8(1)(c) of the
10Electricity Supply (Northern Ireland) Order 1992 has been
granted by an order under Article 9 of that Order,

except where the person is acting otherwise than for purposes
connected with the carrying on of activities authorised by the
exemption.

(2) 15Sub-paragraph (1) applies subject to—

(a) any direction under paragraph 151(1), and

(b) any regulations under paragraph 151(2).

Meaning of “small generating station”

152B (1) In this Schedule “small generating station” means a generating
20station the capacity of which for producing electricity is no more
than 2 megawatts.

(2) Sub-paragraph (3) applies if a relevant station (“station X”) is one
of a number of relevant stations which—

(a) are situated in the United Kingdom, and

(b) 25are owned by P or persons connected with P.

(3) In applying sub-paragraph (1) in relation to station X, the
reference to the capacity of a generating station is to be read as a
reference to the capacity of station X and all the other relevant
stations mentioned in sub-paragraph (2) taken together.

(4) 30In sub-paragraphs (2) and (3) “relevant station” means a
generating station which is neither an exempt CHP station nor a
stand-by generator.

(5) For the purposes of sub-paragraph (2)(b)—

(a) “P” is the person who owns station X, and

(b) 35section 1122 of the Corporation Tax Act 2010 (“connected”
persons) applies.

(6) Sub-paragraph (7) applies if the scheme in relation to which the
CHPQA certificate of an exempt CHP station (“station Y”) is
issued covers other exempt CHP stations as well.

(7) 40In applying sub-paragraph (1) in relation to station Y, the
reference to the capacity of a generating station is to be read as a
reference to the capacity of station Y and all the other exempt CHP
stations mentioned in sub-paragraph (6) taken together.

(8) In this paragraph “exempt CHP station” means a fully exempt
combined heat and power station or a partly exempt combined
heat and power station.”

20 (1) Regulation 5 of the Climate Change Levy (Electricity and Gas) Regulations
52001 (S.I. 2001/1136S.I. 2001/1136) is amended as follows.

(2) In paragraph (1) for “paragraph 14(2) of the Act (exemption: certain supplies
to electricity producers)” substitute “paragraphs 5(2A), 14(2) and 17(1B) of
the Act (which contain references to exempt unlicensed electricity
suppliers)”.

(3) 10In paragraph (2)(a) for “14(4)” substitute “152A(1)”.

(4) The amendments made by this paragraph are to be treated as having been
made by the Treasury under the powers to make regulations conferred by
paragraphs 5(2A), 14(2) and 17(1B) of Schedule 6 to FA 2000.

Commencement

21 15The amendments made by this Part of this Schedule are treated as having
come into force on 26 March 2013.

22 (1) The amendments made by paragraph 6(2) and (3) above have effect for the
purpose of determining if a supply of gas or electricity is exempt from levy
where the gas or electricity is actually supplied on or after 1 April 2013.

(2) 20Those amendments are to have effect for the purpose of determining if any
other supply is exempt from levy where the supply is treated as taking place
on or after 1 April 2013.

(3) The amendments made by paragraph 8 above have effect for the purpose of
determining if a supply of electricity is exempt from levy where the
25electricity is caused to be consumed on or after 1 April 2013.

(4) The amendment made by paragraph 10 above has effect in relation to carbon
price support rate commodities which are brought onto, or arrive at, sites on
or after 1 April 2013.

Part 3 30Carbon price support rates from 1 April 2014

23 (1) In paragraph 42A of Schedule 6 to FA 2000 (as inserted by paragraph 14
above) for sub-paragraph (3) substitute—

“(3) The carbon price support rates are as follows.

(2) The amendment made by this paragraph has effect in relation to supplies
treated as taking place on or after 1 April 2014 but before 1 April 2015.

Part 4 Carbon price support rates from 1 April 2015

24 (1) 15In paragraph 42A of Schedule 6 to FA 2000 (as inserted by paragraph 14
above) for sub-paragraph (3) substitute—

“(3) The carbon price support rates are as follows.

(2) The amendment made by this paragraph has effect in relation to supplies
treated as taking place on or after 1 April 2015.

Section 206

SCHEDULE 41 General anti-abuse rule: procedural requirements

The GAAR Advisory Panel

1 (1) In this Part “the GAAR Advisory Panel” means the panel of persons
5established by the Commissioners for the purposes of the general anti-abuse
rule.

(2) In this Schedule “the Chair” means any member of the GAAR Advisory
Panel appointed by the Commissioners to chair it.

Meaning of “designated HMRC officer”

2 10In this Schedule a “designated HMRC officer” means an officer of Revenue
and Customs who has been designated by the Commissioners for the
purposes of the general anti-abuse rule.

Notice to taxpayer of proposed counteraction of tax advantage

3 (1) If a designated HMRC officer considers—

(a) 15that a tax advantage has arisen to a person (“the taxpayer”) from tax
arrangements that are abusive, and

(b) that the advantage ought to be counteracted under section 206,

the officer must give the taxpayer a written notice to that effect.

(2) The notice must—

(a) 20specify the arrangements and the tax advantage,

(b) explain why the officer considers that a tax advantage has arisen to
the taxpayer from tax arrangements that are abusive,

(c) set out the counteraction that the officer considers ought to be taken,

(d) inform the taxpayer of the period under paragraph 4 for making
25representations, and

(e) explain the effect of paragraphs 5 and 6.

(3) The notice may set out steps that the taxpayer may take to avoid the
proposed counteraction.

4 (1) If a notice is given to the taxpayer under paragraph 3, the taxpayer has 45
30days beginning with the day on which the notice is given to send written
representations in response to the notice to the designated HMRC officer.

(2) The designated officer may, on a written request made by the taxpayer,
extend the period during which representations may be made.

Referral to GAAR Advisory Panel

5 35If no representations are made in accordance with paragraph 4, a designated
HMRC officer must refer the matter to the GAAR Advisory Panel.

6 (1) If representations are made in accordance with paragraph 4, a designated
HMRC officer must consider them.

(2) If, after considering them, the designated HMRC officer considers that the
tax advantage ought to be counteracted under section 206, the officer must
refer the matter to the GAAR Advisory Panel.

7 If the matter is referred to the GAAR Advisory Panel, the designated HMRC
5officer must at the same time provide it with—

(a) a copy of the notice given to the taxpayer under paragraph 3,

(b) a copy of any representations made in accordance with paragraph 4
and any comments that the officer has on those representations, and

(c) a copy of the notice given to the taxpayer under paragraph 8.

8 10If the matter is referred to the GAAR Advisory Panel, the designated HMRC
officer must at the same time give the taxpayer a notice which—

(a) specifies that the matter is being referred,

(b) is accompanied by a copy of any comments provided to the GAAR
Advisory Panel under paragraph 7(b), and

(c) 15informs the taxpayer of the period under paragraph 9 for making
representations, and of the requirement under that paragraph to
send any representations to the officer.

9 (1) The taxpayer has 21 days beginning with the day on which a notice is given
under paragraph 8 to send the GAAR Advisory Panel written
20representations about—

(a) the notice given to the taxpayer under paragraph 3, or

(b) any comments provided under paragraph 7(b).

(2) The GAAR Advisory Panel may, on a written request made by the taxpayer,
extend the period during which representations may be made.

(3) 25The taxpayer must send a copy of any representations to the designated
HMRC officer at the same time as the representations are sent to the GAAR
Advisory Panel.

(4) If no representations were made in accordance with paragraph 4, the
designated HMRC officer—

(a) 30may provide the GAAR Advisory Panel with comments on any
representations made under this paragraph, and

(b) if comments are provided, must at the same time send a copy of them
to the taxpayer.

Decision of GAAR Advisory Panel and opinion notices

10 (1) 35If the matter is referred to the GAAR Advisory Panel, the Chair must arrange
for a sub-panel consisting of 3 members of the GAAR Advisory Panel (one
of whom may be the Chair) to consider it.

(2) The sub-panel may invite the taxpayer or the designated HMRC officer (or
both) to supply the sub-panel with further information within a period
40specified in the invitation.

(3) Invitations must explain the effect of sub-paragraph (4) or (5) (as
appropriate).

(4) If the taxpayer supplies information to the sub-panel under this paragraph,
the taxpayer must at the same time send a copy of the information to the
45designated HMRC officer.

(5) If the designated HMRC officer supplies information to the sub-panel under
this paragraph, the officer must at the same time send a copy of the
information to the taxpayer.

11 (1) Where the matter is referred to the GAAR Advisory Panel, the sub-panel
5must produce—

(a) one opinion notice stating the joint opinion of all the members of the
sub-panel, or

(b) two or three opinion notices which taken together state the opinions
of all the members.

(2) 10The sub-panel must give a copy of the opinion notice or notices to—

(a) the designated HMRC officer, and

(b) the taxpayer.

(3) An opinion notice is a notice which states that in the opinion of the members
of the sub-panel, or one or more of those members—

(a) 15the entering into and carrying out of the tax arrangements is a
reasonable course of action in relation to the relevant tax
provisions—

(i) having regard to all the circumstances (including the matters
mentioned in subsections (2)(a) to (c) and (3) of section 204),
20and

(ii) taking account of subsections (4) to (6) of that section, or

(b) the entering into or carrying out of the tax arrangements is not a
reasonable course of action in relation to the relevant tax provisions
having regard to those circumstances and taking account of those
25subsections, or

(c) it is not possible, on the information available, to reach a view on that
matter,

and the reasons for that opinion.

(4) For the purposes of the giving of an opinion under this paragraph, the
30arrangements are to be assumed to be tax arrangements.

(5) In this Part, a reference to any opinion of the GAAR Advisory Panel about
any tax arrangements is a reference to the contents of any opinion notice
about the arrangements.

Notice of final decision after considering opinion of GAAR Advisory Panel

12 (1) 35A designated HMRC officer who has received a notice or notices under
paragraph 11 must, having considered any opinion of the GAAR Advisory
Panel about the tax arrangements, give the taxpayer a written notice setting
out whether the tax advantage arising from the arrangements is to be
counteracted under the general anti-abuse rule.

(2) 40If the notice states that a tax advantage is to be counteracted, it must also set
out—

(a) the adjustments required to give effect to the counteraction, and

(b) if relevant, any steps that the taxpayer is required to take to give
effect to it.

Notices may be given on assumption that tax advantage does arise

13 (1) A designated HMRC officer may give a notice, or do anything else, under
this Schedule where the officer considers that a tax advantage might have
arisen to the taxpayer.

(2) 5Accordingly, any notice given by a designated HMRC officer under this
Schedule may be expressed to be given on the assumption that the tax
advantage does arise (without agreeing that it does).

Section 213

SCHEDULE 42 Trusts with vulnerable beneficiary

10Inheritance Tax Act 1984

1 IHTA 1984 is amended as follows.

2 (1) Section 71A (trusts for bereaved minors) is amended as follows.

(2) For subsection (3)(c)(ii) substitute—

“(ii) if any of the income arising from any of the settled
15property is applied for the benefit of a beneficiary, it
is applied for the benefit of the bereaved minor.”

(3) In subsection (4), before paragraph (a) insert—

“(za) the trustees’ having powers that enable them to apply
otherwise than for the benefit of the bereaved minor amounts
20(whether consisting of income or capital, or both) not
exceeding the annual limit,”.

(4) After subsection (4) insert—

“(4A) For the purposes of this section and section 71B, the “annual limit” is
whichever is the lower of the following amounts—

(a) 25£3,000, and

(b) 3% of the amount that is the maximum value of the settled
property during the period in question.

(4B) For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.

(4C) 30The Treasury may by order made by statutory instrument—

(a) specify circumstances in which subsection (4)(za) is, or is not,
to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in subsection (4A).

(4D) An order under subsection (4C) may—

(a) 35make different provision for different cases, and

(b) contain transitional and saving provision.

(4E) A statutory instrument containing an order under subsection (4C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.”

3 (1) Section 71B (charge to tax on property to which section 71A applies) is
amended as follows.

(2) In subsection (1), after “(2)” insert “, (2B)”.

(3) After subsection (2) insert—

“(2A) 5Subsection (2B) applies in a case in which—

(a) an amount is paid or applied otherwise than for the benefit of
the bereaved minor, and

(b) the exemptions provided by subsection (2) of this section and
subsections (3) and (4) of section 70 do not apply.

(2B) 10In such a case, tax is not charged under this section in respect of
whichever is the lower of the following amounts—

(a) the amount paid or applied, and

(b) the annual limit.”

4 (1) Section 71D (age 18-to-25 trusts) is amended as follows.

(2) 15For subsection (6)(c)(ii) substitute—

“(ii) if any of the income arising from any of the settled
property is applied for the benefit of a beneficiary, it
is applied for the benefit of B.”

(3) After that subsection insert—

“(6A) 20Where the income arising from the settled property is held on trusts
of the kind described in section 33 of the Trustee Act 1925 (protective
trusts), paragraphs (b) and (c) of subsection (6) have effect as if for
“living and under the age of 25,” there were substituted “under the
age of 25 and the income arising from the settled property is held on
25trust for B,”.

(4) In subsection (7), before paragraph (a) insert—

“(za) the trustees’ having powers that enable them to apply
otherwise than for the benefit of B amounts (whether
consisting of income or capital, or both) not exceeding the
30annual limit,”.

(5) After that subsection insert—

“(7A) For the purposes of this section and section 71E, the “annual limit” is
whichever is the lower of the following amounts—

(a) £3,000, and

(b) 353% of the amount that is the maximum value of the settled
property during the period in question.

(7B) For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.

(7C) The Treasury may by order made by statutory instrument—

(a) 40specify circumstances in which subsection (7)(za) is, or is not,
to apply in relation to a trust, and

(b) amend the definition of “the annual limit” in subsection (7A).

(7D) An order under subsection (7C) may—

(a) make different provision for different cases, and

(b) contain transitional and saving provision.

(7E) A statutory instrument containing an order under subsection (7C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.”

5 (1) 5Section 71E (charge to tax on property to which section 71D applies) is
amended as follows.

(2) In subsection (1), for “(4)” substitute “(4A)”.

(3) After subsection (4) insert—

“(4A) If an amount is paid or applied otherwise than for the benefit of B
10and the exemptions provided by subsections (2) to (4) do not apply,
tax is not charged under this section in respect of whichever is the
lower of the following amounts—

(a) the amount paid or applied, and

(b) the annual limit.”

6 (1) 15Section 89 (trusts for disabled persons) is amended as follows.

(2) For subsection (1)(b) substitute—

“(b) which secure that, if any of the settled property or income
arising from it is applied during the disabled person’s life for
the benefit of a beneficiary, it is applied for the benefit of the
20disabled person.”

(3) For subsection (3) substitute—

“(3) The trusts on which the settled property is held are not to be treated
as falling outside subsection (1) by reason only of—

(a) the trustees’ having powers that enable them to apply
25otherwise than for the benefit of the disabled person amounts
(whether consisting of income or capital, or both) not
exceeding the annual limit,

(b) the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),

(c) 30the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,

(d) the trustees’ having the powers conferred by section 33 of the
Trustee Act (Northern Ireland) 1958 (corresponding
35provision for Northern Ireland),

(e) the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or

(f) the trustees’ having powers to the like effect as the powers
40mentioned in any of paragraphs (b) to (e).

(3A) For the purposes of this section, the “annual limit” is whichever is the
lower of the following amounts—

(a) £3,000, and

(b) 3% of the amount that is the maximum value of the settled
45property during the period in question.