Finance Bill

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
37

Miscellaneous
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Community investment tax relief
Schedule 25 makes provision about community investment tax relief.
72
Lease premium relief
Schedule 26 makes provision in relation to relief for lease premiums.
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73
Manufactured payments: stock lending arrangements
(1)
Section 596 of ITA 2007 (deemed manufactured payments: stock lending
arrangements) is amended in accordance with subsections (2) and (3).
(2)
For subsection (1) substitute—
“(1)
This section applies if conditions A to C are met.
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(1A)
Condition A is that there is a stock lending arrangement in respect of
securities.
(1B)
Condition B is that a dividend or interest on the securities is paid, as a
result of the arrangement, to a person other than the person who is the
lender under the arrangement.
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(1C)
Condition C is that—
(a)
no provision is made for securing that the lender receives
payments representative of the dividend or interest, or
(b)
provision is made for securing that the lender receives—
(i)
payments representative of the dividend or interest, and
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(ii)
another benefit in respect of the dividend or interest
(including the release of the whole or part of any liability
to pay an amount).”
(3)
In subsection (2), for paragraph (a) substitute—
“(a)
were required, under the arrangement—
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(i)
in a case falling within paragraph (a) of subsection (1C),
to pay the lender an amount representative of the
dividend or interest, or
(ii)
in a case falling within paragraph (b) of that subsection,
to pay the lender an amount representative of the
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dividend or interest but deducting from that amount
any payment mentioned in sub-paragraph (i) of that
paragraph on which tax has been, or is to be, charged,
and”.
(4)
Section 812 of CTA 2010 (deemed manufactured payments: stock lending
35
arrangements) is amended in accordance with subsections (5) to (7).
(5)
For subsection (1) substitute—
“(1)
This section applies if conditions A to C are met.
(1A)
Condition A is that there is a stock lending arrangement in respect of
securities.
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Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
38

(1B)
Condition B is that a dividend or interest on the securities is paid, as a
result of the arrangement, to a person other than the person who is the
lender under the arrangement.
(1C)
Condition C is that—
(a)
no provision is made for securing that the lender receives
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payments representative of the dividend or interest, or
(b)
provision is made for securing that the lender receives—
(i)
payments representative of the dividend or interest, and
(ii)
another benefit in respect of the dividend or interest
(including the release of the whole or part of any liability
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to pay an amount).”
(6)
In subsection (2), for paragraph (a) substitute—
“(a)
were required, under the arrangement—
(i)
in a case falling within paragraph (a) of subsection (1C),
to pay the lender an amount representative of the
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dividend or interest, or
(ii)
in a case falling within paragraph (b) of that subsection,
to pay the lender an amount representative of the
dividend or interest but deducting from that amount
any payment mentioned in sub-paragraph (i) of that
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paragraph on which tax has been, or is to be, charged,
and”.
(7)
After subsection (6) insert—
“(7)
This section has effect regardless of section 358 of CTA 2009 (exclusion
of credits on release of connected companies debts) or any other
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provision of Part 5 of that Act (loan relationships) which prevents a
credit from being brought into account.”
(8)
The amendments made by this section have effect in relation to cases in which
a dividend or interest is paid, or is treated as paid, on or after 5 December 2012.
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Manufactured payments: general
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Schedule 27 contains provision for, and in connection with, the application of
the Tax Acts to manufactured payment relationships and payments
representative of dividends and interest.
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Relationship between rules prohibiting and allowing deductions
(1)
In section 31 of ITTOIA 2005 (trade profits: relationship between rules
35
prohibiting and allowing deductions)—
(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
calculating the profits of a trade in respect of an amount which
arises directly or indirectly in consequence of, or otherwise in
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connection with, relevant tax avoidance arrangements, that
rule—
(a)
does not have priority under subsection (1)(a), and

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
39

(b)
is subject to any relevant prohibitive rule in this Part
(and to the provisions mentioned in subsection (1)(b)).”,
and
(b)
after subsection (3) insert—
“(4)
In this section “relevant tax avoidance arrangements” means
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arrangements—
(a)
to which the person carrying on the trade is a party, and
(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).
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“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
legally enforceable).”
(2)
In section 274 of ITTOIA 2005 (property businesses: relationship between rules
prohibiting and allowing deductions)—
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(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
calculating the profits of a property business in respect of an
amount which arises directly or indirectly in consequence of, or
otherwise in connection with, relevant tax avoidance
20
arrangements, that rule—
(a)
does not have priority under subsection (1)(a), and
(b)
is subject to any relevant prohibitive rule in this Part
(and to the provisions mentioned in subsection (1)(b)).”,
and
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(b)
after subsection (3) insert—
“(3A)
In this section “relevant tax avoidance arrangements” means
arrangements—
(a)
to which the person carrying on the property business is
a party, and
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(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
35
legally enforceable).”
(3)
In section 51 of CTA 2009 (trade profits: relationship between rules prohibiting
and allowing deductions)—
(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
40
calculating the profits of a trade in respect of an amount which
arises directly or indirectly in consequence of, or otherwise in
connection with, relevant tax avoidance arrangements, that
rule—
(a)
does not have priority under subsection (1)(a), and
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(b)
is subject to any relevant prohibitive rule (and to the
provisions mentioned in subsection (1)(b)).”, and

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
40

(b)
after subsection (3) insert—
“(4)
In this section “relevant tax avoidance arrangements” means
arrangements—
(a)
to which the company carrying on the trade is a party,
and
5
(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
10
legally enforceable).”
(4)
In section 214 of CTA 2009 (property businesses: relationship between rules
prohibiting and allowing deductions)—
(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
15
calculating the profits of a property business in respect of an
amount which arises directly or indirectly in consequence of, or
otherwise in connection with, relevant tax avoidance
arrangements, that rule—
(a)
does not have priority under subsection (1)(a), and
20
(b)
is subject to any relevant prohibitive rule (and to the
provisions mentioned in subsection (1)(b)).”, and
(b)
after subsection (3) insert—
“(3A)
In this section “relevant tax avoidance arrangements” means
arrangements—
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(a)
to which the company carrying on the property business
is a party, and
(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).
30

“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
legally enforceable).”
(5)
The amendments made by this section have effect in relation to deductions in
respect of amounts which arise directly or indirectly in consequence of, or
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otherwise in connection with—
(a)
arrangements which are entered into on or after 21 December 2012, or
(b)
any transaction forming part of arrangements which is entered into on
or after that date.
(6)
But those amendments do not have effect where the arrangements are, or any
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such transaction is, entered into pursuant to an unconditional obligation in a
contract made before that date.
(7)
“An unconditional obligation” means an obligation which may not be varied
or extinguished by the exercise of a right (whether under the contract or
otherwise).
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