Finance Bill

Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 34 — Treatment of liabilities for inheritance tax purposes
421

(i)
to finance (directly or indirectly) the acquisition of
excluded property or the maintenance, or an
enhancement, of the value of such property, or
(ii)
to discharge (directly or indirectly) any other liability
that, by virtue of this section, would not be taken into
5
account.
(3)
The liability may be taken into account to the extent that it is greater
than the value of such of the excluded property as has not been
disposed of, but only so far as the liability is not greater than that
value by virtue of—
10
(a)
arrangements the main purpose, or one of the main purposes,
of which is to secure a tax advantage,
(b)
an increase in the amount of the liability (whether due to the
accrual of interest or otherwise), or
(c)
a disposal, in whole or in part, of the excluded property.
15
(4)
In subsection (3)(a)—
“arrangements” includes any scheme, transaction or series of
transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations;
“tax advantage” means—
20
(a)
the avoidance or reduction of a charge to tax, or
(b)
the avoidance of a possible determination in respect
of tax.
162B
Liabilities attributable to financing certain relievable property
(1)
Subsection (2) applies if—
25
(a)
the whole or part of any value transferred by a transfer of
value is to be treated as reduced, under section 104, by virtue
of it being attributable to the value of relevant business
property, and
(b)
the transferor has a liability which is attributable, in whole or
30
in part, to financing (directly or indirectly)—
(i)
the acquisition of that property, or
(ii)
the maintenance, or an enhancement, of its value.
(2)
The liability is, so far as possible, to be taken to reduce the value
attributable to the value of the relevant business property, before it is
35
treated as reduced under section 104, but only to the extent that the
liability—
(a)
is attributable as mentioned in subsection (1)(b), and
(b)
does not reduce the value of the relevant business property
by virtue of section 110(b).
40
(3)
Subsection (4) applies if—
(a)
the whole or part of any value transferred by a transfer of
value is to be treated as reduced, under section 116, by virtue
of it being attributable to the agricultural value of agricultural
property, and
45
(b)
the transferor has a liability which is attributable, in whole or
in part, to financing (directly or indirectly)—
(i)
the acquisition of that property, or

Finance Bill
Schedule 34 — Treatment of liabilities for inheritance tax purposes
422

(ii)
the maintenance, or an enhancement, of its
agricultural value.
(4)
To the extent that the liability is attributable as mentioned in
subsection (3)(b), it is, so far as possible, to be taken to reduce the
value attributable to the agricultural value of the agricultural
5
property, before it is treated as reduced under section 116.
(5)
For the purposes of subsections (1) to (4) references to a transfer of
value include references to an occasion on which tax is chargeable
under Chapter 3 of Part 3 (apart from section 79) and—
(a)
references to the value transferred by a transfer of value
10
include references to the amount on which tax is then
chargeable, and
(b)
references to the transferor include references to the trustees
of the settlement concerned.
(6)
Subsection (7) applies if—
15
(a)
part of the value of a person’s estate immediately before
death is attributable to the value of land on which trees or
underwood are growing,
(b)
the value of the trees or underwood is to be left out of
account, under section 125(2)(a), in determining the value
20
transferred by the chargeable transfer made on the person’s
death, and
(c)
the person has a liability which is attributable, in whole or in
part, to financing (directly or indirectly)—
(i)
the acquisition of the land or trees or underwood,
25
(ii)
planting the trees or underwood, or
(iii)
the maintenance, or an enhancement, of the value of
the trees or underwood.
(7)
To the extent that the liability is attributable as mentioned in
subsection (6)(c), it is, so far as possible, to be taken to reduce the
30
value of the trees or underwood, before their value is left out of
account.
(8)
In this section—
“agricultural property” and “agricultural value” have the same
meaning as in Chapter 2 of Part 5;
35
“relevant business property” has the same meaning as in
Chapter 1 of Part 5.
162C
Sections 162A and 162B: supplementary provision
(1)
This section applies for the purposes of determining the extent to
which a liability is attributable as mentioned in section 162A(1) or
40
162B(1)(b), (3)(b) or (6)(c).
(2)
Where a liability was discharged in part before the time in relation to
which the question as to whether or how to take it into account
arises—
(a)
any part of the liability that, at the time of discharge, was not
45
attributable as mentioned in subsection (1) is, so far as
possible, to be taken to have been discharged first,

Finance Bill
Schedule 34 — Treatment of liabilities for inheritance tax purposes
423

(b)
any part of the liability that, at the time of discharge, was
attributable as mentioned in section 162B(1)(b), (3)(b) or (6)(c)
is, so far as possible, only to be taken to have been discharged
after any part of the liability within paragraph (a) was
discharged, and
5
(c)
any part of the liability that, at the time of discharge, was
attributable as mentioned in section 162A(1) is, so far as
possible, only to be taken to have been discharged after any
parts of the liability within paragraph (a) or (b) were
discharged.”
10
4
After section 175 (estate on death: liability to make future payments etc)
insert—
“175A
Discharge of liabilities after death
(1)
In determining the value of a person’s estate immediately before
death, a liability may be taken into account to the extent that—
15
(a)
it is discharged on or after death, out of the estate, in money
or money’s worth, and
(b)
it is not otherwise prevented, under any provision of this Act,
from being taken into account.
(2)
Where the whole or any part of a liability is not discharged in
20
accordance with paragraph (a) of subsection (1), the liability or (as
the case may be) the part may only be taken into account for the
purpose mentioned in that subsection to the extent that—
(a)
there is a real commercial reason for the liability or the part
not being discharged,
25
(b)
the liability or the part is not being left undischarged as part
of arrangements the main purpose, or one of the main
purposes, of which is to secure a tax advantage, and
(c)
the liability or the part is not otherwise prevented, under any
provision of this Act, from being taken into account.
30
(3)
For the purposes of subsection (2)(a) there is a real commercial
reason for a liability, or part of a liability, not being discharged where
it is shown that—
(a)
the liability is to a person dealing at arm’s length, or
(b)
if the liability were to a person dealing at arm’s length, that
35
person would not require the liability to be discharged.
(4)
In subsection (2)(b)—
“arrangements” includes any scheme, transaction or series of
transactions, agreement or understanding, whether or not
legally enforceable, and any associated operations;
40
“tax advantage” means—
(a)
a relief from tax 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
45
(d)
the avoidance of a possible assessment to tax or
determination in respect of tax.
(5)
In subsection (4) “tax” includes income tax and capital gains tax.

Finance Bill
Schedule 35 — Vehicle licences for disabled people
424

(6)
Where the liability is discharged as mentioned in subsection (1)(a)
only in part—
(a)
any part of the liability that is attributable as mentioned in
section 162A(1) is, so far possible, taken to be discharged first,
(b)
any part of the liability that is attributable as mentioned in
5
section 162B(1)(b), (3)(b) or (6)(c) is, so far as possible, taken
to be discharged only after any part of the liability within
paragraph (a) is discharged, and
(c)
the liability so far as it is not attributable as mentioned in
paragraph (a) or (b) is, so far as possible, taken to be
10
discharged only after any parts of the liability within either of
those paragraphs are discharged.”
Commencement
5
The amendments made by this Schedule have effect in relation to transfers
of value made, or treated as made, on or after the day on which this Act is
15
passed.
Schedule 35
Section 188

Vehicle licences for disabled people
1
VERA 1994 is amended as follows.
2     (1)
Section 19 (rebates) is amended as follows.
20
      (2)
In subsection (3), after paragraph (c) insert—
“(ca)
a qualifying application for a vehicle licence for the vehicle is
made,”.
      (3)
After that subsection insert—
“(3ZA)
An application for a vehicle licence is a qualifying application for the
25
purposes of subsection (3)(ca) if—
(a)
paragraph 1ZA of Schedule 1 applies to the vehicle when the
application is made, but
(b)
that paragraph did not apply to the vehicle when the licence
which is unexpired when the application is made was taken
30
out.”
3     (1)
Section 22ZA (nil licences for vehicles for disabled persons: information) is
amended as follows.
      (2)
In subsection (1)(b), at the beginning insert “falls within subsection (1A) or”.
      (3)
After subsection (1) insert—
35
“(1A)
Information falls within this subsection if it is—
(a)
the name, date of birth or national insurance number of a
person who is in receipt of a relevant payment, or would be
in receipt of such a payment but for—

Finance Bill
Schedule 35 — Vehicle licences for disabled people
425

(i)
regulations under section 86(1) of the Welfare Reform
Act 2012 (treatment as in-patient in hospital or similar
institution), or
(ii)
corresponding provision having effect in relation to
personal independence payment in Northern Ireland;
5
(b)
in the case of a person who is or would be in receipt of
personal independence payment attributable to entitlement
to the mobility component, the rate of the payment to which
the person is or would be entitled;
(c)
in the case of a person who has ceased or will cease to receive
10
a relevant payment, the date on which the person ceased or
will cease to receive it and the reason for the person ceasing
to receive it.
(1B)
In subsection (1A) “relevant payment” means—
(a)
personal independence payment attributable to entitlement
15
to the mobility component, and
(b)
armed forces independence payment.”
      (4)
In subsections (2) and (4), and in the heading, omit “nil”.
      (5)
For subsection (5) substitute—
“(5)
In this section “relevant licence functions” means functions relating
20
to applications for, and the issue of—
(a)
vehicle licences in respect of vehicles to which paragraph
1ZA of Schedule 1 applies, and
(b)
nil licences in respect of vehicles that are exempt vehicles
under paragraph 19 of Schedule 2 or paragraph 7 of Schedule
25
4.”
4
In section 62(1) (definitions), at the appropriate places insert—
““armed forces independence payment” means armed forces
independence payment under a scheme established under
section 1 of the Armed Forces (Pensions and Compensation)
30
Act 2004,”, and
““personal independence payment” means personal
independence payment under—
(a)
the Welfare Reform Act 2012, or
(b)
the corresponding provision having effect in
35
Northern Ireland,”.
5
In Schedule 1 (annual rates of duty), in Part 1 after paragraph 1 insert—
“1ZA  (1)
The annual rate of vehicle excise duty applicable to a vehicle to
which this paragraph applies is 50 per cent of the rate which (but
for this paragraph) would be applicable.
40
      (2)
This paragraph applies to a vehicle when it is being used, or kept
for use, by or for the purposes of a disabled person who is in
receipt of personal independence payment by virtue of
entitlement to the mobility component at the standard rate if—
(a)
the vehicle is registered under this Act in the name of the
45
disabled person, and
(b)
no other vehicle registered in his or her name under this
Act is—

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(i)
a vehicle for which a vehicle licence taken out at a
rate of duty reduced in accordance with sub-
paragraph (1) is in force, or
(ii)
an exempt vehicle under paragraph 19 of Schedule
2 or paragraph 7 of Schedule 4.
5
      (3)
This paragraph has effect as if a person were in receipt of personal
independence payment by virtue of entitlement to the mobility
component at the standard rate in any case where the person
would be in receipt of that payment by virtue of that entitlement
but for—
10
(a)
regulations under section 86(1) of the Welfare Reform Act
2012 (treatment as in-patient in hospital or similar
institution), or
(b)
corresponding provision having effect in Northern
Ireland.
15
      (4)
For the purposes of sub-paragraph (2), a vehicle is to be treated as
registered under this Act in the name of a person in receipt of
personal independence payment by virtue of entitlement to the
mobility component at the standard rate if it is so registered in the
name of—
20
(a)
an appointee, or
(b)
a person nominated for the purposes of this paragraph by
the person or an appointee.
      (5)
In sub-paragraph (4) “appointee” means a person appointed
pursuant to regulations made under (or having effect as if made
25
under) the Social Security Administration Act 1992 or the Social
Security Administration (Northern Ireland) Act 1992 to exercise
any of the rights and powers of a person in receipt of personal
independence payment.”
6     (1)
In Schedule 2 (exempt vehicles), paragraph 19 is amended as follows.
30
      (2)
In sub-paragraph (1), for paragraph (b) substitute—
“(b)
no other vehicle registered in his or her name under this Act
is—
(i)
a vehicle for which a vehicle licence taken out at a rate
of vehicle excise duty reduced in accordance with
35
paragraph 1ZA(1) of Schedule 1 is in force, or
(ii)
an exempt vehicle under this paragraph or paragraph
7 of Schedule 4.”
      (3)
In sub-paragraph (2), after paragraph (a) insert—
“(aa)
he or she is in receipt of personal independence payment
40
by virtue of entitlement to the mobility component at the
enhanced rate,
(ab)
he or she is in receipt of armed forces independence
payment,”.
      (4)
After sub-paragraph (2A) insert—
45
   “(2B)
This paragraph has effect as if a person were in receipt of personal
independence payment by virtue of entitlement to the mobility
component at the enhanced rate in any case where the person

Finance Bill
Schedule 36 — Valuation of certain supplies of fuel
427

would be in receipt of that payment by virtue of that entitlement
but for—
(a)
regulations under section 86(1) of the Welfare Reform Act
2012 (treatment as in-patient in hospital or similar
institution), or
5
(b)
corresponding provision having effect in Northern
Ireland.”
      (5)
In sub-paragraph (3), for “person in receipt of a disability living allowance
by virtue of entitlement to the mobility component at the higher rate, or of a
mobility supplement,” substitute “disabled person who satisfies sub-
10
paragraph (2) by virtue of paragraph (a), (aa), (ab) or (b) of that sub-
paragraph”.
      (6)
In sub-paragraph (4)(a), after “disability living allowance,” insert “personal
independence payment or armed forces independence payment,”.
7
The amendments made by this Schedule are treated as having come into
15
force on 8 April 2013.
Schedule 36
Section 190

Valuation of certain supplies of fuel
Introductory
1
VATA 1994 is amended as follows.
20
Valuation of supplies for private use
2
In Schedule 6 (valuation: special cases), before paragraph 1 insert—
“Part 1
Valuation of supplies of fuel for private use
Option for valuation on flat-rate basis
25
A1    (1)
This paragraph applies if, in a prescribed accounting period,
supplies of goods by a taxable person (“P”) arise by virtue of
paragraph 5(1) of Schedule 4 (but otherwise than for a
consideration) where road fuel which is or has previously been
supplied to or imported or manufactured by P in the course of P’s
30
business is provided for, or appropriated to, private use.
      (2)
For this purpose “road fuel is provided for, or appropriated to,
private use” if—
(a)
it is provided or to be provided by P—
(i)
to an individual for private use in the individual’s
35
own car or a car allocated to the individual, and
(ii)
by reason of the individual’s employment,
(b)
where P is an individual, it is appropriated or to be
appropriated by P for private use in P’s own car, or