House of Commons Public Bill Committee Proceedings

Session 2013 - 14
Internet Publications
Other Bills before Parliament

131

SUPPLEMENT TO THE VOTES AND PROCEEDINGS

Monday 1 July 2013

Report Stage Proceedings

Finance Bill, As Amended

NEW CLAUSES AND NEW SCHEDULES RELATING TO INCOME TAX RATES

Report on the additional rate of income tax

Ed Balls

Chris Leslie

Cathy Jamieson

Catherine McKinnell

Negatived on division  NC8

To move the following Clause:—

‘(1)
The Chancellor of the Exchequer shall, within three months of the passing of this

Act, publish a report on the additional rate of income tax.

(2)
This report shall review the impact upon Exchequer receipts of setting the

additional rate to 50 per cent. in the tax year 2014-15.

(3)
The report shall review what impact reducing the additional rate for 2013-14 will

have on the amount of income tax currently paid by those with taxable incomes

of—

(a)
over £150,000 per year; and

(b)
over £1,000,000 per year.

(4)
The report shall review what impact reducing the additional rate for 2013-14 will

have on the level of bonuses awarded in the financial sector in April 2013.’.

NEW CLAUSES AND NEW SCHEDULES RELATING TO A MANSION TAX

Lower rate of tax and mansion tax

Ed Balls

Chris Leslie

Cathy Jamieson

Catherine McKinnell

Negatived on division  NC9

To move the following Clause:—

Report Stage Proceedings: 1 July 2013
132

Finance Bill, continued

‘(1)
The Chancellor of the Exchequer shall, within six months of Royal Assent, lay

before Parliament proposals for an income tax rate of 10 per cent. on a band of

income above the personal allowance.

(2)
The range of income covered by the 10 per cent. rate proposal in subsection (1)

shall be determined by the Exchequer yield of a mansion tax.

(3)
The full benefit of the 10 per cent. rate shall not be available to taxpayers paying

the higher or additional rates of tax.’.

NEW CLAUSES AND NEW SCHEDULES STANDING IN THE NAME OF A MINISTER OF THE

CROWN OTHER THAN NEW CLAUSE 7; NEW CLAUSES AND NEW SCHEDULES RELATING

TO THE GENERAL ANTI-ABUSE RULE

Transfer of deductions

Mr Chancellor of the Exchequer

Added  NC4

To move the following Clause:—

‘Schedule [Transfer of deductions]—

(a)
inserts into CTA 2010 a new Part 14A (transfer of deductions), and

(b)
makes consequential provision.’.

Restrictions on buying capital allowances

Mr Chancellor of the Exchequer

Added  NC5

To move the following Clause:—

‘
Schedule [Restrictions on buying capital allowances] contains provision

amending Chapter 16A of Part 2 of CAA 2001 (restrictions on allowance

buying).’

High quality liquid assets

Mr Chancellor of the Exchequer

Added  NC6

To move the following Clause:—

‘(1)
In paragraph 70 of Schedule 19 to FA 2011 (bank levy: definitions), in sub-

paragraph (1), in the definition of “high quality liquid asset” for “section

12.7.2(1) to (4)” substitute “section 12.7 (assets that are eligible for inclusion in

a firm’s regulatory liquid assets buffer)’.

Report Stage Proceedings: 1 July 2013
133

Finance Bill, continued

(2)
The amendment made by this section has effect in relation to chargeable periods

ending on or after 1 January 2011, and in relation to those chargeable periods the

amendment is to be treated as always having had effect.’.

Anti-abuse measures

Ed Balls

Chris Leslie

Cathy Jamieson

Catherine McKinnell

Negatived on division  NC12


To move the following Clause:—

‘(1)
Her Majesty’s Revenue and Customs shall review the possibility of bringing

forward measures as part of the GAAR to work in conjunction with other G8

countries to require multi-national companies to publish a single easily

comparable statement of the amount of corporation tax they pay in the UK.

(2)
The Chancellor of the Exchequer shall review the effect of incorporating a global

standard for public registration of ownership of companies and trusts via a

convention on tax transparency, including a requirement on companies to publish

a single easily comparable statement of the amount of corporation tax they pay in

the UK, on Treasury tax receipts.

(3)
The Chancellor of the Exchequer shall consider, when counteracting tax

advantages arising from tax arrangements that are abusive, what steps HM

Government could take, working alongside developing country governments, to

assess how UK companies could report their use of tax schemes that have an

impact on developing countries, and how the UK could assist in the recovery of

that tax.

(4)
Within six months of the passage of Royal Assent, the Chancellor of the

Exchequer shall place copies of the review in the House of Commons Library,

and consult with G8 countries on their effectiveness.’.

Mr Chancellor of the Exchequer

Added  ns1

To move the following Schedule:—

‘Transfer of deductions

New Part 14A of CTA 2010

1
After Part 14 of CTA 2010 insert—

“Part 14A

Transfer of deductions

Report Stage Proceedings: 1 July 2013
134

Finance Bill, continued

730A
Overview

(1)
This Part makes provision restricting the circumstances in which

deductible amounts may be brought into account where there has been

a qualifying change in relation to a company.

(2)
For the meaning of “deductible amount” and “qualifying change” see

section 730B.

730B
Interpretation of Part

(1)
In this Part—

“arrangements” includes any agreement, understanding, scheme,

transaction or series of transactions (whether or not legally

enforceable),

“C” means the company mentioned in section 730A(1),

“deductible amount” means—

(a)
an expense of a trade,

(b)
an expense of a UK property business or an overseas property

business,

(c)
an expense of management of a company’s investment business

within the meaning of section 1219 of CTA 2009,

(d)
a non-trading debit within the meaning of Parts 5 and 6 of CTA

2009 (loan relationships and derivative contracts) (see section

301(2) of that Act), or

(e)
a non-trading debit within the meaning of Part 8 of CTA 2009

(intangible fixed assets) (see section 746 of that Act),

but does not include any amount that has been taken into account in

determining RTWDV within the meaning of Chapter 16A of Part 2 of

CAA 2001 (restrictions on allowance buying) (see section 212K of

that Act),

“qualifying change”, in relation to a company, has the same meaning as

in that Chapter, and

“the relevant day” means the day on which the qualifying change in

relation to C occurred.

(2)
In this Part, references to bringing an amount into account “as a

deduction” in any period are to bringing it into account as a deduction

in that period—

(a)
in calculating profits, losses or other amounts for corporation

tax purposes, or

(b)
from profits or other amounts chargeable to corporation tax.

730C
Disallowance of deductible amounts: relevant claims

(1)
This section applies where a relevant claim is made for an accounting

period ending on or after the relevant day.

(2)
“Relevant claim” means a claim by C, or a company connected with

C, under—

(a)
section 37 (relief for trade losses against total profits), or

(b)
Chapter 4 of Part 5 (group relief).

(3)
A deductible amount that meets conditions A and B may not be the

subject of, or brought into account as a deduction in, the claim.

Report Stage Proceedings: 1 July 2013
135

Finance Bill, continued

(4)
But subsection (3) does not exclude any amount which could have

been the subject of, or brought into account as a deduction in, the claim

in the absence of the qualifying change.

(5)
Condition A is that, on the relevant day, it is highly likely that the

amount, or any part of it, would (disregarding this Part) be the subject

of, or brought into account as a deduction in, a relevant claim for an

accounting period ending on or after the relevant day.

(6)
Any question as to what is “highly likely” on the relevant day for the

purposes of subsection (5) is to be determined having regard to—

(a)
any arrangements made on or before that day, and

(b)
any events that take place on or before that day.

(7)
Condition B is that the main purpose, or one of the main purposes, of

change arrangements is for the amount (whether or not together with

other deductible amounts) to be the subject of, or brought into account

as a deduction in, a relevant claim for an accounting period ending on

or after the relevant day.

(8)
“Change arrangements” means any arrangements made to bring about,

or otherwise connected with, the qualifying change.

(9)
This section does not apply to a deductible amount if, and to the extent

that—

(a)
section 730D(2) applies to it, or

(b)
for the purposes of section 432, a loss, or any part of a loss, to

which section 433(2) applies derives from it.

730D
Disallowance of deductible amounts: profit transfers

(1)
This section applies where arrangements (“the profit transfer

arrangements”) are made which result in—

(a)
an increase in the total profits of C, or of a company connected

with C, or

(b)
a reduction of any loss or other amount for which relief from

corporation tax could (disregarding this section) have been

given to C or a company connected with C,


in any accounting period ending on or after the relevant day.

(2)
A deductible amount that meets conditions D and E may not be

brought into account by C, nor any company connected with C, as a

deduction in any accounting period ending on or after the relevant day.

(3)
Condition D is that, on the relevant day, it is highly likely that the

amount, or any part of it, would (disregarding this Part) be brought into

account by C, or any company connected with C, as a deduction in any

accounting period ending on or after the relevant day.

(4)
Any question as to what is “highly likely” on the relevant day for the

purposes of subsection (3) is to be determined having regard to—

(a)
any arrangements made on or before that day, and

(b)
any events that take place on or before that day.

(5)
Condition E is that the main purpose, or one of the main purposes, of

the profit transfer arrangements is to bring the amount (whether or not

together with other deductible amounts) into account as a deduction in

any accounting period ending on or after the relevant day.

Report Stage Proceedings: 1 July 2013
136

Finance Bill, continued

(6)
Subsection (7) applies if—

(a)
(disregarding subsection (7)) subsection (2) would prevent a

deductible amount being brought into account by a company

as a deduction in any accounting period ending on or after the

relevant day, and

(b)
in the absence of the profit transfer arrangements and

disregarding any deductible amounts, the company would

have an amount of total profits for that accounting period.

(7)
Subsection (2) applies only in relation to such proportion of the

deductible amount mentioned in subsection (6)(a) as is just and

reasonable.”

Consequential amendments

2    (1)
In section 1(4) of CTA 2010 (overview of Act), after paragraph (a) insert—

“(aa)
transfer of deductions (see Part 14A),”.

      (2)
In section 432 of that Act (sale of lessors: restriction on relief for certain

expenses), after subsection (1) insert—

“(1A)
For the purposes of subsection (1), an expense is to be disregarded if,

and to the extent that, section 730D(2) (disallowance of deductible

amounts: profit transfers) applies to it.”

      (3)
In Schedule 4 to that Act (index of defined expressions), insert at the

appropriate places—

“arrangements (in Part 14A)
section 730B”

“as a deduction (in Part 14A)
section 730B”

“C (in Part 14A)
section 730B

“deductible amount (in Part 14A)
section 730B”

“qualifying change (in Part 14A)
section 730B”

“the relevant day (in Part 14A)
section 730B”.

Commencement and transitional provision

3    (1)
The amendments made by this Schedule have effect in relation to a qualifying

change if the relevant day is on or after 20 March 2013.

      (2)
But those amendments do not have effect if before that date—

(a)
the arrangements made to bring about the qualifying change were

entered into, or

(b)
there was an agreement, or common understanding, between the

parties to those arrangements as to the principal terms on which the

qualifying change would be brought about.

      (3)
If—

(a)
the relevant day in relation to a qualifying change is before 26 June

2013, or

(b)
paragraph (a) or (b) of sub-paragraph (2) was satisfied before that date,

Report Stage Proceedings: 1 July 2013
137

Finance Bill, continued


those amendments have effect in relation to the qualifying change as if section

730C(9)(b) were omitted.’.

Mr Chancellor of the Exchequer

Added  ns2

To move the following Schedule:—

‘Restrictions on buying capital allowances

Introductory

1
Chapter 16A of Part 2 of CAA 2001 (avoidance involving allowance buying)

is amended as follows.

Restrictions where certain conditions met

2    (1)
Section 212B (circumstances where Chapter 16A applies) is amended as

follows.

      (2)
For subsection (1)(d) substitute—

“(d)
the qualifying change meets one of the limiting conditions.”

      (3)
For subsection (4) substitute—

“(4)
Sections 212LA and 212M set out the limiting conditions and specify

when those conditions are met.”

3
After section 212L insert—

“Limiting conditions

212LA
Limiting conditions

(1)
The qualifying change meets one of the limiting conditions if

condition A, B, C or D is met.

(2)
Condition A is that the amount of the relevant excess of allowances is

£50 million or more.

(3)
Condition B is that the amount of the relevant excess of allowances—

(a)
is £2 million or more but less than £50 million, and

(b)
is not insignificant as a proportion of the total amount or value

of the benefits derived by any relevant person by virtue of the

qualifying change or change arrangements.

(4)
“Relevant person” means a person who, at the end of the relevant day,

is—

(a)
a principal company of C,

(b)
a person carrying on the relevant activity in partnership, or

(c)
a person who is connected to a person within paragraph (a) or

(b) (within the meaning of section 1122 of CTA 2010).

(5)
Condition C is that—

(a)
the amount of the relevant excess of allowances is less than £2

million, and

(b)
the qualifying change has an unallowable purpose.



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