Finance (No. 2) Bill (HC Bill 190)

(a) there is, or is in substance, a disposal of a right to relevant
receipts by the transferor to the transferee,

(b) the disposal is effected (wholly or partly) by or through a
partnership (“the relevant partnership”),

(c) 5at any time—

(i) the transferor is a member of the relevant partnership
or of a partnership associated with the relevant
partnership, and

(ii) the transferee is a member of the relevant partnership
10or of a partnership associated with the relevant
partnership, and

(d) the main purpose, or one of the main purposes, of one or
more steps taken in effecting the disposal is the obtaining of
a tax advantage for any person.

(2) 15This Chapter does not apply if—

(a) the transferor is the spouse or civil partner of the transferee
and they are living together, or

(b) the transferor is a brother, sister, ancestor or lineal
descendant of the transferee.

(3) 20In subsection (1)(a) the reference to a disposal of a right to relevant
receipts includes anything constituting a disposal of such a right for
the purposes of TCGA 1992.

(4) For the purposes of subsection (1)(b) the disposal might, in
particular, be effected by an acquisition or disposal of, or an increase
25or decrease in, an interest in the relevant partnership (including a
share of the profits or assets of the relevant partnership or an interest
in such a share).

(5) For the purposes of subsection (1)(c) it does not matter if the
transferor and the transferee are not members of a partnership as
30mentioned at the same time.

(6) For the purposes of subsection (1)(c) a partnership is “associated”
with the relevant partnership if—

(a) it is a member of the relevant partnership, or

(b) it is a member of a partnership which is associated with the
35relevant partnership (whether by virtue of paragraph (a) or
this paragraph).

(7) In subsections (1)(c) and (5) references to the transferor include a
person connected with the transferor and references to the transferee
include a person connected with the transferee.

(8) 40In this Chapter—

• “arrangements” includes any agreement, understanding,
  scheme, transaction or series of transactions (whether or not
  legally enforceable),

• “partnership” includes a limited liability partnership whether
  45or not section 863(1) of ITTOIA 2005 applies in relation to it,

• “relevant receipts” means any income—

  Finance (No. 2) BillPage 441

  (a)

  which (but for the disposal) would be charged to
  income tax as income of the transferor (whether
  directly or as a member of a partnership), or

  (b)

  which (but for the disposal) would be brought into
  5account as income in calculating profits of the
  transferor (whether directly or as a member of a
  partnership) for income tax purposes, and

• “tax advantage” means a tax advantage, as defined in section
  1139 of CTA 2010, in relation to income tax or the charge to
  10corporation tax on income.

809AAZB Relevant amount to be treated as income

(1) The relevant amount is to be treated as income of the transferor
chargeable to income tax in the same way and to the same extent as
that in which the relevant receipts—

(a) 15would have been chargeable to income tax as income of the
transferor, or

(b) would have been brought into account as income in
calculating profits of the transferor for income tax purposes,

but for the disposal.

(2) 20In subsection (1) “the relevant amount” is to be read in accordance
with section 809AZB(2) and section 809AZB(3) to (6) applies for the
purpose of determining when income under subsection (1) is treated
as arising.

(3) For this purpose, in section 809AZB(2) to (6) references to the transfer
25of the right are to be read as references to the disposal of the right.

(4) If, apart from this subsection and section 809DZB(3)—

(a) both this Chapter and Chapter 5D would apply in relation to
the disposal, and

(b) Chapter 5D would give a greater amount of income of the
30transferor chargeable to income tax,

this Chapter is not to apply in relation to the disposal.”

(2) The amendment made by this paragraph has effect for cases where the
arrangements mentioned in section 809AAZA(1) of ITA 2007 are made on or
after 6 April 2014.

25 (1) 35After Chapter 5C insert—

“Chapter 5D

Disposals of assets through partnerships

809DZA Application of Chapter

(1) This Chapter applies if conditions A and B are met.

(2) Condition A is (subject to subsection (3)) that directly or indirectly in
consequence of, or otherwise in connection with, arrangements
40involving a person within the charge to income tax (“the transferor”)
and another person (“the transferee”)—

(a) there is, or is in substance, a disposal of an asset (“the
transferred asset”) by the transferor to the transferee,

(b) the disposal is effected (wholly or partly) by or through a
partnership (“the relevant partnership”),

(c) at any time—

(i) the transferor is a member of the relevant partnership
5or of a partnership associated with the relevant
partnership, and

(ii) the transferee is a member of the relevant partnership
or of a partnership associated with the relevant
partnership, and

(d) 10the main purpose, or one of the main purposes, of one or
more steps taken in effecting the disposal is the obtaining of
a tax advantage for any person.

(3) Condition A is not met if—

(a) the transferor is the spouse or civil partner of the transferee
15and they are living together, or

(b) the transferor is a brother, sister, ancestor or lineal
descendant of the transferee.

(4) In subsection (2)(a) the reference to a disposal of an asset includes
anything constituting a disposal of an asset for the purposes of
20TCGA 1992.

(5) For the purposes of subsection (2)(b) the disposal might, in
particular, be effected by an acquisition or disposal of, or an increase
or decrease in, an interest in the relevant partnership (including a
share of the profits or assets of the relevant partnership or an interest
25in such a share).

(6) For the purposes of subsection (2)(c) it does not matter if the
transferor and the transferee are not members of a partnership as
mentioned at the same time.

(7) For the purposes of subsection (2)(c) a partnership is “associated”
30with the relevant partnership if—

(a) it is a member of the relevant partnership, or

(b) it is a member of a partnership which is associated with the
relevant partnership (whether by virtue of paragraph (a) or
this paragraph).

(8) 35In subsections (2)(c) and (6) references to the transferor include a
person connected with the transferor and references to the transferee
include a person connected with the transferee.

(9) Condition B is that it is reasonable to assume that, had the
transferred asset instead been disposed of directly by the transferor
40to the transferee, the relevant amount (or any part of it)—

(a) would have been chargeable to income tax as income of the
transferor, or

(b) would have been brought into account as income in
calculating profits of the transferor for income tax purposes.

(10) 45In this Chapter “the relevant amount” means the amount of the
consideration received by the transferor for the disposal.

(11) If the transferor receives—

(a) no consideration for the disposal, or

(b) consideration which is substantially less than the market
value of the transferred asset,

assume for the purposes of subsection (10) that the transferor
5receives consideration of an amount equal to the market value of the
transferred asset.

(12) In subsection (11) references to the market value of the transferred
asset are to that value at the time of the disposal.

(13) In this Chapter—

• 10“arrangements” includes any agreement, understanding,
  scheme, transaction or series of transactions (whether or not
  legally enforceable),

• “partnership” includes a limited liability partnership whether
  or not section 863(1) of ITTOIA 2005 applies in relation to it,
  15and

• “tax advantage” means a tax advantage, as defined in section
  1139 of CTA 2010, in relation to income tax or the charge to
  corporation tax on income.

809DZB Relevant amount to be treated as income

(1) 20The relevant amount is to be treated as income of the transferor
chargeable to income tax in the same way and to the same extent as
that in which it—

(a) would have been chargeable to income tax as income of the
transferor, or

(b) 25would have been brought into account as income in
calculating profits of the transferor for income tax purposes,

as mentioned in section 809DZA(9).

(2) Section 809AZB(3) to (6) applies for the purpose of determining
when income under subsection (1) is treated as arising (reading
30references to the transfer of the right as references to the disposal of
the transferred asset).

(3) If, apart from this subsection and section 809AAZB(4)—

(a) both this Chapter and Chapter 5AA would apply in relation
to the disposal, and

(b) 35Chapter 5AA would give the same amount, or a greater
amount, of income of the transferor chargeable to income tax,

this Chapter is not to apply in relation to the disposal.”

(2) The amendment made by this paragraph has effect for cases where the
arrangements mentioned in section 809DZA(2) of ITA 2007 are made on or
40after 6 April 2014.

Corporation tax

26 Part 16 of CTA 2010 (factoring of income etc) is amended as follows.

27 (1) In Chapter 1 (transfers of income streams) section 756 (partnership shares) is
amended as follows.

(2) 45In subsection (1) omit “if condition A or B is met”.

(3) Omit subsections (2) and (3).

(4) The amendments made by this paragraph have effect for cases where the
transfer of a right to relevant receipts occurs on or after 1 April 2014.

28 (1) After Chapter 1 insert—

“Chapter 1A

Disposals of income streams through partnerships

757A 5 Application of Chapter

(1) This Chapter applies if directly or indirectly in consequence of, or
otherwise in connection with, arrangements involving a company
within the charge to corporation tax (“the transferor”) and another
person (“the transferee”)—

(a) 10there is, or is in substance, a disposal of a right to relevant
receipts by the transferor to the transferee,

(b) the disposal is effected (wholly or partly) by or through a
partnership (“the relevant partnership”),

(c) at any time—

(i) 15the transferor is a member of the relevant partnership
or of a partnership associated with the relevant
partnership, and

(ii) the transferee is a member of the relevant partnership
or of a partnership associated with the relevant
20partnership, and

(d) the main purpose, or one of the main purposes, of one or
more steps taken in effecting the disposal is the obtaining of
a tax advantage for any person.

(2) In subsection (1)(a) the reference to a disposal of a right to relevant
25receipts includes anything constituting a disposal of such a right for
the purposes of TCGA 1992.

(3) For the purposes of subsection (1)(b) the disposal might, in
particular, be effected by an acquisition or disposal of, or an increase
or decrease in, an interest in the relevant partnership (including a
30share of the profits or assets of the relevant partnership or an interest
in such a share).

(4) For the purposes of subsection (1)(c) it does not matter if the
transferor and the transferee are not members of a partnership as
mentioned at the same time.

(5) 35For the purposes of subsection (1)(c) a partnership is “associated”
with the relevant partnership if—

(a) it is a member of the relevant partnership, or

(b) it is a member of a partnership which is associated with the
relevant partnership (whether by virtue of paragraph (a) or
40this paragraph).

(6) In subsections (1)(c) and (4) references to the transferor include a
person connected with the transferor and references to the transferee
include a person connected with the transferee.

(7) In this Chapter—

• “arrangements” includes any agreement, understanding,
  scheme, transaction or series of transactions (whether or not
  legally enforceable),

• 5“partnership” includes a limited liability partnership whether
  or not section 1273(1) of CTA 2009 applies in relation to it,

• “relevant receipts” means any income—

  (a)

  which (but for the disposal) would be charged to
  corporation tax as income of the transferor (whether
  10directly or as a member of a partnership), or

  (b)

  which (but for the disposal) would be brought into
  account as income in calculating profits of the
  transferor (whether directly or as a member of a
  partnership) for corporation tax purposes, and

• 15“tax advantage” means a tax advantage, as defined in section
  1139, in relation to income tax or the charge to corporation tax
  on income.

757B Relevant amount to be treated as income

(1) The relevant amount is to be treated as income of the transferor
20chargeable to corporation tax in the same way and to the same extent
as that in which the relevant receipts—

(a) would have been chargeable to corporation tax as income of
the transferor, or

(b) would have been brought into account as income in
25calculating profits of the transferor for corporation tax
purposes,

but for the disposal.

(2) In subsection (1) “the relevant amount” is to be read in accordance
with section 753(2) and section 753(3) and (4) applies for the purpose
30of determining when income under subsection (1) is treated as
arising.

(3) For this purpose, in section 753(2) to (4) references to the transfer of
the right are to be read as references to the disposal of the right.

(4) If, apart from this subsection and section 779B(3)—

(a) 35both this Chapter and Chapter 4 would apply in relation to
the disposal, and

(b) Chapter 4 would give a greater amount of income of the
transferor chargeable to corporation tax,

this Chapter is not to apply in relation to the disposal.”

(2) 40The amendment made by this paragraph has effect for cases where the
arrangements mentioned in section 757A(1) of CTA 2010 are made on or
after 1 April 2014.

29 (1) After Chapter 3 insert—

“Chapter 4

Disposals of assets through partnerships

779A Application of Chapter

(1) This Chapter applies if conditions A and B are met.

(2) Condition A is that directly or indirectly in consequence of, or
5otherwise in connection with, arrangements involving a company
within the charge to corporation tax (“the transferor”) and another
person (“the transferee”)—

(a) there is, or is in substance, a disposal of an asset (“the
transferred asset”) by the transferor to the transferee,

(b) 10the disposal is effected (wholly or partly) by or through a
partnership (“the relevant partnership”),

(c) at any time—

(i) the transferor is a member of the relevant partnership
or of a partnership associated with the relevant
15partnership, and

(ii) the transferee is a member of the relevant partnership
or of a partnership associated with the relevant
partnership, and

(d) the main purpose, or one of the main purposes, of one or
20more steps taken in effecting the disposal is the obtaining of
a tax advantage for any person.

(3) In subsection (2)(a) the reference to a disposal of an asset includes
anything constituting a disposal of an asset for the purposes of
TCGA 1992.

(4) 25For the purposes of subsection (2)(b) the disposal might, in
particular, be effected by an acquisition or disposal of, or an increase
or decrease in, an interest in the relevant partnership (including a
share of the profits or assets of the relevant partnership or an interest
in such a share).

(5) 30For the purposes of subsection (2)(c) it does not matter if the
transferor and the transferee are not members of a partnership as
mentioned at the same time.

(6) For the purposes of subsection (2)(c) a partnership is “associated”
with the relevant partnership if—

(a) 35it is a member of the relevant partnership, or

(b) it is a member of a partnership which is associated with the
relevant partnership (whether by virtue of paragraph (a) or
this paragraph).

(7) In subsections (2)(c) and (5) references to the transferor include a
40person connected with the transferor and references to the transferee
include a person connected with the transferee.

(8) Condition B is that it is reasonable to assume that, had the
transferred asset instead been disposed of directly by the transferor
to the transferee, the relevant amount (or any part of it)—

(a) would have been chargeable to corporation tax as income of
the transferor, or

(b) would have been brought into account as income in
calculating profits of the transferor for corporation tax
5purposes.

(9) In this Chapter “the relevant amount” means the amount of the
consideration received by the transferor for the disposal.

(10) If the transferor receives—

(a) no consideration for the disposal, or

(b) 10consideration which is substantially less than the market
value of the transferred asset,

assume for the purposes of subsection (9) that the transferor receives
consideration of an amount equal to the market value of the
transferred asset.

(11) 15In subsection (10) references to the market value of the transferred
asset are to that value at the time of the disposal.

(12) In this Chapter—

• “arrangements” includes any agreement, understanding,
  scheme, transaction or series of transactions (whether or not
  20legally enforceable),

• “partnership” includes a limited liability partnership whether
  or not section 1273(1) of CTA 2009 applies in relation to it,
  and

• “tax advantage” means a tax advantage, as defined in section
  251139, in relation to income tax or the charge to corporation tax
  on income.

779B Relevant amount to be treated as income

(1) The relevant amount is to be treated as income of the transferor
chargeable to corporation tax in the same way and to the same extent
30as that in which it—

(a) would have been chargeable to corporation tax as income of
the transferor, or

(b) would have been brought into account as income in
calculating profits of the transferor for corporation tax
35purposes,

as mentioned in section 779A(8).

(2) Section 753(3) and (4) applies for the purpose of determining when
income under subsection (1) is treated as arising (reading references
to the transfer of the right as references to the disposal of the
40transferred asset).

(3) If, apart from this subsection and section 757B(4)—

(a) both this Chapter and Chapter 1A would apply in relation to
the disposal, and

(b) Chapter 1A would give the same amount, or a greater
45amount, of income of the transferor chargeable to corporation
tax,

this Chapter is not to apply in relation to the disposal.”

(2) The amendment made by this paragraph has effect for cases where the
arrangements mentioned in section 779A(2) of CTA 2010 are made on or
after 1 April 2014.

Section 80

SCHEDULE 14 5Abolition of reduced rates for vehicles satisfying reduced pollution
requirements

Part 1 Amendments of the Vehicle Excise and Registration Act 1994

1 VERA 1994 is amended as follows.

2 10Omit section 61B (certificates as to reduced pollution).

3 In consequence of the amendment made by paragraph 2—

(a) in section 45 (false declarations etc), in subsections (3A) and (3B)
omit “or 61B”,

(b) in Schedule 1 (annual rates of duty)—

(i) 15in paragraph 3(6) omit paragraph (a) and the “and” following
it,

(ii) in paragraph 4(7) omit paragraph (a) and the “and” following
it,

(iii) in paragraph 5(6) omit paragraph (a) and the “and” following
20it, and

(iv) in paragraph 7(3) omit paragraph (a) and the “and” following
it, and

(c) in paragraph 22 of Schedule 2 (exempt vehicles: vehicle testing etc)—

(i) in sub-paragraph (1)(a) for “, a vehicle weight test or a
25reduced pollution test” substitute “or a vehicle weight test”,

(ii) in sub-paragraph (2) omit “a reduced pollution test or”,

(iii) in sub-paragraph (2A), in both places it occurs, omit “or a
reduced pollution test”,

(iv) in sub-paragraph (3) omit “, or a reduced pollution test,”,

(v) 30omit sub-paragraph (6AA),

(vi) in sub-paragraph (6B) for “, a vehicle weight test or a reduced
pollution test” substitute “or a vehicle weight test”, and

(vii) in sub-paragraphs (8) and (9) omit paragraph (d) and the “or”
following paragraph (c).

4 35In paragraph 3 of Schedule 1 (annual rates of duty: buses)—

(a) in sub-paragraph (1) omit “with respect to which the reduced
pollution requirements are not satisfied”, and

(b) omit sub-paragraph (1A).

5 In paragraph 6 of Schedule 1 (annual rates of duty: vehicles used for
40exceptional loads), in sub-paragraph (2A)—

(a) in paragraph (a) omit “in the case of a vehicle with respect to which
the reduced pollution requirements are not satisfied,”,

(b) omit the “and” following paragraph (a), and

(c) omit paragraph (b).

6 In paragraph 7 of Schedule 1 (annual rates of duty: haulage vehicles), for
sub-paragraph (3A) substitute—

“(3A) 5The rate referred to in sub-paragraph (1)(b) is £350.”

7 Omit paragraphs 9A and 9B of Schedule 1.

8 Omit paragraphs 11A and 11B of Schedule 1.

9 In paragraph 11C of Schedule 1 (annual rates of duty: tractive units), in sub-
paragraph (2)—

(a) 10in paragraph (a) omit “in the case of a vehicle with respect to which
the reduced pollution requirements are not satisfied,”, and

(b) omit paragraph (b).

10 In consequence of the amendments made by paragraphs 4 to 9—

(a) in section 13 (trade licences: duration and amount of duty) omit
15subsection (7)(a) and the “and” following it,

(b) in section 13 (trade licences: duration and amount of duty) as set out
in paragraph 8(1) of Schedule 4 to VERA 1994 which is to have effect
on and after a day appointed by order, omit subsection (7)(a) and the
“and” following it,

(c) 20in section 15 (vehicles becoming chargeable to duty at a higher rate),
omit subsection (2A),

(d) in paragraph 9 of Schedule 1 (annual rates of duty: rigid goods
vehicles)—

(i) in sub-paragraph (1), omit “is not a vehicle with respect to
25which the reduced pollution requirements are satisfied and
which”,

(ii) omit sub-paragraph (3)(a), and

(iii) in sub-paragraph (4), omit paragraph (a) and the “and”
following it, and

(e) 30in paragraph 11 of Schedule 1 (annual rates of duty: tractive units)—

(i) in sub-paragraph (1), omit “is not a vehicle with respect to
which the reduced pollution requirements are satisfied and
which”,

(ii) omit sub-paragraph (3)(a), and

(iii) 35in sub-paragraph (4), omit paragraph (a) and the “and”
following it.

Part 2 Commencement

Introduction

11 40This Part of this Schedule makes provision for the coming into force of the
amendments made by Part 1.

Licences taken out on or after 1 April 2014

12 In the case of an exceptional load vehicle—